There is a gap between health economic evaluation methods and the value judgments of coverage decision makers, at least in Germany. Measuring preference satisfaction has been claimed to be inappropriate for allocating health care resources, e.g. because it disregards medical need. The existing methods oriented at medical need have been claimed to disregard non-consequentialist fairness concerns. The aim of this article is to propose a new, contractarian argument for justifying needs-based economic evaluation. It is based on consent rather than (...) maximization of some impersonal unit of value to accommodate the fairness concerns. This conceptual paper draws upon contractarian ethics and constitution economics to show how economic evaluation can be viewed as an institution to overcome societal conflicts in the allocation of scarce health care resources. For this, the problem of allocating scarce health care resources in a society is reconstructed as a social dilemma. Both disadvantaged patients and affluent healthy individuals can be argued to share interests in a societal contract to provide technologies which ameliorate medical need, based on progressive funding. The use of needs-based economic evaluation methods for coverage determination can be interpreted as institutions for conflict resolution as far as they use consented criteria to ensure the social contract’s sustainability and avoid implicit rationing or unaffordable contribution rates. This justifies the use of needs-based evaluation methods by Pareto-superiority and consent. The view of economic evaluation presented here may help account for fairness concerns in the further development of evaluation methods. This is because it directs the attention away from determining some unit of value to be maximized towards determining those persons who are most likely not to consent and meeting their concerns. Following this direction in methods development is likely to increase the acceptability of health economic evaluation by decision makers. (shrink)

The paper examines Robert Sugden’s arguments for contractarian economics, which exclude objective valuation. From a metaethical stance we claim that it is possible and desirable to enrich the axiology of contractarian economics to make it more convincing and applicable. Analyzing Sugden’s argument against paternalism, we show that adopting a richer axiology is compatible with the contractarian framework. Examining Sugden’s claim for redistribution, we demonstrate that explaining the psychological stability of a market economy is problematic without (...) a richer axiology. Considering sweatshop problem, we argue that without a richer axiology, contractarian economists are unable to recognize mutually advantageous exploitation. The paper concludes with the postulates on contractarian economics. (shrink)

Abstract:Social contract is rapidly becoming one of the significant alternatives for analyzing ethical issues in business. Contractarian approaches emphasizing consent as a means of justifying principles can provide needed context for rendering normative judgements concerning economic behaviors. Current research issues include developing tests of consent for both hypothetical and extant social contracts, and empirically testing the assumptions of the major contractarian approaches. Open questions include exploring the relationship between contractarian business ethics and other approaches, such as stakeholder (...) management and virtue based ethics; and analysis of the intersection of contractarian approaches with the findings and assumptions of the field of moral psychology. Finally, the managerial utility of social contract based approaches needs to be explored with emphasis on identifying “translator” concepts. (shrink)

Harsanyi defends utilitarianism by means of an axiomatic proof and by what he calls the 'equiprobability model'. Both justifications of utilitarianism aim to show that utilitarian ethics can be derived from Bayesian rationality and some weak moral constraints on the reasoning of rational agents. I argue that, from the perspective of Bayesian agents, one of these constraints, the impersonality constraint, is not weak at all if its meaning is made precise, and that generally, it even contradicts individual rational agency. Without (...) the impersonality constraint, Harsanyi's two justifications of utilitarianism on the grounds of Bayesian rationality fail. As an alternative, I develop a contractarian framework that is compatible with individual rational agency and Harsanyi's central assumptions, and that allows the derivation of moral conclusions on the grounds of Bayesian rationality. The developed framework offers a novel justification of contractarian ethics and may best be described as a combined version of Harsanyi's equiprobability model and Rawls's original position. (shrink)

Perhaps the most salient feature of Rawls's theory of justice which at once attracts supporters and repels critics is its apparent egalitarian conclusion as to how economic goods are to be distributed. Indeed, many of Rawls's sympathizers may find this result intuitively appealing, and regard it as Rawls's enduring contribution to the topic of economic justice, despite technical deficiencies in Rawls's contractarian, decision-theoretic argument for it which occupy the bulk of the critical literature. Rawls himself, having proposed a “coherence” (...) theory of justification in metaethics, must regard the claim that his distributive criterion “is a strongly egalitarian conception” as independently a part of the overarching moral argument. The alleged egalitarian impact of Rawls's theory is crucial again in normative ethics where Rawls is thought to have developed a major counter-theory to utilitarianism, one of the most popular criticisms of which has been its alleged inadequacy in handling questions of distributive justice. Utilitarians can argue, however, as Brandt recently has, that the diminishing marginal utility of money, along with ignorance of income-welfare curves, would require a utility-maximizing distribution to be substantially egalitarian. The challenge is therefore for Rawls to show that his theory yields an ethically preferable degree of equality. (shrink)

There are no first principles etched in stone from which all moral philosophers must take their bearings. We must deliberately choose our point of departure in any attempt to respond to the question: “Must any defensible theory of justice incorporate both a commitment to personal liberty and to economic equality?” Basic to our own approach is a suspicion of seers and visionaries who espy an external source of values independent from human choices. We presuppose, instead, that political philosophy commences with (...) individual evaluation. 1 A near-corollary of this presupposition is that each individual's preferences ought to be taken into account equally with those of others. That is, we suppose that there is no privileged evaluator, whose preferences are accorded decisive weight. Conceptual unanimity as a criterion for institutional evaluation follows naturally from the other two presuppositions. If there is neither an external standard of value nor a corps of resident value experts, only unanimity can ultimately be satisfactory as a test of social desirability. Our perspective then is subjectivist, individualist, and unanimitarian. These presuppositions inform our contractarian analysis. There are, however, two separate contractarian traditions that we shall find useful to distinguish, the “Hobbesian” and the “Rawlsian.” In the first, persons find themselves in the anarchistic war of each against all. They contract away their natural liberties in exchange for the order that civil society – through its sovereign – affords. In this contracting process, individuals are assumed to possess full self-knowledge; they know who they are, what conceptions of the good they hold, and what their endowments are. (shrink)

