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Back to the Blog Ethics and Economics: The Morality of Innovation

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Coffee and Markets

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Francis Cianfrocca joins Ben Domenech for the Wednesday, September 30th edition of Coffee & Markets, a series of brief morning podcasts on politics and the marketplace, now appearing as well on WashingtonTimes.com.

Today’s podcast focuses a fascinating piece in the latest issue of First Things by Nobel laureate Edmund Phelps on the nature of economic freedom, the virtues of capitalism, and the moral dimension at the heart of human innovation.

The article we discussed is available on First Things’ web site:

When the word morality comes up in connection with economics, income distribution and financial stability are usually the issues. Is it moral for rich countries to use such a high proportion of the world’s resources or for investment bankers to earn large bonuses? And is it moral for financial markets to experiment with volatile derivatives that increase the potential for panics?

Across the political spectrum, the voices in the debate presume a homo economicus who is focused on maximizing consumption while taking prudent risks. And these voices presume that the economy in which this maximization takes place is a mechanical sort of system. But real human beings bear little resemblance to this ideal type. Any discussion of economics and morality must begin instead with real human beings who are not only acquisitive and risk averse but also inquisitive and adventurous and who sometimes feel the need to take a plunge, to leap into the unknown. Furthermore, in a healthy economy, each participant has to reckon on a future about which knowledge is imperfect, owing to the ventures being undertaken by the others.