USE OF "EXISTENTIALISM AS A METHODOLOGY FOR SITUATIONAL FTHICS IN ECONOMIC DECISION MAKING''I CARL M. COLONNA It

has long been debated among economists that the d i s t i n c t i o n between normative

and p o s i t i v e economics is a false one at best.

The most o b j e c t i v e economic state-

ments are a function of the values of the i n v e s t i g a t o r and the environmental condit i o n in which such statements

are made.

In economics we f i n d p o l i c y statements are

quite often influenced by our e t h i c a l value base; however, the ethics of economic decision making has been void of much professional i n v e s t i g a t i o n . In part,

if

not t o t a l l y ,

the t r a d i t i o n a l ethics has been a n n i h i l a t e d .

The main

emphasis of ethics in economics is to determine through some thought process which economic decisions are good, which are r i g h t , or which ones ought to be acceptable. However, today we are led to believe that an e t h i c a l approach to economic decision making has been misguided from the beginning. informed that t h i s is called semantics. is called psychology.

I f we observe and evaluate a t t i t u d e s , t h i s

The analysis of c u l t u r a l v a r i a t i o n s is directed to the d i s c i -

p l i n e of sociology or anthropology. c i s i o n making has a l l

I f we study e t h i c a l words, we are

Ethics as a method of appropriate economic de-

but disappeared, i f

indeed i t

ever existed.

In an attempt to bring a t t e n t i o n to the development of a methodology f o r e t h i cal economic decision making, the parameters of t h i s paper w i l l concentrate on three areas:

(I)

to view h i s t o r i c a l l y the changing d i r e c t i o n s of e t h i c a l decision making,

(2) to examine various obstacles to the making of e t h i c a l , economic decisions, and (3) to e s t a b l i s h an argument for e x i s t e n t i a l i s m as a t e n t a t i v e g u i d e l i n e which may assist economists in creating an environment which promotes e t h i c a l t h i n k i n g . Ethical Decision Making:

A Changin9 D i r e c t i o n

At an e a r l i e r age we are conditioned to the notion t h a t the common basis f o r j u s t i f y i n g our b e l i e f s is i n d e f e n s i b l e .

The o r i g i n s of t h i s common basis can be

quite often traced to a u t h o r i t y , f i a t i s m , t r a d i t i o n , i n t u i t i o n , and bias. an economic decision cannot be viewed as an e t h i c a l l y sound one i f or more of these defenses.

it

Therefore

is based on on

Thus, we must search f o r a more " v a l i d " j u s t i f i c a t i o n

f o r our "conditioned b e l i e f s . " Scholarly research f o r such v a l i d j u s t i f i c a t i o n goes back f o r numerous centuries.

This research became more involved with the Classical economists.

Classic~

scholars, such as Smith, Malthus, and Ricardo, considered most economic questions ~nd answers as being s i m p l i s t i c ones.

This was due to the f a c t that the C l a s s i c i s t s

viewed the nature of society and man as being s i m p l i s t i c in composition and in motivation.

The Classical economist's opinions of the individual were largely premised on self-examination and appeal to personal experience.

Man was assumed to be rational

in his behavior in the sense that he attempted to ascertain the consequences of his bQhavior in order to maximize his personal advantage in the marketplace.

Thus, we

~ind that he was not only assumed to be rational in this sense but hedonistic.

The

aggregate i n d i v i d u a l ' s behavior was said to represent the behavior of s(,ciety.

Thus,

society's behavioral pattern was a product of the results of assumed rational human intelligence and individual wants and fears.

This notion of certain societal be-

havior can be observed in such social by-products as a social contract where the aggregate individual values are considered to have homogeneity.

I t was, therefore,

believed that betterment of society could occur only through u t i l i t a r i a n i s m . History shows that the evaluating of economic decisions was determined by i n d i vidual r a t i o n a l i t y , hedonism, and u t i l i t a r i a n i s m . Thus, decisions were considered to be v a l i d ones i f r a t i o n a l i t y , that is maximizing individual wealth, and u t i l i t a r i a n ism, providing the greatest good for the greatest number, were present.

Today i t

appear', that the Classicists emphasized the notion of r a t i o n a l i t y and not that of ethics.

Thus, economic decisions were made on the b~sis of that r a t i o n a l i t y and

not on an ethical basis. One may find that financial values and human welfare can be in c o n f l i c t with o~4 another i f a s t r i c t rational approach to decision making is followed.

I t should be

~oted that the rational approach may generate amenities to the business processes ~hrough such things as wealth, value, price, and cost.

Thus. increases in producti-

wity of products of value would be categorized as good and decreases as bad; reduction in the cost of production could be labeled as good and increases as bad. Aquis i t i o n , s e l f - s e r v i n g , and c o n f l i c t are a l l motivational behavior patterns which f i t ~ i t h i n the parameters of the hedonistic approach to the rational maximization of Material wealth.

