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Vishwanath Pandit

Ethics,
Economics
and Social
Institutions
Ethics, Economics and Social Institutions
Vishwanath Pandit

Ethics, Economics
and Social Institutions

13
Vishwanath Pandit
Sri Sathya Sai Institute of Higher
Learning (SSSIHL)
Puttaparthi, Andhra Pradesh
India

ISBN 978-981-10-0897-9 ISBN 978-981-10-0899-3 (eBook)

DOI 10.1007/978-981-10-0899-3

Library of Congress Control Number: 2016935605

© Springer Science+Business Media Singapore 2016

This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part
of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations,
recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or
information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar
methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are exempt from
the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this
book are believed to be true and accurate at the date of publication. Neither the publisher nor the
authors or the editors give a warranty, express or implied, with respect to the material contained herein
or for any errors or omissions that may have been made.

Printed on acid-free paper

This Springer imprint is published by Springer Nature

The registered company is Springer Science+Business Media Singapore Pte Ltd.
Offered in Gratitude to
LORD
Sri Sathya Sai Baba
With
LOVE and Humility

These days virtue is becoming rare at all

levels—in the individual, family, society
and community, and also in fields of
life—economic, political and even
“spiritual”. Life must be spent in
accumulating and safeguarding virtue,
not riches. …… develop sympathy and the
anxiety to serve and be useful to everyone.

—BABA
Foreword

It is a great pleasure for me to write the foreword to this book by Prof. Vishwanath
Pandit, especially since I have known Prof. Pandit as a colleague and a friend for
nearly 45 years.
The title of Prof. Pandit’s book, Ethics, Economics and Social Institutions, gives
an indication of its very broad scope: the book encompasses a wide range of issues
which have ethical as well as economic dimensions. While the interaction between
economics and ethics has a long history, there have been phases in the develop-
ment of economics, when economics moved sharply away from several disciplines,
including ethics, with much consequent loss for economics. Over the last several
decades, however, there has been a growing realization of this loss. Increasingly, one
sees economists working on issues which are on the interface between economics
and several other disciplines, such as ethics, political philosophy, and psychology.
There is now a substantial recent literature arising from the interaction of these dif-
ferent disciplines. Professor Pandit’s book is a valuable contribution to this literature.
In Chap. 2, Prof. Pandit gives a general outline of the role of ethics in econom-
ics, as economics evolved over several centuries. This historical account in Chap. 2,
which includes, among other things, observations on ethical dimensions of Marxist
and Keynesian thinking, is a valuable feature of the book and provides a historical
background for the chapters that follow. Chapters 3 and 4 of the book are devoted
to detailed discussion of various issues in economics, which have something to do
with ethics and which have received much attention from economists in recent dec-
ades. Ethics matters for economics in at least two important ways. First, given that,
economists study, among other things, the choices or decisions made by individu-
als, it is important for them to study what motivates the individuals in their choices.
Economists have often assumed that the promotion of self-interest is the sole moti-
vation guiding people’s choices. In fact, in less careful economic writings, rational
choice is sometimes taken to be choice that best promotes the agent’s self-interest.
While individual choices are often guided by self-interest, how reasonable or real-
istic is the assumption that ethical considerations never influence people’s choices?
Further, how reasonable is it to identify rational choice with choice that exclusively
promotes the individual’s self-interest as distinct from her ethical objectives? These

vii
viii Foreword

are some of the problems relating to the choices of an individual, where ethics fig-
ures in the picture. Ethics also enters economics in a very different fashion. Stated
in very general terms, the goal of public policies, including those public policies
which deal specifically with economic matters, is to promote social welfare. But
what does one mean by social welfare and what can be the ethical bases for judging
whether some policy will increase or decrease social welfare? Since the question
of what is good or bad for the society is inevitably linked to the notion of the well-
being of individuals constituting the society, the question of what constitutes an
individual’s well-being inevitably comes up in this context. Should one identify an
individual’s well-being with the satisfaction of her preferences, as economists have
often done in the past? Also, if individuals in a society differ in their opinions about
alternative public policies, how should the society take its decision on the basis of
such conflicting opinions? These are just a few examples of issues which have been
discussed in welfare economics, the normative branch of economics. These two
categories of problems involving ethics are discussed in some detail in Chaps. 3
and 4. This is followed by a discussion of the interrelationship between prosper-
ity, happiness, and ethics in Chap. 5. However one may conceive an individual’s
well-being and happiness as likely to be one of its important components. It is not,
therefore, surprising that, in a flourishing recent literature, economists, psycholo-
gists, and philosophers have explored the notion of happiness and what contributes
to human happiness. Professor Pandit’s Chap. 5 continues this exploration.
In Chaps. 6, 7, and 8, Prof. Pandit goes on to study issues relating to social
institutions, social norms, spirituality, and religion; he also studies three specific
spiritual movements originating in India. I am not sure that most economists will
regard religion and spiritual movements as appropriate subjects of study in eco-
nomics. But, if economists want to study the well-being of individuals and socie-
ties, then, given the profound impact, positive and negative, that religion often has
on the well-being of individuals and societies, it is not clear that the study of such
impacts can be kept strictly outside the boundaries of economics. One can also take
the position that the issue of how religion affects human well-being needs to be
carefully studied irrespective of whether one decides to put such studies within the
domain of economics or within the domain of some other academic discipline. Like
all interesting scholarly contributions, Prof. Pandit’s book raises a host of important
questions. It is possible that, given the nature of the questions investigated in the
book, we may not ever reach conclusive answers for many of them. But, in an area
such as this, the value of scholarly contributions often lies in asking important ques-
tions and exploring them systematically rather than in providing definitive answers.
I am grateful to Prof. Pandit for the opportunity to read his book: his book has
compelled me to think again about many issues in normative economics, and it has
also made me aware of several issues, about which I had not thought earlier.

Prasanta K. Pattanaik
Emeritus Professor
University of California
USA
Preface

The present monograph was written mainly during 2013 and 2014 when I held a
National Fellowship awarded by the Indian Council for Social Science Research.
The basic motivation has been to relate ethics and moral ethos to society in its vari-
ous facets with a somewhat sharper focus on economics and related subjects. While
this body of thought has, in recent decades, received considerable attention from
many eminent economists, including several Nobel Laureates like Amartya Sen
and Kenneth Arrow, it has not yet come to be a part of the mainstream discipline
so as to enjoy the status one associates with topics such as microeconomic theory,
macroeconomic policy, finance, economic development, econometrics, trade theory
and industrial economics. Yet, it is not obvious why this class of issues should have
been important to me, who had spent most of his earlier academic career teaching
and researching on topics such as macroeconomic theory and policy, econometric
modeling and financial markets at the Delhi School of Economics, University of
Delhi and other universities in the United States and the United Kingdom.
Looking back it must very well have been so because I have had the privilege
to spend the last fifteen years associated, in different capacities, with Sri Sathya
Sai Institute of Higher Learning (Puttaparthi, India) where the system of educa-
tion is fully saturated with the promotion of human values under the guidance of
Sri Sathya Sai Baba with no compromises on either side. The meticulous objective
has been to turn out students who are not only competent to undertake challenging
assignments in the world outside as it exists today but also be inclined to serve the
society to promote welfare in whichever way they can best do it. No wonder that,
the Master’s program in Economics was drafted so as to include a compulsory
course in “Ethics and Economics” which I taught for several years. All this might
very well have also been the germination of my intrinsic, though dormant, interest
in ethical issues. I recall having agreed even at the University of Delhi to have an
active involvement in different programs organized by World University Service
and Gandhi Bhavan for nearly fifteen years before moving out here.
The foregoing account may look, rather oddly, self-centric but is, in fact,
intended only to explain how the subject chosen for this monograph turned out
to be what it is. One hardly needs to say that the basic motivation for looking at

ix
x Preface

life in a certain way comes from what one sees all round. This is manifested by
increasing inequality across as well as within societies; the new dormant ways
in which crime is taking place; blatant gender bias; growth of violence within as
well as across religious and other affiliations; demoralization of state as an activ-
ist social institution; lack of a deep social commitment in corporate strategies for
growth; and, unidentifiable tendency for corruption in all social agencies. All these
seem to have deep economic roots. With all this one should not be surprised if
economic prosperity does not lead to human happiness.
Fortunately, the awareness of the problems mentioned above is considerably
increasing in all types of social deliberations. It is encouraging to see that the new
thinking is exemplified by many leading academics. In particular, it is heartening
that there are many thinkers who have argued not only for a well-motivated analy-
sis to understand the realities of life but also to revise our basic theories so as to
reorient these towards actual behavior with underpinnings of idealism. The prob-
lem is, by no means simple as it involves tying together a framework which can
explain not only what is happening but also what ought to happen. The task is,
indeed challenging, and we may have to wait considerably more, searching for an
appropriate academically acceptable way out.
In line with the foregoing observations this monograph deviates significantly
from the usual coverage of ethical issues relating to economics and more broadly
society. It covers in some diversity the evolution of basic economic thought
before turning to several empirical and analytical issues relating to human hap-
piness. Considerable attention is paid not only to market which has governed the
economic system for centuries but as required, also to the state as a fundamen-
tal social institution. A relatively modern and quickly realized development in the
form of the financial system, which brings together the state and the economy,
receives special attention with its ethical underpinnings.
The monograph deviates considerably from the usual understanding, as it goes
on to examine ethical issues consistent with the higher view of life. Though the
start is made with religion as the most ancient human institution in its ethical
perspective, it goes further into a considerable degree of abstraction as spiritual-
ity which is now attracting the attention of many competent and well-known sci-
entists. To bring the discussion back to the world we understand and live in, the
monograph concludes with three well-known India-based episodes as international
missions. These cover, rather briefly the ethical messages we have received from
Mahatma Gandhi, Sri Ramakrishna Vivekananda combined, and Sri Sathya Sai
Baba. The ethical relevance of these messages at both individual as well as social
levels in today’s world cannot be exaggerated.
I am considerably indebted to many of my friends, colleagues, and well wish-
ers for different ways in which they have helped me to undertake and complete this
task. I am sure many of them may not even be aware of the way they have been
helpful. First of all, I wish to express my gratitude to Professor G. Venkataraman
who is an eminent scientist and an exceptionally knowledgeable person on a wide
variety of issues that humanity is facing today. My first substantive contact and sig-
nificant interaction with him started with the two of us getting together to handle a
Preface xi

