Creating Policies and the Environment:
Non-market values in labor economies
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|1. Labour economics and the environment||4. The ethical dimension of work in a sustainable development|
|2. Value changes in the labour market||5. Conclusion|
|3. Value changes in the goods and services market||6. References|
3. Value changes in the goods and services market
The change in values on the labour market can also be observed on the market for goods and services However, the value debate has not found an adequate expression in the actual functioning of the economy. A coalition of economic and technologically oriented special interest groups still dominates the market. The initial ecological movement expressing concern about the intrinsic value of nature has expressed a critical view of the traditional institutional setting of the economy. So far it has reached the opposite, namely a reinforcement of established coalitions which seek to protect the environment in the economic and technological logic (Lascoumes, 1994). This postponement of the value debate may have originated in the fall of the Berlin wall in 1989, symbolizing the victory of the market over any attempt to regulate the economy through a centrally planned system. This moral victory at the end of the cold war period showed that the market is the dominating economic system which allocates resources in the most efficient way. Therefore the market has gained definitively its place, but should also be put in its place.
Consequently, the market cannot be seen as the only possible policy response to the environment. Moreover, as we have also experienced a world-wide recession after 1989, with unemployment rising sharply, public awareness of environment protection suddenly ranked behind economic growth targets. This blinkered view does not understand the market as a social construction bound to institutions and social values. If the environment is seen as external to the economic sphere, it is only understood as a market failure. This interpretation raises important normative problems. In the following, we recall the principal ones:
4. The ethical dimension of work in a sustainable development
The market economy clearly expresses ethics (Novak, 1982). However, its interpretation sharply depends on conflicting strategies. From an economic point of view, efficiency is best served by markets. The optimal allocation of resources is reached under perfect competition in the long run.
From an individual point of view, the aim is different. In order to maximize profits, the conditions of imperfect competition are often retained as long as possible. In exceptional cases, which can be depicted only in theoretical terms, profit maximizing is a short-term strategy and conditions of imperfect competition are the rule. Therefore, the market contains an unsolved conflict between short and long-term objectives. A firm avoiding competition does not meet the ethical criterion to be at the service of global efficiency. In violating this criterion, it contributes to the waste of resources and moves away from some supreme justice. This justice means that each individual submits their economic activity to a cost-benefit analysis evaluated in non-biased terms, respects their contractual engagements and gets their reward as a counterpart in the form of a profit. Within a market economy, this balance is evaluated by non-distorted prices set in a competitive environment. The large number of participants in market transactions confirms that these prices have an objective basis. Therefore, under such conditions, a firm is constrained to efficiency and hence to serve the general interest. Activities opposed to such a goal are immoral. A merger destroying jobs, price setting beyond the one set under competition, artificial obstacles to entry would be examples of non-ethical behavior. All these examples are taken from observed economic reality which points to cases of market failure. Therefore the market cannot be the only instrument of the collective decision-making process. This argument is reinforced by the fact that ethical considerations lead to other forms of exchange than the ones organized by markets - to wit, the preservation of species.
However, the conflict between short-term profit maximizing and long- term optimal resource allocation can be eased by competition policy both at the domestic and international levels. The maintenance of competition in markets by means of legislation on restrictive trade practices and of free trade policy can be seen as a first step towards an operational environmental protection policy. But this policy response is not enough because it is closely linked to the underlying behavioral assumptions.
The market failure approach is rooted in the philosophical tradition of utilitarianism, which is only one of many currents in our society (Maclntyre, 1966). Why should utilitarianism be the only reference in economics as well as in public action? How to determine what should be sold on the market and what should not? Which criteria should be used to decide whether the environment is a private or a public good? These questions can only be answered by explicitly referring to value judgments. If, for instance, the preservation of biodiversity only makes sense because one may find a commercial use for it in the future, this poses a serious ethical problem indeed.
If ethics is seen as an integrated part of economics, it cannot be isolated. Economics is interlocked with social justice. Although this view is not shared by most mainstream economists, the fact remains, as Samuel C. Weston puts it (Weston, 1994, p. 4) that "Conceptually distinguishing between positive and normative economics does not automatically entail the practical possibility of a purely positive, that is, value-free or ethically neutral economics". However ethics cannot be delegated to philosophers, but has to also be taken seriously by the economic profession itself.
The positive aspect of economics focuses on causal relationships. Using either a purely deductive approach or available information, positive economics seeks to explain such relationships by true/false statements. A true statement does not contain a value judgment and may simply mean that an observation is supposed to be explained by others. As economically relevant information is often of a qualitative nature and historically unique, the falsification of a theory is not possible. Therefore deductive methods are preferred in order to show that the maximum of social welfare is the sum total of individuals behaving rationally.
The normative aspect casts light on value judgments. Economics is shown as it should be. Its objectives are given outside of economics e g. by a political decision-making process. Positive economics concentrate then on the instruments, showing how these objectives can best be achieved, and leaves it to normative economics to discuss the target setting. If each individual is perfectly free to have their own convictions, objectives issued by a democratically legitimate majority are only just, and lead to ethical norms codified in laws and institutional arrangements. In this sense, the market is a social construction, because it depends on a legal setting. The State plays an active part in translating value judgments and social norms into guidelines. Legal and economic regulation go hand in hand. Therefore, it is not possible to rely on market instruments only in order to create jobs and to protect the environment. Changing values about the social perception of labour and the environment must also be taken into account in the evolution towards a new institutional setting.
Institutional reform of the labour market, leaving room for the expression of ethics as well as strict subordination of the goods and services market to the protection for the environment, implies a unique criterion. Like in medicine where any action should be taken in the interest of the patient, such a criterion in economics would submit any actions to the preservation of life. If such an ethical criterion is accepted by the society, labour will not be considered as a simple factor of production any longer, but as a way of a meaningful life.
Non-economic values play an increasing part both on the labour and the goods and services markets. On the labour market, the question is how can social and psychological needs be covered best. On the goods and services market, the question is how can the environment be protected best Both questions can only find an answer when the ethical dimension of any economic activity is fully acknowledged. The actual policy response to these questions is highly unsatisfactory. On pursuing higher growth targets, unemployment will not strongly decrease, as long as the actual institutions remain unchanged in expressing the dominant belief in values which are only determined in economic terms. Institutional reforms both on the labour and goods and services markets are needed. Job sharing, flexible reduction of work hours, more democratically legitimated labour agreements and active labour participation schemes are aspects of such a reform of the labour market. Full cost pricing, the subordination of economic strategies to principles of responsibility to further generations as well as the acceptance of a fully integrated ethical dimension are other aspects of such a reform regarding the goods and services market.
B. Bürgenmeier, Geneva 2 May 1995
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