Free Markets and the Culture of Common Good: 41 (Ethical Economy)


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Many people engaged in business activity, including accountants and lawyers, are professionals.

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As such, they are bound by codes of conduct promulgated by professional societies. Many firms also have detailed codes of conduct, developed and enforced by teams of ethics and compliance personnel. Business ethics can thus be understood as the study of professional practices, i. This entry will not consider this form of business ethics. Instead, it considers business ethics as an academic discipline. Business ethics as an academic discipline is populated by both social scientists and normative theorists.

This is reflected in the attendees of academic conferences in business ethics and the types of articles that are published in business ethics journals. Social scientists—who at this point comprise the largest group within the field—approach the study of business ethics descriptively. They try to answer questions like: Does corporate social performance improve corporate financial performance, i. I will not consider such questions here. This entry focuses on questions in normative business ethics, most of which are variants on the question: What is ethical and unethical in business?

Considered only as a normative enterprise, business ethics—like many areas of applied ethics—draws from a variety of disciplines, including ethics, political philosophy, economics, psychology, law, and public policy. This is because remedies for unethical behavior in business can take various forms, from exhortations directed at private individuals to change their behavior to new laws, policies, and regulations. One is that the means of production can be privately owned.

A second is that markets—featuring voluntary exchanges between buyers and sellers at mutually determined prices—should play an important role in the allocation of resources. Those who deny these assumptions will see some debates in business ethics e. Merck and Wal-Mart are examples of the first type organization; Princeton University and the Metropolitan Museum of Art are examples of the second.

Business ethicists sometimes concern themselves with the activities of non-profit organizations, but more commonly focus on for-profit organizations. Indeed, most people probably understand businesses as for-profit organizations. One way to think about business ethics is in terms of the moral obligations of agents engaged in business activity. Who is a moral agent? Individual persons, obviously. What about firms?

To be precise, the question is whether firms are moral agents and morally responsible considered as qua firms, not considered as aggregates of individual members of firms. In the business ethics literature, French is a seminal thinker on this topic. He bases this conclusion on his claim that firms have internal decision-making structures, through which they 1 cause events to happen, and 2 act intentionally.

Donaldson claims that firms cannot be persons because they lack important human capacities, such as the ability to pursue their own happiness see also Werhane Other responses denied that firms are moral agents also. Velasquez argues that firms lack a necessary condition of agency, viz. In later work, French recanted his claim that firms are moral persons, though not his claim that they are moral agents.

Discussions of corporate moral agency and moral responsibility have largely faded from the business ethics literature as of But they continue to receive attention in the mainstream philosophical literature, where they are treated with a high degree of sophistication. Here the focus is on collectives more generally, with the business firm playing a role as an example of a collective.

As in the business ethics literature, in the mainstream philosophical literature a key question is: What are the conditions for moral agency and responsibility, such that collectives qua collectives, including firms, do or do not satisfy them? This view has strong intuitive appeal. On the other side are writers who deny that firms can be moral agents, such as Gilbert , S. A claim advanced on this side is that agency requires intention, and firms are not the kinds of things that can have intentions S. Miller The common way of speaking about the agency and responsibility of firms may be metaphorical, or a shorthand way of referring to the agency and responsibility of individuals within firms.

For discussions of these issues, see the entries on collective responsibility , collective intentionality , and shared agency. While the question of whether firms themselves are moral agents is of theoretical interest, its practical import is uncertain. Perhaps BP itself was morally responsible for polluting the Gulf of Mexico. Perhaps certain individuals who work at BP were.

What hangs on this? According to Hasnas , very little. Firms such as BP can be legally required to pay restitution for harms they cause even if they are not morally responsible for them. What ascribing agency and responsibility to firms enables us to do, according to Hasnas, is blame and punish them.

But, he argues, we should not engage in this practice. Phillips , by contrast, argues that in some cases no individual employee in a firm is responsible for the harm a firm causes. To the extent that it makes sense—and it often does, he believes—to assign responsibility for the harm, it must be assigned to the firm itself.

There is significant debate about the ends and means of corporate governance, i. Much of this debate is carried on with the large publicly-traded corporation in view. There are two main views about the proper ends of corporate governance. According to one view, firms should be managed in the best interests of shareholders. Shareholder primacy is the dominant view about the ends of corporate governance among financial professionals and in business schools. A few writers argue for shareholder primacy on deontological grounds.

On this argument, shareholders own the firm, and hire managers to run it for them on the condition that the firm is managed in their interests. Shareholder primacy is thus based on a promise that managers make to shareholders Friedman ; Hasnas In response, some argue that shareholders do not own the firm. They own stock, a type of corporate security Bainbridge ; Stout ; the firm itself may be unowned Strudler Others argue that managers do not make, explicitly or implicitly, any promises to shareholders to manage the firm in a certain way Boatright More writers argue for shareholder primacy on consequentialist grounds.

In support of this, some argue that, if managers are not given a single objective that is clear and measurable—viz. Consequentialist arguments for shareholder primacy run into problems that afflict many versions of consequentialism: in requiring all firms to be managed in a certain way, it does not allow sufficient scope for personal choice Hussain Most think that people should be able to pursue projects, including economic projects, that matter to them, even if those projects do not maximize welfare.