course on Awareness for all postgraduate students at the Prasanthi Nilayam campus
of the Sri Sathya Sai Institute of Higher Learning. Our exchange of views on human
values in the contemporary world has fortunately continued over the recent years.
I am also enormously grateful to Professor Prasanta K. Pattanaik, Professor
Emeritus, University of California, Riverside, USA, and an internationally reputed
scholar of economic theory, for having kindly agreed to write a foreword to this
book. I am happy to mention that Professor Pattanaik is an elected Fellow of
the Econometric Society, Public Choice Society and Human Development and
Capability Association. He has held top faculty positions at Cambridge University,
Harvard University and at Delhi School of Economics.
This study has been completed under the National Fellowship Scheme of
the Indian Council for Social Science Research, Ministry of Human Resource
Development, Government of India during the two years: February 2013 through
January 2015. The Sri Sathya Sai Institute of Higher Learning provided excellent
facilities needed for the study. I am indebted to my colleagues from different disci-
plines for helpful frequent interactions with me. Needless to add that I owe many
thanks to authorities and administrative staff at the Sri Sathya Institute of Higher
Learning for dealing with their responsibilities with much concern. My thanks also
to authorities at the Indian Council for Social Science Research for offering the
fellowship to me and later handling it with much concern. I am particularly grate-
ful to Professor R. Radhakrishna of the Centre for Economic and Social Change,
Hyderabad, India, for encouraging me to undertake the task.
I was able to benefit considerably from my frequent visits to the Delhi School
of Economics where I have had access to the wonderful Ratan Tata Library. I
also received much support, in different ways, from the Centre for Development
Economics as well as the Department of Economics at the Delhi School of
Economics. I take this opportunity to express my deep sense of gratitude to the
authorities at all these institutions. I am, in particular grateful to Professor Pami
Dua, Director, Delhi School of Economics, and Professor Aditya Bhattacharjea,
Chairman, Department of Economics, Delhi School of Economics for several facili-
ties without which my task would have been harder. Dr. Lokesh Sharma, Chief
Librarian of the Ratan Tata Library, and his many colleagues have gone out of the
way to assist me. My thanks to them. For similar help I thank all staff members at the
central library of the Prasanthi Nilayam campus of the Sathya Sai Institute of Higher
Learning. Needless to say that none mentioned above can be held responsible for the
views and assertions expressed in this work. Sagarika Ghosh and Nupoor Singh of
Springer have frequently gone out of the way to help me. I am considerably grateful
for their generous attitude.
Finally and most significantly, this work could not have been completed with-
out the enormous though invisible support I received all along from my wife
Krishna. Above all, I would like to put on record the inspiration we have received
from our beloved daughter, Kanika to pursue a life in search of enlightenment.
How far we have succeeded, we are unable to judge.

Vishwanath Pandit
Contents

1 A General Preview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Economics and Society . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 The Beginning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Ethics and Social Sciences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4 The Ethical Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.5 Prosperity and Its Fallouts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.6 Facets of Injustice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2 Economics and Ethics: Evolution and Interaction. . . . . . . . . . . . . . . . . 17
2.1 Early Economic Thought. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.2 Towards Classical Political Economy . . . . . . . . . . . . . . . . . . . . . . . . 20
2.3 The Agenda for Social Justice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.4 On to Keynes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.5 Marx and Keynes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3 Rationality, Welfare and Ethics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.1 Some Basics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.2 Rationality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.3 General Equilibrium and Welfare. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.4 Preferences and Social Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.4.1 Welfare Prospects and Ethics. . . . . . . . . . . . . . . . . . . . . . . . . 44
3.5 Behavioral Imperfection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4 Alternative Paradigms in Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.1 Ethics in Ancient Thought. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
4.2 Modern Paradigms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.3 Utilitarianism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

xiii
xiv Contents

4.4 Libertarianism and Contractarianism. . . . . . . . . . . . . . . . . . . . . . . . . 63

4.5 Marxism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
5 Prosperity and Happiness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
5.1 The Paradox. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
5.2 Happiness and Ethics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
5.3 Income and Utility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
5.4 Happiness and Aspirations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
5.5 Empirical Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
5.6 Prosperity Devoid of Equality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
5.7 Back to Ethics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
6 Ethical Norms and Social Institutions. . . . . . . . . . . . . . . . . . . . . . . . . . . 91
6.1 The Setting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
6.2 The Market System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
6.3 State and Society . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
6.4 World of Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
6.5 Ethical and Moral Facets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
7 Ethics in a Deeper View of Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
7.1 Contemporary Social Norms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
7.2 Faith in Question . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
7.3 Religion Persists. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
7.4 Alternative Views: Philosophy and Science. . . . . . . . . . . . . . . . . . . . 121
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
8 Missions for Social Ethics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
8.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
8.2 Gandhi for Truth and Nonviolence. . . . . . . . . . . . . . . . . . . . . . . . . . . 130
8.3 Ramakrishna–Vivekananda for Non-Duality. . . . . . . . . . . . . . . . . . . 132
8.4 Sri Sathya Sai Baba for Pure Love. . . . . . . . . . . . . . . . . . . . . . . . . . . 135
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
9 Summing Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
9.1 Basic Thrust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
9.2 Ethics in Economic Thought . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
9.3 Rationality and Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
9.4 Happiness for the Society. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
9.5 Deeper Questions of Life. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
9.6 The Last Word . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
Name Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Subject Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
About the Author

Prof. Vishwanath Pandit received his doctorate in economics from the University
of Pennsylvania, Philadelphia working with Prof. Lawrence Klein, Nobel Laureate
in Economics. He served at the Delhi School of Economics, University of Delhi for
nearly four decades in different capacities including Head, Department of Econom-
ics, and Director, Centre for Development Economics. He also taught at the Univer-
sity of Pennsylvania, his alma mater, as a visiting Professor (1984–1985) and spent
a year at the University of North Carolina, Chapel Hill, in the United States, as a
National Science Foundation Fellow (1970–1971). Professor Pandit served Univer-
sity of Manchester, United Kingdom as a visiting faculty (1975–1976) and later as
Simon Fellow (1976–1977) and Hallsworth Fellow (1983–1984).
Recipient of the University Grants Commission Swami Pranavananda
Saraswati National Award for 2004, he was chosen by the Indian Council for
Social Science Research, GOI to hold a National Fellowship for 2013–15. United
Nations, New York appointed Prof. Pandit as Chairman of the Committee on
Policy Modeling for Less Developed Countries in 1999. Elected as President of
The Indian Econometric Society for 2001–2002 he continues to serve it as a life
member of its Trust. He was deputed by the United Nations Development Program
to serve as advisor to the Ministry of Planning, government of Sri Lanka for
1989–1990.
Professor Pandit had the privilege to join the Sri Sathya Sai Institute of
Higher Learning in 2001 and set up the Department of Economics at the Deemed
University. He was later appointed as its Eighth Vice Chancellor.

xv
Introduction

The New Paradigms

The world has changed at a remarkably fast rate over the last few decades,
­presumably since the end of the Second World War. Changes, one is thinking
about, have been almost universal covering the society as well as individuals. At
the political front we have moved from colonialism to globalization. The social-
ist world which had got enlarged over three to four decades since the start of the
twentieth century has practically disappeared; democracy has got enlarged but at
the same time substantially transformed in its modus operandi over the recent dec-
ades. Perception of the role of the state as well as the mode and motivation of its
functioning are now different, as they have moved from its social welfare focus in
most countries. Technological changes based on great scientific achievements have
transformed corporate activity and outlook in a serious way. No wonder, the capi-
talist system itself has a new thrust which has given rise to differently structured
institutions.
One major development has been with regard to the distribution of income and
wealth in all countries particularly those in the advanced world. We cannot but
agree when it is asserted that,
Indeed the distribution of wealth is too important an issue to be left to economists,
­sociologists, historians and philosophers. It is of interest to everyone and that is a good thing.1

This has strongly changed and continues to change the design and thrust of eco-
nomic forces in most countries. Correspondingly, society, with its micro-units,
namely, the families and households are no longer the same; nor are the guiding
principles of social commitment at the aggregate level visible and adequately
accepted as part of the inherited ethos. Equally seriously, the rate of environmen-
tal damages motivated by short-term benefits of some has accelerated so as to
threaten the very livelihood and safety of life all around. In our view, the single

1
Piketty (2014) p. 2.

xvii
xviii Introduction

most important reason for these mostly adverse changes has been the sharp decline
of ethical and moral commitments in their different contexts individually and
collectively.
It needs to be recalled that ethical theory is basically a significant part of the
wider discipline of philosophy. Most introductory textbooks in philosophy rightly
highlight that this subject deals with everything from pure sciences to social affairs
like economics and history in addition to literature. One may, however, go as far as
to claim that ethics has been the most prominent guidepost of philosophy before it
got involved with other aspects of human concerns and the implicit thought pro-
cess. At one time widely used, introductory text (Joad 1960) considers different
views which may not go the same way. A frequently coming up assertion turns out
to be that human values exist in their own right in the sense that these lead to
human benefits. It has, however, been frequently held that ethical values must be
judged by their benefits to humanity. If this is seen as support for consequential-
ism, it would not be in line with the views of Kant.2 It is also, however, been
pointed out that there is no unique meaning for the word “right”—not to be con-
fused with consideration of pleasure and advantage. Clearly, what one ought to do
would typically be different from what one likes to do.3

Ethical Issues in Economics

Ethics gets substantively more meaningful when we consider it in its social rather
than individual context. To appreciate this we need to be aware that the social con-
tract theory view of the relevant issues elaborated in the seventeenth and eight-
eenth centuries has enabled humanity to live together by getting rid of the fear of
each other. Further progress in this context has considerably been possible by
devising effective social institutions like the state and its associated agencies to
promote human well-being, sense of security, and above all a deep sense of com-
mitment to each other.4
No wonder, the last few decades have witnessed a spectacular emergence of
deep thoughts on ethics in its relation to economics with different perspectives.
This has been a clear deviation from the preceding periods when ethics did not fig-
ure as a theme worthy of attention, particularly from economists. It is heartening
that most distinguished economists, including Nobel Laureates like Amartya Sen,
Kenneth Arrow, and several others have written on a variety of ethical issues in
their relation to economic and other broader social concerns. Prior to this the focus
remained on mainstream microeconomic theory with either implicit or explicit

2
Kant, who receives considerable attention in ethical literature is, however, considered to have
been “intolerably and unnecessarily” obscure and yet frequently commented upon. (Joad 1960)
p. 141.
3
Kant has often claimed that “ought implies can,” rendering ethical behavior less arduous.
4
Joad (1960) p. 186.
Introduction xix

assumption that economic agents behave purely to promote their self-interest.

