Free Markets and Moral Character

The Templeton Foundation recently commissioned a group of thinkers to answer the question, "Does the Free Market Erode Moral Character?" I've read a good number of the entries (some I guessed weren't worth the time), and the series as a whole is pretty interesting. I wanted to highlight Kay Hymowitz's response. She putatively argued that it does, and the front part of her article is a jeremiad against all things modern, from the car to the television. But towards the end, she gets much more interesting:

In the United States, indicators of juvenile moral health, like rates of violence and promiscuity and rebellious attitudes toward adults, have declined in recent decades even as the electronic media have increased the market's reach.
[. . . ]
The relative moral health of the young has also been bolstered, it must be said, by the free market's relentless encouragement of self-discipline. To succeed in today's knowledge economy, young people understand that they must excel at school. Despite the temptations of consumerism, middle-class and aspiring immigrant children grow up knowing that education is crucial to maintaining or improving their status and that competition in the knowledge economy is keen. In an earlier day, children imbued with the Protestant ethic did their chores and minded their p's and q's. Today's kids go to cram schools and carry 40-pound backpacks.

I think this is precisely correct. It's an old (and correct) libertarian argument that markets discourage discrimination through the use of impersonal exchange. What maybe has been understated, though, is the extent to which capitalism builds moral virtues. Deidre McCloskey has written extensively on this (I haven't read it yet myself though), and I think it's absolutely true. Building a society of hard-working, honest citizens is made easier by the market, not harder.

What I wish the article had focused more on is this assertion:

The free market's celebration of hedonism and autonomy has had its predicted effect on those with less cultural capital – the poor and, more recently, the working class. In low-income communities, the assault on norms of self-restraint and fidelity in personal relations has undermined both the extended and the nuclear family.

I'm not so sure I agree, but it's provocative at least. I think it's very arguable that changing "traditional" mores has been a net negative for the lower class. But what I would say is that the poor are also the most insulated from the market economy. If we want to improve the lot of the poor, we need them to be integrated into the market system that she herself argues has done so well to improve the moral character of the middle classes, to say nothing about what it has done for the material standard of living.

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Yup, free markets corrode moral character. But....

I haven’t read people’s answers on the Templeton Foundation website, so I may well be repeating something said by someone else. With that disclaimer....

The question “Does the free market corrode moral character?” requires a lot of unpacking. What does "moral character" mean? What does “free market” mean? Is “corrode” merely a disparaging term for “change”? And, most important, change relative to what? Relative to “traditional societies”? Communes? Lawless anarchy?

Here's one view: “Morals” arise within the context of social orders. When societies that lack free markets develop them, a new social order emerges that likely rewards different behavior than the old social order. As new behaviors come to be prized, conflicting behaviors may lose their prestige. People who had a vested interest in the old social order will conclude that the new social order “corrodes moral character!”

I find cross-cultural research into the Ultimatum Game to be illuminating. This game involves two players, a “Proposer” and a “Responder” who are each told all the rules, but not told the other party’s identity. The Proposer is given the control to divide a sum – say, $100 – between herself and the Responder. The Responder must then choose to accept or reject the deal. Acceptance will result in both players getting the amount allocated by the Proposer. Rejection means both parties get nothing.

In other words, the Proposer must anticipate how much inequality a stranger will accept before the stranger decides the chuck the whole thing. And the Responder gets to consider how unequal the shares are, and decide how much it’s worth to punish someone for offering unequal terms.

(Some libertarians have difficulty understanding this game. Why would anyone reject free money? And why should anyone care whether they were being offered 50% or 5%? Why are people so filled with envy and obsessed with equality? It's FREE MONEY, dammit! Whatever the answers to those questions, evidence demonstrates that throughout the world people DO care about equality, and are willing to sacrifice real money to demonstrate their concern. Like it or lump it, while libertarians may advocate a high-minded disregard for your neighbor’s wealth, much of the world regards this as simple blindness.)

Experiments show that people who live in market economies tend to demand, and to offer, greater equality than do people who live in “traditional” economies. People differ in how they interpret this outcome. But one interpretation concludes that people in traditional societies are accustomed to dealing primarily with their own kin. They’re quite reciprocal or even generous with their kin, but ruthless in their dealings with strangers. In contrast, people who live in market economies have larger circles of acquittances. They are accustomed to dealing with, and being dealt with by, strangers. Consequently they have an interest in building and maintaining a social norm promoting equitable treatment to strangers.

Does the free market corrode moral character? The Ultimatum Game suggests that the answer is YES. In many traditional societies, a person of "moral character" would hoard resources for the benefit of his kin. To sacrifice for a stranger means to have fewer resources to share with kin, a practice of questionable morality. But as traditional societies transition to market economies, kinship networks decline in importance, and other networks arise. Old social norms erode. New social norms take their place.

If we can see beyond the stigma of the terms chosen for the initial question, we may see that "corrosion" of "moral character" is neither good nor bad; it's just one more aspect of change.

