egoism to paradigmatic status. “It is not fromthe benevolence of the butcher, the brewer,or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their human-ity but to their self-love,” wrote Smith (1994,p. 15) in one of the most cited passages of the
Wealth of Nations
. Today, the neoclassical ap-proachthatformalizedmoderneconomicthe-ory generally posits that individuals maximizetheir utility in all social relations. Principal-agent theory, for instance, is predicated onthe notion that actors will retain informa-tion and cheat organizational demands. Pub-lic choice theory hypothesizes that corrup-tion,ratherthanbenevolenceinsomedegree,is the natural condition of the government. And an infamous leaked World Bank memoabout the comparative advantage of develop-ing economies in attracting dirty industrieshas become a canonical example of the po-tential gap between moral questions of justiceand cold-blooded considerations of allocativeefﬁciency (
1992).If economists exclusively made narrow claimsabouttheallocationofresources,anar-ticle about markets and morals would featurethem only as a negative case. Yet the relation-ship of economic theory to morality is morecomplex than this. First, economic theory isbuilt on assumptions whose implicit moralcontent can be drawn out in detail (Hausman& McPherson 2006). Second, and more im-portantly for our purposes, there is a long tra-dition within economic discourse of explicit praiseforthemoralbeneﬁtsofmarketsociety. The precise beneﬁts vary. The
tradition is carried forward by arguments that the market nourishes personal virtues of hon-est behavior, civility, and cooperation. Oth-ers have seen markets as a necessary condi-tion for freedom in other aspects of life, most prominently in politics and in the culturalrealm. A ﬁnal tradition, represented today by thebulkofprescriptivemacroeconomics,em-phasizes economic growth as a condition forhuman progress, and it is best encapsulatedby Keynes’s comment that economists are the“trustees, not of civilization, but of the possi-bility of civilization.”
A Virtue Ethics of the Market
The reason morality seems a priori irrele- vant to economics is that, as Smith discov-ered, a system may be virtuous and harmo-niousasawholenomatterhowselﬁshitscon-stituent parts are. But here is the twist: Eachindividual’s hunger for proﬁt will be kept incheck by a similar drive among other individ-uals. Rather than producing ruthless greed,self-interest will tend to make people polite,serviceable, and honest. Thus, Smith (1978,p. 538; cited in Stigler 1981, pp. 172–73) also wrotethat“whenevercommerceisintroducedinto any country, probity and punctuality al- ways accompany it
. . .
. Of all the nations of Europe, the Dutch, the most commercial, arethe most faithful to their word.” Markets, then, not only produce eco-nomic harmony (the satisfaction of individ-uals’ desires and needs), they also createsocial harmony. McCloskey (2006) is today perhaps the most prominent defender of the view that markets encourage not only public but also personal virtue. Like other virtue ethicists, she seeks to identify both the virtues that comprise good moral characterand the individual habits and social institu-tions that cultivate such virtues in people.In broad outline, we may contrast this ap-proach with the Kantian and consequential-ist traditions, which offer competing theoriesfor judging the morality of actions (whetherthroughtheapplicationofdeontologicalprin-ciples of moral duty or a utilitarian calcu-lation of the good and bad consequencesof one’s choices). For McCloskey, marketsnurture a long list of “bourgeois virtues,”including integrity, honesty, trustworthiness,enterprise, respect, modesty, and respon-sibility. Commerce teaches ethics mainly through its communicative dimension, that is, by promoting conversation among equalsand exchange between strangers. We canbring out the distinctive nature of this
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A n n u . R e v . S o c i o l . 2 0 0 7 . 3 3 : 2 8 5 - 3 1 1 . D o w n l o a d e d f r o m w w w . a n n u a l r e v i e w s . o r g b y U n i v e r s i d a d d e C h i l e o n 0 8 / 2 9 / 1 2 . F o r p e r s o n a l u s e o n l y .