I t can be observed that these decisions, which encourage c o n f l i c t ,

,could conceptually f i t

within parameters of the Classical rational approach but,

c e r t a i n l y , cannot be called ethical ones. The Classical view of the individual and society has been questioned by many scholars.

Three of the more s i g n i f i c a n t scholars were Freud, Jung, and Marx. Both

Freud's findings on the unconscious and Jung's notions of c o l l e c t i v e group behavior seem to question the s i m p l i s t i c nature of man as viewed by the C l a s s i c i s t s .

Man

~ay very well not be p~Jrsuing his own interests as believed by the C l a s s i c i s t s . we must now be aware of r a t i o n a l i z a t i o n rather than r a t i o n a l i t y . of a society

Therefore,

T)WI

instead

being composed of individual values characterized by homogeneity, we

find that society's values are heterogenous.

In a d d i t i o n , Harx has tBught us that social

i n s t i t u t i o n s r e f l e c t social forces

and c e r t a i n class r e l a t i o n s evolve from the prominent mode of production.

Thus,

one's personal values then become a f u n c t i o n of one's status or p o s i t i o n in the class s t r u c t u r e .

This can r e s u l t in the dominant class being able to pursue i t s

own i n t e r e s t v i r t u a l l y undisturbed.

I t may be said that Harx's most s i g n i f i c a n t

c o n t r i b u t i o n was in the area of i n t e r r e l a t i o n s h i p s :

i n t e r r e l a t i o n s h i p s between man

and man, man and i n s t i t u t i o n s , and i n t e r r e l a t i o n s h i p s among the various i n s t i t u t i o ~ of our s o c i e t y . It

is these c o n t r i b u t i o n s which enabled us to reassess the way in which we

viewed man and s o c i e t y . i l y e t h i c a l ones.

We must conclude that r a t i o n a l decisions are not necessar-

We cannot v e r i f y our own personal and r a t i o n a l values as being

wniversal, and we cannot simply assume i n d i v i d u a l and group motives but must i n vestigate.

It

is the need f o r i n v e s t i g a t i o n and i n q u i r y which has assigned a pro-

minent role to l o g i c a l p o s i t i v i s m .

A h i s t o r i c a l prospective of the trend toward

l o g i c a l p o s i t i v i s m may have been a c o n t r i b u t i n g f a c t o r in removing us from e t h i c a l evaluation of economic decisions. Logical p o s i t i v i s m has as i t s major theme v e r i f i c a t i o n or v e r i f i a b i l i t y .

Thus

with t h i s approach to problem s o l v i n g , we are beginning our i n q u i r i e s with various established p r i n c i p l e s and theorems.

It

is from these that we deduce statements of

agreement which supposedly represent t r u t h . existed long before we saw them. Igreed that they did indeed e x i s t .

A case in p o i n t , we knew t h a t germs

How? Because in essence the medical

profession

We know such statements of agreement (potocol

statements) by the people "who count" c o n s t i t u t e s c i e n t i f i c t r u t h .

It

is believed,

t h e r e f o r e , that the l o g i c a l p o s i t i v i s t can discover, d i s c l o s e , and discuss t r u t h because his f i n d i n g s can be v e r i f i e d q u a n t i t a t i v e l y . One of the inherent weaknesses of l~ogical p o s i t i v i s m as an approach to the discovery of t r u t h is that one may be compelled to make d a i l y phenomena conform to %he laws of cardinal measurement. Logical p o s i t i v i s m does, however, lend i t s e l f some advantage in economic decision making:

it

to

enables the researcher to l i m i t the

areas of the controversy by exposing f o r i n v e s t i g a t i o n the a v a i l a b l e facts and data which are p e r t i n e n t to the s p e c i f i c problem. Logical p o s i t i v i s m , which has come to the f o r e f r o n t as a s i n g l e c r i t e r i o n f o r determining the soundness of a d e c i s i o n , has v i r t u a l l y no r e l a t i o n s h i p to the ethic of that decisi~n.

To a great degree we f i n d that the l o g i c ~ l p o s i t i v i s t simply

ignores the e t h i c a l r a m i f i c a t i o n s of decision making; however, he does not r e f u t e the existence of an e t h i c .

Therefore, the notion of e t h i c a l considerations or t h e i r

i m p l i c a t i o n s are ignored by the methodology of the l o g i c a l p o s i t i v i s t .