Under macroeconomics the sharp focus persisted to be on magnitudes and policy
issues with an aggregative view. Distributional questions rarely figured in this lit-
erature even though we had a rich debate on a wide variety of policy scenarios.
Implications for social equity were seldom in the forefront. To be fair, these were
considered as the problems to be analyzed by policy makers and policy advisors in
specific and relevant contexts. The commonly used nomenclature has been “posi-
tive economics” which is meant to evaluate different possible outcomes as the
result of different policies. What was desirable was left for those implementing the
policies to judge.
Somewhat surprisingly, the link involving ethical issues remained missing
even in the sophisticated literature on welfare economics, because of its being
rooted in individual preferences. The problem was not only with the theories
that were available but also with the lack of interest in empirical investigations.
Furthermore, the rich body of thought on growth economics also did not look into
moral issues which should have included not only deprivation to many inside the
economy but also to many others across countries which had to suffer exploitation
either directly or indirectly through damages to the environment. While this may
have been understandable till about the end of the Second World War it should no
longer have been so over the last three decades and even more. The environmental
problems hold the key for further growth but more so for the quality of life itself
for all sentient beings. An equally and closely related view that higher per capita
GDP does really mean a greater sense of satisfaction for the society was widely
but wrongly shared till recently, but fortunately no longer so. Though the ques-
tion was raised in the mid-seventies it was not taken very seriously for nearly two
decades. In fairness, it should be mentioned that the so called “Easterlin Paradox”
formulated four decades back is now being seriously investigated and widely
accepted.
The present study is intended to highlight the ethical aspects which are inher-
ent to economics in the context of the prominent social institutions today. It is by
no means easy to do full justice to the job at hand. However, one way to make a
good start is at least by setting out the basic issues and how far these have been
dealt with. This should result, we hope, in a useful monograph rather than a body
of conclusive views. The attempt will serve its purpose if the monograph succeeds
in highlighting what are seen as major issues and how these have been dealt with.
Implicit in each case would be the empirical and theoretical work that is wait-
ing to be undertaken. Adequate care has to be taken to ensure that the treatment
in each case goes deep into the economic problems as they arise within a wider
sociological and political environment with adequate understanding of the existent
ethical/philosophical paradigms. The work undertaken is intended to review differ-
ent problems, as far as possible, with an emphasis on dominant social institutions,
namely, markets, government agencies, corporate entities, financial networks, and
religious systems. The coverage is briefly as follows.
xx Introduction

Attempted Coverage

To start, an effort is made to give a broad outline of what is covered and, to some
extent, why. The basic idea has been to justify the choice of the issues and what,
within that, are the major concerns that need to be addressed. First, we try to
explain how we need to see a strong connection between the society and the econ-
omy directly in terms of its collective as well as micro-entities without exception.
Then it turns to how economics started as a formal intellectual discipline with an
effort to articulate major social concerns, motivating us to emphasize the role of
ethics. The discussion then turns to how great economic achievements have also
led to problems unknown under the earlier regimes. This leads us to consider the
large variety of social and moral failings which may land us on to a new regime of
social violence in different forms and magnitudes in different situations.
Next, we consider the articulation of different themes in modern economic the-
ory from an ethical point of view over the last two and a half centuries. But, to
start with, there is a short introduction to ancient economic thought in India and
Greece as parts of the state policy with obvious ethical implications. The specific
themes taken up subsequently start with classical political economy and then move
to Keynesian and Marxian economics. An attempt is made not only to highlight
how these modes of thought were motivated by changing economic circumstances
but also the extent to which they implied different ethical viewpoints.
The next chapter takes up some major issues related to the concept of rational-
ity that is widely viewed as the root of modern economics. This takes us to the
market system and to welfare economics. Finally, there is an assessment of the
prevailing dominant approaches to economic theory with regard to its appropriate-
ness for decision-making and consequent human behavior. Chapter 4 goes on to
outline prevailing major paradigms in ethics after a further elaboration of ethical
deliberations in two ancient civilizations, namely, Greece and India. The currently
well-known paradigms taken up subsequently include utilitarianism, libertarian-
ism, contractarianism, and Marxism.
The discussion then turns to the complex but important pursuit of the ultimate
objective of human life, namely, “happiness” which seldom gets included in dis-
cussions on ethics. Clearly, it has been necessary to start with an explanation of
how happiness is related to ethics and thus in need of some justification for inclu-
sion here. This prompts us to turn to both theoretical and empirical aspects of
happiness. The chapter concludes with a kind of postscript dealing with why hap-
piness is deeply rooted in ethics as a driving force in human life.
The next chapter is substantively related to how ethical questions arise in the
context of different social institutions, the basic theme of the monograph as it is
taken up, in greater detail and in greater depth. Market as the dominant economic
and social entity in today’s world, which is discussed earlier, is taken up again
for a deeper evaluation. Subsequently, we turn to the role of the state in the mod-
ern setting and go on to examine the financial system which has in recent dec-
ades turned out to be the most important entity in today’s world. Though formally
Introduction xxi

a component of the market mechanism, the financial system with its distinctive
characteristics and modes of functioning is dealt with separately. The chapter con-
cludes with a broad postscript to recapitulate the relevant ethical issues.

Further On

The concluding two chapters turn to a rather difficult topic, namely, the role of spir-
ituality in its relation to human values in its different facets ultimately converging
on the view that it is a strong foundation for ethical human values. The decision to
get into this class of issues was primarily motivated by the feeling that ethics can-
not be separated from religion, which has dominated human life for not only the
two and a half centenaries of known history but also the earlier eras of inadequately
recorded or, more often, unrecorded history. It has, nevertheless, become difficult
for academics to relate the two for a variety of complex reasons, including amongst
others, violent conflicts based on religion in different parts of the world.
In an objective analysis of history one cannot deny these conflicts yet it is
pointed out that religion is not an exception. Most institutions have been misused
from time to time and this does not justify ignoring their importance. Furthermore,
we must not undermine the positive impact of spirituality on ethics due to its pro-
motion of human values in its universal manifestation in many parts of the world
and over a long period of time. This reminds one of an interesting and equally
insightful anecdote recalled by Marglin (2008). This is about the renowned British
economist Sir Dennis Robertson being asked, “What does economist economize?”
Prompt was his reply “That scarce resource, LOVE.” Commenting critically on
this response Marglin says,
Love is very special commodity, an irregular economical oddity. Bread, when you take
it, there is less on the shelf. Love, when you make it, it grows on itself. Robertson was
wrong. Love is not like bread.

We cannot but fully agree with the foregoing view. For a fuller view of the under-
lying issues we consider the widely but wrongly perceived and propagated conflict
between science and spirituality in today’s world. For, once religion culminates in
spirituality LOVE is the only sentiment that survives and binds the entire human-
ity together. This is brought out by three India-based missions that have spread all
across the globe and served as a source of hope for many in different ways.
The work completed, hopefully, as a monograph has the distinction of analyz-
ing from an ethical point of view topics like “Evolution of Economic Thought,”
“Happiness,” and “Spirituality and Human Values” in their relation to ethics. This
renders the monograph considerably more comprehensive than the existing similar
works we have. Finally, it is tempting to mention that the discussion pays good
attention to the important linkages across economic issues, philosophic delibera-
tions, and social systems, covering the distinctive contributions to the available lit-
erature with considerable focus and precision.
xxii Introduction

References

Joad CEM (1960) Philosophy, The teach yourself books series. The English Universities Press,
London
Marglin SA (2008) The dismal science (How thinking like an economist undermines commu-
nity). Harvard University Press, Cambridge, MA
Piketty T (2014) Capital in the Twenty First Century. Belknap Press of Harvard University Press,
Cambridge, MA
Chapter 1
A General Preview

Abstract Economic issues have always been basic to human life in all its endeavors.
This gets even more pronounced when one deliberates on ethical behavior. That
is why ethics and economics need to be seen as closely related and, indeed able to
enrich each other. This turns out to be more important when one is concerned with
broader social issues because individuals have over time been getting increasingly
dependent on each other and on the overall social system. This brings into focus how
theories relating to economics and more broadly social sciences need to be articu-
lated. It is in this context that Adam Smith is widely but wrongly accused of ini-
tiating economic theory on the foundation of pure self-interest. The other equally
important segment of the needed understanding relates to ethics and morality at indi-
vidual and social levels, which requires us to go back to philosophers like Kant. The
central question here is about what one ought to do in contrast to what one likes to
do. An important distinction in this context is about whether consequences do or do
not serve as the required criterion. It is widely agreed that, howsoever articulated,
the need for ethical considerations, has grown socially very important because social
wellbeing has not at all kept pace with growing prosperity. Social concerns need to
be focused on growing inequality, deprivation of large segments of the society with
regard to proper education, adequate healthcare and many other important items.

Keywords Ethics and morality · Pure self-interest · Economic inequality ·

Healthcare and education · Social system · Consequences

1.1 Economics and Society

Economic issues, in different ways and in different contexts have been basic to
human life since times immemorial. This is because among all human pursuits
bread has come first, as the basic means of subsistence and has therefore always
been of immense concern. Next comes the need for clothing and shelter for com-
fortable survival. Quite naturally, human thoughts could turn to other important
problems and preoccupations at both gross and subtle levels only when the basic

© Springer Science+Business Media Singapore 2016 1

V. Pandit, Ethics, Economics and Social Institutions,
DOI 10.1007/978-981-10-0899-3_1
2 1 A General Preview

needs for food, clothing and shelter were satisfied in that order. Consequently,
individual concerns got translated into social needs only later. This is best illus-
trated by the caveman in whose life there was practically no space for anything
other than his own physical needs. The emergence of nuclear family marked the
beginning of a long journey, leading eventually to the global set up in which we
find ourselves today. The basic needs have also grown considerably in their quan-
tity and diversity.
Yet, that part of knowledge academically referred to as Economics has not
been a very old discipline in the world of learning. The stylized terminology cur-
rently used not only in esoteric discussions but also in popular parlance is even
more recent. It is useful to note that economics is typically seen to be concerned
with three broad types of issues. These consist of (a) an understanding of what,
why and how material developments unfold, (b) an assessment of the way such
developments may be adjusted to suit a chosen objective and, finally, (c) how eco-
nomic policies adopted by individuals or agencies may be articulated to bring
about desired objectives. Each of these may relate to an individual or to the entire
society.1 This gives rise to an endless connection between values and facts as visu-
alized by Schumpeter (1954).
Economically and, indeed, socially and politically too no one today is insulated
against what may be happening considerably away across space and time. Though
we may not often be aware of this, all of us have become interdependent irrespec-
tive of where we may be and what we may be doing. Yet, there has also been a
contrary development at the individual level in recent years as a result of which
the awareness of this interdependence has grown rather vague and even less vis-
ible. Not surprising, this itself is due to the fact that nearly all benefits or losses we
have due to others are taken for granted. In economic terminology these are seen
broadly as outcomes of the prevailing economic system as well as due to the emer-
gence of several other social institutions. As a result, the need for ethical consider-
ation of whatever is taking place, desirable or otherwise, is seen to be unnecessary.
This is rather striking even at a casual level.
Economics is a social science as it deals primarily with human behavior in its
relation to society at both individual as well as collective levels. In some sense, the
former also distinguishes it from other prominent social sciences like sociology,
politics and history which are primarily focused on ex post evaluation of collective
behavior of communities, social groups and nations. One may even claim that eco-
nomic theory has primarily concerned itself with articulation of individual behav-
ior based on relevant motivation. This is then utilized, as appropriately as possible,
to propound patterns of aggregative social behavior, taking us, in a way, from
microeconomics to macroeconomics.2 The method which takes us from individual
to aggregative behavior may not always be rigorously formulated but there it is;
and, we live with it as long as it remains empirically meaningful.