The second main view about the proper ends of corporate governance is given by stakeholder theory.

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To its critics, stakeholder theory has seemed both insufficiently articulated and weakly defended. The groups most commonly identified are shareholders, employees, the community, suppliers, and customers. But other groups have stakes in the firm, including creditors, the government, and competitors. It makes a great deal of difference where the line is drawn, but stakeholder theorists have not provided a clear rationale for drawing a line in one place rather than another.

With respect to defense, critics have wondered what the rationale for managing firms in the interests of all stakeholders is. This is precisely what defenders of shareholder primacy say about that view. It is important to realize that a resolution of the debate between shareholder and stakeholder theorists however we conceive of the latter will not resolve all or even most of the ethical questions in business. This is because this is a debate about the ends of corporate governance; it cannot answer all of the questions about the moral constraints that must be observed in pursuit of those ends Goodpaster ; Norman Rather, these views should be interpreted as views that managers should do whatever is morally permissible to achieve these ends.

A large part of business ethics is trying to determine what morality permits in this domain. Answers to questions about the means of corporate governance often mirror answers to question about the ends of corporate governance. Often the best way to ensure that a firm is managed in the interests of a certain party P is to give P control over it. We might see control rights for shareholders as following analytically from the concept of ownership. To own a thing is to have a bundle of rights with respect to that thing. As noted, in recent years the idea that the firm is something that can be owned has been challenged Bainbridge ; Strudler But contractarian arguments for shareholder control of firms have been constructed which do not rely on the assumption of firm ownership.

All that is assumed in these arguments is that some people own capital, and others own labor. It just so happens that, in most cases, capital hires labor. Many writers find this result troubling. Even if the governance structure in most firms is in some sense agreed to, they say that it is unjust in other ways. Anderson characterizes standard corporate governance regimes as oppressive and unaccountable private dictatorships. Arguments for these governance structures take various forms. According to it, if states should be governed democratically, then so should firms, because firms are like states in the relevant respects Dahl ; Walzer A fourth argument for worker participation in firm decision-making sees it as valuable or even necessary training for participation in political processes in the broader society Cohen Space considerations prevent a detailed examination of these arguments.

But criticisms generally fall into two categories. The first insists on the normative priority of agreements, of the sort described above. There are few legal restrictions on the types of governance structures that firms can have. And some firms are in fact controlled by workers Dow ; Hansmann To insist that other firms should be governed this way is to say, according to this argument, that people should not be allowed to arrange their economic lives as they see fit.

Another criticism of worker participation appeals to efficiency. Allowing workers to participate in managerial decision-making may decrease the pace of decision-making, since it requires giving many workers a chance to make their voices heard Hansmann It may also raise the cost of capital for firms, as investors may demand more favorable terms if they are not given control of the enterprise in return McMahon Both sources of inefficiency may put the firm at a significant disadvantage in a competitive market. And it may not be just a matter of competitive disadvantage.

The Moral Economy: Why Good Incentives are No Substitute for Good Citizens

If it were, the problem could be solved by making all firms worker-controlled. The problem may be one of diminished productivity more generally. Business ethicists seek to understand the ethical contours of, and devise principles of right action for, business activity. One way of advancing this project is by choosing a normative framework and teasing out its implications for a range of issues in business. One influential approach to business ethics draws on virtue ethics see, e. For MacIntyre, there are certain goods internal to practices, and certain virtues are necessary to achieve those goods.

Building on MacIntyre, Moore develops the idea that business is a practice, and thus has certain goods internal to it, the attainment of which requires the cultivation of business virtues. Scholars have also been inspired by the Aristotelian idea that the good life is achieved in a community. They have considered how business communities must be structured to help their members flourish Hartman ; Solomon Another important approach to the study of business ethics comes from Kantian moral theory D.

In a competitive market, people may be tempted to deceive, cheat, or manipulate others to gain an edge. Ethical theory, including virtue theory and Kantian deontology, is useful for thinking about how individuals should relate to each other in the context of business cf. Rorty But business ethics also comprehends the laws and regulations that structure markets and organizations. And here political theory seems more relevant see and cf. This is not an easy task, since while Rawls makes some suggestive remarks about markets and organizations, he does not articulate specific conclusions or develop detailed arguments for them.

But scholars have argued that justice as fairness: 1 is incompatible with significant inequalities of power and authority within businesses S. Arnold ; 2 requires people to have an opportunity to perform meaningful work Moriarty ; cf. Hasan ; and requires alternative forms of 3 corporate governance Norman ; cf. Singer and 4 corporate ownership M.

A version of this view can be found in McMahon , but it has been developed in most detail and is now most closely associated with Heath According to Heath, the reason we have a market-based economy, as opposed to a command economy, is because markets are more efficient.

But markets fail, due to imperfect information, externalities, transaction costs, and more. The state corrects for many market failures through regulation. We set limits on pollution and require truth in advertising, among other things. But we would not want, and we cannot write, regulations to address every market failure. This is where business ethics comes in, according to the MFA. Businesspeople have a moral obligation not to exploit the market failures that the law allows them to exploit.

