Are economists basically immoral?
This question is the title of a collection of essays written by the late economist and ordained minister Paul Heyne. While it is safe to conclude that economists, as humans, are no more flawed, sinful, and immoral than anyone else, some have asserted that one must be immoral to be successful in a market economy because such a system encourages greed and other vices.
This assertion ignores the fact that a market order is built on certain virtues, and, more surprisingly, produces certain virtues that most of us find agreeable and essential to a well-functioning society. Among these virtues are trust, service, and stewardship.
Trust and its fellow traveler, honesty, are the foundational virtues of a market order. From the simplest transaction to the most complicated Wall Street deal, trust is needed.
Economist Deirdre McCloskey has written a series of books on the virtues of the market economy. She argues,
Virtues underlie a market economy. And economic historians have long understood so…Yet what the social sciences have not recognized is that a market economy can actually produce virtues, and some of the best: prudence and courage and hope called “enterprise,” for example. We are stuck viewing virtues only as those of soldiers and saints. We need a re-orientation to suit a world in which we are all now bourgeois.
We engage in all sorts of transactions because we trust our trading partners even if we never meet them. Online purchasing and remote buying both require that we trust the provider of the goods or services. They must trust us as well. We pay with checks and swipe pieces of plastic to pay for all sorts of things. In some cases we just provide a number over the phone. All of this works because we trust each other.
Trust is foundational to relationships, including those that take place within the market economy. This is one reason God commands honesty. He prohibits theft, commands the use of fair weights and measures, and condemns those that are dishonest.
The market also produces a number of virtues as well, in the sense that it takes people as they are, turning them with their private vices into producers of public virtue. The market order provides powerful incentives for people to think of others, to serve others, to find out what others need, and try to meet that need in order to be successful.
We see this demonstrated in odd ways we often don’t think about. Consider the odd politeness observed in many transactions where both the buyer and seller say “thank you” and seldom does anyone say “you’re welcome.” This double “thank you” is because both parties served each other, and in turn were also served.
When we produce something people value, it is our act of service to them. What we buy is someone else’s act of service for us. Every market participant is motivated to find out what people want and what we can provide, given our skills and abilities.
The market economy is the only arrangement that strongly encourages the working out of the Golden Rule in a commercial setting. Every other arrangement encourages vices like greed and selfishness. If we want anything in a market economy we have to serve others. Any other arrangement encourages theft, cronyism, and lobbying, and these largely operate on connections and favoritism – not performance and superior service.
In addition to serving others, the market economy produces stewardship. Service is one side of the equation, and if we do it well, we earn revenues in the form of wages or sales. But to do this, we must serve efficiently by properly practicing stewardship, if we are to flourish. Stewardship is about using our resources, talents, and skills to their fullest ability. Profits or high wages may be one indicator of good stewardship. There is also what economists call psychological compensation as well. For a Christian, this is the satisfaction of knowing that you are using your talents and skills as God desires. The market order creates a wide variety of possibilities for service and the practice of stewardship.
The market economy more than provides an opportunity to demonstrate virtues; it requires they be demonstrated. To be successful in a market system, one must look for ways to serve others while practicing proper stewardship and being trustworthy. It is another miracle of the market that this system can cause people of all beliefs and attitudes to serve others and be good stewards.
Do markets promote virtue? Leave your comments here.