The Making of Homo Financius and Neoliberal Morality Oleg Komlik

In their paper Maman and Rosenhek made an insightful contribution in shedding light on how the state agencies, institutional actors and mechanisms concoct the neoliberal morality and conduct the moralization of the economic field within particular macro-institutional context. This important research direction should be amplified more in our field. One thing is certain: in (neoliberal) capitalism moral sentiments play a key role in the extraction of economic value.

Maman, Daniel and Zeev Rosenhek. 2019. “Responsibility, Planning and Risk Management: Moralizing Everyday Finance through Financial Education.” The British Journal of Sociology https://doi.org/10.1111/1468-4446.12698

Economic Sociology and Political Economy
The Making of Homo Financius and Neoliberal Morality
Oleg Komlik | founder and editor-in-chief of the ES/PE, Chairman of the Junior Sociologists Network at the International Sociological Association, a PhD Candidate in Economic Sociology in the Department of Sociology and Anthropology at Ben-Gurion University, and a Lecturer in the School of Behavioral Sciences at the College of Management Academic Studies

Peter Turchin — What Is the Role of Morality in a Capitalist Economy?

In September 1970 Milton Friedman published an articlein The New York Times Magazine, “The Social Responsibility of Business is to Increase its Profits.” Friedman, who has received the Nobel Prize in Economics in 1976, is probably the most influential economist of the second half of the twentieth century. His views have become the mainstream economic thinking, although few economists today care to state them as boldly as Friedman.

In my recent book UltrasocietyI use the examples of fictional Gordon Gekko (a character in the movie Wall Street) and all-too-real Jeff Skilling (the CEO of Enron) to explain why this view is wrong. Yet I have wondered on occasion, do economists really believe that “the world runs on individuals pursuing their self interests” (to use another Milton Friedman quote) and that businessmen should be motivated solely by self-interest unadulterated by any feelings of sympathy or morality?...

Evonomics
What Is the Role of Morality in a Capitalist Economy?

Peter Turchin | Professor in the Department of Ecology and Evolutionary Biology at the University of Connecticut, Research Associate in the School of Anthropology, University of Oxford, Vice-President of the Evolution Institute, and blogger at Cliodynamica — A Blog about the Evolution of Civilizations

See also

The CEO of Sears Fails His Company by Believing in Ayn Rand and the Invisible Hand

Jonathan Haidt | Thomas Cooley professor of ethical leadership at the NYU-Stern School of Business

Andrew Gelman — A quick rule of thumb is that when someone seems to be acting like a jerk, an economist will defend the behavior as being the essence of morality, but when someone seems to be doing something nice, an economist will raise the bar and argue that he’s not being nice at all.

A statistics professor looks at the economics profession.

This is an awkward topic to write about. I’m not saying I think economists are mean people; they just seem to have a default mode of thought which is a little perverse.

In the traditional view of Freudian psychiatrists, which no behavior can be taken at face value, and it takes a Freudian analyst to decode the true meaning. Similarly, in the world of pop economics, or neoclassical economics, any behavior that might seem good, or generous (for example, not maxing out your prices at a popular restaurant) is seen to be damaging of the public good—“unintended consequences” and all that—, while any behavior that might seem mean, or selfish, is actually for the greater good.

Let’s unpack this in five directions, from the perspective of the philosophy of science, the sociology of scientific professions, politics, the logic of rhetoric, and the logic of statistics....

Statistical Modeling, Causal Inference, and Social Science
A quick rule of thumb is that when someone seems to be acting like a jerk, an economist will defend the behavior as being the essence of morality, but when someone seems to be doing something nice, an economist will raise the bar and argue that he’s not being nice at all.
Andrew Gelman | Professor of Statistics and Political Science and Director of the Applied Statistics Center, Columbia University

Ricardo Hausman — The Moral Identity of Homo Economicus

Even Harvard waking up and smelling the coffee?

Project Syndicate
The Moral Identity of Homo Economicus
Ricardo Hausmann | Director of the Center for International Development at Harvard University and professor of economics at the Harvard Kennedy School, formerly minister of planning of Venezuela and former Chief Economist of the Inter-American Development Bank.

Geoffrey Hodgson — Why We Need Adam Smith and Charles Darwin to Fix the Global Economy

Adam Smith is said to be the founder of modern economics.[1] Yet, contrary to a widespread view, Smith regarded individuals as driven by moral motives as well as self-interest. This is most clear in his Theory of Moral Sentiments, but ideas of justice and morality also pervade his Wealth of Nations.[2]

It took economics a while to get rid of this argument. In two classic works published in 1871, William Stanley Jevons and Carl Menger placed individual self-interest at the foundation of economics. Three years later, Léon Walras built neoclassical general equilibrium analysis upon a similar assumption. For the next 100 years or more, self-interested, utility-maximizing, “economic man” was the centerpiece of mainstream economic theory.

