Updating Adam Smith on Business Ethics: Institutional Economics and Ethical Capitalism

2013-01-09T14:40:24Z (GMT) by Sigmund Wagner-Tsukamoto
The paper analyses Adam Smith’s stance on ‘business ethics’, specifically asking whether morality can be realigned with Smith’s economic writings, and if so, how and in what respect this can be applied, especially in relation to the Wealth of Nations (WN). The paper argues that there are at least three different perspectives, in terms of (1) societal welfare (‘public good’) as an outcome of economic, ‘business’ activity, (2) the systemic codification of morality in institutional frameworks (e.g. business laws), and (3) the generation of ethical capital in market transactions, that enable a concept of ‘business ethics’ to be set out and attributed to Smithsonian economics. Not all of these ethical dimensions were clearly seen – not even by Smith or by his critics. Starting from these base points, the paper ‘updates’ the Adam Smith scholarship on business ethics. The paper connects with and draws from institutional economics to develop arguments. It also questions the idea that business ethics could somehow be attributed to Smithsonian economics (i.e. the WN) by projecting Smith’s virtue and sympathy-based moral philosophy (his Theory of Moral Sentiments, TMS) onto the WN, a project keenly indulged in by a considerable number of authors of business ethics and moral philosophy. The paper projects these arguments to a debate of corporate social responsibility and corporate social performance.