Thomas Hobbes' method of deriving some moral principles from a social contract has inspired some contemporary moral philosophers to combine the contractarian approach with the model of rational behavior familiar to economists, in order to derive substantive principles of right from essentially formal constraints on the choice of principles. They argue that the device of a hypothetical social contract could serve to generate intuitively plausible moral principles even when the contractors are assumed to be self-interested maximizers of expected utility (...) . Since economic rationality, as defined here, is a relatively pliable model of rational deliberation, the hope is that this approach will provide a systematic tool for the derivation and justification of moral principles. ;Given this conception of rationality, a hypothetical social contract may be interpreted as any of several formal models of rational choice, each of which I examine, as exhibited in the work of some contemporary contract theorists: John Rawls' early work represents the view that choosing the social contract involves an individual decision under certainty; in his later work , Rawls presents the social contract as an individual decision made under ignorance; John Harsanyi defends the case for an individual decision under risk; and David Gauthier's recent work treats the social contract as the product of a rational collective bargain. ;I argue that, if the model of economic rationality is taken seriously, none of these conceptions of the social contract produce principles which conform to our considered moral judgments, and most of them will fail to produce a contractual agreement of any sort. Consequently, I conclude that the combination of economic rationality and procedural constraints on the deliberations of such contractors is an inadequate substitute for other-regarding sentiments usually considered necessary for the justification of moral principles. (shrink)

Using the approach known as ‘Economics of Scientific Knowledge’, this paperdefends the view of scientific norms as the result of a ‘social contract’, i.e., as anequilibrium in the game of selecting the norms under which toproceed to play the game of scientific research and publication. Acategorisation of the relevant types of scientific norms is offered, as well as adiscussion about the incentives of the researchers in choosing some or otheralternative rules.

The topic of Chief Executive Officer (CEO) compensation has been a focus of interest for many years. The purpose of this article is to explore the ethical dimensions of various generally accepted theories of CEO renumeration. We argue that a contractarian approach, based on the Kantian ethical framework, can be used to augment the existing contingent pay models.While the neoclassical economic model of the firm views the maximization of the shareholders'' wealth as the sole responsibility of top management, a (...) contractarian approach regards the balancing of various stakeholders'' interests as the primary task of top management. Ethical problems emerge when there are divergent, yet equally justifiable interests which compete in order to channel organizational resources to meet their own needs. In this situation, given the inherent ambiguities and ever present possibilities of multiple perspectives, it may not always be feasible to provide a categorical answer to the question of whether the CEO''s decisions are ethical. We suggest that a broad interpretation of the neoclassical theory of the firm, one that is grounded in Kantian and contractarian ethics, can serve as a basis for a reconciliation of different theories of executive compensation. (shrink)

The problem of economic justice is the division and distribution of income and wealth. Is a just distribution an equal distribution, or are some unequal distributions just, and if so which ones? We critically examine what the ideal theories of justice of Aristotle and Rawls say or imply about a just distribution of wealth and income in the best of circumstances. Rawls’ contractarian view takes strict equality to be the benchmark of justice; Aristotle’s teleological theory claims that the equality (...) appropriate to distributive justice is proportional, equality of ratios among persons’ shares of a good and their respective merits for that good. The applications of the two theories result in different distributional outcomes. Aristotle’s justice principle will result in unequal outcomes if the merits of persons are unequal and in equal outcomes if the merits are equal. An example of the latter is his best polis and constitution--its ideal citizens will have superlative and equal merits and they will justly receive equal political and economic shares. Although he supports reducing economic inequalities in actual cities, serious inequalities in resources will remain. Rawls’ basic principle of justice will produce equal shares. But democracies allow great inequalities in wealth and income, presumably recognizing that some inequalities promote the common good; everyone is better off when some economic incentives are rewarded. But which economic inequalities are just? Rawls in his second principle of justice identifies the most widely held way of answering this question. (shrink)

Using the approach known as ‘Economics of Scientific Knowledge’, this paper defends the view of scientific norms as the result of a ‘social contract’, i.e., as an equilibrium in the game of selecting the norms under which to proceed to play the game of scientific research and publication. A categorisation of the relevant types of scientific norms is offered, as well as a discussion about the incentives of the researchers in choosing some or other alternative rules.

This comment addresses two issues that arise in Sacconi/faillo/ottone's essay. The first is the problem of compliance as it arises in social contract theory. The second is the problem of avoiding an incoherence that arises in the formulation of welfarist principles of distributive justice if these principles are taken to be concerned with the distribution of welfare without restriction. Sacconi, Faillo, and Ottone define an interesting class of principles that govern only the distribution of 'material utility', which they distinguish from (...) 'conformist utility'. Sacconi, Faillo, and Ottone are primarily concerned, however, to argue that there is a need to revise 'the utility maximization model of a rational economic man'. I discuss this claim briefly, in concluding the paper. (shrink)

Abuse of authority is an unsolved problem in the new institutional theory of the firm. This paper attempts a double attack to this problem by developing a contractarian view of corporate codes of ethics. From the ex-ante standpoint the paper elaborates on the idea of a Social Contract based on Co-operative Bargaining Games and deduces from it the fair/efficient 'Constitution' of the firm endorsed by means of a well-devised corporate code of ethics. From the ex-post standpoint, codes of ethics (...) are proved to be self-enforcing norms, by showing how they put at work the mechanism of a Repeated Game of Reputation within hierarchical transactions (firms) characterised by incomplete contracts and unforeseen events. To accomplish this task a theory of rationality in the face of unforeseen contingencies is sketched by working out the idea that the domain of a principle of ethics defines a fuzzy event, i.e. an event to which also the ex-ante unforeseen, unimaginable states of the world belong to a certain degree. (shrink)

David Gauthier's Morals by Agreement is an impressive — indeed, daunting — exercise in contractarian moral and political philosophy. The primary purpose of his treatise is to explicate practical rationality as constrained maximization and morality as compliance with these constraints. Gauthier offers an account of which constraints on straightforward utility maximization each rational individual will be prepared to accept and comply with on the condition that other individuals also will accept and comply with them as well as an explanation (...) of why compliance with those constraints counts as morality. However, although Morals by Agreement is in the great tradition of Hobbesian moral and political theorizing, Gauthier's morality by agreement does not begin with the Hobbesian state of nature. Gauthier does not start by envisioning a Hobbesian war of all against all which has been generated by rational individuals, each pursuing his own maximum utility, and then asking what constraints on this no-holds-barred utility maximization would be mutually advantageous and therefore mutually rational. (shrink)

