Chapter 1
Anglo Saxon model
Free market operation. Government secures private property and contract rights, but does
not intervene or regulate the economic process
- Share holder model for companies: maximize stock value
Descriptive/positive statement = knowledge about ‘what is’ ( economics). Based on facts
and cannot be approved or disapproved.
Prescriptive /normative statement = what ought to be or should be. Is based on value
judgment
Economics: neoclassical definition = the science which studies human behavior as a
relationship between ends and scarce means which have alternative uses
Lionnel Robbins all the scarce means can be used in more than one purpose. The main
problem of economics is how to satisfy the unlimited wants with limited means which have
alternative uses.
Ethics:
- Applied ethics= further specification of moral action guides to a certain field for
example medical ethics, business ethics, engineering ethics.
- Definition of ethics = study of morality = standards than an individual or group has
about what is right and wrong
- Economic ethics = reflects on moral standards that apply to economic phenomena,
evaluate them from a moral point of view.
- General normative ethics = what is morally right and wrong. Formulate basic moral
principles. For example utilitarianism, duty/right/justice/virtue/care ethics.
- Individual ethics = what an individual believes of morality and right and wrong
- Macroeconomic ethics = considers the morality of economic structures ( institutions
or market)
o Does the economic order respect ethical standards?
- Microeconomic ethics = evaluates the actions of individual economic agent given the
economic structure or institutions
o How should the individual economic agent behave on the market?
- Social ethics = guidelines and principles that a group of people have decided to
reference to in order to be accepted
Adam Smith = the free market will produce the greatest benefits. Labor division generates
higher productivity and innovation.
Invisible hand/ unintended consequences = although the businessman intends to serve his
own interest, the consequence of his action also serves the interests of his customers and
community
Locke, John = free markets are supposed to respect the right to freedom an private
property. Government only needed to preserve these rights.
Morality = standards that an individual or group has about what is right or wrong.
Dilemma’s
Moral standards (characteristics) = how people ought to do or how the world should be.
Practical standerds = profitability, self-interest and pride
1
, - Moral dilemma = dilemma arising from a conflict between two moral standards. One
has to weight two important standards so it is challenging.
- Motivational dilemma = dilemma arising from a conflict between a moral and
practical standard. Problem of moral motivation: what motivates people to act in
accordance with their moral standards.
- Practical dilemma = dilemma arising from a conflict between two practical
standards. For example deciding on the color of the new company vehicles or what
amount of money should be invested next year.
Positive statements = if the government applies policy instrument y, goal x will increase
Rand, Ayn = only self interest is rational
- The world takes away the freedom of the entrepreneurs
- Laissez fair capitalism
- Solidarity is a vice and leads to injustice ( community of feelings)
Rhineland model = government regulates the market and provides for welfare state
- Stakeholder model for companies: balance of interests of stakeholders
Values = concern ends or ideals that persons pursue and give content to how they define the
good life. What makes certain acts or way life valuable
Norms = are the rules that should be followed up in order to realize moral values
concrete behavioral rules ( what is normal). Relate to values as means relate t ends. If norms
do not serve any value, they are meaningless.
Virtues= how people are/what they tend to do: honesty, prudence, industry
Chapter 2
Agent neutrality = utilitarianism holds that an act is permissible if and only if it maximizes
utility. This theory is agent-neutral, this means that it cannot accommodate agent-relative
features of commonsense morality, such as agent-centered options and agent-centered
constraints
Bentham = argued that two ‘sovereign masters’, pleasure and pain, regulate all human
behavior and that all human experience might theoretically be measured in terms of these
basic units ( pleasure as + and pain as - )
- Qualitative differences of experience reduced to standard units of pleasure and pain.
Pleasure reading poem = watching a circus performance
- Benthams theory is hedonistic = pleasure is the highest good and proper aim of
human life
Capability principle (Amartya Sen)/ Extra welfarism = consequential evaluation in which
capabilities that foster freedom play a more important role that happiness. Capability
reflects what a person can do. A person’s freedom depends on being able to perform
functions that require certain capabilities.
