Economic Social Contracts as a Tool for Trade

Why is Business Usually Seen as Immoral?

September 24, 2020 by Juan Icon

Summary: Business is based on money which really is just quantitative information. It is unable to carry qualitative information such as morality. Contracts, on the other hand, can carry such information and are a better foundation of the economy.

In some societies, especially Eastern ones, business is usually looked down upon. In ancient China and Japan, merchants were not respected and were even oppressed.

In fact, both China and Japan closed off their doors to foreign trade. In Europe after the fall of Rome, traders were seen as mean and lowly peddlers. One just needs to read the Merchant of Venice, as well as King Edward I’s oppression of bankers and traders, to find proof of this.

Chinese dominance

It was only during the mercantile period, from the 17th century onwards, did merchants gain respect gradually until they reached the pinnacle of respect seen today. In modern times, CEOs, such as Ken Lay and Bernie Ebbers, and even speculators, such as George Soros, were looked up to.

This rise in respectability is an effect of the Industrial Revolution. After people experienced the ease and usefulness of created by industrialization and man-made products, they naturally gave respect to the humans who made those things possible.

Why Is Immorality Attached To Business?

The immorality in business is best explained by using David Hume’s technique of chasing down effects to causes.

Business is defined as the activity of making, buying, or selling goods or providing services in exchange for money. The problem is that money is merely a number and does not have any quality attached to it. The only action that our minds can do on numbers is to connect them to each other: the idea of 1 connected to another 1 through another idea of addition which logically leads to the new idea of 2.

The qualities or ideas of goodness and ‘badness’ have no chance to enter this stream of ideas. A computer can output big numbers better than any human, but they are incapable of moral judgements unless qualities are added onto those numbers.

Morals excite passions and produce or prevent actions. Reason is utterly impotent in this.The rules of morality therefore, are not conclusions of our reason.

Simple Treatise of Human Nature

Because there is no quality attached to numbers, morality cannot be attached as well. Business is based on money-numbers which carry no information on morality. A revenue of $100,000 is easily better than a revenue of $100. But if that revenue were obtained by robbing a bank or selling drugs, then it would immediately be the opposite.

In reality, a businessman is good merely if he can produce big money-numbers and is bad if he has negative numbers or loss. So the goal of business is to raise those numbers in whatever way, with or without morality. Sellers rarely ask their customers if their money payments were sourced from ethical sources – they just care to get those payments.

Likewise, we do not usually applaud a businessman who keeps on losing money with every transaction. Nor would we know whether a rich businessman’s wealth came from gambling, child-labour, palm oil plantations which destroy forests, tax-avoidance which could have built schools and hospitals, etc. Humans look at wealth rankings positively without asking whether such wealth came from moral or immoral means.

This is why the concept of ethics has to be added onto business as “business ethics”. In contrast, there is no need to create “family ethics” or “family morals” as they are innate and do not have to be learned.

Proof of the lack of natural morality in business transactions is the prevalence of fraud:

Fraud Banking
Morality advancement does not correlate with Material advancement

Solution: Economic Social Contracts as a Tool of Trade

Morality might not enter money and numbers, but it surely enters agreements, as explained by Hume:

To distinguish the interested commerce* from the disinterested one, the interested commerce is called a promise. A promise is the sanction of the interested commerce of mankind. When a man promises anything, he expresses a resolution to perform it. By using the word ‘promise’, he subjects himself to the penalty of never being trusted again in case of failure.. Interest is the first obligation to the performance of promises. Afterwards, a sentiment of morals concurs with interest, and becomes a new obligation on mankind..This sentiment of morality in the performance of promises, arises from the same principles as the sentiment in the abstinence from the property of others..The obligation of promises is an invention for the interest of society. A Treatise of Human Nature Simplified

*We refer to modern commerce as ‘disinterested’ and social resource allocation as ‘interested’

Any agreement between two persons eventually requires both parties to keep their promise or agreement, which is a moral or proper behavior. By breaking the agreement, a person risks losing a customer or supplier and the revenue that goes with it. Agreement-based systems therefore naturally encourages morality, which in turn encourages or develops fellow-feeling between humans.

In contrast, a money-based system only requires physical money for a successful transaction, without either party bothering to know about the other. Socrates supports the use of voluntary contracts to solve the problems brought by financial and debt crises:

The men of business stoop as they walk. They pretend not to see those whom they have already ruined. They insert their sting—their money—into someone else who is not on his guard against them. They recover the parent sum many times over multiplied into a family of children sums. And so they make drone and pauper to abound in the State. The evil blazes up like a fire. They will not extinguish it.. by letting every one enter into voluntary contracts at his own risk. This will compel the citizens to look to their characters and reduce this scandalous money-making. The Republic by Plato Simplified

What About the Store of Value?

A moral or sustainable economic system must focus on the exchange agreements themselves, and not any extra layer or tool or symbol (such as money or cryptocurrencies) to facilitate the exchange.

This agreement-based system is the foundation of a free trade network that allows barter, money or points and is more robust than the money-only commercial system. The Commercial system is based money which makes it easy to compare the prices of commodities.

How can Supereconomic free trade match that, when it uses barter, money, and points?

The answer is in the Grain Index from the Effort Theory of Value.


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