Tuesday, August 09, 2011

God and economics

At last week's ACCAN/ACMA Summit on the Reconnecting the Customer report I got mentioned for the best tweet, being

DT says you can't embed an ethical basis into coroporations without an external motivator - hmmm sounds like God. #RTCsummit

The context was a discussion on whether regulation of telcos was required and one speaker advanced the proposition that regulation was necessary because firms won't self regulate - in his terms the
"ethical basis" has to be imposed by an external agent.

That's where God comes in - because under a religious world view we only act morally because of the intervention of God. And the only reason to behave morally is God's retribution.

Interestingly the fact that Adam Smith had a place in his economic world view for God as the creator of the natural order of markets. In fact, Veblen noted this as one of his critiques of neoclassical theory (the three part "The Preconceptions of Economic Science).

Put simply, the theory of self-interested rational utility maximisation is counter to the principles of an organised society and moral behaviour.

The good news is that dynamic, evolutionary models demonstrate that self-interested agents can and will create a system of trust - this was demonstrated by Axelrod in his Evolution of Cooperation.

The intent of my comment was that the proposition must be wrong - firms just like people can iteratively create moral behaviour and norms. The regulatory question then is not how to impose the norms but how to affect the dynamics so that the morals evolve.

Novae Meridianae Demetae Dexter delenda est

No comments: