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The Implicit Morality of the Market and Joseph Heath’s Market Failures Approach to Business Ethics

Author

Listed:
  • Marc A. Cohen

    (Seattle University
    Seattle University)

  • Dean Peterson

    (Seattle University)

Abstract

Joseph Heath defends competitive markets and conceptualizes business ethics with reference to Pareto efficiency, which he takes to be the “implicit morality of the market.” His justification for markets is that they generate Pareto efficient outcomes, meaning that markets optimally satisfy consumer preferences. And, for Heath, business ethics is the set of normative constraints—regulation and beyond-compliance norms—needed to preserve that outcome. The present paper accepts Heath’s claim that the economic justification for markets is ethical, in that satisfying consumer preferences is a good. But, contra Heath, the ethical consideration at work is a consequentialist one; and acknowledging this consequentialism exposes limitations of Heath’s “market failures” approach to business ethics. We suggest two limitations, and we expect many will accept our argument that Heath’s conception of business ethics is too narrow. The present paper outlines two broader implications. First, acknowledging that the justification for markets is ethical eliminates the apparent—and false—conflict between purportedly amoral economic activity on one hand and ethical considerations on the other; instead, business ethics is a matter of weighing the consequentialist ethical benefit of economic activity and markets against other moral arguments/other ethical considerations. Second, Heath restricts business ethics to the constraints needed to protect the market’s ability to efficiently satisfy consumer preferences, constraints he calls “efficiency imperatives”; this restriction (inadvertently, perhaps) supports the widespread tendency to think that all social problems are economic; and, a business ethics so-conceived diminishes the perceived importance of noneconomic values—this attitude is dangerous.

Suggested Citation

  • Marc A. Cohen & Dean Peterson, 2019. "The Implicit Morality of the Market and Joseph Heath’s Market Failures Approach to Business Ethics," Journal of Business Ethics, Springer, vol. 159(1), pages 75-88, September.
    • Handle: RePEc:kap:jbuset:v:159:y:2019:i:1:d:10.1007_s10551-017-3761-6
    DOI: 10.1007/s10551-017-3761-6
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    References listed on IDEAS

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    1. Heath, Joseph & Moriarty, Jeffrey & Norman, Wayne, 2010. "Business Ethics and (or as) Political Philosophy," Business Ethics Quarterly, Cambridge University Press, vol. 20(3), pages 427-452, July.
    2. Joseph Heath, 2007. "An Adversarial Ethic for Business: or When Sun-Tzu Met the Stakeholder," Journal of Business Ethics, Springer, vol. 72(4), pages 359-374, June.
    3. Zamir, Eyal & Medina, Barak, 2010. "Law, Economics, and Morality," OUP Catalogue, Oxford University Press, number 9780195372168.
    4. David Carrithers & Dean Peterson, 2006. "Conflicting Views of Markets and Economic Justice: Implications for Student Learning," Journal of Business Ethics, Springer, vol. 69(4), pages 373-387, December.
    5. Heath, Joseph, 2006. "Business Ethics without Stakeholders," Business Ethics Quarterly, Cambridge University Press, vol. 16(4), pages 533-557, October.
    6. Wayne Norman, 2011. "Business Ethics as Self-Regulation: Why Principles that Ground Regulations Should Be Used to Ground Beyond-Compliance Norms as Well," Journal of Business Ethics, Springer, vol. 102(1), pages 43-57, March.
    7. David Colander, 2003. "Integrating Sex and Drugs into the Principles Course: Market-Failures Versus Failures-of-Market Outcomes," The Journal of Economic Education, Taylor & Francis Journals, vol. 34(1), pages 82-91, January.
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