Put another way, the moral obligations of businesspeople are identified by the ideal regulatory regime—the one we would have if regulations were costless and written and administered by a godlike figure. Selecting a normative framework and applying it to a range of issues is an important way of doing business ethics. But it is not the only way. Indeed, the more common approach is to identify a business activity and then analyze it using intuitions and principles common to many moral and political theories.

The main way that firms interact with consumers is by selling, or attempting to sell, products and services to them. Many ethical issues attend this interaction. Among the things commonly said to be inappropriate for sale are sexual services, surrogacy services, and human organs. Some writers object to markets in these items for consequentialist reasons. They argue that markets in commodities like sex and kidneys will lead to the exploitation of vulnerable people Satz Others object to the attitudes or values expressed in such markets.

They claim that markets in surrogacy services express the attitude that women are mere vessels for the incubation of children Anderson ; markets in kidneys suggest that human life can be bought and sold Sandel ; and so on. Whether selling a particular thing for money expresses disrespect, they note, is culturally contingent. They and others also argue that the bad effects of markets in contested commodities can be eliminated or at least ameliorated through appropriate regulation, and that anyway, the good effects of such markets e.

Some things that firms may wish to sell, and that people may wish to buy, pose a significant risk of harm, to the user and others. When is a product too unsafe to be sold? This question is often answered by government agencies. In the U. In some cases these standards are mandatory e. The state identifies minimum standards and individual businesses can choose to adopt higher ones. Questions about product safety are a matter of significant debate among economists, legal scholars, and public policy experts.

Legal scholars have also devoted considerable attention to tort law, the area of law that deals with cases of non-contractual, non-criminal harm. But business ethicists have paid scant attention to these questions. Existing treatments often combine discussions of safety with discussions of liability—the question of who should pay for harms that products cause—and tend to be found in business ethics textbooks. There is much room for exploration of these issues. Drop side cribs pose risks to consumers; so do chainsaws. On what basis should the former be prohibited but the latter not be Hasnas ?

On the question of liability, an important issue is whether it is fair to hold manufacturers responsible for harms that their products cause, when the manufacturers are not morally at fault for those harms Piker Most advertising contains both an informational component and a persuasive component. Advertisements tell us something about a product, and try to persuade us to buy it.

Both of these components can be subject to ethical evaluation. Emphasizing its informational component, some writers stress the positive value of advertising. Markets function efficiently only when certain conditions are met. One of these conditions is perfect information: minimally, consumers have to understand the features of the products for sale. While this condition will never be fully met in reality, advertising can help to ensure that it is met to a greater degree Heath Another value that can be promoted through advertising is autonomy.

People have certain needs and desires—e. Their choices are more likely to satisfy their needs and desires if they have information about what is for sale, which advertising can provide Goldman These good effects depend, of course, on advertisements producing true beliefs, or at least not producing false beliefs, in consumers. The issue here is not whether deceptive advertising is wrong—most believe it is cf.

Child —but what counts as deceptive advertising, and what makes it wrong. Its advertisements were deceptive, and therefore wrong, because they appeared to make a true claim, but in fact made a false claim. But many advertisements that do not seem deceptive make false or unverifiable claims. It is common to say of these types of claims that they are not warranted as true, and so cannot deceive Carson Yet these claims may in fact deceive some people.

Advertisements are deemed deceptive when a reasonable person, not any person at all, is deceived. This makes deception in advertising a matter of results in consumers, not intentions in advertisers. Many reasons have been offered for why deceptive advertising is wrong. One is the Kantian claim that deceiving others is disrespectful to them, a use of them as a mere means. Deceptive advertising may also lead to harm, to consumers who purchase suboptimal products, given their desires and competitors who lose out on sales.

A final criticism of deceptive advertising is that it erodes trust in society Attas When people do not trust each other, they will either not engage in economic transactions, or engage in them only with costly legal protections. The persuasive component of advertising is also a fruitful subject of ethical inquiry. Galbraith , an early critic, thinks that advertising, in general, does not inform people how to acquire what they want, but instead gives them new wants.

Moreover, since we are inundated with advertising for consumer goods, we want too many of those goods and not enough public goods. Hayek rejects this claim, arguing that few if any of our desires are independent of our environment, and that anyway, desires produced in us through advertising are no less significant than desires produced in us in other ways.

Galbraith is concerned about the persuasive effects of advertisements. In contrast, recent writers focus on persuasive techniques that advertisers use. Some of these are alleged to cross the line into manipulation. It is difficult to define manipulation precisely, though many attempts have been made see, e.

For our purposes, manipulative advertising can be understood as advertising that attempts to persuade consumers, often but not necessarily using non-rational means, to make irrational or suboptimal choices, given their own needs and desires see and cf. Associative advertising is often held up as an example of manipulative advertising. In associative advertising, the advertiser tries to associate a product with a positive belief, feeling, attitude, or activity which usually has little to do with the product itself.

Thus many television commercials for trucks in the U. Commercials for body fragrances associate those products with sex between beautiful people. The suggestion is that if you are a certain sort of person e. Crisp argues that this sort of advertising attempts to create desires in people by circumventing their faculty of conscious choice, and in so doing subverts their autonomy cf.

