The Relationship between Economics and Ethics - Literature review Example

THE RELATIONSHIP BETWEEN ECONOMICS AND ETHICSIntroduction Ethics is basically moral philosophy. It involves the defense and recommendation of concepts that relate to right and wrong. Ethics therefore seeks to understand how humans can best live; the actions that are wrong and right given particular circumstances. It resolves the question regarding concepts of human morality which may include justice, good, evil as well as right and wrong among others (Teulon, 2014,pg.16-7). Economics on the other hand is a social science.

It is concerned with economic activities in order to understand the processes that influence production, distribution as well as consumption of goods and services within an economy. It emphasizes on the interactions and behavior of economic agents and how the economy works (Teulon, 2014, pg.21-22). Understanding these two terminologies, this essay therefore seeks to explore how moral values and ethical reasoning are involved in both the science of economics and the operation of the economy through giving the relationship that exist between economics and ethics with tax policy as a case.

Finally the essay will give a brief conclusion on the topic. The relationships between economics and ethics have an antecedent that can be traced back to the time of Aristotle whose understanding of economics was that it was a practical philosophy with ethics and politics (Teulon, 2014, pg.31-3). As such, economics involved skills that are oriented towards wealth creation and politics considered the art usable in this since it will determine what is done to bring about human happiness, ethics.

The relationship between ethics and economics can be understood in the context of welfare theory and social choice (Teulon, 2014, pg.35). The argument on the good and its subsequent achievement gives the link between ethics and economics. Fundamental elements that link the two are the theorems of value and choice. Theory of value concerns what is good, while the theory of choice is the principle determinant of how that good is come by. That is to imply, the choice of the actions to be taken to achieve the intended objective.

According to Teulon, in imposing tax policies, the effect of it is felt both by the citizenry and the government (2014, pg.39). The government intends to generate more revenue and thus wealth. However, the choices made with regards to how the policy is implemented (the means to the end) will determine the good felt by the people and is thus ethics. Standard economics theory therefore will give the manner in which preferences are ordered and their subsequent ends. It as a result provides the rational choice that characterizes the government actions.

This consequently provides a valuation framework and how to achieve what is valued, the revenue. Further, ethics and economics relates in the manner in which preferences and interests as well as choices made have a capability of laying a foundation for moral actions (Teulon, 2014,pg.43-6). These moral actions are those that are individually or socially considered to determine the good end. Therefore as economics deal in governance of distribution and consumption patterns in the economy, the decisions that are made to that effect is grounded on ethics since their outcome will determine the good or the bad as morally viewed by the affected.

Conclusion It is therefore apparent that there is a solid relationship between economics and ethics. The paper has used tax policy as a case to understand the linkages between the two illustrating the interactions and behavior of economic agents (government) and how the economy works in relation to ethics (moral philosophy) which involves the defense and recommendation of concepts that relate to right and wrongReferenceTeulon, F. 2014. Ethics, moral philosophy and Economics (No. 2014-288).