Compensation test (Kaldor and Hicks) = a decision can be more efficient – as long as there is
a net gain to society – enabling any potential losers to be compensated from the net gain.
Losers could be compensated by the winners.
2
, Utilitarianism = consequentialist ethical theory the greatest happiness for the greatest
number
Welfarism = requires that the goodness of a state of affairs be a function only the utility or
welfare obtained by individuals in that state. Welfare = mental stake like happiness or
pleasure.
Consequentialism = actions, choices or policies must be judged exclusively in terms of the
resulting or consequent, rather than any intrinsic features they may have.
Sum ranking = individual sovereignty implies that individual utilities are the sole base for
evaluating an action or policy. Focal point = individual. The social welfare for society as a
whole is considered to be the sum of these individual utilities. Utilitarianism = do whatever
to maximize the total sum of utilities
Cost benefit analysis= estimate total welfare gain ( evaluate benefits and costs)
- Problem of interpersonal comparison = how is one to compare how well-satisfied
the preferences of different people are? Preferences are subjective and difficult to
test.
- Price individuals are willing to pay for a certain measure
Monism = concept of utility by assuming that all values can be measured on the same scale
of pleasure ( and pain) ~ Bentham
Mill = distinguishes higher pleasures ( such as the pleasure of the intellect and moral
sentiments) that are qualitatively different from the lower pleasures such as eating:
intellectual pleasures of writing an academic article are such that no amount of physical
enjoyment could encounter balance them.
- Pluralist utilitarianism (Mill) = utility is defined in terms of whatever has intrinsic
( non-moral) value, not just pleasure and pain. Including knowledge, love, friendship,
courage, health, beauty.
Problems:
Retributive justice = if income is equally distributed, it is reasonable to value the prices of all
individual equally. But if income is not equally distributed, the preferences of those with
larger incomes will carry more weight than the preferences of those with smaller incomes
because the rich are more prepared to pay a high price for improving their utility than poor.
3
Anglo Saxon model
Free market operation. Government secures private property and contract rights, but does
not intervene or regulate the economic process
- Share holder model for companies: maximize stock value
Descriptive/positive statement = knowledge about ‘what is’ ( economics). Based on facts
and cannot be approved or disapproved.
Prescriptive /normative statement = what ought to be or should be. Is based on value
judgment
Economics: neoclassical definition = the science which studies human behavior as a
relationship between ends and scarce means which have alternative uses
Lionnel Robbins all the scarce means can be used in more than one purpose. The main
problem of economics is how to satisfy the unlimited wants with limited means which have
alternative uses.
Ethics:
- Applied ethics= further specification of moral action guides to a certain field for
example medical ethics, business ethics, engineering ethics.
- Definition of ethics = study of morality = standards than an individual or group has
about what is right and wrong
- Economic ethics = reflects on moral standards that apply to economic phenomena,
evaluate them from a moral point of view.
- General normative ethics = what is morally right and wrong. Formulate basic moral
principles. For example utilitarianism, duty/right/justice/virtue/care ethics.
- Individual ethics = what an individual believes of morality and right and wrong
- Macroeconomic ethics = considers the morality of economic structures ( institutions
or market)
o Does the economic order respect ethical standards?
- Microeconomic ethics = evaluates the actions of individual economic agent given the
economic structure or institutions
o How should the individual economic agent behave on the market?
- Social ethics = guidelines and principles that a group of people have decided to
reference to in order to be accepted
Adam Smith = the free market will produce the greatest benefits. Labor division generates
higher productivity and innovation.
Invisible hand/ unintended consequences = although the businessman intends to serve his
own interest, the consequence of his action also serves the interests of his customers and
community
Locke, John = free markets are supposed to respect the right to freedom an private
property. Government only needed to preserve these rights.
Morality = standards that an individual or group has about what is right or wrong.
Dilemma’s
Moral standards (characteristics) = how people ought to do or how the world should be.