Arrington ; Phillips Lippke argues that it makes people desire the wrong things, encouraging us to try to satisfy our non-market desires e. How seriously we take these criticisms may depend on how effective we think associative and other forms of persuasive advertising are. Our judgments on this issue may be context-sensitive. Paine Paine et al.

But children, she argues, do not have the capacity for making wise consumer choices see also E. Moore Thus advertising directed at children—as opposed to advertising of products for children directed at adults—constitutes a form of objectionable exploitation. Other populations who may be similarly vulnerable are the senile, the ignorant, and the bereaved.

Ethics may require not a total ban on marketing to them but special care in how they are marketed to Brenkert Sales are central to business. Perhaps surprisingly, business ethicists have said little directly about sales. But much of what is said about advertising also applies to sales.

Salespeople are, in a sense, the final advertisers of products to consumers. They provide benefits to consumers in much the same way as advertisers and have the same ability to deceive or manipulate consumers. Carson works out a detailed theory of ethics for salespeople. Carson justifies 1 — 4 by appealing to the golden rule: treat others as you want to be treated. Stuttgart: Klett-Cotta. Stuttgart: W. Die Himmelsgabe. Ein Festspiel. Wiesbaden: Limes. Karlsruhe: C. Privatrechtsgesellschaft und Marktwirtschaft. Freiheit und Ordnung in der Marktwirtschaft. Baden-Baden: Nomos, Buchanan, James M.

The Constitution of Economic Policy. American Economic Review , 77 3 : Candeias, Mario. Neoliberalismus, Hochtechnologie, Hegemonie. Grundrisse einer transnationalen kapitalistischen Produktions- und Lebensweise. Eine Kritik. Hamburg: Argument Verlag. Coleman, James S. Social Capital in the Creation of Human Capital. Foundations of Social Theory.

Pontiff-icating on the Free-Market System (Ep. 149)

Koblenz: Bundesarchiv. Wirtschafts- und Sozialordnung. In Nils Goldschmidt and Michael Wohlgemuth eds. Aussagen evangelischer Christen in Deutschland zur Wirtschafts- und Sozialordnung. Ein Quellenband. Dietzfelbinger, Daniel. Soziale Markwirtschaft als Wirtschaftsstil. Eucken, Rudolf. Thomas v. Aquino und Kant. Ein Kampf zweier Welten. Kant-Studien , 6 : Leipzig: K. Berlin: de Gruyter. Eucken, Walter. Die geistige Krise und der Kapitalismus.

Religion und Sozialismus. Eine Fortsetzung der Diskussion. Religion — Wirtschaft — Staat. Zur Problematik des Gegenwartsmenschen. Staatliche Strukturwandlungen und die Krisis des Kapitalismus. Kapitaltheoretische Untersuchungen. Jena: Fischer. Schmollers Jahrbuch , 62 1 : In Walter Eucken, Ordnungspolitik. Das ordnungspolitische Problem. ORDO , 1 : Die Wettbewerbsordnung und ihre Verwirklichung. ORDO , 2: Berlin: Springer. Stuttgart: Franz Steiner, Wettbewerb, Monopol und Unternehmer. Foucault, Michel. The Birth of Biopolitics. Houndmills: Palgrave Macmillan.

Goldschmidt, Nils. Walter Eucken und das soziale Anliegen des Neoliberalismus. Illusionen und Reinterpretationen einer ordnungspolitischen Integrationsformel. Bern: Haupt, Hayek, Friedrich A. Law, Legislation and Liberty. Heidenreich, Felix. Foucaults Rekonstruktion des Liberalismus und die Rolle des Staates. In Heidenreich, Felix ed.

Homann, Karl and Franz Blome-Drees. Wirtschafts- und Unternehmensethik. Kant, Immanuel. Die Metaphysik der Sitten. Frankfurt: Suhrkamp. Kirchner, Christian. In: Korff, Wilhelm et al. Band 2: Ethik wirtschaftlicher Ordnungen. Innerstaatliche und interstaatliche Institutionalisierungen wirtschaftlicher Prozesse. Berlin: Berlin University Press, Kiwit, Daniel and Stefan Voigt. ORDO , 46 : Individualethik und Institutionenethik! Korreferat zum Beitrag von Peter Weise.

Korff, Wilhelm. Normen als Regelwerke menschlichen Handelns. In Korff, Wilhelm et al. Konstitutive Bauelemente moderner Wirtschaftsethik. Larner, Wendy. Neo-liberalism: Policy, Ideology, and Governmentality. Studies in Political Economy , 63 Autumn : Lemke, Thomas. Neoliberalismus, Staat und Selbsttechnologien. Politische Vierteljahresschrift , 41 1 : Lenel, Hans Otto.

ORDO , 42 : Lenel, Hans Otto and Fritz W. Die Aufgabe des Jahrbuchs. Lippmann, Walter. Die Gesellschaft freier Menschen. Bern: Francke. Meijer, Gerrit. Rivista Internazionale di Scienze Economiche e Commerciali , 34 7 : Miksch, Leonhard [] Wettbewerb als Aufgabe. Wirtschaftslenkung und Marktwirtschaft. Wirtschaftsordnung und Wirtschaftspolitik. Das Jahrhundert ohne Gott. Zur Kultursoziologie unserer Zeit. Stil und Ordnung der Sozialen Marktwirtschaft.

