Chapter 5: The Efficiency Standard, Corruption and the Growth of Government
5. The efﬁciency standard, corruption and the growth of government 5.1 ‘EFFICIENCY-ENHANCING’ CORRUPTION The philosopher Roger Scruton has suggested that Jeremy Bentham’s ‘feliciﬁc calculus’ is the ‘archetype of the decision theory that is now accepted in economics’ (1994, p. 283). Whether or not this is correct, it is his criticism of consequentialism in its utilitarian form that is of immediate interest. In Scruton’s account, utilitarian morality is the morality of homo economicus – the classically rational, narrowly self-interested agent of neoclassical economic theory (Chapters 4 and 6). While he does not reject the Smithian ‘invisible hand’ and, pari passu, the notion that ‘Free transactions by proﬁt seeking individuals [unintendedly] beneﬁt society’, he sees these beneﬁts as contingent upon the intervention of ‘interdictions’: ‘Cheating, fraud, theft and the like must be forbidden’ (1994, p. 283). Broadly speaking, this thinking is consistent with the view that ‘A market economy is perhaps best viewed as a network of rights and obligations based on contracts and legal requirements’ (Furubotn and Richter 1997, p. 140). To some, the claim that ethical constraints are instrumentally, even intrinsically, valuable to the functioning of market economies may seem unexceptionable. Indeed, the transaction cost economics literature is predicated, inter alia, on the idea that ‘bounded rationality and opportunism are characteristic features of the real world’ (Furubotn and Richter 1997, p. 166). It follows that ethical constraints may both reduce transaction costs and facilitate exchange in increasingly impersonal markets (Arrow 1969, p. 62). All of this...
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