Christianity, Greed, and Markets
February 27, 2012
Via Mark White comes this link to a New York Times blog post by Gary Gutting, a professor of philosophy at Notre Dame. Gutting attempts to get inside the Republican candidates' debates and argues that a clearer and more careful understanding comes from seeing things from "inside" their world view. Here are some excerpts:
We could greatly improve the quality of our political debates if we simply held to the philosophers' rule of understanding and charitably formulating our opponents' views.
In particular, there is a basic tension between the two main elements of the conservative view: Christian ethical values and the free enterprise system. Christian morality is a matter of love for others and self-sacrifice on their behalf. A market economy assumes that all agents (employers, workers, buyers, sellers) act in their own selfish interests. The problem is evident in the New Testament's unease with the wealthy and sympathy for the poor; see, for example, Matthew 13: 22, Mark 10: 23-25 and James 5: 1-3.
The standard response to this sort of moral objection is that the "invisible hand" of the market produces public goods out of private selfishness. If we all act for our own selfish ends, there will be far more material goods for us to share than there would be otherwise. But this is a utilitarian argument; that is, one that judges actions as moral because they increase our material happiness. Christian morality, however, denies that moral good and evil depend on what maximizes such happiness. Christian love and self-sacrifice, in particular, are moral goods in their own right, regardless of their consequences.
Mark White rightly flags the second paragraph. First, Gutting makes the sort of mistake that Ronald Coase identified: science has no goals, only people have goals. Hence, the market economy itself makes no assumptions about agents, only people do. And it was a standard practice of economists to make such assumptions about selfish agents in the 20th century. But today such a view is largely obsolete. Anyone who has been reading Amartya Sen and Vernon Smith, or even anything written about Adam Smith, is by now aware that the old standard view is simply wrong.
Most markets—the ones that you and I frequent every day—do not operate in reality on the "greed is good" philosophy. To do so would be to alienate most customers. Yes, the butcher and the brewer and the baker want their lucre, but they acquire it within the context of a moral understanding—in which their self-interest is held in check by self-control and by genuine and natural feelings of benevolence and justice. Adam Smith, when writing about the invisible hand, explicitly noted that the "character" of the trader in a market was critically important to the operation of the invisible hand. For elaboration, see here.
Deirdre McCloskey has beautifully told this story in The Bourgeois Virtues: Ethics for an Age of Commerce (2006). Paul Heyne also provided a lovely short analysis in "Moral Criticisms of Markets," The Senior Economist 10(4): April 1995 (link not available). My own academic novel, Saving Adam Smith, traces Adam Smith's views on the role of virtues in the marketplace and shows its relevance for business operations, even seemingly cut-throat computer chip businesses in Silicon Valley. There's plenty to read on this subject.
The bottom line is that markets and virtuousness (in the Christian sense) are entirely compatible. The most exciting development for the 21st century is the rise of social entrepreneurs, who use the vehicle of a company and the institution of a market to lift people out of poverty and solve a myriad of problems. The motives can be many, and do not necessarily have to do with maximizing material consumption (think of all the entrepreneurs working to solve global warming or those solving local problems of survival by giving poor people access to markets). Profit is a necessary part of greasing the machine and making it sustainable over time. In a healthy competitive situation, profit is held in check.
No one would deny that the system breaks down sometimes, and there are many who use markets who are decidedly non-Christian in their pursuit of greed. But as McCloskey and Heyne make so clear, the motive of greed is operative under communism and all other systems as well—it is part of human nature. Nothing is perfect. But a competitive market is often the most transparent and easy way to deal with sociopaths like Bernie Madoff. That is not so say regulations are not needed. Even Adam Smith desired regulations in the financial sector to protect small savers.
So, while trying to get inside the world view of Republican candidates, Gutting does a service by calling attention to the need for understanding. But it is possible today to entirely rewrite his last two paragraphs using a more realistic science and philosophy of economics. I think his thesis still stands, crafted in a different way: The caricature of a market held by some Christians is that agents operate on the basis of greed and this caricature is indeed in opposition to Christian values. Much work remains to be done to overcome the ideological legacy of Scrooge and the "greed is good" image of entrepreneurs. Thanks to Gutting for bringing this to our attention.
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