{"id":3439,"date":"2009-11-05T11:42:12","date_gmt":"2009-11-05T16:42:12","guid":{"rendered":"https:\/\/www.orthodoxytoday.org\/blog\/?p=3439"},"modified":"2009-11-05T11:58:21","modified_gmt":"2009-11-05T16:58:21","slug":"the-market-school-of-virtue","status":"publish","type":"post","link":"https:\/\/www.orthodoxytoday.org\/blog\/2009\/11\/the-market-school-of-virtue\/","title":{"rendered":"The Market, School of Virtue"},"content":{"rendered":"

Acton Institute<\/a> | by Stephen Grabill | Nov. 4, 2009<\/p>\n

Does the market inspire people to greater practical virtue, or does it eviscerate what little virtue any of us have?<\/p>\n

Far from draining moral goodness out of us\u2014as many think\u2014the free market serves as a \u201cschool of the practical virtues.\u201d Rather than elevating greed and self-sufficiency, the market fosters interdependence and cooperation. Its rewards do not go to those who are the most isolated, self-absorbed, or cut off from society, but to those who sustain mutually prosperous relationships with others. <\/p>\n

Adam Smith made a striking observation more than two hundred years ago in his treatise, The Theory of Moral Sentiments. In a commercial society, he wrote, \u201cevery man becomes in some sense a merchant.\u201d If Smith is right, what does that imply for the development of character in society? Is the market economy more likely to produce a Bernie Madoff or a Dave Ramsey? Does the market tend to erode character traits such as honesty, loyalty, courage, and the responsible stewardship of resources?<\/p>\n

Culture-oriented critics of the market on both the left and the right have always attacked the acquisitiveness or self-serving aspects of the market that supposedly emanate from its core. Within the religious community especially, self-interest, which is not a sin, is often identified with selfishness, which is. No doubt, self-interest can be a turbulent, disruptive, and potentially disintegrative force. Depending on the level of one\u2019s pessimism, it is fair to ask whether the market economy necessarily releases self-interest from moral restraints, whether it contributes to a commodification of human relationships, whether it pits private interest over against social responsibilities, and whether it substitutes competition for cooperation. The bottom line for the culture critic is that he or she believes the market economy undermines its own moral foundation. The market economy is a school of vice rather than of practical virtue.<\/p>\n

But there is another side to this story, one that is optimistic about the moral effect of the market economy on culture. According to the optimistic view, the market economy is constantly in the process of replenishing its stock of moral virtues. Free-market thinkers believe that commercial society will encourage a \u201cmore polished\u201d (not perfect) human person\u2014one that is more honest, reliable, orderly, and disciplined, as well as more friendly and helpful.<\/p>\n

So, how does this work?<\/p>\n

One possibility the culture critics overlook is that the practical virtues may not only be socially beneficial, but they may be a source of private economic benefit as well. Those who cultivate the practical virtues may be more successful in the marketplace than their counterparts who do not. The normal operation of the market may reward\u2014and so, reinforce\u2014the practical virtues.<\/p>\n

Let\u2019s look briefly at four practical virtues to see how the market economy might accomplish this positive result.<\/p>\n

Trustworthiness.<\/strong> Why do people keep their promises? There are surely many reasons. According to Smith, one of the more prominent is self-interest. He writes: \u201cWhere people seldom deal with one another, we find that they are somewhat disposed to cheat, because they can gain more by a smart trick than they lose by the injury that it does to their reputation.\u201d Thus, the principal sanction that holds dishonesty in check is the loss of business that would follow the damage to the businessperson\u2019s reputation. A reputation for being trustworthy will create business opportunities, while even a hint of suspicion of untrustworthiness may preclude such opportunities.<\/p>\n

Self-Control. <\/strong>Trustworthiness assumes self-control. What, after all, is promise-keeping if not the ability or disposition to pass up an immediate advantage or gratification? That explains why, for Adam Smith, \u201cself-command is not only itself a great virtue, but from it all the other virtues seem to derive their principal lustre.\u201d Self-control is not a tradeoff between self-interest and the public interest; it is instead a tradeoff between short-term and long-term self-interest.<\/p>\n

Sympathy.<\/strong> In a market economy, the fortune of an economic agent depends upon successfully meeting the needs of other people. To the extent that sympathy\u2014or what might be called empathy\u2014helps an entrepreneur to anticipate those needs, it contributes to economic success. Smith knew that sympathy is indirectly linked to self-interest because it might be in our self-interest to work to understand the needs of others.<\/p>\n

Fairness.<\/strong> Like the other practical virtues, a reputation for fairness or equity is likely to create business opportunities. Since it is virtually impossible to regulate complex transactions by means of simple written contracts, in many cases parties prefer to restrict their business to those on whom they can rely not to take advantage of them if circumstances change. They are spared considerable transaction costs such as attorneys, auditors, and inspectors of all kinds.<\/p>\n

We are unaccustomed to think of the market economy as a school of practical virtue; most people reserve this title for institutions like the family, the church, or the school itself. In fact, many go well beyond this claim and insist that the market is the cause of a great deal of individual moral failing.<\/p>\n

In contrast, I am suggesting that many of the character traits we call practical virtues are rewarded by the market economy. As a result, market activity may actually inculcate values and moral habits that make us better citizens, colleagues, employers, and employees. Thus, far from undermining morality, markets reinforce character traits that strengthen the foundation of the market economy and gradually produce a moral culture that curbs the more egregious side effects of sin.<\/p>\n

. . . more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Acton Institute | by Stephen Grabill | Nov. 4, 2009 Does the market inspire people to greater practical virtue, or does it eviscerate what little virtue any of us have? Far from draining moral goodness out of us\u2014as many think\u2014the free market serves as a \u201cschool of the practical virtues.\u201d Rather than elevating greed and … Read more<\/a><\/p>\n","protected":false},"author":497,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"generate_page_header":"","footnotes":""},"categories":[88,87,15],"tags":[],"class_list":["post-3439","post","type-post","status-publish","format-standard","hentry","category-capitalism","category-economics","category-moral-issues"],"_links":{"self":[{"href":"https:\/\/www.orthodoxytoday.org\/blog\/wp-json\/wp\/v2\/posts\/3439","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.orthodoxytoday.org\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.orthodoxytoday.org\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.orthodoxytoday.org\/blog\/wp-json\/wp\/v2\/users\/497"}],"replies":[{"embeddable":true,"href":"https:\/\/www.orthodoxytoday.org\/blog\/wp-json\/wp\/v2\/comments?post=3439"}],"version-history":[{"count":0,"href":"https:\/\/www.orthodoxytoday.org\/blog\/wp-json\/wp\/v2\/posts\/3439\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.orthodoxytoday.org\/blog\/wp-json\/wp\/v2\/media?parent=3439"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.orthodoxytoday.org\/blog\/wp-json\/wp\/v2\/categories?post=3439"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.orthodoxytoday.org\/blog\/wp-json\/wp\/v2\/tags?post=3439"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}