1Dutt and Wilber (2013) Chap. 2.

2Itmay be noted that the term “macroeconomics” which is very widely used today came into
existence only during the interwar period.
1.1 Economics and Society 3

Until about the beginning of the twentieth century economics was a part,
presumably a major one, of the wider discipline of moral philosophy. In fact,
renowned forerunners like Adam Smith at the University of Glasgow and Stanley
Jevons at the University of Manchester were both designated as professors of
moral philosophy. The message was clear. Economics, the queen of social sciences
as it is considered to be today, was accepted to be closely related to ethical and
moral issues; clearly because it related to human behavior involving others within
the prevailing social and technological conditions. In fact, the history of economic
thought would sometimes consider those involved in the affairs of the church,
referred to as churchmen, to be the earliest economists. For, they were expected
to be considerably concerned with the economic wellbeing of the community they
served.

1.2 The Beginning

Adam Smith, who authored An Enquiry into the Nature and Causes of the
Wealth of Nations, as early as 1776, widely considered as father of modern eco-
nomics is often accused of having put the discipline of economics on a track of
self-interest, bereft of ethical considerations. This is not an acceptable assess-
ment because while Smith admired the market as a socially fruitful institution, his
emphasis was not entirely on self-interest. The implicit behavioral motivations did
not rule out ethical considerations as these arose in specific contexts. It needs to be
pointed out that Smith (1759) had nearly two decades earlier authored a substan-
tive treatise on morality, namely, The Theory of Moral Sentiments which viewed
market as a useful social institution through which people helped each other. In
any case, more than two centuries back when he wrote The Wealth of Nations,
the world was vastly simpler. The very meaning of self-interest and how it worked
in that simpler social setting has to be seen as having been considerably different
from what it has turned out to be today.
Over the past century, or so, economics as an academic discipline has tended
to be highly quantitative in its general orientation. In keeping with this, there has
been a considerable emphasis on measurability of the different entities under dis-
cussion. In turn, economic theory has increasingly used fairly advanced math-
ematical and statistical methodologies to derive and articulate its important
propositions. A frequently held view is that this has led to distancing theory from
reality of human behavior. However this view cannot be accepted because meth-
odology has always been only secondary to the substance of issues under discus-
sion. It is true, nevertheless, that in recent decades, economics as a social science
has moved away from its earlier links with ethics and morality. We need, also to
remember that unlike pure sciences economics does not have the benefit of con-
trolled experimentation to learn from. Nor is there the advantage of relatively pre-
cisely quantifiable phenomena one has to deal with. Fundamentally, however, the
problem is, much deeper as it relates to the view one takes of human motivation
4 1 A General Preview

and the consequent behavior. In any case, the view that all economic decisions
are exclusively based on pure self-interest cannot be accepted, as we shall see
subsequently.
It is appropriate at this stage to mention that since the advent of modern eco-
nomic theory and its applications to the real world economic problems, we have
come fairly close to the issues of human wellbeing in economic literature. This has
eventually led to the work on social welfare functions and found a major thrust in
the celebrated work of Arrow and subsequently, considerably enriched by many
other eminent economists. This, however, could not get sufficiently close to ethics
because it rested on the belief that human wellbeing is adequately captured by a
utility function; usually referred to as welfarism.
There have also been other grounds on which this route has been found to be
inadequate, though in many ways useful. One of these relates to the conceptualiza-
tion of rational behavior. It is not that rationality itself is questioned but certainly
the fact of its getting identified with pure selfinterest and/or consistency has come
under question. Equally at issue is the question of how rationality may be seen
in a setting of incomplete information, uncertainty, and similar other real situa-
tion problems. A wider view of actual patterns of human behavior has also led to
notions such as bounded rationality. These issues will be taken up in some detail in
later chapters.
Two points that need to be made here are as follows. First, the enormous growth
of sophisticated theories not only in economics but also in other social sciences
like politics and sociology, have deepened our understanding of mutual interde-
pendence across distinct disciplines at all levels. Second, growth of technology on
the one hand and emergence of political and economic institutions on the other,
have added to this interdependence by giving rise to a more complex and, so to
say, a more connected world. Finally, nothing illustrates this human interdepend-
ence better than the fact that disastrous environmental problems which we face
today have been collectively created by all of us over a long time in different ways.
The reason why these issues are being highlighted here is to make a case for
human values and for an ethical approach to various phenomena at social as well
as at individual levels. Since, we believe that economics provides the unavoida-
ble base for an understanding of different social phenomena a greater interaction
between the two disciplines cannot be exaggerated. Indeed, Sen (1987) argues
forcefully that damages caused to both disciplines by their separation are already
clear and enormous in many ways. Our view tries to go further by looking at
ethics in relation to the wider social setting.

1.3 Ethics and Social Sciences

What is ethics itself is a question that has been addressed by reputed thinkers since
long. Widely considered to be the most outstanding among such thinkers has been
Immanuel Kant (1724–1804) from Prussia. His theories have been fundamental
1.3 Ethics and Social Sciences 5

and considerably purist in several ways. Approving the views of Greek thinkers,
Kant asserts that philosophy has three components namely, logic, ethics and phys-
ics. While logic is the formal part of philosophy it is taken to be unrelated to the
empirical view of things. On the other hand ethics and physics relate to material
issues. While physics is concerned with the laws of nature, ethics relates to the
laws of freedom, or more understandably, to the laws of human behavior.3
It is often said, as an over-simplification, that whereas physics and other sci-
ences “describe”, ethics “prescribes”. More meaningfully, however, one may view
ethics to be concerned with ability to distinguish between what is “right” and what
is “wrong” duty or, what we ought to do. It may have a pure part as well as an
empirical part. To quote the pioneer himself we have;
…In contrast to formal logic, which is concerned with forms of argument abstracted from
their content, ethics (like physics) has a special subject matter (or “object”). It is about
right and wrong duty, or what we morally ought to do…4

Kant goes on to the basic principle as he says that,

…If any action is to be morally good it is not enough that it should conform to the moral
law – it must also be done for the sake of the law…5

The implication is, for instance, that to speak the truth is not ethical if it merely
suits one to do so, but is ethical only if one does that without exception. In other
words, ethical behavior is not merely compliance but also a deep conviction. It
needs to be emphasized that Kant has been known not to be guided by perceived
consequences. In other words, nothing is by itself right simply because it leads
to good results. The act itself has to be considered to be either right or wrong. It
may also be mentioned here that Kant frequently emphasizes the significance of
four concepts, namely, “good will”, “duty”, “law” and “freedom” which need to
be understood properly. Let us again quote him as follows.
…It is impossible to imagine anything at all in the world, or even beyond it, that can be
called good without qualification except a good will… A good will is not good because of
its effects or accomplishments and not because of its adequacy to achieve any proposed
end; it is good only by virtue of its willing – that is, it is good in itself…6

It is further asserted that duty presumes good will and good will is the formula
for universal law. In this context it may be mentioned that rationality identified
with freedom to act or an assured autonomy can be seen to conflict with ethics.
However, when moral or ethical issues are raised in the context of social, eco-
nomic and political problems the basic purist view often gets considerably diluted.
From the socio-economic point of view there have been alternative approaches
to ethics. These include utilitarianism of John Stuart Mill which runs close to
the idea of the contemporary social welfare analysis. Paretianism propounded by

3Kant (1785) Preface, p. 189.

4op. cit. p. 109.
5op. cit. p. 191.
6op. cit. p. 195–196 (Chap. 1).
6 1 A General Preview

Wilfred Pareto is indeed linked with efficiency related to the free market system.
The other three include Libertarianism, Contractarianism and Marxism. These dif-
fer from each other depending on whether the main focus is on how the notion of
good is conceptualized for a state of the society or on how an overall social setting
is rated. They may also differ in terms of their philosophic approach; whether it is
consequentialist, in which case, as noted above, what matters is only the final out-
come or historical in which case the act undertaken itself is good or bad irrespec-
tive of the outcome as enunciated by Kant. It may be pointed out that Marxism
differs from the other paradigms in so far as it is concerned with classes and not
with individuals and is primarily focused on exploitation.
At this stage it is gratifying to point out that deliberation of theoretical and
applied economic problems over the last few decades has paid a considerable
attention to ethical and moral issues after a long period of passive neglect. This
has taken place at two levels. In the context of theories involving alternative pat-
terns of behavior it is the ethical attitudes of the agent as an individual that are
relevant. But in dealing with such things as state policies for growth, distribution,
or resource mobilization the relevant norms have to be seen predominantly in their
macro perspective.
It may, indeed be noted that ethical issues at the latter level have been discussed
even in ancient times in different civilizations: Indian, Greek, Roman, Chinese and
Egyptian for example.7 In today’s world the important context for ethical norms
would primarily include policies for such things as employment, education and
health care. An excellent treatment of this class of topics has been taken up by
Little (2002) who examines ethics in its relation to economics and politics. The
three areas are not merely seen as overlapping but with an interface with each
other in the sense of their actively rubbing against each other. Politics is not
merely the notion of the state as an institution but also that of its several agencies
inside and outside the government, which formulate and implement different
social and economic programs.
Ethics relating to politics continues to be vital despite the fact that role of the
state in shaping economic and other related phenomena appears to have dimin-
ished in recent decades. The need for ethics with regard to the economic policy
debate involving different agencies continues to be vital, though this must be seen
as having changed in its substance over time. For, what one could earlier leave to
the state has now to be channeled through several alternative institutions notably
the market. Neither the market nor the other institutions can indeed be adequately
relied upon to come out with appropriately desirable outcomes. It appears to us
that with recent developments including globalization, in all its dimensions, the
need for an ethical orientation for all agents has grown to be more important than
ever before.