ABSTRACT This paper compares two alternative answers to the question ?Who is the addressee of welfare economics?? These answers correspond with different understandings of the status of the normative conclusions of welfare economics and have different implications for how welfare economics should be adapted in the light of the findings of behavioural economics. The conventional welfarist answer is that welfare economics is addressed to a ?social planner?, whose objective is to maximize the overall well-being of (...) society; the planner is imagined as a benevolent despot, receptive to the economist's advice. The alternative contractarian answer is that welfare economics is addressed to individuals who are seeking mutually beneficial agreements; a contractarian recommendation has the form ?It is in the interests of each of you separately that all of you together agree to do x?. Each of these answers should be understood as a literary convention that uses a highly simplified model of politics. I defend the contractarian approach and show that it is less supportive of ?soft paternalism? than is the welfarist approach. (shrink)

This essay seeks to give a contractarian foundation to the concept of Corporate Social Responsibility, meant as an extended model of corporate governance of the firm. It focuses on justification according to the contractarian point of view. It begins by providing a definition of CSR as an extended model of corporate governance, based on the fiduciary duties owed to all the firm's stakeholders. Then, by establishing the basic context of incompleteness of contracts and abuse of authority, it analyses (...) how the extended view of corporate governance arises directly from criticism of the contemporary neo-institutional economic theory of the firm. Thereafter, an application of the theory of bargaining games is used to deduce the structure of a multi-stakeholder firm, on the basis of the idea of a constitutional contract, which satisfies basic requirements of impartial justification and accordance with intuitions of social justice. This is a sequential model of constitutional bargaining, whereby a constitution is first chosen, and then a post-constitutional coalition game is played. On the basis of the unique solution given to each step in the bargaining model, the quest for a prescriptive theory of governance and strategic management is accomplished, so that I am able to define an objective-function for the firm consistent with the idea of CSR. Finally, a contractarian potential explanation for the emergence of the multi-fiduciary firm is provided. (shrink)

Economic man seeks to maximize utility. The rationality of economic man is assumed, and is identified with the aim of utility-maximization. But may rational activity correctly be identified with maximizing activity? The object of this essay is to explore, and in part to answer, this question.This is not an issue solely, or perhaps even primarily, about the presuppositions of economics. The two great modern schools of moral and political thought in the English-speaking world, the contractarian and the utilitarian, (...) identify rationality with maximization, and bring morality into their equations as well. To the contractarian, rational man enters civil society to maximize his expectation of well-being, and morality is that system of principles of action which rational men collectively adopt to maximize their well-being. To the utilitarian, the rational and moral individual seeks the maximum happiness of mankind, with which he identifies his own maximum happiness. (shrink)

Early contractarians such as Thomas Hobbes and Jean-Jacques Rousseau stretched the idea of contract to encompass all realms of society: the political, the economic, the familial. Contract is still a fundamental concept for many modern disciplines; indeed, it names fields in political philosophy, in economics, and in law. There was no such governing notion of contract in the fourteenth century, no metaphor of exchange that could link together ideas about agency, conditions, profit, and responsibility from different disciplines and provide (...) a theory of the basis of society itself. Retrospectively it may seem that scattered ideas about contract were, in fact, being developed: for instance, by the common law in the actions called debt, covenant, and trespass; by constitutional theory, in conciliarism; by economic thought, in a miscellany of glosses and laws redressing fraud and regulating prices and markets; by theology, in discussions of will, intention, and the marriage sacrament; by the civil law, in Roman law of contract; and by canon law, in treatments of individual consent and incapacity in marriage. Yet nothing about this discontinuous hodgepodge predicts that a fundamental connection among those topics will emerge in later political theory. To find a powerful combination of social analysis and political philosophy that takes up the issues deliberated by the later contractarians, we can call upon a medieval allegorist. (shrink)

I have argued, then, that is simplistic and potentially dangerous to suppose that a contractarian model can adequately account for all of the moral relations in agriculture or serve singularly as a basis for policy. Conversely, I do not naively argue that we ought simply to replace a contractarian based agricultural ethic with an ethic of care such as the one I have outlined. A single farmer may be a spouse, parent, son or daughter, caretaker of land, keep (...) of animals, business operator and partner, employer, processor, and consumer. Agriculture itself encompasses all of these relations. Both our ethical systems and social and economic policies must reflect and build on this diversity of contexts and associated practices. (shrink)

This article develops contractarian business ethics by applying social contract arguments to a specific question: What are the pre-legal (or moral) rights and responsibilities of corporations? The argument uses a hypothetical social contract to show the existence of for-profit corporations in democratic capitalist societies is consistent with Rawls’s fundamental principles of justice. Corporations ought to have recognised their rights to be autonomous, to pursue private purposes, and to engage in economic activities. Corporations have a responsibility to respect the freedom (...) and human rights of all people, and not to interfere with government programs that ensure people have the education and training they need to find and keep corporate employment and that provide a safety-net that prevents destitution. If corporations have any other rights and responsibilities, those rights and responsibilities need to be established by actual social contracts, probably in the form of legitimate democratic processes. (shrink)

I reply to Mills's critique of my effort to show the relevance of Rawls's theory of justice for thinking about and responding to racial injustices. Contrary to Mills's claims, my suggestion that the fair equality of opportunity principle can remedy socioeconomic disadvantages caused by the legacy of racial oppression is compatible with Rawls's framework, does not conflate distributive justice with corrective justice, and does not confuse racial injustice with economic injustice. I also raise doubts about Mills's project to radically reconstruct (...) contractarian political philosophy. He seeks to displace ideal theory with nonideal theory by foregrounding the realities of past racial domination. Against this approach, I argue that an ideal theory that abstracts away from these realities is not inherently ideological, useless for corrective justice, or too ideal to guide social reform. And I defend the view that ideal theory is indispensible for nonideal theorizing about racial justice. (shrink)

