 Der Wohlstand der Nationen und die Moral der WirtschaftssubjekteMeyer Wilhelm ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, 2000, vol. 51, issue 1, 127-168 Abstract: Adam Smith based his explanation of individual behaviour in a social context on the principles of self-love and of sympathy. He used the principle of self-love in his “Wealth of Nations” to demonstrate that a system of natural liberty would provide people with the means to get more income and wealth than in any other system. He probably believed that a free market economy would be compatible with a decent style of behaviour of all or of most economic actors. This belief may be called the weak harmony thesis.Recent experiences with regard to the behaviour of economic actors and experiences in earlier times with market economies have, in the opinion of many people, falsified the harmony thesis. It isn’t usually the decent one who gets the most out of the economy but the reckless opportunistic one who seems to gain. This fact, if it is a fact at all, is no problem for modern economics. According to Keynes people refrain from unscrupulous behaviour in economic affairs only in a state of material affluence. Modern economic theory (Becker, Ehrlich) believes in utility maximizing behaviour and is able to explain even criminal acts. The economics of transaction costs (Williamson) argues that opportunistic behaviour and even cheating is not the rare exception but should be expected as the rule in economic dealings if one is willing to accept in earnest the fundamental principle of self-interest. This may be called the mistrust thesis of modern economics.Ancient philosophers like Aristotle despised most economic activities because they believed that all trading would necessarily be contaminated with cheating. In recent times modern moral philosophers express their concern about the thorough commercialization of modern life and point to a fundamental conflict between economics and ethics. This may be called the Aristotle Thesis. Yet, if economics is understood as a positive science than there is no such conflict. However, the problem with economics is that as a general theory of behaviour it is not generally true; it has to be modified in order to encompass most of the daily acts of decent behaviour.Modern economic theory explains behaviour in terms of utility maximizing individuals who use all means at their disposal - even unethically ones - if they can expect thereby to increase their utility. But such behaviour may contradict the principle of sympathy. Further, if the market economy must be understood as a set of institutions which is full of incentives to harm other members of the society than the critique of many enemies of a free market society will gain momentum.The article analyses whether there is a contradiction of some sort between the principles of self-love and of sympathy (the „Adam Smith problem“). In order to lay the ground for a new answer to the fundamental „Adam Smith problem“ the article develops and interprets in some detail some hypotheses of „The Theory of Moral Sentiments“. Four meanings of the alleged contradiction were distinguished: Incompatibility, crowding out of inclinations of decent behaviour, weakening of moral viewpoints and strengthening of opportunistic strategies, and fragmentation of individual moral codes of behaviour, i.e. cheating only in the market sphere and obeying the norms of decent behaviour in private relations. It is shown that lasting economic relations, which in volve, in contrast to pure exchanges, some investment in trust may produce many opportunities to engage in opportunistic behaviour and to exploit the economic rents of the other contracting parties. In these cases there will be no crowding out of all morality but there will be at least a strong incentive to damp down all regards to the wellbeing of an unlucky partner in a long-term relationship. If this partner has no ready alternative the reckless quitting of the relationship by other partners in order to increase their own profits may evoke feelings in the dismissed individual of being nothing but a poor tool. Those are the situations where there is some conflict between the principles of Smith.Traditional economics concentrates on markets and hierarchies and neglects personal networks. This leads to a crowding out of morals as an explanatory hypothesis of economics, which is not due to Smith but to the view that competition will mysteriously provide the optimal kind of personal networks in an economy.Free markets open the way for unscrupulous subjects as well as for decent ones. Those who favour the thesis that markets crowd out decency usually look at the state for some help to control and earmark the bad market guys. They seem to believe that only in their role as members of economic transactions do people have incentives to disobey the norms of decent behaviour and that the role as political actor mysteriously immunizes them from behaving contrary to the public good. They forget that the politician not only has incentives to further his own interests or those of his good friends but that he has usually the power too. Market institutions don’t need much of the scarce moral resources to provide strangers with the necessities for life. However, market institutions alone are unable to provide the moral ground of a society. In a competitive market society decency needs faithful public advocates besides public control backed by independent courts. One may call this the Wilhelm Röpke Thesis.The „Theory of Moral Sentiments“ is compatible with the more important ideas of the Wealth of Nations. Yet, as far as I can see, there is one missing element: The emotional basis of morality needs the lead of ethical ideas and probably some material welfare too in order to become effective for the sake of general humanity. Date: 2000 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bpj:ordojb:v:51:y:2000:i:1:p:127-168:n:8 Ordering information: This journal article can be ordered from Access Statistics for this article ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft is currently edited by Christian Müller More articles in ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft from De Gruyter |
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