7For an insightful elaboration see Spengler (1980).

1.4 The Ethical Perspective 7

1.4 The Ethical Perspective

Sen (1987) has rightly argued that the other side of the problem also needs to be
taken up. As pointed out earlier, the distancing between ethics and economics has
impoverished not only economics but also ethics. This is because much of ethics is
substantively meaningful when it deals with economic issues directly or indirectly.
This is considerably so because, as stated earlier, a good part of human behavior
and decision making is, one way or the other, related to economic problems, day
in and day out. Social and political decision making on the other hand, in their
exclusive contexts, arise only occasionally and typically at aggregative levels. It
is for this reason that specialists in ethics and moral philosophy need to keep in
touch with economic issues with the underlying arguments and more closely with
a wide variety economic developments. This will enrich deliberations in ethics so
as to make these more relevant and remain in tune with the contemporary human
issues.
As mentioned earlier, it was sometime in the early part of the twentieth cen-
tury that economics got on to a track of formal and rigorous framework labeled as
the neoclassical economic theory, by virtue of an explicit utilization of mathemati-
cal methodology and an implicit quantitative orientation. To some extent it also
borrowed from scientific disciplines notably Physics. However, we must note that
these developments have led to the emergence of an impressive body of literature
on the formal discussion of issues relating to welfare, efficiency, economic growth,
policy analytics and even alternative views of economic choice. Consequently,
some of the aspects of economics as a social science which could not fit into this
framework got neglected over time leading to the adoption of what Sen (1987) has
termed as the “engineering approach”.
A widely held but somewhat exaggerated view is that economics has ceased to
have much concern for ethical judgments. This indeed is not true. As noted earlier,
specific mention may be made of the work undertaken by stalwarts like Arrow,
Sen, Kahneman, Rawls, Scitovsky, Simon, Boulding, Phelps and Buchanan who
have made substantive contributions to several aspects of morality and ethics in
economics. It is gratifying that many of them have been chosen for the Nobel
Prize in economics. This strongly corroborates the view that concern for these
issues has become quite significant.8 Notwithstanding the foregoing claims, one
way or the other, it may be fair to think that the dominant themes in the main-
stream economics as expounded over almost a century are bound to give us the
impression of this subject as a so called positive science because it is predomi-
nantly and, perhaps rightly seen to be concerned with theories and propositions
which build sets of consequences from a set of causes. Of course, each such prop-
osition is based on assumptions which are presumed to be empirically valid.
One sphere where one would seriously raise issues regarding the need for ethics
is the one in which the economist plays a role in designing and/or recommending

8See for example, Arrow (1963), Boulding (1966), Scitovsky (1978) and Rawls (1971).
8 1 A General Preview

economic policies. Those who have strong views in favor of economics as a posi-
tive science tend to argue that the job of an economist ends once he or she explains
to the policy maker as to which policies will lead to which consequences. It is for
the state agencies to decide on the alternative policy packages consistent with the
chosen objectives and targets. This has, however, been disputed on the ground that
state agencies may not fully be aware of the socioeconomic aspects of different
outcomes. It is, indeed, the job of the economist to analyze these aspects with the
relevant though implicit ethical considerations and thereby prioritize them in terms
of chosen objectives. The distinction between positive and normative economics is
not always adequately clear. One may see it as “is” versus “ought” or, as some
claim “facts” versus “values”. The emergence of welfare economics in the thirties
does not appear to have changed the situation because it was designed only to ini-
tiate a style of theorizing which is not focused on value judgments. The promoters
were probably of the view that values were, in any case, considerably
controversial.9
This brings us to yet another important question. Do we take human behavior
for granted, with or without its ethical content? In other words, when we bring
in ethics either in economics or in any other social science what are we trying
to do? The simplest agenda, so to say, is to make agents and the policy makers
aware of ethical implications of their decisions so that this gets incorporated into
the decision making process. It requires us to incorporate these as an unavoidable
part of the decision making process in some acceptable way. What one is argu-
ing here quite specifically is that those dealing with public affairs should not be
entirely motivated by the efficiency criteria, which may be articulated in different
situations.
There has been a considerable discussion on how the moral aspects of deci-
sion making can be integrated with relevant economic theory relating to human
behavior. Quite understandably, this has largely been concerned with modern wel-
fare economics. Again, as expected, much of it has gone back to utilitarianism
as a socioeconomic moral paradigm. Substantive early contributions go back to
Harsanyi (1976) and more recently to Pattanaik (2009). It is gratifying and pre-
sumably correct that some of the basic views of Kant as a moral philosopher and
those of Adam Smith the outstanding early economic theorist prominently figure
in this debate. We shall come back to this in a subsequent chapter.
No wonder, the traditional “textbook model” of economic behavior is being
widely questioned on several grounds, for example, by Bowles (1998) and
some others. It has also been pointed out that more thoughtful economists have
always known that markets need a background not only of formal laws but also
of accepted rules of behavior, if the “invisible hand” is to work fruitfully (Brittan
1995). This view is strongly supported by Sen (1995a) in the context of effi-
cient business, as he refutes the usual perception that moral codes are, in most
situations, economically expensive. For, the counter argument is that productive

9Blaug (1980), Chap. 5.

1.4 The Ethical Perspective 9

efficiency does considerably depend on such things as team spirit, commitment

to duty and coordinated collective effort which go much beyond “selfinterest”.
Similar views have been expressed by Arrow with respect to blood donation also.
It is important to note, before closing this section that several attempts have
recently been made to review economic theory so as to incorporate a wider view
of how economic agents are motivated in their decision making process as the
basis of their behavior. While these are taken up in some detail in a later chapter,
one of these deviating substantially from others may be mentioned right away. The
reputed economist, Professor Levitt, chosen for the John Bates Clark Medal by the
American Economic Association a decade back tells us that,
…economics is a science with excellent tools for gaining answers but a serious shortage of
interesting questions. For instance, if drug dealers make so much money, why do they still
live with their mothers? Which is more dangerous, a gun or a swimming pool?……….His
particular gift is the ability to ask such question….. His abiding interests – though he says
he has never trafficked in them himself – are cheating, corruption and, crime…10

A later assertion is that human behavior typically responds to incentives which

arise from three considerations, economic, social and moral. Which one among
these is overriding may depend on the context. From our view point the last of
these is to be taken most seriously.

1.5 Prosperity and Its Fallouts

The last century has been remarkable in terms of human achievements in dif-
ferent areas. Economic performance prompted and supported by technological
progress has beaten all earlier records. Political systems have progressed with
increased commitment to democracy. Social systems have grown considerably out
of their feudal structures in most countries. Achievements in sciences, progress in
information technology and computer science have given new directions to aca-
demic research, enriching it increasingly with interdisciplinary linkages. Similar,
though somewhat slower trends are visible in social sciences, arts and humanities.
Globalization over the recent decades has integrated economies and endowed them
with greater benefits including wider cultural contacts across nations. However, it
has also exposed all countries to increased risks.
Once again since material wellbeing is an essential component of human pur-
suits, we see that innovative procedures of all kinds have to wait acceptance till
these are economically found to be feasible. This is as true of government policy
formulation as of procedural designs of bureaucracy which have to implement
them. Similar new devices are being worked out for corporate decision making,
political processes and even technology choices. Inevitably, the role of the state

10The work by Levitt is remarkably enriched by his gifted co-author, Dubner. See Levitt and

Dubner (2005) p. xi.

10 1 A General Preview

and of the market processes have to be prominent in all spheres because of their
impact on economic wellbeing of humanity. If the prominent systems are required
to be like what one wishes for social welfare and happiness, we need to examine
economic and related institutions in an ethical perspective. This makes it necessary
to have another critical look at economics in its relation to ethics in a wider social
context.
While recent world developments mentioned above have been gratifying, the
other side of this world view is considerably disturbing. There are enormous prob-
lems in all spheres of human life. Incredible economic deprivations of many kinds
coexist with greater overall affluence. The distribution of income and wealth has
largely got tilted against the poor in almost all countries. Yet, governments in
many leading countries are no longer concerned about affordable access to such
vital things as education and health care which would certainly help everyone over
the long run. More broadly, the state policy is not sufficiently sensitive to how it
impacts the common citizen. Crime of all kinds is seen to be growing with the pas-
sage of each day. Corruption in the government agencies as well as in the corpo-
rate sector is being accepted as something one has to live with.11 Many social
institutions including the family have become dysfunctional.
It is hardly necessary to argue in detail that the ethical and moral dimensions
of human behavior have failed to keep pace with human achievements. This issue
may clearly be examined in many ways in keeping with the fact that ethical and
moral behavior has many contexts and correspondingly many facets. However, it
appears to us, as to many others, that economic aspects are basic in most cases.
This is because irrespective of whether one is concerned with social, political,
corporate or any other phenomena at either individual or at collective levels, most
problems turn out to be driven by economic considerations, one way or the other.
One may, for instance, highlight one specific instance in which the World Bank,
several years back was persuaded to pursue policies under which poor developing
countries would agree to promote high pollution generating industries like those
dealing with chemicals, so that these can be shifted out of the richer developed
countries.12 The argument was based on the consideration that the developing
countries are less polluted because of their low level of industrialization and the
fact that these countries were also making efforts to raise their industrial produc-
tion, employment and income levels. Assuming these assumptions to be valid, the
economic argument was made that the suggested relocation of polluting industries
will be advantageous to both sets of countries. Nevertheless, the consideration that
the health and quality of life in the poorer countries will get traded for presumed
economic benefits clearly goes against ethical norms.
Let us now turn to an important aspect of the problem under discussion. At the
micro level does one take it for granted that the patterns of behavior depend on
the attitudes of decision making agents? This is important. The ethical outcome

11Many of these issues are extensively discussed in Ben-Ner and Putterman (1998).
12For more on this see Hausman and McPherson (1996).
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 CHAP. XI.

LETTER LXVIII.
From Capt. Sinclair to Capt. Flint.
My Dear Sir, Jamaica.

