CEI: There’s Less Corruption In Business Than You Think

business_ethics_highlights_2If the data show rent-seeking behavior by firms to be so effective, why don’t firms do more of it? This white paper from the Competitive Enterprise Institute is interesting because it encourages public choice economists to explore (as the authors call them) “morality-based explanations” and posits the existence of both a sense of decency and an implicit code of honor among business people. It could be used in a classroom environment to motivate a discussion about the behavioral assumptions we have about business people and how we interpret our experience of business. >>>

LINK: Virtuous Capitalism: Why there Is Less Corruption in Business than You Think (by Fred L. Smith, Jr. and Ryan Young for Competitive Enterprise Institute)

Having gone through traditional economic explanations for low rent-seeking, we conclude with morality-based explanations, and present several ideas for further research.

Most—but not all!—businessmen, we argue, have a sense of decency or an implicit code of honor that causes them to refrain from rent-seeking behavior, or at least do less of it than one would expect. This virtue defies quantification, which may be why many economists defy incorporating it into their analysis. We seek to encourage public choice economists and other social scientists to gain a fuller picture of humanity than they do now.

A second point we wish to make is that entrepreneurs deserve praise, not just criticism, where due. Economists are quick to condemn unethical behavior like rent-seeking, and rightly so. But they rarely take the time to praise virtue or to recognize the value of cultural restraints on unethical behavior. If abstention from rent-seeking were more widely praised, there might be more of it. To the extent economists focus on rent-seeking while paying little attention to virtuous behavior, they tell only half of the full human story.

Note: Link above is to the executive summary, but there is a link to the full document on that page.

What do you think?


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2 comments

  1. Why do corporations contribute to CEI? Is it to advance a universalist goal of economic liberty or to protect particular industries? Is “rent-seeking” is the only form of corruption?

    I assume CEI is done with tobacco.
    https://cei.org/msa

  2. Pingback: Ethics and Rent-Seeking | Inertia Wins!

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