Practical standerds = profitability, self-interest and pride
1
, - Moral dilemma = dilemma arising from a conflict between two moral standards. One
has to weight two important standards so it is challenging.
- Motivational dilemma = dilemma arising from a conflict between a moral and
practical standard. Problem of moral motivation: what motivates people to act in
accordance with their moral standards.
- Practical dilemma = dilemma arising from a conflict between two practical
standards. For example deciding on the color of the new company vehicles or what
amount of money should be invested next year.
Positive statements = if the government applies policy instrument y, goal x will increase
Rand, Ayn = only self interest is rational
- The world takes away the freedom of the entrepreneurs
- Laissez fair capitalism
- Solidarity is a vice and leads to injustice ( community of feelings)
Rhineland model = government regulates the market and provides for welfare state
- Stakeholder model for companies: balance of interests of stakeholders
Values = concern ends or ideals that persons pursue and give content to how they define the
good life. What makes certain acts or way life valuable
Norms = are the rules that should be followed up in order to realize moral values
concrete behavioral rules ( what is normal). Relate to values as means relate t ends. If norms
do not serve any value, they are meaningless.
Virtues= how people are/what they tend to do: honesty, prudence, industry
Chapter 2
Agent neutrality = utilitarianism holds that an act is permissible if and only if it maximizes
utility. This theory is agent-neutral, this means that it cannot accommodate agent-relative
features of commonsense morality, such as agent-centered options and agent-centered
constraints
Bentham = argued that two ‘sovereign masters’, pleasure and pain, regulate all human
behavior and that all human experience might theoretically be measured in terms of these
basic units ( pleasure as + and pain as - )
- Qualitative differences of experience reduced to standard units of pleasure and pain.
Pleasure reading poem = watching a circus performance
- Benthams theory is hedonistic = pleasure is the highest good and proper aim of
human life
Capability principle (Amartya Sen)/ Extra welfarism = consequential evaluation in which
capabilities that foster freedom play a more important role that happiness. Capability
reflects what a person can do. A person’s freedom depends on being able to perform
functions that require certain capabilities.
Compensation test (Kaldor and Hicks) = a decision can be more efficient – as long as there is
a net gain to society – enabling any potential losers to be compensated from the net gain.
Losers could be compensated by the winners.
2
, Utilitarianism = consequentialist ethical theory the greatest happiness for the greatest
number
Welfarism = requires that the goodness of a state of affairs be a function only the utility or
welfare obtained by individuals in that state. Welfare = mental stake like happiness or
pleasure.
Consequentialism = actions, choices or policies must be judged exclusively in terms of the
resulting or consequent, rather than any intrinsic features they may have.
Sum ranking = individual sovereignty implies that individual utilities are the sole base for
evaluating an action or policy. Focal point = individual. The social welfare for society as a
whole is considered to be the sum of these individual utilities. Utilitarianism = do whatever
to maximize the total sum of utilities
Cost benefit analysis= estimate total welfare gain ( evaluate benefits and costs)
- Problem of interpersonal comparison = how is one to compare how well-satisfied
the preferences of different people are? Preferences are subjective and difficult to
test.
- Price individuals are willing to pay for a certain measure
Monism = concept of utility by assuming that all values can be measured on the same scale
of pleasure ( and pain) ~ Bentham
Mill = distinguishes higher pleasures ( such as the pleasure of the intellect and moral
sentiments) that are qualitatively different from the lower pleasures such as eating:
intellectual pleasures of writing an academic article are such that no amount of physical
enjoyment could encounter balance them.
- Pluralist utilitarianism (Mill) = utility is defined in terms of whatever has intrinsic
( non-moral) value, not just pleasure and pain. Including knowledge, love, friendship,
courage, health, beauty.
Problems:
Retributive justice = if income is equally distributed, it is reasonable to value the prices of all
individual equally. But if income is not equally distributed, the preferences of those with
larger incomes will carry more weight than the preferences of those with smaller incomes
because the rich are more prepared to pay a high price for improving their utility than poor.
3