Thus, we f i n d t h a t the l o g i c a l p o s i t i v i s t would categorize any economic decision which contains, e x p l i c i t l y or i m p l i c i t l y ,

the term "nhould" or "ought" as bein 9

outside the domain of the s c i e n t i f i c methodology and may very well ignore i t

alto-

gether. Such areas which may e x s i s t in economics might deal with questions such as "Is the current tax s t r u c t u r e equitable?" f a m i l i e s below the poverty l i n e ? "

It

and "Should income be r e d i s t r i b u t e d to

is my b e l i e f that society must deal with these

types of problems and recognize that they require e t h i c a l c o n s i d e r a t i o n . As pointed out e a r l i e r , l o g i c a l p o s i t i v i s m can e s t a b l i s h the l i m i t s or areas of controversy by exposing the p e r t i n e n t facts and data.

It

is my argument that the v~-

i n t r o d u c t i o n of ethics i n t o economic decision making can f u r t h e r help narrow t h i s controversy by at least revealing those decisions which can be defined to be unethical.

In the study of ethics and e t h i c a l decision making, we come to terms w i t h

such questions as should and ought, good and bad, r i g h t and wrong. It

should be observed that i t

is u n l i k e l y that we can reach d e f i n i t i v e conclu-

)ions in the area of ethics and e t h i c a l decision making. we may very well enhance our a b i l i t y

However, as economists,

to survey and ascertain the e t h i c a l content of

our economic decisions. Wi~at is Ethics and I t s Roadblocks? We feel

that personal experiences and/or our c o g n i t i v e a b i l i t i e s have given us

some preconceived notions concerning the nature of e t h i c s .

An attempt w i l l

be made

to i n v e s t i g a t e j u s t what areas and subject matters c o n s t i t u l e e t h i c s . Several d e f i n i t i o n s can be offered.

A rather narrow d e f i n i t i o n of ethics can

be defined as the study of r i g h t and wrong.

Those acts which are defined as good,

o b v i o u s l y , are determined by goals, events, and processes.

When we t a l k of " r i g h t " ~

; t tends to connote a c t i o n s ; and when we use good, we g e n e r a l l y r e f e r to the d e s l Yable goals of that a c t i o n . used statements:

It

is important to d i f f e r e n t i a t e between two generally

" t h i s act is r i g h t , " and "you ought to do t h i s . "

word " r i g h t " refers to something which is acceptable or permissible. the phrase "one ought do do something," i t

g e n e r a l l y implies i t

Generally, the But when w e ~

is wrong not to do

it. Another f r e q u e n t l y used d e f i n i t i o n of ethics is that i t or

morality.

It

is the study of morals

is g e n e r a l l y considered to be true that the study of ethics does

indeed touch on what people believe to be r i g h t or wrong.

But a survey of some

) o c i a l sciences, such as anthropology, psychology, and sociology, reveals that they ~ive treatment to t h i s same theme. However, what d i s t i n g u i s h e s the two from one another is that social sciences are b a s i c a l l y d e s c r i p t i v e , and ethics is prescriptiv4L

In short, ethics is not merely a d e s c r i p t i v e approach to the moral ideals held by persons but asks such questions as which ideal is b e t t e r and why. However, i t is important to remember that d e f i n i n g ethics on a moral or m o r a l t i y basis tends to put an act or acts i n t o established categories. Ethics, we can conclude, share the same c h a r a c t e r i s t i c s as does any other technique or i n q u i r y in the sense that i t

is interested in the discovery of t r u t h .

It

appears h i s t o r i c a l l y that ethics has d i f f e r e d from other d i s c i p l i n e s in t h a t i t

has

attempted to define truths in the area of absolutes (what is r i g h t and good) and not on a r e l a t i v e basis ( s i t u a t i o n a l ) .

It

has been t h i s absolute a p p l i c a t i o n or

i n a b i l i t y to generalize e t h i c a l rules which has been one of the major roadblocks to e t h i c a l reasoning. E x i s t e n t i a l i s m As A Tentative Guideline The need for an e t h i c a l decision ensues when the decision maker is exposed to a problem.

It

is assumed that he w i l l

with c e r t a i n action guides.

take action to solve the problem in accordam(e

To have an e t h i c a l action guide, i t

must be s u p e r i o r ,

defensible, and other-regarding. (I) ~ill

Superior Action Guide - For an action guide to be s u p e r i o r , an i n d i v i d u a l

f o l l o w the action guide whether the i n d i v i d u a l wants to or not. (2)

Defensible Action Guide - The i n d i v i d u a l must be not only able to give

"reasonable" reasons for his action, but he must be w i l l i n g to do so.

These reason5

must be acceptable when advanced by others even when t h e i r views lend support to opposing conclusions. (3)

Other-Oriented

The decisi, on maker must be aware of the i m p l i c a t i o n s and

e f f e c t s of his decision on the welfare of others. It

is from t h i s notion of an e t h i c a l action guide that the i n d i v i d u a l ' s basic

e t h i c a l p o s i t i o n is developed.

The basic e t h i c a l p o s i t i o n may be e i t h e r method-

oriented

We w i l l concentrate on the r e s u l t s - orlcnted e t h i c .

or r e s u l t s - o r i e n t e d .

