Are Markets Moral? … Reflecting on Economics and Virtue

Economy is Doing Well_Colleen Lane

Photo Credit: Economy is Doing Well, by Colleen Lane, Flickr

I’m not an economist, but am fascinated by conversations about economics. The reality is that we all live within economies, and yet rarely reflect on the morality of these systems within which we live.

Here are some of my reflections on the relationship between economics and virtue as I address this question: Are markets moral?

Healthy Cultures Included Healthy Economies

I would argue that healthy cultures are characterized in part by healthy economies. While most individuals quickly associate economies with transacted goods and services, the heart of economic systems is relational in nature—“the incredible social networks that capital both creates and depends upon.” Economies are the relational context within which we serve one another and contribute to human flourishing.

Healthy Economies Depend on a Healthy Environment or Culture

But one of the key challenges to healthy economies and markets is the environment or ecology that surrounds the economies or markets. If the surrounding ecology is healthy, this typically translates into a healthy economy. Conversely, if the surrounding ecology is unhealthy, this typically translates into a challenged and unhealthy economy.

Daniel Finn puts it this way: “An awareness of the interplay of markets and their contexts is critical for understanding under what conditions the outcomes of voluntary interactions of individuals and businesses in the market will be considered just.” Finn sees four dimensions the “context” or ecology surrounding economies:

  1. The Construction of Markets by Government (markets being properly defined by law)
  2. The Provision of Essential Goods and Services
  3. The Presence of Morality among Individuals and Groups
  4. The Existence of a Vibrant Civil Society

Depending on That which Markets Cannot Create

To answer the question of whether markets are moral therefore requires us to look outside economic markets. Markets depend on forces—such as individual and group morality—that markets themselves are not able to produce.

On this point William McGurn notes that the economy “depends on virtues—self-restraint, honesty, courage, diligence, the willingness to defer gratification—that it cannot itself create.” Restating it—healthy economy is dependent on something that the economy itself cannot produce.

Moral Markets Surrounded by Multiple Sectors

In light of such arguments by Finn and McGurn, health and morality of economic markets are dependent on the health and morality of the surrounding culture and ecology. As someone working to train leaders especially in the non-profit and church realms, I feel the need for leaders in these sectors to better understand their contribution to healthy economies and healthy cultures.

Such leaders play an important role in nurturing this dimension of virtue—virtue that serves as the social or spiritual capital upon which healthy economies are dependent. Just as the business and government sectors play vital roles, the non-profit and religious sectors also play a key role in nurturing healthy economies and the virtue upon which healthy markets may function.

Because of the power of healthy economies to contribute to human flourishing, it is vital for the people of God in religious sectors to engage in theological reflection and practical conversation that will help contribute to the social and spiritual capital upon which the incredible social network of the economy may flourish.

Virtues and Leadership

Though not specifically dealing with economics, for those wanting to engage the importance of virtue in leadership a bit more, I recommend you take a look at an article Jim Lanctot and I wrote for the International Journal of Leadership Studies entitled Character and Leadership: Situating Servant Leadership in a Proposed Virtues Framework.

The Moral Market and You

It is easy to look around and feel powerless to affect the economy in a positive and healthy manner. Drawing on the insights of William McGurn and others, perhaps a great first and best place to start is with your closest sphere of influence.

  • Are you working to nurture virtue and morality within your own life and the life of those closest to you (children, family friends)?
  • Are you using your place in the market as a voice and presence to help create what the market itself cannot create?
  • Are you engaging in your work and market activity with responsible action, a spirit of value creation (giving more than you take), and commitment to steward your gifts and talents in a way that productively contributes to the flourishing of the world around you?

Such action at the personal and local level leaves a powerful ripple in the markets and economies of which you are part.

So, are markets moral? It depends on the surrounding environment, which means it also depends on you. Let’s be a force for positive and healthy economic flourishing within our sphere of influence.

Easter, The Gospel, & Virtuous Leadership

Peeps, Mike Mozart, Flickr

Peeps, Mike Mozart, Flickr

Easter week is just around the corner as I write this post. At the heart of Easter is the message of the gospel. In this brief post, I’d like to make some connections between the core message of Easter and leadership practice.

Ethics matter for those working in at diverse organizational levels. But ethics especially matter for leaders.

We want to know that what our leaders say is true. We want to see that the actions of our leaders are consistent with what they say as leaders.

General Ethical Approaches

Though certainly an oversimplification of ethical theory, we can argue that there are three primary approaches to ethics:

  • Virtue Ethics
  • Duty Ethics
  • Utilitarian Ethics

Here is a brief overview of these approaches drawn from an article I wrote with a colleague:

  Virtue Ethics Duty Ethics Utilitarian Ethics
Key operational question Who ought I to be? What ought I to do? What brings the greatest happiness to the greatest number?
Definition of Happiness Fulfilling one’s purpose or function Adherence to moral absolutes Maximization of pleasure, absence of pain
Focus Character of the individual Rules and resulting obligations of the individual Outcomes and consequences
  • A utilitarian approach to ethics bases decisions on what brings the greatest happiness to the greatest number.
  • A duty-based approach (or deontological approach) to ethics bases decisions on what one ought to do.
  • A virtue-based approach to ethics bases decisions on who one ought to be.

