Maxi-max decision, utopia and the need for professional economic ethics – Published on real-world economics review, issue no. 56, by George DeMartino, University of Denver, USA, March 2011, 1 pdf-pages.
Introduction: The economics profession has attracted a good bit of attention lately due to revelations regarding the failure of influential economists to disclose potential conflicts of interest when serving in the role of public intellectual. For this we are indebted to filmmaker Charles Ferguson, whose film “Inside Job” ought to serve as a wake-up call to a profession that has suppressed its ethical obligations for over a century. Even worse, the film makes clear that the economists it exposes have never given the matter of disclosure a moment’s thought prior to being grilled on camera by Mr. Ferguson. The film spawned several studies that further documented a failure to disclose among leading economists, and pressure from the business press on the AEA to explain just why it has no general rules or guidelines that speak to this issue (Epstein and Carrick-Hagenbarth 2010; Flitter, Cooke and da Costa 2010). In response, the AEA established a committee “to consider the Association’s existing disclosure and other ethical standards and potential extensions to those standards.”
These developments are important: like doctors (who sometimes shill for pharmaceutical companies), economists must routinely be required to disclose their financial entanglements so that the public can make informed judgments about the dependability of the economic advice they receive. Economics ought to adopt rules similar to those in place in other professions, as Epstein and Carrick-Hagenbarth rightly argue. That said, this is but one of many ethical issues that arise in the in the context of economic practice … //
… On the need for professional economic ethics:
The answer, I think, lies in the fact that unlike virtually every other major profession with influence over the lives of others, economics has stubbornly neglected its obligation to examine openly, carefully and critically the professional ethical entailments of its practice. As of now there are no textbooks, journals, newsletters or curriculum that examine these ethical entailments, and that train economics students or practicing economists in the daunting ethical burdens that they face by virtue over their enormous influence in the world. And so it is the case that leading economists, who sometimes acquire extraordinary powers by virtue of their intellectual expertise and institutional positions, can pursue their craft without the least recognition of the dangers they face, or of the most basic duties to their profession and those they purport to serve. In this context we should not be surprised when they act badly—when they fail to give full disclosure of their financial entanglements when providing economic expertise, or when they practice economics in other ways that violate the tenants of any imaginable body of professional ethics.
Over the past century economics has presumed that the professional responsibilities attending economic practice are so obvious as to render the study of professional ethics optional (cf. Coats 1985). This presumption is terribly wrong-headed and even dangerous. As the evidence of the past several decades demonstrates, a profession that chooses to ignore its ethical duties is apt to stumble badly through the ethical thickets that its work necessarily entails. As a consequence, economists do substantial harm as they try to do good.
The foregoing should not be taken exclusively as an indictment of the individual economists who adopted maxi-max in their work. The responsibility falls equally on the profession as a whole. Economists have worked hard to secure influence for economics. In that regard, we’ve succeeded immensely. Not as much as some economists would like, to be sure, since many fail to recognize that the control they covet is (and should be) unobtainable. We have as much influence as it is reasonable to ever expect—at least, if we value democratic governance.8 What we haven’t done is attend to the ethical challenges and obligations that necessarily attach to that influence. We haven’t explored carefully what it means to be an ethical economist, and what it means for economics to be an ethical profession. It is an ethical fact that we have an obligation to do so. And until we do, the societies we purport to serve might be better off were we to lose some of the influence that we’ve illicitly acquired. (full long 14 pdf-pages-text).