ECONOMISM, ECONOMIC ETHICS AND DONATIONS

Interview with Dr. Ulrich Thielemann

[This interview published in the 9/8/2004 newsletter of the Deutsche
Stiftungsagentur is translated from the German on the World Wide Web  http://www.iwe.unisg.ch/org/iwe/web.nsf/wwwPubLiteraturAutor/79DD66B52A6BCD50C1256F46003D96BD.]
]

[The enormous salaries of top German managers, a voluntary 10 percent
salary cut (by Daimler-Chrysler CEO Juergen Schrempp in “exchange” for
salary cuts for employees of $600 million and after a rise of Schrempp’s own remuneration of 190 percent in recent years) and cancellation of the law protecting against unlawful termination are currently being discussed. In these times, the perspective of economic ethics can highlight these burning themes. Dr. Ulrich Thielemann is assistant professor of economic ethics and philosophy at the University of St. Gallen, Switzerland.]


1. You criticize the increasing economization of our society. What do you mean by that?

Economization refers to the progressive elimination of non-market
considerations from social life as well as from the economy. We treat
fellow human beings more and more according to their economic
“performance” (their output, their “efficiency”, solvency and
so forth). The transformation of patients, citizens, church members and students and so on into “customers” are specific examples. This seems as though their “needs” are “finally” considered. Strictly speaking however, it is only their capacity to pay that matters. Whoever cannot pay or does not pay enough is not a “customer.” Accordingly, a freshly arisen “customer orientation”, for example in public services, often goes along with higher prices and fees. Another example of economization is that, as a matter of course, “reform” today means adjustment to the alleged practical necessities (Sachzwaenge) of global competition.

Economization means to understand politics as the provider of a “service” and the state as an enterprise. Economization means that one does not say what one means but instead presents oneself in such a manner as to gain the support of useful persons. Economization means that we live our lives with a calculating attitude. We measure our own performance and the others' performance so as to maximize our own profits – financially and otherwise. Economization means that we all become entrepreneurs of our life, which means that we continuously invest in our own “human capital”, and that we regard ourselves as well as our fellows as “human capital”.

Economization aims at attaching a value or a price to everything, but not at attaching “dignity” (Immanuel Kant) to anything or anybody. By saying this, however, we already touch economism, which normatively declares economization as the principle of our thinking and acting.

2. How did this development occur? Why are more and more areas of life assigned and subject to market logic?

On the one hand, competition forces the individual to assume an
increasingly entrepreneurial (economic) attitude. No one wants to belong to the losers?… Since competition lacks authority (you might ask: who is responsible for the constant “structural change” in the economy?), the pressure for entrepreneurship is not felt as coercion but as free will. This is the deeper meaning of the Smithian formula for the market as the “obvious and simple system of natural liberty.” We cannot identify a responsible actor for the increasing competitive pressures and thus are thrown back on ourselves. Therefore “self-responsibility” is a core concept of our time. But at the same time it is economism that wants to make us believe that the economic principle is the epitome of practical (ethical) reason. Economism is the great ideology of our time. It claims that a)it is “impossible” to resist the market’s forces and that b) it is best for everyone to submit to the market. Both claims are not true.

Ultimately, the conceptual error of economism is that the economic
principle is understood as the all-embracing principle of conduct and
thought, not as one aspect among others that can be and needs to be
relativized next to others. “Whatever pays is right.” That's how
the Swiss writer Max Frisch summarized this thinking.

3. Can economization also be seen in the third sector?

Hasn’t the third sector also evolved to a giant market? Aren’t there
professional “fundraising” specialists? No area is spared from
economization. A few years ago Greenpeace spent as much for mailings as it received in donations. Marginal costs = marginal revenues, as the economic textbooks say. That is the profit maximization formula. What’s important here is: When does economization evolve into economism? Is there an overarching yardstick that does not submit to the logic of supply and demand? Is there a yardstick that socially embeds and relativizes economic considerations? If not, an “ethic” of the right of the stronger is defended – namely in the form of the right of the more wealthy or the more competitive. This is not only an empirical question but also a conceptual question – a question of our approach with which we live in this world. If a donor understands his contributions as an expression of his “moral preferences”, effectuating a special consumer surplus (in the form of his good feeling), this can be interpreted as economism.

4. In the 1980s the pair of opposites “economy and ecology” guided political discourse. Today we know that these are not necessarily antagonisms. Transferred to our present time, can the economizing of society be applied to the third sector? Can the market logic, applied to the third sector, lead to this sector becoming more and more professionalized?

What does professionalism mean? In its original meaning, the “professional” was a person who used his specialized skills in
the public interest without, of course, ignoring his own interests. His own interests formed one aspect alongside others and were not his sole motivation. Today “professionalization” is understood as just that: self-interest is to become the measure of conduct. It is crucial for what purpose specialized skills are used, and what their social meaning is. People should be warned of a false harmony. Between economic aspects (income achievement) and ecological aspects of the protection of natural resources and areas there obviously do exist massive conflicts. How we deal with this antagonism at least partially depends on the ordo-political framework we give the market, which needs severe revision. This is also true for other areas.

The task of embedding the market into societal principles that stipulate usefulness to everybody’s life has a priority when setting up an order. Every citizen contributes to this task and all the citizens have a shared responsibility. “We, the people” establish rules, which are necessary to avoid that responsible citizens (and corporations) are the losers. This is the foundation of the modern constitutional state.

