[OPE] Moral markets - review by Herb Gintis

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Moral Markets: The Critical Role of Values in the Economy (Paperback)
by Michael C. Jensen (Foreword), Paul J. Zak (Editor) 

Reviewed by  Herbert Gintis (Northampton, MA USA) 

The role of values in the modern market economy is important for two reasons. First, economic development in poor countries involves importing some subset of institutions and cultural values from the currently advanced economies, while rejecting others in order to maintain traditional values and institutions, where possible. We have a pretty good idea as to which institutions are required for a healthy market economy, but only a few obvious organizing points when it comes to cultural values (e.g., corruption and nepotism are bad, primary, secondary, and higher education, and the rule of law are good). Second, business leaders in the United States and other advanced market economies have been involved in huge numbers of scandals in recent years, and there is a general sense that business culture tolerates a much higher level of unethical and illegal behavior that such other professions as medicine, science, education, and law. What can be done, if anything, to rectify this situation? 

This problem is interdisciplinary by its very nature, draw upon the knowledge of psychologists, economists, legal scholars, sociologists, and biologists within the behavioral sciences, as well as neuroscientists, philosophers, journalists, and even business executives themselves. Twenty years ago, the need for interdisciplinary research would have assured that nothing interesting from the scientific point of view could possibly be said. This is because until recently, interdisciplinary research meant compromising down to a common denominator that could be accepted by all representatives of diverse fields with largely contradictory organizing principles and incompatible views of social organization and dynamics. 

This distressing situation is no longer the case, as this excellent volume clearly indicates. This is not a highly technical volume for the professional experts, but rather a report for the intelligent layman on what experts from a variety of fields have come to accept in common as a framework for dealing with the question of the role of values in a market economy. While the chapters of this books were written independently by various authors, most of whom had limited or no exposure to one another prior to the formation in 2006 of a "free enterprise research group," funded by the Gruter Institute and the Templeton Foundation, there are no major disagreements among them. This is doubtless in part because researchers with incompatible ideas were not invited to join the group, but it is also because there is a solid basis in scientific research for the views put forth in the volume. 

I was a member of this research group, and even though the topic is a specialty of mine, I learned an immense amount from the other participants, and this books includes in detail many of the important things I have learned. My only proviso is that I hated from the first calling the entity we were studying the "free enterprise" economy, because the latter term usually implies some right-wing ideology about minimal state intervention, whereas in fact the modern market economy requires extensive intervention to work properly and produce fair and environmentally sound outcomes. However, we addressed no issues concerning government intervention, and we accepted the stupid term "free enterprise" only because the funding agencies required us to do so. 

The book's editor, Paul Zak, lays out the major issues very clearly in an introductory essay. First, morality is not simply "learned," like physics, chemistry, or language, but is deeply ingrained in our nature as members of the species Homo sapiens. Thus, the study of morality is not the contemplative quest for the Nature of the Good and the Just, but rather the study of how people acquire, transform, and deploy moral principles in living their lives. Second, the market economy accustoms people to cooperating and sharing with strangers of different race, creed, and ethnicity, thus promoting a sense of fairness and tolerance that is generally absent from pre-market societies, in which charity and considerateness are extended only to family and close friends. While the market economy is based on competition, there are ethical values that, under the proper conditions, govern competitive interactions, including honestly, trustworthiness, and social responsibility. "The very freedom to exchange in markets celebrates individual dignity and choice," says Zak, "but also allows for transgressions." (p. vxii). Zak's point is that social interactions in a market economy are determined by legally enforceable contract alone, but rather by mutual trust and honesty, without which the rule of law is but a hollow shell. "Leges sine moribus vanae," said Horace (Third Ode)---Laws without morality are useless. The commonly expressed idea that the capitalist economy is run purely on greedy self-interest is thus so stunningly false that it is difficult to believe intelligent individuals could ever have believed it. T 
The first part of this book deals with some philosophical issues that must be addressed before dealing with social issues. Philosophers William Casebeer and Robert Solomon defend what is know as "virtue ethics," associated with Aristotle among others, as opposed to intuitionist, deontological, and utilitarian ethical theories. I think this is an excellent choice, because the character virtues of honest, trustworthiness, fairness, tolerance, and loyalty are precisely what is needed to underpin social relations in a market society where agreements cannot be enforced by law along. Economist Robert Frank develops his idea that the moral emotions are precisely what motivates us to honor our commitments when naked material gain might induce us to behave otherwise. 

The second part of the book treats human morality as an extension of moral behavior in primate species that live in social groups where prosocial behavior is a prerequisite to a high average fitness of group members. The third part includes a summary by Robert Boyd and Peter Richerson of their highly original and quite cogent theory of human sociality, called gene-culture coevolution. They argue that humans are the first species to have a cumulative culture, and that this culture became the basis for genetic development of prosociality in our species. 

This explains why most humans derive pleasure and satisfaction from doing good to others and living up to the standards of virtuous living---behaving this way is in both our genes and our culture. Of course, this deep commitment to the social group is also the basis for the most vicious and horrific forms of human behavior, in which we maim and kill outsiders in real or imagined defense of one's own group of "insiders." 
The final two parts of the book include several chapters that apply the foregoing principles to law, social policy, and business education. 

I may be biased by being a member of the research group that produced this volume, and by having written a chapter in the book, but in complete honesty I believe this books to be absolutely seminal in jump-starting a serious scientific dialogue concerning the ethical basis of market societies. I think political democracy, civil liberties, and gender equality are intimately bound up with private property and market exchange, because powerful movements for political emancipation have been most salient in societies with modern market economies. Future research should explain why these political and economic institutions have so deep an elective affinity, and how the blessing of liberty and personal dignity can be extended the world over. 
http://www.amazon.com/gp/product/0691135231/ref=cm_rdp_product

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