This paper applies Wempe’s (2005, Business Ethics Quarterly 15(1), 113–135) boundary conditions that define the external and internal logics for contractarian business ethics theory, as a system of argumentation for evaluating current or prospective institutional arrangements for arriving at the “good life,” based on the principles and practices of social justice. It does so by showing that a more dynamic, process-oriented, and pluralist ‘dialogic twist’ to Donaldson and Dunfee’s (2003, ‘Social Contracts: sic et non’, in P. Heugens, H. van (...) Oosterhout and J. Vromen (eds.), The Social Institutions of Capitalism: Evolution and Design of Social Contracts (Cheltenham, UK, Edward Elgar Publishing, Ltd.) pp. 109–126; 1999, Ties that Bind: A Social Contracts Approach to Business Ethics (Boston, MA, Harvard Business School Press); 1995, Economics and Philosophy 11(1), 85–112; 1994, Academy of Management Review 19(2), 252–284.) integrated social contracting theory (ISCT) of economic ethics will further develop this promising and influential approach to moral reasoning, ethical decision-making, and stakeholder governance. This evolutionary, interactive learning-based model of ethical norm generation via dialogic stakeholder engagement is particularly appropriate within economic communities that are experiencing value conflict and pressures for institutional change. (shrink)

This essay discusses the arguments in Buchanan’s 1964 paper, ‘What should economists do?’, in the light of recent developments in behavioural economics. Criticizing the preference-satisfaction criterion of neoclassical economics, Buchanan argues that the central concern of economics should be to design and maintain institutions that allow individuals as much opportunity as possible to make their own choices and to engage in voluntary cooperation. He worries that using preference rather than choice as the fundamental normative concept might license (...) social planners to set themselves up as the judges of what individuals ‘truly’ prefer. This is exactly what behavioural welfare economics is now doing by using the satisfaction of latent preferences as its criterion. Following Buchanan, I propose an opportunity-based criterion and argue that the contractarian justification for this criterion is unaffected by behavioural findings. (shrink)

First published in 1997, this volume delves into the most influential theories of economic justice, which ground themselves in utilitarian or related contractarian ideas about the self. These ideas take self-interest to be transparent and unproblematic. Favoured assumptions about the self also make scarcity the primary reality with which economic justice must deal. Much is lost in consideration of the justness of economic arrangements when we take the wants and interests of the self for granted in this way, and (...) treat scarcity as a premise. In this book the author places the discussion of economic justice on a sounder foundation as regards the nature and ends of the self. The book begins with a discussion of the self as a structure, and proceeds to consider aspects of self-interest, public ends, economic welfare, needs and wants, the limits of the market, economic democracy, global inequality, and justice as the end of development. (shrink)

In lieu of an abstract, here is a brief excerpt of the content:Organizational Ethics and Health Care: Expanding Bioethics to the Institutional Arena **Laura Jane Bishop (bio), M. Nichelle Cherry (bio), and Martina Darragh* (bio)In 1995, the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) expanded its patient rights standards to include requirements for assuring that hospital business practices would be ethical. Renamed “Patient Rights and Organization Ethics,” these standards are based on the realization that a hospital’s obligation to its (...) patients is derived from two relationships: the patient-provider relationship governed by “clinical ethics,” and the customer-supplier relationship governed by “business ethics.” “[This] boundary between ‘clinical’ ethics and ‘business’ ethics is not clear and in many cases is nonexistent. While marketing and admission practices are seen as issues related to ‘business’ ethics, they can lead to unneeded admissions or demand for unneeded services, both of which can unnecessarily expose the patient to the risk of side effects or complications. Likewise, underutilization of needed services is likely to lead to less than optimal health outcomes” (I. Schyve 1996, p. 17). “These new standards arose out of well-publicized concerns about abuses in which patients were admitted to hospitals unnecessarily and were discharged or transferred only after their insurance expired” (I. Schyve 1996, pp. 15–16).These abuses also sparked eloquent protests against threats to patient well-being and to the nature of the patient-provider relationship in the bioethics literature. The fiduciary responsibility of the provider to inform and to protect the patient was fragmented by insurer business practices such as gag clauses and economic credentialing of providers (VII. Scope Note 31, 1996). The background role that the institution plays, though poorly articulated historically, has been brought sharply into focus by the explosive growth of the managed practice of medicine. The context of medical ethics is no longer limited to the resolution of individual cases, but instead encompasses the adoption of institutional structures to protect and promote patient welfare (IV. Emanuel 1995, p. 335). In this new configuration, the institution and the providers are co-fiduciaries for populations [End Page 189] of patients, and the medicine that is practiced is “appropriately economically disciplined.” The expression “My patient always comes first” is no longer “... intellectually serious or morally responsible.” But, “... to be sure, both conceptually and in practice, being an economically disciplined fiduciary professional or institution is ethically unstable.... The task is to identify the boundaries outside of which institutional policy and behavior will not count as an ethically defensible form of being... [a] fiduciary.” (IV. McCullough 1997, pp. 143–44). This process of delimiting and enforcing boundaries requires the development of “... a language for talking about the ethical values of the organization. If such a language does not exist, discussions about ethics become cumbersome and unlikely to occur” (IV. Cleveland Clinic Foundation 1998, p. 2).As with bioethics generally, the literature addressing organizational ethics is multidisciplinary. JCAHO’s compliance guide for its revised standards, Ethical Issues and Patient Rights, draws on a wealth of ideas from both clinical ethics and business ethics. This is often an awkward alliance. “Because the study of organizational ethics is in its infancy compared to other areas of healthcare ethics, discussions about it often seem like hot air with no palpable payoff” (I. Boyle 1998, p. 2). The fact that “... there is an ancient history that reflects widespread doubt about the moral probity of business” (II. Frederick 1995, p. 209) does not help. To begin, “Aristotle had rude things to say about business” (II. Jackson 1998, p. 401). A brief review of introductions to several of the business ethics textbooks cited in this bibliography reveals that a rebuttal of “business ethics as an oxymoron” is the standard opening paragraph. This stigma is unfounded, and “increased stability” has characterized the state of business ethics literature during the 1990s (II. Beauchamp and Bowie 1997, p. ix). Significant attention has been given to elaborating two often overlapping theories—stakeholder and social contractarian.Originating in the 1960s as a pun on “stockholder,” proponents of stakeholder theory claim that a corporation’s fiduciary responsibility extends beyond increasing its profitability to protecting the rights of individuals or groups affected by its actions. Popular as a strategic planning tool in the... (shrink)