The one obvious "fact" of Christian doctrine is our sin nature

Moral character is determined by what we think we can get away with. After the Constitutional Convention one of the big shots made a comment something to the effect that the Constitution was designed for religious people of high moral character. I would rather see a government designed by people of good intent who know they are greedy liars by nature.

"Free will" means the ability to overcome our nature and make decisions against our own personal interest for the good of the community.

constitution

After the Constitutional Convention one of the big shots made a comment something to the effect that the Constitution was designed for religious people of high moral character.

Then they fucked up the stuff even more than I thought.

You can say that again!

:-)

constitution

After the Constitutional Convention one of the big shots made a comment something to the effect that the Constitution was designed for religious people of high moral character.

Then they fucked up the stuff even more than I thought.

Framers not fools

After the Constitutional Convention one of the big shots made a comment something to the effect that the Constitution was designed for religious people of high moral character. I would rather see a government designed by people of good intent who know they are greedy liars by nature.

Then they fucked up the stuff even more than I thought.

I’m not acquainted with that quote. But I am acquainted James Madison’s argument supporting ratification of the Constitution in Federalist Papers #51:

But what is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions [such as the separation of powers, etc.]

Thus I’m not persuaded that the Framers were quite so naive as you suggest. And, for what it’s worth, Justice Oliver Wendel Holmes opined at length on the need to govern with a practical regard toward human nature.

I think it desirable at once to point out and dispel a confusion between morality and law.... You can see very plainly that a bad man has as much reason as a good one for wishing to avoid an encounter with the public force, and therefore you can see the practical importance of the distinction between morality and law. A man who cares nothing for an ethical rule which is believed and practised [sic] by his neighbors is likely nevertheless to care a good deal to avoid being made to pay money, and will want to keep out of jail if he can.
* * *
If you want to know the law and nothing else, you must look at it as a bad man, who cares only for the material consequences which such knowledge enables him to predict, not as a good one, who finds his reasons for conduct, whether inside the law or outside of it, in the vaguer sanctions of conscience.

Probably they were not

Probably they were not naive. They were evil, having replaced the Articles wiht ever bigger government.

The free market 'celebrates' alot of things

The free market's celebration of hedonism and autonomy has had its predicted effect on those with less cultural capital – the poor and, more recently, the working class. In low-income communities, the assault on norms of self-restraint and fidelity in personal relations has undermined both the extended and the nuclear family.

But some low income communities - those made up of the highly religiously observant and immigrants - don't truck much with tacky reality tv shows and the like. They are watching Veggie Tales and other family fare like those in suburban Salt Lake City.

The free market just tends to amplify whatever it is one is already predisposed to partake in, because you can find it so easily.

And isn't autonomy something celebrated by relatively higher income folks?

Samuel Johnson Had it Right

“Does a free market erode moral character?"

No.

There are few ways in which a man can be more innocently employed than in getting money.

Getting money is not all a man's business: to cultivate kindness is a valuable part of the business of life.
Samuel Johnson

As Johnson said,just the opposite is true. But also I don’t think that the market can’t operate unless the majority of participants are of good character. People who are not of good character are parasites in the sense that they inhibit the efficient functioning of the free market. A free market can’t be made up largely of parasites, though it can tolerate a load of them, depending how strong it is. A free market can’t operate unless the buyers and sellers can usually trust one another. It requires hard work and honesty to be a trustworthy participant in the market.

This is why you can’t cure poverty by simply by giving poor people money or bringing in the goods exchanged in markets. You need the culture of honesty, hard work and nonviolence that is present in working markets. But more than that, you need a society where people are used to the day to day activities of economic interchange.

You read of the problems of free markets in the newspaper, absent high character. For example a guy wants to purchase drugs. The seller gives out fake drugs or the buyer tries to leave without paying. Then you get a shooting because violence is the basis of the transaction, not a well working free market.

What if third parties get involved, such as distributing welfare? Permanent dependence on unearned benefits results in less, not more moral character. Even the character normally present is destroyed. For example a man who feels the duty to take care of his children, even if meagerly, will be pushed out of the picture by welfare authorities who take over his duties. This cooption of his responsibilities by government agents will then be passed down to his children, especially his male children. Before permanent welfare, families remained intact and immigrants worked their way out of poverty in a generation or so. This is the fallacy of redistribution. This explains why welfare doesn’t solve social dysfunction.

An interesting question is what would people of good character do if there were no free market? History has shown that people will always seek power and will always use that power either for self aggrandizement or to pursue some belief system, which seems to be a proxy for self aggrandizement. Therefore any critique of market based economics must not measure it against an unspecified ideal but must compare it to other time tested alternatives.

In times past the male population which was not employed in subsistence agriculture either became part of the predatory clerical bureaucracy of became soldiers fighting wars of aggression, conquest or defense. Preindustrial life was far from idyllic.

Modern alternatives to market economies , fascism, communism and socialism are no better in practice.

Dave