The Ethical Economics
Study Center


There are several additional ethical principles, widely expressed within society that are worth discussing; among these are loyalty, courage and respect for authority. Loyalty is the avowed support or allegiance to another person or institution. It involves behavior that works to consistently improve the well-being of another person or institution sometimes at the expense of the welfare of the loyalist. As such, it is a cooperative, rather than purely self-serving behavior. A person might be loyal to a friend, a spouse, the family household, a community, a club, a firm or business, a government or country, and even to a set of principles or ideals. In an economic system, loyalty can work to either increase economic efficiency or to reduce it, depending on the situation in which it is applied. Hence, loyalty as a general principle is problematic.

For example, economic institutions such as households, firms, and governments require its members to cooperate in certain ways in order to achieve their objectives. Each needs to split up responsibilities and have its members assume particular roles. This often means accepting some level of hierarchy in decision-making. Institutions like these are not democratic because some individuals take on greater degrees of authority. Such institutions can allocate resources based on inherent advantages and increase productivity to serve all of its members. Thus, fostering loyalty, together with a respect for authority to the hierarchy and structure of the organization, can improve everyone’s well-being. In this case, loyalty and respect for authority works to improve outcomes for all even though it requires group members to give up some degree of freedom.

Loyalty to a country is known as patriotism. A simple economic argument for this is that throughout history a country has always been in danger of invasion, or raids, from external groups, or from other countries. These raids could result in the destruction or takeover of productive resources and the death or possible enslavement of the people. To prevent this, countries have needed to establish a military force that can defend and secure the country. A larger military force that has a hierarchical command and control structure is more effective in defense than if individuals were responsible only for the self-protection of their own persons and properties. However, participation in the military will often mean the sacrifice of individual lives for the good of the larger group. For this reason, fostering loyalty or patriotism to king and country, or to its democratically elected leaders, could induce a voluntary participation in the military forces necessary to protect that country. As such, loyalty can help to promote the provision of the public good known as national security.

Loyalty in the face of extreme danger is often required of individuals in military or defense forces. These forces will be more successful in defeating an attacking force if participants in the battle behave with courage and valor. That means there is a clear benefit to the group if individuals are inspired to act courageously. In contrast, cowardly behavior would often be the better response to protect individual self-interest. The coward who runs away from a battle and hides may survive to live another day. However, cowardly behavior does not preserve the interest of the group. The group will be more successful when individuals give up their freedom and conform to the hierarchical command structure. It will be more successful when individuals go courageously into battle. Thus, promotion of this trait within a population will also help promote the provision of the public good, national security.

Sometimes however, loyalty, courage, and respect for authority can be misdirected to support gross inefficiencies. For example, employee loyalty to a firm could result in activities designed to thwart competition and secure a monopoly position. Some employees may be motivated to lie, steal, and threaten others, to promote the well-being of their company. Similarly, patriotism to a country can be justly used to rally community members to defend against an attacker, or it can be rallied to support the offensive pursuits of an autocratic leader bent on controlling and enslaving neighbors. Courage and respect for hierarchy is as useful for a purely defensive organization as it is for an offensive group. For this reason, people who develop a strong moral conviction for courage and loyalty often face moral dilemmas when asked to support others who appear to be violating other ethical principles. For example, should you turn in a family member to the police when you know they have committed a crime, or does family loyalty dictate otherwise? Or, do you join the armed forces to fight for your country when its leader is pursuing an expansionist military campaign that you do not believe in?

On the other hand, loyalty to a set of honorable principles has sometimes been regarded as the most important moral value. One of the strengths of democratic societies is the commitment its citizens have to its constitutional principles and the rule of law. Adherence, or loyalty, to these principles is what can assure outcomes such as “Equal Justice under the Law.” However, loyalty suffers the same potential problem in this situation as well. For what if the set of principles one is loyal to is not so “honorable?” What if one’s blind loyalty is to the principles of a fascist dictator or a radical jihadist? Can we continue to accept that loyalty is the most important moral value?

Steven Suranovic, December 1, 2019

Ethical Principles
Promoting Economic Efficiency

  • Loyalty to Family, Community, and Country
    • Do not betray others
    • Do not act cowardly
    • No insubordination



  • Improves organizational efficiency of households, firms, police and military
  • Sustains provision of police and military protections (public goods)