Is a rational morality a necessary evil—a mean between what an individual would judge best—bettering his situation at whatever cost to others, and worst—having one's situation worsened at other's pleasure? It would seem that Glaucon's fable of the ring of Gyges may be applied to our account of morality. And indeed, matters may be worse—a contractarian morality such as we have developed may seem to be a tool for the clever and strong to use in domination, using the language (...) of cooperation to conceal the reality of exploitation. If we understand ourselves on the model of economic man, treating all basic motivation as exemplifying asociality and all human relationships as contractual, we may find these conclusions hard to escape. Even though we could understand the rational arguments in support of morality, our feelings would be engaged only by our own concerns, and we would lack any affective capacity for morality. (shrink)

The a priori definitions of rationality and freedom that permeate orthodox economics in particular and the liberal discourse in general have important theoretical implications. A Hegelian critique of ahistorical approaches to the meaning of Liberty and Reason reveals insurmountable problems that the axiomatic approach inflicts upon game theory, contractarian theories of justice and Rational Choice Marxism. While the postmodern critique and the method of deconstruction are useful, the meaning we seek is best gleaned through Marx's conception of praxis.

This 1994 book constitutes a sustained, comprehensive, and rigorous critique of contemporary Hobbesian contractarianism as expounded in the work of Jean Hampton, Gregory Kavka, and David Gauthier. Professor Kraus argues that the attempts by these three philosophers to use Hobbes to answer current political and moral questions fail. The reasons why they fail are related to fundamental problems intrinsic to Hobbesian contractarianism: first, the problem of collective action arising out of the tension in Hobbes's theory between individual and collective rationality; (...) second, the classical problem of explaining the normative force of hypothetical action, a problem that can be traced to the conflicting strategies of hypothetical justification found in Rawls's and Hobbes's theories. Given the deep interest in Hobbesian contractarianism among philosophers, political theorists, game theorists in economics and political science, and legal theorists, this book is likely to attract wide attention and infuse life into the contractarian debate. (shrink)

Jeffrey Friedman broaches a number of criticisms of Libertarianism as a conceptual basis for opposing the extensive modern welfare state, examining several variants and concluding that they are fundamentally unsupported. He opts for a “consequentialist” view of foundations. Nevertheless, he thinks that the modem welfare state is subject to effective critique along such lines. But rational contractarian individualism works and does provide foundations for libertarianism, while “consequentialism” is an ill‐defined theory.that is quite unpromising for the proposed critique; nevertheless, Friedman's (...) empirical and economic critique of the welfare state is valid. (shrink)

This interdisciplinary work draws on research from psychology and behavioral economics to evaluate the plausibility of moral contract theory. In a compelling manner with implications for moral theory more broadly, the author's novel approach resolves a number of key contingencies in contractarianism and contractualism. Acting in accordance with principles that we could all agree to under certain conditions requires that agents are capable of taking up the perspectives of others. Research in social and developmental psychology shows just how challenging (...) this can be. The author discusses in detail what implications findings on perspective-taking have for contract theory. He concludes with cautious optimism that, despite our limitations, it lies within our power to become better at perspective-taking and to adopt a contractarian or contractualist mode of moral thinking. This does however require us to be much more attentive to the standpoints of others than we tend to be. Contract theorists also assume that agents can be moved to comply with principles that would be the object of agreement, with some arguing they can be so moved out of their own interest. The book show that, in contrast to the suspicion of many philosophers, this idea is largely supported by research on the dynamics of trust and our ability to distinguish trustworthy from untrustworthy others. Bringing a welcome dose of realism to the debate on contract theory, the author shows the value of assessing moral theories from an empirical perspective. (shrink)

In this paper I want to present the guiding lines of a research programme into the economics of scientific knowledge, a programme whose ultimate goal is to develop what I would like to call a contractarian epistemology. The structure of the paper is as follows: in the first section I will comment on two conflicting approaches to the topic of rationality in science: the view of the rationality of scientific knowledge as deriving from the employment of sound methodological (...) norms, and the view of scientists as rational agents pursuing the optimisation of their own personal and professional interests. In section 2 I will try to make both approaches mutually consistent by showing that a competition among rational "recognition-seekers" is only possible if they agree in accepting some system of methodological norms. Section 3 will be devoted to analyse the main kinds and properties of these norms. Finally, in section 4 I will discuss a question which is far from being easy and innocent: why are scientific norms obeyed by researchers, once they have been established in a scientific discipline? (shrink)

The title of this special topic in RMM is borrowed from a 1978 paper of Hillel Steiner in which he argues against Robert Nozick's invisible hand conception of the emergence of the state. Steiner believes that central institutions of social order such as money and government need some form of conscious endorsement by individuals to emerge and to persist over time. -/- Tony de Jasay's critique (in Philosophy 85, 2010) of Bob Sugden's plea for a Humean version of contractarianism (see (...) RMM, Vol 0) motivated us, to take this old – but still central – theme of the debate on the origin of social order as one starting point in a new attempt to evaluate the idea of a social contract). -/- Within the 35 years since the publication of Hillel Steiner's paper different advances have been made in economics and philosophy that may well shed some new light on some of the fundamental issues in the debate about a contractarian conception of social order. These make us confident that a new attempt to explore the contractarian idea is well worthwhile. -/- Those who first motivated this project, Hillel Steiner, Anthony de Jasay, and Robert Sugden, as well as a number of other renowned scholars confirmed to contribute. The special topic will actually start with a previously unpublished paper by Hillel Steiner, originally written in 1986, in which he extends and elaborates on his argument about money from the 1978 paper, and with an original article by Anthony de Jasay, in which he further clarifies his worries. A response by Robert Sugden will follow. Further contributions will discuss the matter by reference to the roots of the debate in seventeenth and eighteenth century philosophy or to recent advancements in economics, the behavioral sciences or in social philosophy. Some of the contributions confirmed are already in a very elaborated stage and ready to be published soon. They are announced here right from the start and – for the time being – marked as 'to appear'. -/- As always, the special topic is an open ended project and further contributions will be considered; please send your submission to [email protected] (see 'How to Submit' for details). Also, readers are invited to submit shorter comments for the discussion section, which may be published after an abridged refereeing process. (shrink)

