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Business Ethics Journal Review
Volume 5, Issue 5, 2017
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Business Ethics Journal Review:
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Etye Steinberg
The Inapplicability of the Market-Failures Approach in a Non-Ideal World
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Joseph Heath (2014) argues that the contribution of competitive markets to Pareto-efficiency generates moral constraints that apply to business managers. Heath argues that ethical behavior on the part of management consists in avoiding profit-seeking strategies which, under conditions of perfect competition, would decrease Pareto-efficiency. I argue that because (1) such conditions do not obtain; and (2) the most efficient result – under imperfect conditions – is not achieved by satisfying the largest possible set of the remaining conditions; it is (3) impossible to draw any substantive ethical guidelines from Heath’s approach.
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