David Ruccio — Moral economies

Yesterday in our class on A Tale of Two Depressions, we discussed Robert McElvaine’s notion of “moral economy” (which he introduces in chapter 9 of his book, The Great Depression: America, 1929-1941). The idea is that, during the first Great Depression, Americans were engaged in an intense debate between different moral economies (which McElvaine characterizes as the difference between the “cooperative individualism” of workers and the “acquisitive individualism” of businesspeople).

As I explained to students, all economic theories—for example, neoclassical, Keynesian, and Marxian theories—represent moral economies. And they arrive at very different conclusions concerning the justice or fairness of capitalism. Thus, for example, neoclassical economists argue that everyone gets what they deserve and, through the workings of the invisible hand, the result will be full employment.

In contrast, Keynesian economics is based on the proposition that, while everyone may get what they deserve (with the possible exception of coupon-clippers), it’s quite possible that will result in less-then-full-employment equilibrium, which then requires the visible hand of government intervention.

Marxian economists propose a third possibility: even if everyone gets what they deserve in markets, in production things are different (because of exploitation)—and the consequence, whether there’s an invisible or visible hand, is inequality and instability. In other words, the three economic theories represent radically different moral economies.

These three major theories are not exhaustive of possible explanations and other theories are possible, such as proposed by institutionalists who hold that social, political and economic outcomes result from cultural convention and institutional arrangements reflective of the imposition of a class and power structure, but differently from Marx.  Such theories, which are a combination of life science, social science and economics, are capable of explaining not only capitalism but other social, political and economic systems and their consequences historically as Marx sought to do. But they do it differently on the whole, even though they may make use of some of Marx's insights.

Marxian economics also uses this type of analysis but it is not the only approach that does, even though neoliberals generally tar anyone who does so with the Marxist label. By the way, Marxian economics different from the Marxist variety, in that Marxism is an ideological approach that generally claims faithfulness to Marx, while Marxians interpret insights of Marx contemporaneously.

Ruccio also brings up the point of flawed individuals versus flawed institutions. In my view this a a blurred distinction, since flaws individuals create flawed institutions and also maintain them at least implicitly by participating in them, rather than flawed institutions just happening with good people being caught up in them innocently.

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Moral economiesDavid F. Ruccio | Professor of Economics University of Notre Dame Notre Dame