Until recently, as market forces gradually prevailed over government intervention, the contractarian view had emerged as a preferred method of economic governance due to its attractiveness for business. Following the recent collapse of financial markets and the resulting recession, however, this structural form is now being called into question as the calls for more regulation and government intervention increase. In this context, this article revisits the law versus contract debate in the field of corporate law and governance. Following a (...) theoretical framework utilizing elements of game and resource-based theory of the firm, the company is envisaged as a central counterparty in repeated bargains with its stakeholders. It is shown that power dynamics, which are inherent in the repeated bargains between stakeholders and the company, are prone to imbalance rather than balance by causing cumulative increases in the relative power of stronger parties and vicious spirals of relative power loss for weaker ones. This cumulative power imbalance is then reflected in the organizational rent appropriation process, as weaker parties are eventually expropriated by stronger ones. It is therefore argued that since the contractual model is inherently prone to instability, mandatory power-balancing rules are necessary. Such (re)balancing regulation, however, would need to follow a systemic approach because stakeholder and company power is drawn from, and affected by numerous structural arrangements in the legal and economic system. (shrink)

In his Theory of moral Sentiments , Adam Smith does not deal only with interpersonal moral issues. He also addresses some economic and political consequences that tie with his analysis of ‘sympathy’. Interestingly, these socially relevant outcomes do not feature as products of sympathy proper, but rather as byproducts of certain ‘irregularities’ or biases which affect the way sympathy actually works. The stability of a political society through a system of ‘ranks’ which are spontaneously granted a share of authority thus (...) gets projected beyond the reach of a rational approach, e.g. of a contractarian character. Although the idea of a spontaneous order certainly attracts Adam Smith here as elsewhere, his approach of the economic and political sphere in TMS is nevertheless tinged with a tone of moral criticism which must be taken seriously. (shrink)

I propose to criticize two strands of argument - contractarian and utilitarian – that liberals have put forth in defense of economic coercion, based on the notion of justifiable paternalism. To illustrate my argument, I appeal to the example of forced labor migration, driven by the exigencies of market forces. In particular, I argue that the forced migration of a special subset of unemployed workers lacking other means of subsistence cannot be redeemed paternalistically as freedom or welfare enhancing in (...) the long run. I further argue that contractarian and utilitarian approaches are normatively incapable of appreciating this fact because the kinds of reasons that they adduce for justifying the long-term freedom-enhancing consequences of forced migration are not ones that would be acceptable to the migrants themselves. I conclude that only a discourse ethical approach, which mandates direct, empathetic communication between would-be migrants and members of potential host communities, captures the full range of reasons that would be acceptable to both migrants and members of these communities. These reasons – appealing both to agency-enhancing communal attachments as well as to agency-enhancing freedom of choice – fully reveals the extent to which a global capitalist system composed of relatively closed national communities coerces the world’s poorest migrants. (shrink)

This essay seeks to give a contractarian foundation to the concept of Corporate Social Responsibility, meant as an extended model of corporate governance of the firm. Whereas, justificatory issues have been discussed in a related paper, in this essay I focus on the implementation of and compliance with this normative model. The theory of reputation games, with reference to the basic game of trust, is introduced in order to make sense of self-regulation as a way to implement the social (...) contract on the multi-fiduciary model of corporate governance. This affords understanding of why self-regulation, meant as mere recourse to a long-run strategy in a repeated trust game, fails. Two basic problems for the functioning of the reputation mechanism are examined: the cognitive fragility problem, and the motivational problem. As regards the cognitive fragilities of reputation, the paper develops the logic and the structure that self-regulatory norms must satisfy if they are to serve as gap-filling tools with which to remedy cognitive limitations in the reputation mechanism. The motivation problem then arises from the possibility of sophisticated abuse by the firm. Developed in this case is an entirely new application of the theory of conformism-and-reciprocity-based preferences, the result of which is that the stakeholders refuse to acquiesce to sophisticated abuse on the part of the firm. (shrink)

Gillian Hadfield and Stephen Macedo argue that late-Rawlsian stability for the right reasons, that is, stability based on participants’ reciprocal cooperation, can arise even if participants start out only economically rational and indifferent to justice. As they explain, even purely rational actors have an interest in having a neutral “shared logic” to coordinate decentralized enforcement of social cooperation and in internalizing that logic. Once developed and internalized, they add, that logic renders their reasoning public, and their persons, reasonable and responsive (...) to Rawlsian justice considerations. Hadfield and Macedo’s account seeks to lend Rawlsian contractualism a contractarian foundation. I raise five challenges to their account, focusing on the sense in which actors “start out” purely rational; on illiberal means that may serve rational citizens’ joint ends; on the counterexample of Martin Luther King; on the difficulty of specifying the mechanism for shared logic-internalization; and on the further counterexample of a medical student who internalizes compassion, only upon the condition that it serves his rational aims. (shrink)

Liberalism is based on the juxtaposition of consent to coercion. Autocracy and slavery were based on coercion whereas today’s political democracy and economic “employment system” are based on consent to voluntary contracts. This article retrieves an almost forgotten dark side of contractarian thought that based autocracy and slavery on explicit or implicit voluntary contracts. The democratic and antislavery movements forged arguments not simply in favor of consent but arguments that voluntary contracts to alienate aspects of personhood were invalid—which made (...) the underlying rights inalienable. Once understood, those arguments apply as well to today’s self-rental contract, the employer-employee contract. (shrink)

Abstract:Robert Sugden has suggested a normative standard of freedom as ‘opportunity’ that is supposed to help realign normative economics – with its traditional rational choice orientation – with behavioural economics. While allowing preferences to be incoherent, he wants to maintain the anti-paternalist stance of orthodox welfare economics. His standard, though, presupposes that people respond to uncertainty about their own future preferences by dismissing any kind of self-constraint. We argue that the approach lacks psychological substance: Sugden's normative benchmark (...) – the ‘responsible person’ – can hardly serve as a convincing role model in a contractarian setting. An alternative concept is introduced, and some implications are briefly discussed. (shrink)