In Goldschmidt, Nils and Michael Wohlgemuth eds. Wirtschaftspolitik in der sozialen Marktwirtschaft. In Patrick Boarman ed. Stuttgart: Kohlhammer, Soziale Marktwirtschaft. In Ludwig Erhard Stiftung ed. Zeugnisse aus zweihundert Jahren ordnungspolitischer Diskussion. Stuttgart: Fischer, Gedanken zu einem Kodex des richtigen konjunkturpolitischen Verhaltens. Das gesellschaftspolitische Leitbild der Sozialen Marktwirtschaft. The Principles of the Social Market Economy. In Peter Koslowski ed.

Theory and Ethics of the Economic Order. Berlin: Springer, Because of the tax exemption for health insurance, it makes sense for employees to take part of their compensation as untaxed health benefits rather than as taxable income. For most Americans, employers choose insurance providers and plans and arrange financing, but employers do not bear the final cost of the insurance premiums. Insurance premiums are viewed as merely one component of the total amount of compensation paid by employers to their employees. Rising health care costs, therefore, divert compensation received from take home pay to insurance and thereby slow the growth of wages.

They do, however, indicate why health care costs are an object of concern for many Americans. Rising health care costs are generating pressures and difficulties for state and federal budgets as well. Through Medicare, Medicaid, the Veteran's Administration, and other programs, the states and the federal government pay for about 45 percent of total health care spending in any given year.

Health care costs constitute the single largest expense in most if not all state budgets, and they are rising far more quickly than tax receipts. Their ripple effects include pressures to restrain or to cut other public programs, most frequently funding for public higher education.

In explicating the problems of American health care, particularly the ways in which those problems are interrelated, we have noted how increasing costs are implicated in the growing number of uninsured. What about costs and quality? Are increases in the former associated with improvements in the latter? There is no consensus among health policy analysts regarding whether the high costs associated with sophisticated, technology-intensive care yield benefits proportionate to their cost.

By some measures of population health—for example, infant mortality and life expectancy—the United States does not do well in comparison to such countries as Australia, Canada, Germany, New Zealand, and the United Kingdom. Those comparisons, however, are controversial, especially with respect to the question of whether a given problem—for example, infant mortality—is due to health care system defects or to more pervasive socio-cultural factors.

That evidence has been gathered and presented in the body of scholar literature whose central conclusions are two-fold: the quality of American health care is mixed at best, and the amount of resources spent on health care varies greatly in different regions of the country without any correspondingly observable differences in health outcomes.

For example, a study in the New England Journal of Medicine found that clinical practice guidelines for the most effective diagnoses and treatments were being followed and patients were receiving recommended care only As Eliot Fisher argued in a presentation to the Council in March , the correlation between cost and quality is low, as is illustrated by the figure below. Wennberg and Fisher conclude that much of the health care spending in Medicare, between 20 and 30 percent, does not bring added health benefit, and there is probably a similar proportion of ineffective care in private health care.

A blunt, succinct summation of the preceding problem analysis might read as follows: we worry that some of us receive more care than is needed, others receive less than is needed, and the rising cost of care contributes to everyone's anxiety about both our personal budgets and the national budget. The most obvious solutions to these problems seem to lead in different and perhaps even contradictory directions.

We might like to do something about the uninsured, but proposals for the government to act directly to help, whether by enrolling them in a public program or by subsidizing their purchase of private insurance, runs into the inevitable objection that our current obligations to provide Medicare seem unsustainable in the long term.

If we were to make a public commitment to helping the many uninsured directly, would we not put ourselves at the mercy of the ever-rising costs of health care? In turn, if there is some consensus that the situation of the uninsured is a real problem for us, what to do, if anything, about rising costs is a topic of serious controversy among health policy experts. Some argue that if Americans want to spend their money on care of perhaps doubtful value, they should be able to do so, but that they should have to pay for it themselves. Those proponents would increase deductibles and co-payments in order to induce greater cost-consciousness on the part of patients in order to make them into more prudent consumers of health and medical care, thus restraining cost and perhaps encouraging improvements in quality as well.

Some studies show, however, that patients, and particularly poor patients, have difficulty distinguishing necessary from unnecessary care, so such measures may worsen the problem of access to health or medical care. Others argue that the only proven way to keep costs down is more government intervention, perhaps through some form of single-payer health care. Yet that change, despite the claims of its advocates that it is the only ethical and sustainable option, has never proven popular with the American people at large.

For us, what is striking is how these various solutions presuppose certain understandings of what it is that is in dispute and of how to frame public discourse. The recent trend toward consumer-driven health care, for example, implicitly treats health or medical care as nothing more and nothing less than another commodity in a free market.

That view makes a certain amount of sense if the primary problem in American health care is patients blithely consuming large amounts of health care without thought to the cost. Indeed, that view might plausibly claim to encouraging responsibility and prudent stewardship. But, taken by itself, that vision does not have very much to say about the numbers of Americans who, we have good reason to believe, are not getting the care they need.

