The Moral Foundation of Economic Behavior

By Otteson, James R. | Independent Review, Fall 2012 | Go to article overview

The Moral Foundation of Economic Behavior


Otteson, James R., Independent Review


The Moral Foundation of Economic Behavior

By David C. Rose

New York: Oxford University Press, 2011.

Pp. xiii, 269. $49.95 cloth.

Who is this David Rose, and where has he been? Such was my initial reaction after reading Rose's book The Moral Foundation of Economic Behavior. It is so provocative, so carefully constructed, and so potentially pathbreaking, especially for a first book, that it seems to have sprung fully formed like Athena from Zeus's head.

The book is an extended thought experiment launched by this question: "If a society's sole objective is to maximize general prosperity and it can choose its own moral beliefs, what kinds of moral beliefs would it choose?" (p. 4, emphasis in original). The author proposes a sophisticated, novel, and compelling answer to this question. It therefore deserves to be read by anyone with an interest in how to promote human prosperity.

It is not possible to sketch all of Rose's argument in this brief review, so let me instead focus on one central part of it, which is connected to an unappreciated but deep problem with respect to harm-based moral prohibitions. The problem is that in many cases an action that might cause obvious harm in one-on-one interactions and thus would be prohibited by an injunction to "do no harm" either does not cause harm or causes no perceptible harm in larger communities. Thus, if I defraud you when you and I have made an agreement, the harm I cause you is likely to be both real and apparent. When I defraud an insurance company, however--say, I have the body shop repair a ding on the passenger door even though the accident for which I am filing a report did not affect that part of the car's body--not only is there no perceptible harm to anyone, but there is a real sense in which there is no harm to anyone. The extra $500 charged to my insurance company is distributed across so many people (hundreds of thousands, perhaps even millions) or is part of such a large budget (perhaps billions or tens of billions of dollars), that it may as well have been zero. No one will notice because no one can notice. Thus, although a system of moral prohibitions based on avoidance of harm will restrain people in many, mostly small-scale cases, in many other instances it will be simply inapplicable--and these latter instances only increase as globalization increases. If, therefore, we wish to advocate a set of moral beliefs that will maximize general prosperity, it will have to be based on something other than injunctions to refrain from harming others. So although Mill's so-called harm principle is a good first approximation, it turns out not to be sufficient.

The first step in Rose's solution to this problem is to divide moral behavior into two groups: positive moral actions and negative moral actions. The former is doing something good for others; the latter is doing something bad to others. Rose demonstrates that contrary to what one might have expected, exhortations to take positive moral actions are far less important for maximizing general prosperity than are prohibitions against negative moral actions, which therefore gives the latter a moral "lexical primacy" over the former. He then demonstrates that the way to overcome the kinds of problems articulated earlier is by making the reason for refraining from committing negative moral actions principled rather than calculated: "[O]nly when moral restraint is regarded as a matter of duty will it produce unconditional trustworthiness where doing so matters most." He continues: "This means that it is not enough to strongly value re/raining from taking negative moral actions; we must possess a nonconscquentialist theory of moral propriety with respect to negative moral actions" (p. 141).

The maximization of prosperity that is the ultimate goal of this thought experiment is achieved by realizing gains from exchange--by exploiting the mechanisms of a free and decentralized market.

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