Academic journal article Review of Social Economy

The Moral Economy

Academic journal article Review of Social Economy

The Moral Economy

Article excerpt


In the eighteenth century, Scottish philosophers Adam Smith and David Hume saw the new European class of bourgeoisie as a "civil society" emerging to protect individuals against feudal rule. The world of commerce and business was an alternative to feudalism; a path toward freedom and progress where competition, mutual regard and a moral order was deemed a natural part of economic exchange. Both the coercive State and the Hobbesian theory of "raw nature" would be transcended as people began to live as interdependent individuals. On the other hand, the danger for this new society, as Adam Smith indicated, was that if this new society encouraged selfishness, it risked destroying its moral foundation. He said that people must try to put themselves "in the situation of the other," and to become aware of that other's distress and suffering. Thus, the new capitalist order of the eighteenth century strengthened individual freedom, creating a new space in which people could be separate from monarchal government, but a danger existed in that an interpersonal separation could occur, therefore undercutting the interdependency fostered by the new market society (Smith 1996: 9, 61).

"Civil society" was a term then applied to the private commercial sector, a realm of personal autonomy, in which people were free to develop their own proper accounting. The moral energy required in free enterprise was seen as superior to feudalism. Such autonomous accounting offered a new moral potential in that people were more responsible for their own lives and actions. The enterprise system held the prospect for a greater moral development compared with the feudal past. However, this emerging morality was not simply a product of the new economic order.

Unpacking this dynamic taking place at that time, allows us to better understand the distinct moral character of this civil society. Sociologist Alan Wolfe argues that the political economists of the eighteenth century were not justifying a capitalist society. "[T]heir aim was to provide the rationale for a capitalist economy within a society held together by a nonbourgeois (or more precisely, an early bourgeois) morality." Wolfe says that the difference between a realm of morality organized solely by economic principles and one organized by the principles of civil society becomes clear in Adam Smith's treatment of friendship. (Wolfe 1989: 29, 30)

Under feudalism, friendships were formed out of what Smith called necessitudo, that is, they were imposed by the necessity of the situation. In the more "modern" countries of Smith's time, people could join together around "a natural sympathy" that would enrich and deepen their moral obligations to one another. Smith's picture of a market was based on mechanisms of sympathy. He saw civil markets based on a sense of mutuality and friendship, and very different than the calculative and utilitarian economics for which Smith is often attributed today. In specific marketplaces, infused with friendship, economic exchange re-enforced mutual trust and respect. Principles of that civil society defined economic transactions in a moral light. In a specific market, people could barter and exchange until they made the best mutual agreement. Friends could rely on their knowledge of one another during an economic transaction.

Conversely, in the market system of today, people are forced generally to treat one another as potential threats to the fulfillment of their own self-interest. Unfair play, suspicion, and deceit can arise in excessive and impersonal competition. Specific markets could be reconciled with morality and civility in Smith's vision, Wolfe argues, but not the market system. Moreover, Adam Smith recognized that civility (trust, reconciliation, mutual regard) could be endangered by the rise of corporations (Wolfe 1989: 29-30).(1)

In the mid-nineteenth century, a corporate (capatilist) society began to evolve, and markets seemed to attach a monetary value to everything. …

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