Our worthy and zealous friend Mr. Paget having spared me the
painful detail of events, which, of late, have rendered this abode of
peace one of sorrow and consternation, I will employ my pen on
subjects of better and renewed hopes. In the first place, Lady
Maclairn will be soothed by hearing, that Philip is the father of a fine
healthy boy; and that the mother is doing well, and already the
nurse. She has been cautiously told of Mr. Flamall’s death; and thus
the suspense and alarm avoided, that would have been occasioned by
her seeing her husband’s dejection, which was but too apparent, in
spite of his endeavours. We must give him credit for more sensibility
on this melancholy occasion, than we feel ourselves. To say the truth,
the termination of a life passed without honour or satisfaction, is, in
my opinion, little entitled to the tear of affection; although the
means, which Flamall employed for the purpose, are appalling to
nature and to the Christian. It is a happy circumstance for my
brother, that he has uniformly conducted himself in respect to his
uncle, so as to have secured his own self acquittal. This, with the
prospect of happiness, before his eyes, will, in time, restore him. We
shall, however, wait with anxiety for news from Farefield. Had not
his wife’s critical situation checked his solicitude for his mother, I
believe we could not have prevented his undertaking the voyage to
England, for the purpose of supporting her, in the trial which nearly
overset himself.
 I beg you to be particular in your account of Lady Maclairn’s
health, as also Miss Flint’s.
Let Miss Cowley be assured, that her concerns will suffer nothing
from the loss of her agent. We have been fortunate in having with us
a Mr. Montrose; this gentleman is the early friend of Philip and
Margaret; and is brother to Mrs. Lindsey, my sister’s first nurse, and
constant companion at present.
Montrose makes a better consoler than myself. I therefore yield up
to him this office; as being his by profession; and no man can better
know, and perform his duty. I have not, however, been idle. The
attested papers you will receive with this, will inform you that all has
been done that could be done. Flamall’s late gloom and the evidence
of the servants, induced the coroner’s inquest to give in a verdict of
lunacy. We have discovered no letters nor papers of consequence, to
his private concerns; and one letter excepted, of a recent date, from
his banker, which mentions his having received the half year’s
interest of five thousand pounds Bank stock: this of course devolves
to his sister. I cannot conclude this letter, without telling you, that I
believe, from the order in which all Flamall’s accounts were, that he
has, for sometime, been meditating how to escape from a world, in
which he knew he was regarded with contempt. You may think me
too harsh; be it so. But believe me sincere and honest, and

Your’s to command,
Francis Sinclair.
 LETTER LXIX.
From Dr. Douglass to Mr. Hardcastle.
Farefield, Dec. 30.

I conjure you, my dear Sir, to rely on my assurances. Miss Cowley

is entirely out of danger. We have a decided intermission, and are
hourly gaining on the enemy. But I will not disguise my fears, for the
consequences which will probably result from you and Miss
Hardcastle’s visit here at this time. The truth is, that as terror and
exertions beyond Miss Cowley’s strength, produced the fever, it is my
opinion, that joy, and a new demand on her feelings, will produce a
return of it. Calmness and repose are necessary to give efficacy to the
medicines which have hitherto been useful, and I entreat of you, to
postpone your journey, till my patient is more able to welcome you.
To say what this young creature’s fortitude has been, is beyond my
abilities! I only know, that I shall in future blush, when I hear
strength of mind called a masculine endowment.
You will easily imagine, how little prepared she was, after the
attention and exertions she had shown to Lady Maclairn, to sustain
the sudden terror, which Miss Flint’s death produced. Every
precaution had been used to prevent the intelligence of Mr. Flamall’s
death, from reaching the dying woman. She was so weak, as to bear
with apathy her sister’s absence from the room; indeed, she noticed
little those who were about her, being for the most part in a lethargic
stupor, and gradually sinking. In the neighbourhood it was, however,
no secret that Mr. Flamall had died suddenly. Warner, Miss Flint’s
woman, had in the morning left her post to a chamber maid, in order
to get some repose. This girl’s mother had been frequently employed
in the sick room, and she, on calling to see her daughter, was
directed where to find her. Miss Flint was heavily dozing, and the
women, though with precaution, as they say, talked of poor Lady
Maclairn’s illness, and the melancholy news from Jamaica. The
visitor had heard the report, which has circulated here, and which a
London newspaper has communicated to the public. Namely, that,
“Mr. Flamall was assassinated by a negro, whom he had too severely
treated.” I suspect the precaution of whispering this tale was
forgotten, in the eagerness of curiosity and the love of the
marvellous. Suddenly, they were alarmed by a faint scream from the
sick woman, who, with convulsive groans and agitations, said, “dead!
murdered! lost! for ever lost! Flamall!” Screams followed this
apostrophe, and the terrified girl ran to Miss Cowley’s room. She was
unfortunately sleeping on the sopha, after having passed the greater
part of the night by Lady Maclairn´s bed side. She rose with
firmness, to perform the duty to which she was summoned; not
permitting Mrs. Allen to be informed of what was passing; because
she was with Lady Maclairn. I found her calm and collected; sitting
by the dying Miss Flint, whose senses were lost before she ceased to
breathe. Let me finish this melancholy detail, by saying, that I did
not quit Miss Cowley’s bed side for the space of six and thirty hours.
Heaven was merciful! and she will be restored to health. But we must
have no beloved friends to greet at present.
I quit you to obey the summons of my precious patient. She insists
upon signing this bulletin. She will soon be well; for she is growing
saucy, and this morning, at four o’clock, when I carried her the
prescribed potion, she told me “that in my night cap and gown, I was
the very image of Blue Beard; and still more savage than he; for, that
his scymitar was nothing in comparison with my glass of poison.”
Judge with what contentment of mind I now sign the name of your
sincere

Archibald Douglass.

P.S. Indeed, my dear Lucy, I am getting well. They tell me, the
wind is still against the Lisbon packet’s sailing. How fortunate I am!
There! the whole junto are rising! and the inkstand has vanished.
Your’s! your own R. Cowley is, indeed, only too weak to mutiny
against this authority.
 LETTER LXX.
From Miss Cowley to Miss Hardcastle.
It is with gratitude to Heaven, that I find my dear friends at
Heathcot, are relieved from their too tender anxieties and
apprehensions on my account, yet wherefore do I say “too tender,” I
recall the words, my Lucy, which my heart does not sanction, and I
will not assume a virtue I have not; I give you joy, that death has
spared to you your Rachel Cowley. I rejoice in your love; and I
participate in your present feelings. Your goodness to Horace has
contributed towards my restoration. I should have died, had you
mentioned your terrors to him.
I have written to him the state of affairs here. He will be satisfied,
that the recent events, in which I have been engaged, occasioned the
brevity of my letter.
Mrs. Heartley sends her love to you with the enclosed: she insists,
that you will be better pleased with it, than with my labours. They
have, amongst them, annihilated the self will of your

Rachel Cowley.
 LETTER LXXI.
From Mr. Serge to Mrs. Heartley.
(Enclosed in the preceding.)

Madam, Putney.

I make no doubt, but that you have heard Mr. Maclairn mention
his friend Jeremiah Serge; and that you are convinced, I mean to
deserve my title. I shall, therefore, enter into the business before us
at once. Herewith you will receive the deeds, which secure to your
daughter and her children the estate called the Wenland Farm, now
occupied by Malcolm Maclairn; the day she becomes that
gentleman’s wife, he is her tenant and his children’s steward.
Counsellor Steadman has managed this affair for me, to my entire
satisfaction, and I trust it will not be less so to my young friend.
I have, for the first time, during many long weeks, felt that the
Almighty has yet the means in his hands with which to heal my
wounds. I never, Mrs. Heartley, had a son; I have not, like Sir
Murdoch, had a son like his Malcolm, to follow me in my feeble
steps, with duty and affection; nor try to perpetuate my name, and
his own virtues to children unborn; but I had a child, who was, whilst
she lived, the joy and the prop of my life! But you know what I have
had to suffer! I am forgetting the object of this letter.
From the first hour I knew Mr. Malcolm Maclairn, I took a liking
to him; this goodwill was, in part, owing to the favourable character I
had of him from my excellent friend, Counsellor Steadman. Some
particulars I learned from this gentleman, led me to think that it was
in my power to serve this worthy young man; and with this intention,
and other thoughts in my mind, I paid my visit to Farefield Hall. I
was in part disappointed in my scheme; but I saw the young man was
all, and more, than I expected, and I gave him my heart, though I
could not give him my daughter’s hand. I thought I had explained
myself to his good father, in regard to my views in assisting the son;
but I perceived, that Sir Murdoch had a little of the infirmity, which
is common to men of high birth; so I consulted the counsellor, and
did what I could without offending the baronet’s high spirit.
Believing that you are a very judicious lady, I request from you the
favour, in case you should see the good baronet’s scruples, to say
what, in truth, you may affirm, that you perceive nothing in my
conduct, that ought either to offend, or surprise him.
Some men, with less wealth than I possess, keep fine houses, fine
madams, and fine horses; buy fine pictures, and plant fine gardens.
Now, Mrs. Heartley, I have no taste nor pleasure in these things;
seeing I was not brought up to like, or understand them; but this is
no reason why my money should be useless to me, and if I can
purchase, by my superfluity, the happiness of having such a friend as
Malcolm Maclairn, I should be a fool not to have done what I have
done. So, heartily wishing the young couple happy, and
recommending to your fair daughter to marry her tenant directly,

I remain, your sincere,

Jeremiah Serge.
 LETTER LXXII.
From Miss Cowley to Miss Hardcastle.
January 12.