In today’s America the persistence of crushing poverty in the midst of staggering affluence no longer incites the righteous jeremiads it once did. Resigned acceptance of this paradox is fueled by a sense that poverty lies beyond the moral and technical scope of government remediation. The failure of experts to reach agreement on the causes of poverty merely exacerbates our despair. Are the causes internal to the poor – reflecting their more or less voluntary choices? Or do they emanate from (...) structures beyond their control? If both of these explanations are true, poverty experts will need to shift their focus to a hitherto under-theorized concept: coercion. I defend this claim by appealing to distinct areas of philosophical inquiry: social epistemology and moral theory. Poverty knowledge is directly related to both of these inquiries. The aim of poverty knowledge is clearly moral: to reduce suffering and to empower the weak. While the former aim is grounded in utilitarian thinking, the latter aim is grounded in the social contractarian insight that poverty is unjustly coercive, imposing excessive limits on the opportunities and choices of the poor that render them vulnerable to domination by others. Equally obvious is the social nature of poverty knowledge. All knowledge depends on the reliable testimony of others. Poverty knowledge not only ostensibly offers us the most reliable, scientific beliefs about the causes and effects of poverty, thereby determining how we morally judge the poor and their poverty, but it reciprocally bases its understanding of poverty on what the poor themselves have to say about it. What unites both social epistemology and moral theory – at least the social contract variants I will be examining here – is concern about the limits and possibilities of rational choice. As poverty knowledge came of age in the fifties and sixties, it absorbed the language of rational choice prevalent in economics, especially the Keynesian economics whose moral underpinnings can be found in Rawlsian social contract theory. Echoing a different economic theory supported by a different, more libertarian, brand of social contract theory, poverty expertise in the eighties continued to use an abstract model of rational choice. I submit that, in both early and later epochs of poverty expertise, reliance on rational choice reasoning prevented poverty experts from appreciating the coercive impact of poverty on the poor. Social epistemology explains this failure by demonstrating the poverty of rational choice thinking and its mistaken reliance on inflated commonsense expectations about the capacity of individuals to calculate their long-term interests, free from the distortions of social bias. Social epistemology not only exhibits the dangers of not relying on expert testimony, but it also exhibits the dangers of relying on an unreliable source of expert testimony that has removed itself from its human subject matter. In order for poverty experts to become more reliable educators about poverty’s coercive impact on the poor they must return to their discipline’s social epistemological roots. Only a more descriptive and explanatory sociology can narrate a comprehensive story about how the lived experience of poverty relates to the larger social system. The social contractarian model best suited to underwriting this kind of poverty knowledge, I submit, is the discourse theoretic model that has been championed by Jürgen Habermas. When applied as a pedagogical method of dialog and not as a social contractarian model of rational normative consent, discourse theory highlights the unique epistemological advantages of empathetic understanding that are so essential to dispelling stereotypes about the poor. Dispelling these stereotypes is the first step toward respecting the poor as free agents who are nonetheless forced to make suboptimal choices. My defense of these claims proceeds as follows: Part One argues that poverty expertise rightly deserves the opprobrium critics have heaped on it. The charge – leveled by progressives and conservatives alike - that such expertise is ideological is true to the extent that poverty knowledge has all-too-easily accommodated the political aims of the agency that has funded it: the federal government. The shift from the war on poverty to the war on the poor – and the resulting shift from blaming poverty on economic structures to blaming it on the culture of poverty – would not have been possible without an increased emphasis on data gathering aimed at measuring poverty rather than describing it. Part Two assesses the consequences of turning away from qualitative research to statistical analysis: the coercive nature of poverty becomes invisible beneath the surface of aggregate individual choices. The failure to grasp how voluntary choices, ostensibly based on rational, self-interested calculations, can be coerced by social structures - and thereby lead to sub-optimizing behavior – invites the conclusion that the poor have only themselves to blame for their misery. Part Three suggests that this pathologization of the poor directly controverts the major aim of poverty research: to empower the poor as free and equal parties to the social contract. I argue that the different varieties of social contract theory that have justified poverty expertise over the last forty years – the welfarist model pioneered by Rawls and the market-based model defended by Nozick – embrace the same rational choice models favored by poverty experts and so conspire with the latter in neglecting important dimensions of poverty-related coercion. While the welfarist model conceals the coercive nature of bureaucratically administered entitlement programs and top-down urban renewal policies, the market-based model conceals the coercive nature of economic class structures. The discourse-theoretic alternative proposed by Habermas endorses a populist, democratic response to the overly abstract rational choice assumptions embedded in these other models. Despite this advance over its counterparts, the chief advantage of discourse theory for poverty knowledge, I submit, resides less in its proposed procedure of rational collective choice than in its heuristic as a dialogical method of social learning. I demonstrate this claim in Part Four, where I turn to the social epistemological insights of Allen Buchanan. Social epistemology offers a much needed corrective to theories of knowledge that rely on the reasoning capacities of isolated individuals. By stressing the connection between moral response and social belief, on one hand, and the dependence of social belief on epistemic authorities, on the other, social epistemologists suggest ways in which we can learn to distinguish reliable from unreliable authorities and become aware of our own error-prone cognitive proclivities. Their insights need to be supplemented by moral epistemologists who stress the affective dimension of knowledge, above all, the role that empathy plays in understanding the plight of others. Drawing from victim narratives, Diana Meyers shows that switching between first-person experiences of one's own and third-person reconstructions of others' experiences is essential to appreciating the gravity of human rights violations and the seriousness of human rights claims. It goes without saying that such empathy is just as essential to understanding the plight of the poor. Meyers mainly has in mind empathetic understanding that has been facilitated by third-person observation and literary encounter, but the importance of visceral and corporeal representation suggests that face-to-face dialog may sometimes be a more effective way to facilitate empathetic understanding. (shrink)

This chapter contains sections titled: Background: mapping the field of business ethics The evolution of social contract approaches to business ethics Integrative social contracts theory (ISCT) Remaining issues and promising research directions for contractarian business ethics.