Those who see the primary problem in American health care as the uninsured might well claim that we need to assert strongly a moral imperative to get care to everyone. They often talk as though health or medical care is the kind of thing to which human beings, as human beings, have or ought to have a right. While one can understand why someone might be tempted to see health or medical care through either one of these lenses, we argue in what follows that both are one-sided and possibly dangerous if taken as the whole truth about health or medical care.

To anticipate, the view that health or medical care is best seen under the rubric of commodity fails to do justice to the traditional orientation of the medical profession toward the care for human beings in need; the view that human beings have a right to health and medical care sends the wrong message about individual and social responsibility for health and threatens to become far too expansive. We take up these matters in the final section, after which we argue that medical care—but not health care—is best seen as a human good and as critical to the common good.

Whether, or to what extent, health care should be conceived and treated as a commodity is a matter of persistent disagreement. Some analysts and policymakers contend that health care is a commodity like any other in a market economy and that a relatively free market will solve or ameliorate our problems with cost and quality. Others oppose this view, arguing that health care cannot and should not be treated as a market good among others and that it is special, in large measure, due to its unique properties and to the moral realities of the relationships between patients and health professionals.


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What is gained, and what is lost, by this way of seeing the matter? Here, we examine the rationale for conceiving and treating health care as a commodity and conclude that, perhaps despite the intentions of its advocates, this view does not adequately capture, and in some ways even distorts, essential aspects of health care, especially the moral realities of the relationship between a patient and a physician. What is a commodity? That is, what are the essential features that commodities of different types share?

And what is the rationale for conceiving and treating health care as a commodity? Conditions of short supply and high demand usually drive prices up; surplus supplies and low demand usually drive prices down. Unlike objects that have intrinsic value to those who possess them, objects of purely instrumental value have little to do with the owner's identity.

Markets operate on the assumption that the only difference between buyers and sellers is that the former wish to acquire what the latter possess. Turning from the question of what is a commodity to the question of why we might be inclined to conceive and treat health care as a commodity, we begin with consumer-driven health care, whose proponents cite some of our well-known problems as support for the explicit commodification of health care. They point above all to the evidence of rising costs and mixed quality, including the amount of inefficient or inappropriate care, and they argue that these problems are caused, in part, by various distortions in the market for health care.

Thus, these advocates contend that the solution to these problems is to remove the insulation, to make patients—that is, consumers—more aware of the price of health care and, thereby, more cost-conscious toward their care. In keeping with the logic of this argument, proponents recommend an ideal form of insurance, that is, a high deductible plan combined with a health savings account for other out-of-pocket spending. Such plans protect health care consumers against high costs, while high deductibles give them incentives to be more prudent about using their resources for most routine health care spending.

In brief, in a system of consumer-driven health care, patients would be, first and foremost, savvy, hard-nosed consumers, motivated by self-interest to find and make the best deal. Armed with information and able to take their health care dollars elsewhere, such consumers could theoretically hold doctors and other health care professionals accountable and thus spur them to drive down costs and provide better quality. In its purest form, consumer-driven health care draws on democratic beliefs about the sufficiency of the individual's ability to recognize and act upon the right course of action for himself at any given time.

It envisions individuals with the ability to negotiate their care, and it suggests that relationships between physicians and patients are, at bottom, contractual, reached between two parties of roughly equivalent knowledge and resources—that is, between a patient who is nothing more and nothing less than a consumer and a physician who is, likewise, a service provider, brought together to negotiate with each other with the aim of realizing interests that are ultimately each individual's own.

Consumer driven health care implicitly, as well as explicitly, offers a particular account of the relationship between patients and physicians—an account that we believe is out of sync with the moral realities of this relationship. In this relationship, born of the patient's need for healing and of the physician's promise to heal, inequality is inescapable and essential. The very meaning of patient, after all, is someone who endures pain or affliction, 31 and he or she comes to the doctor in a state of need and vulnerability.

To be sure, many if not all of us like to think of ourselves as self-sufficient beings, standing tall and requiring the permission of no one to be ourselves and to act as we wish. But needing a physician, even when we are well, is in no small tension with such proud aspirations. As patients, we must bare our bodies, and in some sense, our souls, revealing what we usually share with only our closest intimates, if at all.

Moreover, illness and disease undermine our proud assertions of autonomy. They remind us that we are dependent, that being healthy and being ill are states that are not within the ambit of our strict control— i.

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From the physician, a patient needs not simply a service or a good although services and goods surely support the physician's functions and activities , but even more, the physician's judgment about what can and cannot be done to meet his needs in a particular situation. And in the most extreme cases, such as when a patient is lying in the emergency room after a car accident or waiting for brain surgery, the patient can hardly be the savvy, hard-nosed consumer that we expect in other areas of the economy.

The physician, on the other hand, presents herself to a patient first and foremost as a professional, armed with superior knowledge and judgment about the patient's medical condition. By her very presence before the patient, she offers implicit assurance that she is competent in the skills and practice of medicine, and will use those skills for the benefit of the patient, and not with a view to larger social goals, to her own self interest, or to anyone else's good. As such, the professional presents herself as something different from the seller of a commodity, who avowedly aims to strike the best deal for himself.