5. Is there an argument in economic ethics for charitable donations?

Personally, I am convinced that fairness of primary distribution is more appropriate to a modern civil society (unlike a neo-feudal society) than first allowing expanding disparities in income and assets, and then hoping for donations from a few wealthy persons. A “winner-takes-all” society plus a few donations here and there, possibly even in order to justify and facilitate this neo-feudalism, is not a role model for a modern society.

Certainly, considerable income and assets disparities may exist even in
a modern, egalitarian society. However, responsible citizens will not
simply spend their assets on villas, yachts and the like, should they
exceed the standards of somehow normal prosperity. Neither will they
reinvest everything to become even richer. They will instead use a part of their assets to foster the good development of society, to remove, or at least moderate, undesirable trends, to promote clearer views on today’s societal problems in society and so forth. They must be educated citizens to recognize the aberrations of our times as well as the characteristics of a good societal development. They will observe a
“meritorious duty” (Kant) and not simply follow a “moral
preference”.

However, the charitable sacrifice of assets may never serve to justify and solidify great disparities in the primary distribution of assets, set by the rules of the game. Then it becomes not just a “meritorious”, but a “necessary duty”, to act co-responsibly with regard to the rules of the game. Gifts should be understood as subsidiary to the good and fair rules of the game of a well-ordered society. There are some wealthy Americans, including Warren Buffet, who understand this difference quite well; they appealed to the Bush administration for a more adequate (i.e., higher) taxation of their wealth…

6. In one of your publications (“Focal Point: Banking Ethics”), you criticized banks for being geared too strongly to profitability. You spoke of a fundamental distinction between the pursuit of profit and profit maximization. Is this a realistic distinction in times of globalization?

Sorry, but I must always start with the implications of your questions.
Questions always imply something that can be and sometimes needs to be
scrutinized. Your question implies that “realism” takes precedence over
ethical insights, which would be an absurd notion. The primacy of ethics is a question of logic. With every assertion, question, justification, substantiation and so forth, we presume that good reasons should decide the issue, and not any non-discursive authorities. [This is an insight of discourse ethics.] Such a non-discursive authority would be what is “realistic”, which means: enforceable, attainable. Power, then, would be decisive. Basically, this already explains why maximizing profits, or, more general, why maximizing personal utility cannot be justified.

Profit maximization means doing everything in order to make the profits as high as possible. Thus, the legitimate claims of others are only considered if they influence profitability. The pursuit of profit soars to the moral principle. This does not mean that the pursuit of profit or income is illegitimate. It simply acts as one claim or aspect besides many others.

Surely, the one who eliminates all aspects besides economic performance
wins out in the global competition. This is a serious problem of our
times. Through competition, those who appreciate other aspects, sooner or later, are eliminated from the market. This is a complex matter, and I only can give a hint here: in a global world economy, we need a just
economic world order in order to solve this problem.

7. Aren’t charitable foundations the ideal bridge between the economy and ethics?

I think, charities, gifts, foundations and the like are a compromise, at best, but surely not a solution… For example, no one can actually perform 1000 times better, and thus earn 1000 times more, than another… The shady foundations of “charitable ethics” (understood as the role model to ethics in general) can also be seen in that there is a paradox: The higher the profits, the more can be donated. Thus, if we reinvest, we make more profit and become even richer, and hence are able to donate even more. So, we reinvest these profits. We end up with profit maximization, not donations… We have to look at the rules of the game themselves, not just at income redistribution. Otherwise we quickly are entangled in merely combating symptoms.

8. Have we perhaps missed a discussion re-exploring the ethical value of money, a discussion that sets “profit” and “profitability” in an ethical and not only economic context?

Yes. Basic reflection on economic ethics is presently discussed in narrow circles of scholars. We indeed need a discourse of experts in this difficult field to reach a high level of reflection. However, this
discourse should take place, rather sooner than later, in the general
public, in the political sphere in a wider sense… The Institute of
Economic Ethics actually takes part in such public discussions on how to ethically assess economic policies and practices. We regard this as a kind of a “public service.” However besides the institute there are only very few economic ethicists in the German-language area. This is disgraceful. A broad discussion about the importance of economic aspects in society with regard to our well-being and to fairness hardly occurs on these grounds.

9. Do we need a culture of the priceless to counter the increasing economization?

“In the kingdom of ends everything has either value or dignity.”
Sometimes economic ethics needs to refer to the insights of classical authors of philosophy like the great philosopher of the Enlightenment, Immanuel Kant. Kant only straightened out what we, who know what a duty is, already are familiar with: namely that we should acknowledge others as subjects (persons) of equal dignity. If we only treat others according to their usefulness for us, by appraising only their performance, we degrade them, and we degrade ourselves. We basically know all this. Nevertheless seeing through the rampant economism and its all-embracing commodification tendencies is still difficult. Therefore, the critical reflection of the foundations of our economic thinking is a necessity of our times.

10. Will you make a donation?

I give now and then. However I probably will never reach an income level in my life that, to quote myself, “exceeds the standards of somehow normal prosperity”, in order to considerably donate. By the way, a “foundation” in Liechtenstein or in any other tax haven is not acceptable. The threshold of injuriousness to the public interest is reached and surpassed in Liechtenstein where there are three foundations for each inhabitant.