The Priority of Virtue Ethics

While there are supporting arguments for each of these ethical paths, I find that the most effective form of ethical practice is grounded in virtue-oriented approaches. Why is this?

In times of crisis and ethically challenging circumstances, people will tend to do what is natural to them. They will act in accordance with who they are. Because of this, the most powerful approach to ethics is one that takes seriously the formation of ethical people at a level of virtues and character.

Though we need moral guidance (a deontological and duty-based approach), the capacity to act on this comes from moral fortitude (an ontological and virtue-based approach).

Virtuous leadership requires virtuous leaders. Ethical leadership requires ethical leaders.

Because of this, a foundational question in this discussion is how does one become a virtuous person/leader?

The Gospel and Virtue Ethics

I don’t want to imply that only Christians may be virtuous leaders. Certainly we can all think of Christians we know who have not acted virtuously and those of other non-Christian commitments who do act virtuously.

I do want to emphasize that the Christian gospel provides a powerful answer to the question of how one becomes a virtuous person/leader.

At the heart of Easter is the gospel. The gospel centers on the person and work of Jesus Christ. Jesus’ death on the cross, remembered in the heart of Holy Week, is at the center of the Christian faith. Jesus died on a cross to pay the penalty for sinful people and to restore wholeness to our broken world. Those who trust in Jesus’ work on their behalf are offered forgiveness for their sins and are welcomed into both God’s family and God’s mission of restoring and healing a broken world. At Easter, we celebrate not only Jesus’ death, but also his being raised to life three days later to demonstrate His power over sin and death.

So How Does this Relate to Virtue-Based Leadership?

The gospel is not about good, moral, or virtuous people offering themselves to God. The gospel is about sinful, immoral, and broken people being made new by Christ’s work in their lives.

We can never be good enough, moral enough, or righteous enough to make ourselves right before God. Only God’s work in us by the gospel can do that.

What does this mean for a Christian approach to virtue ethics?

Rather than seeking to be virtuous in order to make ourselves right before God, in the gospel we yield to the God who is able to make us right before him.

The gospel does not lower the ethical bar. The gospel does not say that sin and unethical leader behavior doesn’t matter. Rather, the gospel gives us a pathway for changing us from the inside out. The gospel gives us a hopeful path on which we can start to see change. The gospel gives us a credible answer to the question of how one may become a virtuous person/leader.

The answer is not in our own virtuous behavior, but rather in looking to the God of Easter who is able to do in us what we are not able to do ourselves.

Power to the People — Leaders and the Ethical Use of Power

Vuisten (fists) - Power, by Bolwidt on Flickr

Photo Credit: Vuisten (fists) – Power, by Bolwidt, Flickr

Power to the People

The public exercise of power is often disliked, mistrusted, or undermined in our society. Roots of this suspicion of power are deep, but this suspicion is often grounded in the exercise of positional power that is not founded upon personal power. It is distasteful to see people occupying positions of power without also embodying the personal credibility to support and enact this power effectively. In contrast to resistance that is often the result of excessive use of positional power, personal power helps to develop followers and their commitment to organizational goals.

Asking the Right Questions

In terms of when and how power can be used most effectively and more acceptably, I would point to the importance of the ethical use of power. On this point Richard Daft identifies key questions leaders need to ask. Some of these questions ask whether the action and use of power…

  • …is consistent with the organization’s goals,
  • …respects the rights of individuals,
  • …meets standards of equity and fairness, and
  • …is consistent with how one would behalf if the action would affect them personally.

These guidelines for ethical action help in thinking through how power is being utilized. To engage power effectively, acceptably, and ethically, leader’s need to be comfortable that the answers to such questions are focused on the good of others and the organization rather than simply serving themselves as leaders.

A Commitment to Serving Others

On this point, I appreciate the emphasis of people like Robert K. Greenleaf who write on the theme of servant leadership. Greenleaf emphasized that the servant leader was to be servant first. In other words, Greenleaf emphasized that the most acceptable or beneficial leader for a community is the one who at their core is a servant, and who then expresses this servant-oriented heart through a leadership role. Greenleaf emphasized that true power rested with followers who recognize a servant-oriented person and then attribute personal power to them. From this personal power, the servant-leader may then lead effectively and ethically.

In my view, this is the best place from which to use power—using it from a place that recognizes the best power is that which has been freely granted to the leader by the personal trust of followers.

_______________________

What do you think of Greenleaf’s point? How do you see leaders using power ethically and responsibly?