My patience is recompensed. “I may write half an hour, seeing that

scribbling is the aliment some girls live upon.” This is my kind
doctor, Lucy; and if you had seen how grateful I was for this
indulgence, you would be of Mrs. Heartley’s opinion, who has
pronounced my fever good for something; for that it has saved Lady
Maclairn’s life; and, as you may perceive, has taught me to submit.
Blessed be God for the renewal of that life, which is so dear to my
friends! and which I may, if it be not my fault, still render a blessing
to them and myself.
We are once more in sight of the harbour of peace; not indeed of
that peace which “this world can neither give nor take away,” but of
that season of tranquillity, which, in mercy, is allotted to man, in
order, as it should seem, to give us time to refit our feeble bark, and
to rectify the chart, to which we have hitherto trusted; to recover by
repose, strength and vigour for the storms and perils we may yet
have to encounter in our passage to eternity; and to leave behind us
traces of that providential power which hath piloted us home.
You will like to have the particulars of Miss Flint’s will. It will
satisfy you, as it has done me, that a death-bed repentance is much
better than none. She specifies, that, in consideration of her brother
Oliver’s donation to Philip Flint, it appears to be an incumbent duty
on her part, to provide for those of her family, who have been too
long neglected, and to the last moment of her mortal life, will she
bless Philip Flint, for having seconded her in this act of justice, by his
advice and concurrence.
The Farefield estate, with the moveables, besides a considerable
sum in money, which will devolve on him as residuary legatee, are
left to Captain Flint for his life; at his decease they go to Philip Flint,
to whom she has only bequeathed five thousand pounds “as a token
of her love.” To her niece Mary the same sum, payable when she is of
age, and five more at her uncle’s decease. To Malcolm Maclairn two
thousand pounds, “as a mark of her esteem for him, and gratitude to
his mother.” By the way, poor Malcolm was nearly overpowered by
this mark, for he had not mourned as one who needed comfort; and I
suspect that his conscience was not quite prepared for the legacy.
To the poor of the parish she has left a liberal peace offering: to her
servants she has been generous and just: to Warner, her woman, she
leaves a thousand pounds.
Flamall’s execrable name does not appear in any paper that is left;
and yet the contents of the cabinet left to Lady Maclairn’s inspection,
clearly prove that Miss Flint had long been engaged by the thoughts
of death. Not a friend has been overlooked but Flamall, and it is
evident to me, that she ceased to regard him even in that point of
view, from the time he declared his marriage. I suspect she was
informed of his baseness in that business. All her little donations
were marked and ticketed by her own hand. To Sir Murdoch she
leaves a very fine seal; its antiquity as well as beauty, make it
valuable. To Mrs. Allen a gold snuff box, containing an hundred
pound bank note, “for mourning;” for Miss Cowley a diamond ring.
To each of Douglass’s boys a hundred guineas for books, and three
hundred pounds in notes, for their worthy father. A small box,
directed “to my niece, Mary Howard, as a token of my too late
repentance and unfeigned love.” The captain, who was present when
her ladyship performed this painful office, was so much affected by
the sight of this box, that he burst into tears, and, with extreme
agitation, tore off the address, and put it in his bosom. Philip Flint
had not been overlooked in this partition of kindness. Her picture in
miniature, taken at the time he was born, with a rich string of pearls
that had been her mother’s, were marked for him and his wife. We
have since examined Mary’s gift. Some fine lace, and a few family
jewels are the principal things. When you have cautiously informed
her, that, from her aunt’s hand, she has restored to her what she will
judge to be invaluable, namely, her father’s and mother’s pictures, so
long lost! so deeply regretted! But I am called to order; and you will
be contented with this four day’s labour of your poor shackled Rachel
Cowley; who is bound, though in silken fetters. You know that the
Heartleys are here. I gain nothing by that; for they are as bad as any
of my arguseyed nurses.
 P. S. My dear Miss Hardcastle, we have now only to fear that our
patient should be too soon well. She has no fever, but that which
arises from her exertions. She cannot vegetate, to use her own word;
and she thinks her body is strong, because her mind is never idle. It
is in vain that we oppose her. She will write; and then who can
wonder that she does not sleep! Use your influence, and give us time
to recruit her strength.

Yours,
A. Heartley.

Mrs. Allen is in good spirits. She has left me nothing to say in

regard to Doctor Douglass. But, I verily believe, his care saved the life
of our precious friend. She was, indeed, for some hours, so ill as to
leave little for hope. I leave Alice to express, to my dear Mary, all that
my full heart feels on her account.
 CHAP. XII.

LETTER LXXIII.
From Miss Cowley to Miss Hardcastle.
January 29.

Although in the calculation of months and weeks, I have contrived to

beguile the lagging hours which are still between me and my
promised bliss, I have not yet been able to find an expedient for the
day, without scribbling to you. It seems to be the aliment necessary
for my existence; and notwithstanding I could match an hungry
school boy, in my appetite for my pudding, I could sooner console
myself for the absence of my dinner, than of the use of my right
hand, as the agent of my fondest, sweetest employment. I have
written a volume to Horace; and he will know as much of the
occurrences at Farefield, as will content him. He will know that I am
in health and in hope. Say not a word of my having been so ill. The
old bard says, “men are deceivers ever.” A woman therefore, may for
once deceive, when in that deceit, she spares to a beloved object the
useless anxiety arising from past danger and past pains.
Yesterday our “busy-heads” went to Wenland place, in order to
give their opinion of certain alterations and improvements projected
by the new tenant Malcolm. I was ordered to stay at home by my
despotical doctor, and Lady Maclairn promised to take good care of
me.
They departed after breakfast, meaning to dine at Mr. Wilson’s,
and left us to a danger, as bad as cold rooms. I soon found it
impossible to evade the topic I so much dreaded for her; she at once
led to the subject by saying, that she had still secrets to communicate
to her only comforter, but that she feared my sensibility. I desired
her to proceed. “Some time before my sister’s death,” continued she,
“I received this sealed parcel from her hands. It is, as you see,
addressed to myself. I hesitated when she offered it to my
acceptance. She observed my reluctance.” “Make yourself perfectly
easy,” said Miss Flint, “it contains nothing but papers essentially
necessary for your future security. I cannot die, without telling you
that they are necessary. You do not know your brother, Harriet, so
well as I do; and I must tell you, what steps I have taken to secure
you from his future tyranical power. I shall die, however, without
bitterness of spirit. I once loved Flamall; I do not accuse him here;
nor will I accuse him hereafter; for my own envy, my own implacable
spirit, my own stubborn and hard heart prepared the way for the
influence of his inordinate purposes, and more deliberate mischiefs.
As a father, he has been equally base and cruel. Philip has informed
me of the measures he pursued, in order to gratify his ambition in
regard to his son’s marriage with Miss Cowley. Let it suffice, that
they were such as did not surprise me. I immediately wrote to Mr.
Flamall. You will find a copy of my letter amongst those papers. He
knows, that I have, by a full and ample confession of my crimes, so
implicated them with those which he has committed, as must ruin
him in this world, if discovered; and as inevitably destroy his hopes
of a better, if he do not repent. Should he ever dare to disturb the
comforts of my son, by a declaration of his real affinity to him;
should he ever dare farther to invade on your peace; he knows what
must be the consequence. Actions, which will be recognisable in a
court of justice, will determine his fate, and crush with ignominy his
worthy and unoffending child. Obdurate as he is in sin, nature is not
extinguished in his bosom. He loves his son, and, I am certain, would
sooner die himself, than see him disgraced in the world: time may
soften to him his present disappointment. I have urged to Philip
every possible measure, in order to effect a reconciliation between
him and his uncle Flamall. He may, if he be wise, live on good terms
with his son, and if he be not lost to conscience, he may find
employment, for his remaining term of grace.” “You weep, my dear
Harriet,” continued my poor Lucretia; I cannot. How many bitter
tears of yours will swell my account; for I was born for your sorrow!
and the ruin of the innocent! Can you give comfort to the broken and
contrite of heart? Can you say you forgive me? “As freely,” answered
I eagerly, “as I hope for mercy and pardon. I have also sinned, I have
also erred.” “Yes,” replied she, with quickness; “but the snare was
laid for you; and you only stumbled. I boldly invited the danger, and
made an acquaintance with guilt and perfidy; see to what purpose?
to languish with a mother’s yearnings, to behold and bless that child,
who would shrink from me as a monster, did he know me; to dread
the future, and to mourn, too late, the wretchedness annexed to a life
of guilt. Promise me,” added she, “to be still my Philip’s mother. Let
me die in the hope, that, you will never forego the title.” “Never,”
answered I, sensible only to her condition, “never, whilst it depends
on me to preserve it; he is mine in affection, and nothing can cancel
his rights to my love.” “May Heaven reward you,” exclaimed she, in
an agony. “May that child’s children bless and revere you——My poor
boy will not be surprised at the tenor of my last will,” continued she
thoughtfully. “He is rich; and I have explained my intentions, in
regard to my brother and Mary. It required very few arguments to
prove, that they had not been justly treated. But let me not think of
their wrongs! I wrote him word, that it was essentially necessary to
my peace to consider them. His last letter was a cordial to my sinking
soul; he urges me even to omit his name, if it interfered with my kind
purposes; that he possessed more than he wanted of the goods of
fortune. Judge, adds he, when I tell you that my brother has
frequently realized fourteen thousand pounds annually from his
estates: Judge whether, my dear, I may say maternal friend and
sister, needs bequeath me more than her blessing and her love.” “I
wear at my heart this precious letter,” added she, taking it from her
bosom; “but you must take it with the papers. His picture may yet
remain, I mean it should moulder into dust with me.”—She paused
—“I think,” pursued she, as though collecting herself, “that I may
hope to stand acquitted before my Maker for the last and only
compensation I can make to some, whom I have injured; perhaps
strict justice would exact more sacrifices. But I am a mother,
Harriet; the guilty mother, of an innocent child, now a worthy
member of society. Something is surely due to him; and thy merciful
Maker will not weigh this consideration in the balance of offended
justice. Such has been my state of mind for some time past, that had
it not been for Philip, I would have fearlessly met every stigma with
which this world could have branded me, for the hopes of meeting
with a reconciled God. It becomes not me to say, that I think, in this
instance of my conduct, I have acted right. But conscience has at
least been my guide; I have done for the best. Will not that prudence,
which will protect the honour of your family, and the happiness of
mine, sanction your secresy in regard to the birth of thy poor——!”
She could not go on. Again I soothed her to composure, I solemnly
repeated my promise, my dear Miss Cowley, that I would preserve
our secret from every danger of a disclosure. “This engagement now
distresses me,” continued Lady Maclairn, “I fear I have been wrong;
but what could I do, in a moment of such difficulty? I was unequal to
the trial; I could not see her die miserable.”—
I placed before Lady Maclairn the wonderful interference of
Providence, which had removed the guilty, to secure the innocent. I
urged to her the purity of her intentions, and the humanity which
pointed out to her the line of conduct she had pursued, and had
engaged to pursue. “Repose on your merciful Maker,” added I, “for
an acquittal, where you mean to do for the best; patiently wait the
end, when this darkness shall be removed; and you will, I trust, find,
that having lived to promote the happiness of others, to have
contributed to the comfort and security of your family has not been
to live in vain. Be assured, my dear friend, that your sufferings will
have their place with a Being “who knoweth what is in man; and with
a Father, who loveth his children, you may reasonably hope for
acceptance and favour.”” “You are my comforter,” replied she,
meekly raising her eyes to Heaven; “I have not outlived this first of
all human hopes. My weakness, not my will, has betrayed me from
the paths of rectitude. But it is difficult for me, to conceal my
feelings. I dare not even break the seal, which confines my
knowledge to what I already know of the wretched life and conduct of
my brother; I sometimes think I shall lose my senses, in reflecting on
his end, and the enormities of his conduct. Oh, it is dreadful, Miss
Cowley, to follow him to that tribunal before which he must appear!
——Leave me for a while,” added she, sobbing, “leave me to my God,
to my Almighty supporter”——I obeyed, too much affected to resist. I
took the papers with me. She has acted prudently in not reading
them. She begs they may be forwarded to you, and that the whole
transaction may remain in your hands. You are allowed to read them.
What will you say to the letter marked No. 4? The one she burned
was the answer to it; but I dare not pursue this horrid subject. My
eyes would betray me, and the doctor would be angry; for he has
made me promise not to harrass my spirits, and to check my friend’s
sorrows. I am going to her! and we will be wise. The return of the
vagrants renders this necessary.