Moreover, the training and skills of the physician are not and cannot be the proprietary knowledge of the individual physician: although she has expended her own effort to acquire that competence, the knowledge itself and the opportunity to acquire it depend on the community of doctors and the larger community of citizens. The physician holds that competence in trust, a trust that brings with it certain obligations to orient her thinking and her actions to the good of the patient. In addition to his technical competence, the physician has another, often overlooked advantage: unlike the patient, she is not sick.

Neither her proud claim to self-sufficiency nor her very existence is called into question by the all-too-real evidence of vulnerability. For these reasons, the physician can and must act as an authority to the patient. She must tell the patient things the patient does not want to hear, and she must prescribe courses of treatment that the patient may not want to follow. At this juncture, it is important to add the critical qualification that the patient presents himself to the physician as a human being whose dignity and right to self-determination demand respect in any medical decision or course of treatment.

Although the physician may give orders—and in some respect must give orders—she can only do so if the patient is prepared to accept them. Thus, in addition to scientific knowledge and technical skill, the physician must have some facility with the arts of persuasion and with the prudent exercise of her epistemic, technical, and experiential authority. To put the matter succinctly: the physician's authority is successfully exercised only to the extent that she is worthy of, and she encourages and elicits, the patient's trust.

It is in light of the centrality of trust that the relationship between physician and patient is described as a fiduciary—a trust-based—relationship oriented to the good of the patient. The moral realities of this relationship—the realities of compromised but cherished autonomy, of inequality ameliorated by trust, of shared commitment to the good of healing—may be distilled into a single phrase: beneficence-in-trust.

Those moral realities are the focus of growing concern within and beyond the health professions—concerns that have to do with phenomena and trends that indicate how pervasive the market ethos has become in contemporary health care and how far down the path to commodification we have already traveled. Consider, for example, the roiling controversy within medicine over the alleged influences of pharmaceutical companies on clinical decision making, that is, on physician prescribing practices.

At issue here is the argument that marketing practices introduce illegitimate bias into the process of clinical reasoning and divert physician judgment such that interests other than the patient's benefit become controlling. Another prominent example of these concerns is reflected in the claim that fee-for-service medicine introduces strong incentives for physicians to do more than is necessary—to order more diagnostic tests and to perform more interventions.

Whatever the motivation, it seems clear that the phenomenon of overtreatment described in the previous analysis of the problem of quality is related to the encroachments of a market ethos into health care. That ethos is reflected as well in the behaviors and expectations of patients, many of whom seem induced to think of themselves, first and foremost, as consumers. For the would-be buyer of a commodity, the market ethos is distilled in the dictum, caveat emptor —let the buyer beware.

The encouraged wariness is to be cultivated and reflected in 1 self-education about one's health or disease to ensure that as a consumer, the patient encounters the physician on as level a playing field as possible with regard to knowledge-based power; and 2 in the demand that everything possible be done, if only because, like any other commodity, the function of the care sought is to satisfy one's desires, and one ought to obtain as much of a good as one can for the same expenditure. And, thus, on the side of patients, who are increasingly described as consumers of health care, we also see evidence of the market ethos.

In the literature of bioethics, the impact of that ethos is evident as well in the argument that the relationship between physician and patient is best seen and lived as a contractual relationship that brings together autonomous equals for the purposes of negotiating what the one will provide that is, sell and the other will receive that is, buy. Both the impetus and desire to interpret health care as a commodity are understandable given our culture's traditional reliance upon markets as the primary means by which goods and services are distributed and the primary framework within which goods and services are interpreted.

Moreover, many market ideals are the ideals of all social interactions: all participants have full knowledge, understanding, and rationality; there is equal accessibility for all; there is no collusion or dishonesty on the part of any participants; there is full transparency in all transactions; etc. Nevertheless, viewing health care as a commodity, and the concomitant view of patients as consumers and health care professionals vendors, does a serious injustice to the realities of the relationship between the patient and the professional, to the moral standing and moral obligations of the patient and the professional, and to the nature of the particular good health care or medical care that is being provided and its centrality to the patient's very self.

The ineradicability of beneficence-in-trust from the relationship between the patient and the health care professional makes any attempt to reduce health care to the status of a mere commodity dangerous and illegitimate. The argument that health care is or should be seen as a commodity appeals to the traditionally American embrace of the market as the forum for the expression of liberty.

Another argument, the claim that there is a right to health care, also appeals to concepts with deep roots in the American tradition of political and ethical thought—the concepts of equality and of rights. These concepts figure prominently in our contemporary debates about the plight of the uninsured, a plight that is often conceptualized as an unjust denial of something, in some sense, owed to every American.

1. Varieties of business ethics

Here, we ask if this construal of health care is true to—if it reveals or obscures—the moral realities of health, illness, and disease. We begin with a taxonomy of rights and then turn to a prominent explication and defense of the argument that there is a right, not only to health care but to health itself; this brief on behalf of a right to health has been developed in a series of steps by Norman Daniels of the Harvard School of Public Health. What is a right? The most basic meaning of a right is this: a right is a legitimate claim on the part of an individual on others to do or to forebear from doing some particular thing.

