Smith versus Friedman: Markets and ethics
This paper addresses the issue of ethics in modern business thought from the perspective of the father of modern economics Adam Smith using both An Inquiry Into the Nature and Causes of the Wealth of Nations and The Theory of Moral Sentiments. The foundation of modern business thought is represented by the Chicago/Austrian School of economic thought using Milton Friedman as a basis and examples from the popular business press and from the work of accounting scholars to illustrate the pervasiveness of this idea of market solutions to ethical problems. It is contended that modern business theory, as represented by this neoclassical economic paradigm, has established a moral code for business based on efficiency of outcome and the assumed link of efficiency to self-interested behavior. The result is markets as the arbitrators of ethical outcomes, and profit maximization as the ultimate moral code.
School of Accountancy
Accounting, Accounting education, Adam Smith, Baumal, W.J., Business ethics, Economics, Ethics, Markets, Milton Friedman, Profit maximization
Keller, A. Craig. "Smith versus Friedman: Markets and ethics." Critical Perspectives on Accounting 18, no. 2 (2007): 159-188.
Critical Perspectives on Accounting