Accordingly, the r e s u l t s - o r i e n t e d basic e t h i c a l p o s i t i o n could lead eo a behavior that helps oneself, helps others, or helps oneself and others. superior action guide would obviously be:

first,

The

to help others; then, oneself and

others; and l a s t , oneself. 2 A revievs of most basic l i t e r a t u r e on e x i s t e n t i a l i s m reveals t h a t , among other things, the e x i s t e n t i a l i s t school of thought c a l l e d i n t o question the notion of essence preceding ex~sLence. Nietzsche destroyed essence when he stated that "God died l a s t n i g h t , " i n t e r p r e t e d to mean that the absolute died. that Sartre awakened mankind to the premise that l i f e that r a t i o n a l beings w i l l tial

Later, we f i n d

is absurd--absurd in the sense

t r y to explain an i r r a t i o n a l world.

According to e x i s t e n -

philosophy, the means to obtain awareness comes from three sources:

6

1) 2) (3)

Freedom of Action, Freedom of Choice, Act in Good Faith.

lhe Sartre philosophical ethic views man in his environment, in essence an I - i t concept.

This would r e l a t e , I b e l i e v e , to our r e s u l t s - o r i e n t e d basic e t h i c a l pos-

i t i o n which creates an action that is s e l f - o r i e n t e d .

The basic e t h i c a l position

action guide would be less e t h i c a l than one which was other-oriented or s e l f - o t h e r oriented. Camus takes the basic premise of Sartre, "that l i f e motion of absurdity.

I t is his premise that l i f e

is absurd," and expands on the

is absurd, but we must l i v e i t as

i f i t had meaning. This, Camus f e e l s , can be accomplished i f we have "awareness." Camus develops what is called "Camusian Moral Ethic" which tends to approximate our r e s u l t s - o r i e n t e d basic e t h i c a l position which is s e l f - o t h e r - o r i e n t e d .

This, he

f e e l s , can best be accomplished through " d i s t a n c i a t i o n " of oneself in his environment.

T h a t i s , view society not from an I - i t

from s e l f - o t h e r conceptual

relationship.

conceptual

r e l a t i o n s h i p , but view i t

To accomplish t h i s o b j e c t i v e , an i n d i v i -

dual must establish his r e l a t i o n s h i p with the universe through a type of peripheral vision about himself and his r e l a t i o n s h i p to others ( s e l f - o t h e r ) .

It

is the b e l i e f

of the w r i t e r that t h i s notion of " d i s t a n c i a t i o n " of the "Camusian Moral Ethic" lends i t s e l f to a r e s u l t s - o r i e n t e d ethic with action guides that would be superior, defensible, and other-oriented. An example of a r e s u l t s - o r i e n t e d basic e t h i c a l position which is s e l f - o t h e r oriented can be seen through the f o l l o w i n g .

Suppose Mr. Jackson, a manager in a

toy manufacturing f i r m , is faced with shrinking p r o f i t s . of production by laying o f f workers.

He decides to cut his cost

His basic premise is that p r o f i t s are v i t a l

to the firm and to him and that the popular toys he produces w i l l no longer be a v a i l a b l e for youngsters

if

the p r o f i t margin is not increased.

that s a t i s f a c t o r y p r o f i t s are necessary in a l l cases.

His a t t i t u d e is

He exercises concern about

the l a i d - o f f workers and is hopeful that they w i l l be rehired when the p r o f i t profile

improves.

workers.

He admits, however, that he has another a l t e r n a t i v e to laying o f f

T h a t is to reduce the q u a l i t y of resources used in his product, therefore~

s i g n i f i c a n t l y reducing the safety of the toy which his company s e l l s .

He refuses

to do so. We find here that Mr. Jackson

has followed a results-oriented

superior, defensible, and s e l f - o t h e r - o r i e n t e d . be an ethical one.

ethic that is

Therefore, his decision appears to

I t is hopefully recognized by the reader that t h i s is not a

d e f i n i t i v e analysis of e x i s t e n t i a l i s m and ethic model building but is intended to shed some l i g h t on areas which may be useful in e t h i c a l economic decision making.

The w r i t e r feels that f u r t h e r research on t h i s t i m e l y topic is merited.

FOOTNOTES: IC. M. Colonna. I would l i k e to take t h i s opportunity to thank the l a t e J.W. Nickson, J r . , Professor of Economics, Old Dominion U n i v e r s i t y , my f r i e n d s , and my students for t h e i r continuing support of my professional career. 2David L i t t l e , Sumner B. Twiss, Jane Webb, George Webb. The Man and the A l l i g a t o r or Ethical Decision Making.. Tidewater Program on Ethics and P o l i t i c a l Decision Ma--~-ing, Newport News, V i r g l n l a . F a l l , 1974, pp. I - 6 .