Kylteri 02/23

On Ethics and Economics: Discussions with Sixten Korkman

Why business students should care about the humanities.

We inhabit a world shaped by money and markets, governed by laws which uphold them. These structures and the basic incentives that underlie them may appear to be atemporal, unchanging and amoral, as if they are natural laws of motion. Just as with a fish’s inability to observe the waters it inhabits, we may often struggle to directly observe the systems and ideas that foundationally shape our lived environment. Unlike water, however, these constructs were created by humans, and though we may swim through them, we may also question them.

Francis Fukuyama famously proclaimed “the end of history” with the spread of liberal democracy, but the sands of time stop for no man, let alone for economies. As such, it may be worthwhile to ask: How did we end up here? How did economic and political ideas spread throughout the world and what can economists learn from this history? Sixten Korkman, a renowned economist, author, and former head of the Research Institute of the Finnish Economy, has been one of the more prominent voices advocating for a more humanist perspective within the field of economics. In his most recent work, Talous ja Humanismi, (2022) Korkman discusses the historic evolution of Western economic structures, their moral philosophical underpinnings, and the challenges they face.

Korkman identifies as both a humanist and an economist, emphasising the importance of humanist sciences, such as philosophy, art, and history, in providing a more holistic view of economics that respects the humanity of individuals. He finds that the Nordic model adheres to these principles best, a perspective often lost in neo-liberal economies that purely concern themselves with financial and not human rights. Korkman believes that the crucial contribution of economics is its ability to think within budget constraints. Nevertheless, he highlights that at the end of the day such a perspective may be incomplete: “The economy is a means to an end, it’s good for getting bread on the table, but there’s more to life” and adds that economics does not in itself have the answers for what more there is to life.

Korkman also notes a risk, as highlighted in Joseph Schumpeter’s History of Economic Analysis (1954), of economics to be seen only as a value-free “box of tools”. He remarks that economics cannot be so easily pried apart from the underlying pre-analytic vision embedded in our values and society, and that this foundational vision needs to be constantly assessed and evaluated. He encourages the evaluation of said values: “Good questions for all individuals are: why are we here, what makes life meaningful, what is a good society, what is required for a world of strong interdependence to function satisfactorily?”  

While technology and our economic lives undergo a rapid change, our cultural views tend to be much more stagnant. On discussing the challenges modern economies face, Korkman notes a dichotomy in the enlightenment of the 18th century, between its “hard” side—science, technology, and economics—and its “soft” side—ethics, politics, and religion—with the former experiencing much more progress compared to the latter. He adds: “Liberal democracy is a great development on the soft side, but ethically we are not much wiser than our ancestors. There is a big gap between our technological competence and economic progress as compared to our moral development.”

Korkman sympathises with those taking issue with Milton Friedman’s view that businesses’ only task is to maximise shareholder value, and thinks highly of a perspective in which profitability should only be a constraint. “The real objective of business should be to improve the world, be it in terms of climate policy, other environmental issues, social cohesion or the fight against poverty,” Korkman suggests. Though, he does note that such perspectives cannot always be financially viable, since those acting without due regard for morality will tend to outcompete those who do care about such matters.

"The real objective of business should be to improve the world."

It is worth noting that the relationship between culture and economics is strongly interdependent. Just as our cultural upbringing reflects the economies we design, the economic conditions we inhabit shape our cultural views. “Economic developments influence culture and attitudes: favourable economic developments enhance tolerance and compassion, economic distress does the contrary.” Such observations can be made in the 1930s, or in the aftermath of the financial crisis, and thus it may also be worth considering how our current economic conditions are reflecting on our cultural attitudes. Korkman continues: “The understanding of such phenomena is an additional reason why students of economics can benefit from humanist and other social sciences.”

These ideological discussions need not be quarantined to academic research. Korkman highlights the positive value of more accessible public debate on such matters. Furthermore, he also notes that while an individual’s or a group’s ideas and protests may not directly appear to achieve the changes they desire, they create a cultural environment amicable to the demands they represent, which often filters up towards key actors with more power. This may indeed be one of the stronger tools that young people have for achieving change on relevant topics, such as climate change. Korkman emphasises both the power and persistence of ideas in shaping our world, noting that: “Ideas still matter.” Any analysis or discussion, therefore, that does not engage with the ideas that foundationally shape us is woefully incomplete.

Our economic systems are not divine commandments. Humans created them to serve themselves, and therefore we as humans ought to be diligent in constantly questioning what we want these systems to look like and what values we want them to serve, lest we get blinded by our unique cultural position. We may also benefit from encouraging these critical foundational thoughts in our education, emphasising the teaching of philosophy and social sciences, even in the context of business and economics. For any of us to be good business leaders, to be good economists, advisors or consultants, we must put in the work of being good moral agents. Morality and ethics need not be the domain of philosophers, for each of us has the right and duty to strongly consider our moral standings—to question the water we swim through. Go read philosophy.