"Nearly all the essays are theoretically informed, argumentative, and exceptionally interesting; nearly all try to paint the merits (and demerits) of utilitarianism as a political philosophy in the light of attempted solutions to theoretical problems that are explored in some detail. The result is a searching, thoughtful volume." --Ethics "The Utilitarian Response is unique in the breadth of problems and questions in utilitarian theory covered. It is more suggestive of strategies by which contemporary utilitarianism could be improved than a comprehensive (...) reply to recent objections to utilitarianism. It should be of great interest to scholars in ethical theory and political philosophy. It would also serve well as a text for a graduate level seminar, if accompanied with readings in the area of recent objections to utilitarianism." --Utilitas Utilitarianism is an important component of both popular and academic responses to the problems of ethics and public policy. Over the past two decades, it has lost some ground to rival theories, such as: contractarian, libertarian and natural rights. This book explores the capacity of utilitarianism and the existing challenge of reviving it in political theory. Primary attention is given to questions on the intellectual coherence and moral acceptability of utilitarian responses to practical dilemmas, including health care, punishment, and electoral arrangements. Also examined are the relationships between private ethics and public policy, utility and freedom, utility and democracy, and the role and limitations of states, both locally and internationally. The Utilitarian Response is a broad and contemporary account of utilitarian theory as it exists today. It explores the continuing applicability of utilitarian thought to current practical and interrelated issues of ethics, economics, and politics. An ideal resource for scholars in political philosophy and political theory. (shrink)

The question of what a group of rational agents would agree on were they to deliberate on how to organise society is central to all hypothetical social contract theories. If morality is to be based on a social contract, we need to know the terms of this contract. One type of social contract theory, contractarianism, aims to derive morality from rationality alone. Contractarians need to show, amongst other things, that rational and self-interested individuals would agree on an impartial division of (...) a cooperative surplus. But it is often claimed that contractarians cannot show this without introducing moral assumptions. This paper argues that on the right understanding of the question contractarians are asking, these worries can be answered. Without relying on moral assumptions, the paper offers a novel derivation of symmetry, which is the axiom responsible for the impartiality of the most famous economic bargaining solutions appealed to by contractarians. (shrink)

The constitutions of many nations have been explicitly or implicitly founded upon principles of the social contract derived from Thomas Hobbes. The Hobbesian egoism at the base of the contract fairly accurately represents the structure of market enterprise. A contractarian analysis may, then, allow for justified or rationally acceptable universal standards to which businesses should conform. This paper proposes general rational restrictions upon multi-national enterprises, and includes a critique of unjustified restrictions recently proposed by the Organization for Economic Cooperation (...) and Development (OECD). I propose restrictions that may be tighter than the OECD and international law currently demand, because reason requires that the activities of enterprises accord with standards of environmental and governmental sustainability in addition to consortium, national law and international law agreements. I argue that it is justifiable that indictments may be presented by a citizen or a government against the local arm of a multinational enterprise in response to violations committed by an arm within a different country. (shrink)

Liberal thought (in the sense of classical liberalism) is based on the juxtaposition of consent to coercion. Autocracy and slavery were seen as based on coercion whereas today's political democracy and economic 'employment system' are based on consent to voluntary contracts. This paper retrieves an almost forgotten dark side of contractarian thought that based autocracy and slavery on explicit or implicit voluntary contracts. To answer these 'best case' arguments for slavery and autocracy, the democratic and abolitionist movements forged arguments (...) not simply in favour of consent, but arguments that voluntary contracts to legally alienate aspects of personhood were invalid 'even with consent' – which made the underlying rights inherently inalienable. Once understood, those arguments have the perhaps 'unintended consequence' of making the neo-abolitionist case for ruling out today's self-rental contract, the employer-employee contract. The paper has to also retrieve these inalienable rights arguments since they have been largely lost on the Left, not to mention in liberal thought. (shrink)

Policy-based corporate law scholarship has come to be dominated by law and economics contractarian theory. Contractual focuses have obscured three deficiencies of the theory: inadequate attention to post-contractual bargaining, reductionist approaches to legal rights, and indifference to distributional considerations. Calabresi and Melamed's framework for examining the allocation and protection of legal entitlements, as explored and refined over more than 25 years of scholarship, offers a systematic means of analysing these neglected areas without compromising an economic orientation. The author (...) uses this analytical tool to demonstrate that, under conditions of relatively low bargaining costs, traditional strict fiduciary doctrine achieved bargaining outcomes that are likely to be both efficient and equitable. It accomplished this by relying simultaneously on property rule protection and information-forcing properties. (shrink)

On a view that emerges from the “law and economics movement,” the purpose of law is to ensure that when individual citizens seek to maximize their individual utility, they will incidentally maximize society’s utility; the law ideally provides individual agents with incentives for efficient behavior. Finkelstein argues that laws that maximize social utility are not necessarily the best legal rules for individuals that seek to maximize their personal utility. In particular, she suggests that ideally rational individuals would be unlikely (...) to select the principle of utility maximization as the basis for choosing ideal legal rules. If Finkelstein is correct, the assumption that human beings are rational utility maximizers would have very different consequences from those that legal economists have identified. Rational actor theory would be more likely to lead us to justify legal rules structured around contractarian principles, i.e., principles of agreement, than around the principle of utility maximization. (shrink)

Contractarians aim to derive moral principles from the dictates of instrumental rationality alone. But it is well-known that contractarian moral theories struggle to identify normative principles that are both uniquely rational and morally compelling. Michael Moehler's recent book, *Minimal Morality* seeks to avoid these difficulties by developing a novel "two-level" social contract theory, which restricts the scope of contractarian morality to cases of deep and persistent moral disagreement. Yet Moehler remains ambitious, arguing that a restricted version of Kant's (...) categorical imperative is a uniquely rational principle of conflict resolution. We develop a formal model of Moehler's informal game-theoretic argument, which reconstructs a valid argument for Moehler's conclusion. This model, in turn, enables us to expose how a successful argument for Moehler's contractarian principle rests on assumptions that can only be justified by subtle yet significant departures from the standard conception of rationality. We thus extend our understanding of familiar contractarian difficulties by showing how they arise even if we restrict the scope of contractarian morality to a domain where its application seems both promising and necessary. We show that the problem lies not in contractarians' immodest ambitions but in the modest resources rationality can offer to satisfy them. (shrink)