It is not simply a desire, a want, or an ability to do something. The assertion of a right always entails an appeal to justice. Thus, the claim of a right always implies a correlative duty on the part of another: my right to life always implies your duty not to kill me. Rights in this sense are often characterized as absolute and unconditional with the danger that they may be asserted as if, once claimed, they require no further justification.

Rights may be distinguished as either natural or civil and negative or positive. In the American tradition, the Declaration of Independence provides one authoritative articulation of natural and negative rights. According to the Declaration, all men are created equal and possess certain inalienable rights, chief of which are rights to life, liberty, and the pursuit of happiness.

These rights are natural because they exist prior to governments, which are always instituted by human beings. At most, governments recognize those rights; they do not create them and therefore cannot take them away. These rights are negative because their primary function is to protect certain liberties or freedoms from infringement either by governments or by others.

A right in this sense does not provide a title of property to any one thing in particular but only preserves the freedom of the individual to live his or her own life free of interference by others. There are, as well, civil and positive rights, which are related to the concept of statutory entitlements. Unlike a natural right, a civil right is a creature of a particular polity, and is dependent for its existence and protection on that polity and, in the case of the United States , is usually understood as protected by the Constitution.

For example, the right to vote is not a natural right, because it is a privilege to vote in a particular polity and does not belong to all human beings as such. But it does institutionalize or formalize the more fundamental right to consent to or reject government, which is, according to the Declaration, a natural right. And so civil rights realize or make effective rights that are more properly understood as natural. Civil rights should also be distinguished from statutory entitlements, which are legal recognitions of the claim of an individual to some activity, good, or service.

For example, when we acquire a driver's license, we acquire a right to drive motor vehicles under certain conditions in certain jurisdictions. Where civil rights are conventional reflections of more fundamental natural or human rights, statutory entitlements are based only in regular law. Positive rights, on the other hand, suggest a claim on some specific thing, whether an opportunity or a good. One of the more prominent articulations of positive rights is the United Nations Universal Declaration of Human Rights. Unlike the Declaration of Independence, however, it goes beyond rights to life and liberty and speaks of rights to social security Art.

The preceding taxonomy orients our discussion about health and health care as putative rights—and underscores the need for clarity in deliberating about the question, is there a right to health care or health? In light of the preceding taxonomy, a more specific form of this question might be, is there a negative right to health or health care? If there is such a negative right, it would appear to be a version of the more general right to life: it would be, that is, a right not to have one's health interfered with by others.

Similarly, one could speak of a right to health care and mean no more than a statutory entitlement—just as, for example, it might be said that once one reaches a certain age, one has a right to Medicare benefits. Yet neither of these ways of speaking captures the usual meaning of the claim that there is a right to health care. Those who make such a claim may seek its fruition in a statutory entitlement to the goods and services included under the rubric of health care, but the roots of such an entitlement must be sought in something other than a legislative decision—that is, in some conception of justice or natural rights or human rights.

In other words, the proponents of a right to health care must mean that such a right is analogous to a civil right, which is instituted by a specific polity for the sake of its members but which is grounded in an appeal to natural rights. The proponents of a right to health care must mean, therefore, that we ought to see that right as something like a constitutional civil right, like the right to vote, and to make good on their assertion, they must show that health is a matter of justice. As previously noted, Norman Daniels is, perhaps, the most prominent, articulate advocate of a right to health care—indeed, of a right to health itself.

Daniels's initial argument, developed in and presented in Just Health Care and elsewhere , turned on the connection between justice, equality of opportunity, and health and health care. A core commitment of liberal democratic societies, Daniels argued, is to promote and to protect equality of opportunity for all of its citizens.

Because health care promotes health, understood as normal functioning, and because health is a precondition for realizing opportunity, health care is important to the promotion and protection of opportunity.

Free Markets and the Culture of Common Good: 41 (Ethical Economy) Free Markets and the Culture of Common Good: 41 (Ethical Economy)
Free Markets and the Culture of Common Good: 41 (Ethical Economy) Free Markets and the Culture of Common Good: 41 (Ethical Economy)
Free Markets and the Culture of Common Good: 41 (Ethical Economy) Free Markets and the Culture of Common Good: 41 (Ethical Economy)
Free Markets and the Culture of Common Good: 41 (Ethical Economy) Free Markets and the Culture of Common Good: 41 (Ethical Economy)
Free Markets and the Culture of Common Good: 41 (Ethical Economy) Free Markets and the Culture of Common Good: 41 (Ethical Economy)
Free Markets and the Culture of Common Good: 41 (Ethical Economy) Free Markets and the Culture of Common Good: 41 (Ethical Economy)
Free Markets and the Culture of Common Good: 41 (Ethical Economy) Free Markets and the Culture of Common Good: 41 (Ethical Economy)
Free Markets and the Culture of Common Good: 41 (Ethical Economy) Free Markets and the Culture of Common Good: 41 (Ethical Economy)
Free Markets and the Culture of Common Good: 41 (Ethical Economy)

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