Bitcoin's market power will grow as it is traded in futures markets.
You know a book is timely when the fund manager of Peter Thiel’s fortune is making statements like the following: “We may need a hybrid model in the future which is paradoxically more capitalistic than our capitalism today and perhaps even more socialistic than our communism of yesteryear.”
When the technologists are open to sponsoring socialism, capitalism has a problem, and it runs deep. Are Markets Moral? collects 10 academic essays that are oriented by the observation of its editors, Arthur M. Melzer and the late Steven J. Kautz: that “there is something very attractive about capitalism and something morally suspicious about it.” At the moment that America’s astonishing wealth is coming under severe scrutiny, this book suggests capitalists will struggle to offer a united front.
The contributions reveal fissures in what capitalists think their ideals are, and how they go about defending them. The book also makes clear that capitalism cannot rely on conservatives as solid allies. For example, the well-known economic historian, Deirdre McCloskey, expresses astonishment that anyone is still worried about capitalism after all the good it has done: bringing billions out of poverty. Yet some, like the late conservative Peter Augustine Lawler, are nonetheless anxious: he argues that capitalism is eroding the universities. Perhaps even more surprising, even the usually reliable Adam Smith has gone wobbly: this volume is a witness to the intense Smith scholarship over the last few decades which has left many unsure that he was a cheerleader for capitalism.
McCloskey uses India as a test case, noting that even into the 1990’s commentators insisted India’s culture could not absorb the lessons of capitalism. Of course, India’s economy transformed in the last three decades. Amidst the data points attesting to that fact is McCloskey’s important claim that over the last few decades little in the “deep culture” of India changed, but the way people talked about one another did alter significantly. Innovation and development happen, argues McCloskey, where there is a rhetoric honoring bourgeois values:
What changed in Europe, and then the world, was not the material conditions of society, or “commercialization,” or a new security of property, but the rhetoric of trade and production and improvement – that is, the way influential people talked about earning a living… and then almost everyone commenced talking this way . . . .
There is value in this thesis, but the overall effect of her argument is weakened by overreach, a tendency to extreme conflation. A case in point: “The bourgeois talk was challenged mainly by appeal to traditional values, aristocratic or religious, developing into theorized nationalism, racism, socialism, eugenics, and environmentalism.”
It is far more likely that not religion and aristocracy but mass political movements spawned by the rhetoric of equalitarianism—to which McCloskey herself is given—is responsible for the theorization of racism, socialism, eugenics, etc. If, and the claim needs examining, capitalism expresses the desire for acquisition without any larger guiding purpose, as Melzer contends in his opening comments, then there is no reason why eugenics, racism, and even variants of socialism, are excluded from capitalism.
Melzer and McCloskey—the book’s two great defenders of capitalism—are at one in their dislike of hierarchy or natural order, but, as Adam Smith argues at length, it is deference and obedience to values acknowledged as controlling and above our material passions that root conscience and give us a vantage point to be critical of our partiality and blind spots. This is what Smith calls the impartial spectator, which he describes as a demi-god. Gurcharan Das, philosopher and formerly managing director of Proctor & Gamble, is alert to this point, arguing that market exchanges surf a reservoir of trust and coherence, which, in the case of India, is secured by the ethos of dharma. He thus argues against McCloskey that something in the “deep culture” of India facilitated its commercial ignition. Das also invokes Smith, contending that Smith believed economic motivation is “highly complex and embedded in broader social habits and mores.” I think he is right about this.
Fonna Forman puts starkly a definite theme of the work: “Adam Smith might be the most widely misunderstood and abused figure in all of modern thought.” A prominent part of the book is a debate about Adam Smith’s philosophy, with Forman claiming that Smith believed public institutions important to shaping the economy. She also cheekily reminds the scorched earth capitalist types of this inconvenient fact:
It is a delicious irony of history, and an uncomfortable biographical fact for many, that Smith ended the last twelve years of his career, as his father had, working as a customs commissioner, a proud tax collector in the Scottish customs house, the very agent of British mercantilism.
Forman’s essay is full of interesting examples of public infrastructure projects transforming economies but it is a bit light on evidence that Smith believed that public investment projects are essential to flourishing commerce.
Nonetheless, Forman’s broader point about the importance of public goods to a healthy economy is a theme of two of the other essays. Channeling Pope Benedict’s analysis of distributive justice, Robert P. George argues, “business, in important ways, depends for its flourishing on things that business itself cannot produce. In many cases, these things are produced, if they are produced at all, by other social institutions. So business has a stake in the health, the flourishing of these institutions.” An example is the university. Among many fine observations, Lawler usefully identifies something he calls libertarian securitarianism: “So many libertarian Americans focus their time and treasure on perfecting personal security.” The consequence for the university is the same as for society as a whole: “They are often “libertarian” on all matters of personal morality, and even the free market, but puritanically moralistic and highly regulatory on the health-and-safety front.”
Higher education is basic to a complex economy but obsessing over material well-being means education degenerates into “techno-competency,” a reduction of the mind to technical labour in the mistaken belief that it is only from production that we can expect security. As evidence, Lawler points to cuts in the liberal arts at liberal arts colleges and filler offered through narrowly professional courses. Lawler observes that “more than ever, America is defined by a meritocracy based on productivity.”
The volume thus divides into the boosters of capitalism and those who think commerce cannot actually function without a broader social and moral coherence rooted in institutions that are prior to, and the fulcrum for, market exchanges. In Aristotelian terms, you cannot have commutative justice (contracts served) without distributive justice (social trust).
The problem for the boosters of capitalism is that its defenders seem unsure if its energy comes from desire or speech. McCloskey thinks it primarily a matter of rhetoric but Melzer thinks it more a matter of unrestrained appetite. In the opening essay, Melzer argues that capitalism is defined by two things: acquisitive lust and the moral principle of private property, i.e. “a view of justice that bases the rightful ownership of goods on production as distinguished from need.” This second element is well-taken, but the first needs work.
Melzer adds colour to the first axiom of capitalism, thusly:
It is the open-ended desire for material gain, the embrace of acquisitiveness more or less for its own sake, neither grounded in nor limited by some clear final end or purpose beyond it. Thus, in particular, it is not the love of wealth – of the use and enjoyment of money – but of endlessly increasing one’s wealth.
The problem here is that Melzer cites Hume and Smith in support. I know of no thinker of the Scottish Enlightenment who would support this proposition, and certainly Hume and Smith would be astonished by the claim. This only vaguely-hidden vitalism—“It is rather a dynamic view of life: a delight in endless forward movement for its own sake”—dates the axiom to Victorian biologism rather than the civilizational project of the eighteenth century.