Yours,
Rachel Cowley.

P. S. Sedley will give you this.

 LETTER LXXIV.
From Miss Cowley to Miss Hardcastle.
Again I am permitted to take a better cordial than bark. Mrs.
Heartley has fully explained to us the mystery relative to the portraits
in Miss Flint’s possession. It appears that Mrs. Howard,
apprehending that they would be more pernicious to her brother,
than consolatory, requested Mrs. Heartley to secrete them from his
search. She obeyed her dying friend. “But,” added Mrs. Heartley, “my
feelings at this juncture were nearly as little under the control of my
reason, as poor Percival’s. I wrote a letter to Miss Flint, which was
dictated by my sorrow, and the romantic hope of touching her heart
in favour of a child whom she had contributed to render an orphan
and a beggar. I enclosed these powerful pleaders,” continued Mrs.
Heartley, taking up the miniatures, and surveying them with
emotion, “and my language was not less forcible. Malcolm was
employed to place my packet in her hands. He effected his purpose;
for she found it on her dressing table. The next morning he was
questioned, and he frankly owned, that he had, at my request, placed
the parcel where she had found it. You have been faithful, Sir, in the
performance of your commission, said Miss Flint, trembling and pale
with fury; “be so in delivering my message to your Mrs. Heartley.
Tell her, that her insolent and officious interference has failed, and
that whilst Miss Flint’s family have no better advocates than a kept
mistress, she wants no apology for renouncing it.” Malcolm bluntly
told her, that she must employ some one to deliver such a message
who had never heard of Mrs. Heartley; for himself, he begged leave
to decline insulting his best friend. I heard no more from Miss Flint;
and I concluded that she had destroyed the portraits in a similar
manner as she had that of her mother. Frustrated in my project, I
was forced to conceal this occurrence; and the pictures were
supposed to be irrecoverably and unaccountably lost.”
Although my conscience reproached me frequently when hearing
the captain bewail this loss, it never did so as to the motive from
which I had acted: but it is to be feared, that my zeal in the cause of
the injured, disqualified me for making a convert to justice and
humanity. It is most probable that I irritated where I wished to heal;
and it is certain, that I was from that time the object of Miss Flint’s
implacable resentment. “Poor woman!” continued Mrs. Heartley,
with compassion, “she was then under the miserable yoke of those
passions, which although they govern, cannot blind us. Neither her
spirit of resentment, nor any entrenchment from her prosperous
fortune, could shield her from the voice within her bosom. It spoke
my language with tenfold energy, and she hated me, because she
knew I was in unison with her conscience. She shunned me, as she
would have shunned that, had she been able.” “Is it not
unaccountable,” added Mrs. Heartley, addressing me, “that any
rational being should fear to encounter the eyes of a fellow creature
under the circumstances of guilt, nay, even of folly, without
considering the power of conscience, from whose suggestions this
very dread arises. That Miss Flint was sensible of its power is certain.
Nor do I believe, with some, that it is possible for us to outlive its
authority. When I hear of such, who are said to be hardened by sin,
and become callous by guilt, I no more believe it, than I do those
tales I hear of the elixir for perpetuating our existence here for ever. I
am convinced that God will not be mocked by the creatures of his
power, and I have only to follow the bold and impious offender of his
laws to his hours of privacy, to learn, that he cannot evade that
Being’s presence, whose commands he insults.” I was more disposed
to shorten this conversation, than to dispute the truths it contained.
Lady Maclairn’s conscience wants no stimulants. Douglass entered,
and we became cheerful. You love the doctor, you say, prithee who
does not? but no one shall love him so well as Horace. You have
heard of his gallantry three or four nights he past in my antichamber!

Rachel Cowley.
 LETTER LXXV.
From Miss Cowley to Miss Hardcastle.
I am, my dear friend, so powerfully impressed by the perusal of
Miss Flint’s confession, as her legacy to Lady Maclairn may with
truth be called, that I cannot divert my mind from the subject. What
a scene of iniquity have I sent you! and how rejoiced am I, that I
prevailed on Lady Maclairn not to tear open those wounds afresh by
reading a detailed account of actions and artifices which her brother
employed to defraud Mr. Flint’s children of their rights. Surely, my
Lucy, the death of Flamall was “a consummation devoutly to be
wished.” To be removed from the indignation of the injured, to be
spared from the abhorrence of the virtuous; to be saved from the
constant dread of living an object amenable to the most vigorous
laws of his country; to be freed from the horrors of his dying bed! But
how momentary is this delusion of feeling! My reason and my faith
point out this disembodied spirit in its next state of existence. With
trembling awe I follow it to the tribunal of an all-wise, omnipotent,
and pure Judge. There do I contemplate this forlorn and sullied soul,
as rushing uncalled into the presence of that Being, whose merciful
purposes he has counteracted; and whose laws he has insulted.
Nature stands appalled, at the magnitude of offences like these; and
humanity must deplore the sinner thus cut off in the midst of his
sins.
I cannot however help being of opinion that, useful as the
contemplation of a Flamall’s life may be to beings who fearlessly
follow the impulse of every disorderly passion, we, my beloved Lucy,
shall not be unwise, to direct our thoughts from such shocking
depravity of creatures like ourselves. I wish so to do; and yet not lose
the lesson of wisdom as applicable to myself. In what, I would ask
you, consisted the difference between Miss Flint and Rachel Cowley
at two years of age. The general lineaments of our minds have a near
affinity. What has produced the moral differences which from that
period have discriminated us? Education, and the habits resulting
from our respective situations: in the one instance, the soil was left
uncultured; in the other, it was judiciously cultivated. Lucretia had
been overlooked by her mother in the early period of her life.
Indolence and indulgence were this mother’s faults. She found, in
cultivating the docile and mild Percival, a gratification of her own
taste, and an object of amusement, as well as for exclusive
tenderness. This mother wanted firmness, and the vigilance
necessary for her duty. When passion had taken its root, this
unhappy creature was consigned over to the care and tuition of a
schoolmistress. I mean not to be illiberal; for I believe many women
in that class of life are not only accomplished women, but
conscientiously disposed to be useful to their pupils; but I cannot
think that in a large school, either the temper, or peculiar moral
defects of a girl are likely to meet with that nice and accurate
observation which are necessary for their correction. I will however
admit that in this seminary Miss Flint acquired the outward habits of
decorum, and that knowledge, which, with experience, and a
different temper, might have conducted her, as it does multitudes of
our sex, in the common routine of private and domestic life. She then
returned to her parents, slenderly furnished by the gifts of nature,
with a spirit unsubdued, and a mind without any fixed principle of
action, beyond a confidence in herself. She was next a candidate for
favour in the world; and she proudly conceived that no one would
dare refuse it; but she found a rival, even in the cradle, and under the
parental roof. Is it to be expected, that from such a disposition, and
under such circumstances, envy and malice could be long a stranger
to her? The mother perceived their baneful influence; and she
opposed to their growth, nothing but remedies which relieved herself
from trouble and vexation. She flattered instead of reproving, and
gave to her daughter an authority which she knew she would abuse.
Uncontrouled and domineering over those about her; irritated by the
neglect of those whom she could not subjugate to her imperious will,
she became soured, disappointed, and vindictive; and she finished by
becoming the fit instrument in the hands of a Flamall, for the ruin of
the innocent, and the perpetration of injustice, cruelty, and deceit.
Thus have we seen the fatal torrent of unchecked passions flow!
but suppose this wretched victim of their fury had been in Mrs.
Hardcastle’s hands. Oh Lucy, we want no supposition! We have seen
a torrent, not less impetuous, directed by her wisdom, to the salutary
purposes for which Heaven gave it strength and abundance; and
instead of desolating all within its reach, it has been led to supply
delight, and satisfaction! How often has her patient firmness
subdued my angry passions? How often has she detected them
before I knew their power! With what skill did she temper and mix
the warm affections of my nature with the rougher elements which
composed me. How sweet, how endearing was her notice of every
little triumph I gained over myself; and with what discrimination did
she effect that bond of love, which made her children useful to each
other. Her Lucy’s gentleness was opposed to her Rachel’s courage;
and Horace’s self-command was the only point to which emulation
was recommended. Is it wonderful, that I have escaped the fate of a
Miss Flint? Is it wonderful that I should love virtue, and reverence a
faith thus exemplified? No, Lucy. But I have to fear, lest I should
disgrace Mrs. Hardcastle. We may, and I hope we shall, live to be
wives and mothers. Let us in that case, aim at being something better
than mere teeming animals; and like some in that class, who,
following their instinct, squeeze their offspring to death through
fondness. I am persuaded that we are weak and fallible creatures; but
I cannot for an instant admit, that an all-wise and merciful Being has
exacted any one duty, or enforced any one command, without having
bestowed upon us the faculties and capacity for fulfilling our
obligations. Every mother whose mind is sound, is called upon to
perform the duties of a mother; and without any better guide than
her own reason and attention, she will soon perceive that something
more is required, than merely watching over the preservation of her
children. I am, and I wish to remain, a stranger to that humility
which represses, as beyond me, all that is arduous and praise-
worthy. I believe, that by applying my heart to wisdom, I may
become wise; and the mother who diligently watches over the first
openings of moral existence in the beings entrusted to her, will soon
discover, that she has the necessary talents for governing them
safely. Attention and experience will enlighten her; and should she
never reach to the accomplishment of all she wishes, she will at least
secure to herself the favour of God, and her own peace of mind. It
pleases me, my Lucy, to look forward to that period, when, with the
name of Hardcastle, I may be treading in the same path of duty
which our mother pursued in her road to Heaven. Will you wish me
to suppress my hopes, that I may one day be able, with the pure joy
of an accepted spirit in her abode of bliss, to point to her those
inmates, whom her virtues trained for happiness? Yet why this tear?
I cannot erase the blot it has made. Wherefore is it that my spirit
faints? You must come and chide me; you will find me paler and