But also in 1871, Darwin published his Descent of Man, with its evolutionary explanation of cooperative solidarity and morality, which took over one hundred years to be confirmed broadly by theoretical and empirical research. In that same year, Darwin had provided an evolutionary vindication of Smith’s view of human motivation. But it was ignored by most economists.

It is one of the great ironies of history that portraits of Smith and Darwin appear respectively on £10 and £20 banknotes in the UK. I do not think that these designs were intended to remind us that moral and evolutionary considerations are central to our understanding of a money-driven economy. But they are.…

When morality is ignored as not being substantive, then the result is that morality is equated with legality, so that if it is legal it is moral. Powerful elites then use their power and influence to shape the law so that what society regards as being immoral or unethical is made legal and there is not penalty involved in acting immorally or illegally. Elites are famously shameless, so that reputational stricture does not apply to them or restrain their behavior.

Evonomics

Why We Need Adam Smith and Charles Darwin to Fix the Global Economy
Geoffrey Hodgson | research professor at Hertfordshire Business School, University of Hertfordshire, England

Jag Bhalla — Stop Associating Adam Smith with Laissez-Faire Economics

Some keeper Smith quotes.

Evonomics
Stop Associating Adam Smith with Laissez-Faire Economics
Jag Bhalla

George Lakoff — Trump and the Invisible Hand of Moral ValuesTrump and the Invisible Hand of Moral Values

As the editors of Evonomics, we recognize the importance of moral and political behavior in economic systems. This essay explores voting behavior in the United States as a way to see how different ideological tribes make sense of economic issues.

Evonomics
Trump and the Invisible Hand of Moral ValuesTrump and the Invisible Hand of Moral Values
George Lakoff | Distinguished Professor of Cognitive Science and Linguistics at the University of California at Berkeley

Brian Davey — Putting moral philosophy back into economics

In conclusion – if we are going to try to reclaim economics as a branch of moral philosophy and if we are really going to describe the world as it is, rather than as we would like it to be, then we have to acknowledge what happened in the historical process that paralleled the “development” of the economy and the development of economics as a subject. Put bluntly the people who were fraudsters, thieves, gangsters, thugs and murderers have had a predominant influence across much of that history and have ruled in what are now “developed” societies for centuries. They have conquered most of the rest of the world, stole resources and terrorised it – and economists helped them by supplying a narrative that justified what was happening as a source of improvement and technological progress.

Actually it has been a history of violence, duress and crime and it still is. There is an estimated $ 21 trillion to $ 32 trillion in wealth hidden in financial secrecy jurisdictions which are places that facilitate fraud, tax evasion and aggressive tax avoidance. These places facilitate escape from financial regulations, embezzlement, insider dealing, bribery and money laundering. In Britain the continued prominence of the City of London and its network of tax havens was originally based on an Empire imposed by violence and then continued by providing a place to evade tax, regulations and the law. If economics is supposed to describe the world as it really is, how come that the analysis of these kind of facts are not what economic textbooks are about?

The first step to putting ethics back into economics is to take centuries of PR spin out of it and describe the world as it is, not the comfortable ideas that we would prefer to believe.

Feasta
Putting moral philosophy back into economics

Brian Davey

Oleg Komlik — Markets, policy and sociology of economic immorality

Economics as a positive science (Samuelson) versus a moral science (Keynes).

Economic Sociology and Political Economy

Markets, policy and sociology of economic immorality

Oleg Komlik | founder and editor-in-chief of the ES/PE, Chairman of the Junior Sociologists Network at the International Sociological Association, a PhD Candidate in Economic Sociology in the Department of Sociology and Anthropology at Ben-Gurion University, and a Lecturer in the School of Behavioral Sciences at the College of Management Academic Studies

Matias Vernengo — Material well being and morality

Is there a contradiction in the pope's condemnation of capitalism and the demonstrable fact that the developed world is capitalist and as poor countries adopt capitalistic economics they develop more quickly, so that everyone is better off. In other words is the pope wrong about trickle down, that is, a rising tide does lift all boats?

Only if TINA ("there is no alternative"), and that is an unproven assumption. It also disregards the effect of neoliberalism on the developing world though the attendant neo-imperialism and neocolonialism.

Naked Keynesianism
Material well being and morality
Matias Vernengo | Associate Professor of Economics, Bucknell University

See also

WCEG — The Equitablog
Plutocratic Self-Justification as a Dissipative Activity…
Brad DeLong

"The lady doth protest too much, methinks." — William Shakespeare, Hamlet

Michael Stephens — Is Economic Inequality Immoral?

Harry Frankfurt, whose formal concept of “bullshit” is indispensable to both professional and everyday life, recently published an article for Bloomberg View arguing that (1) economic (income and wealth) inequality is, in and of itself, morally insignificant and (2) “egalitarianism” (being concerned about economic inequality in and of itself) is harmful. The article is an excerpt from a book he has coming out at the end of the month….

Multiplier Effect
Is Economic Inequality Immoral?
Michael Stephens

Eric Schliesser — Smith, Design, Hume/Kant, and Transcendental Illusions

Adam Smith versus David Hume on foundations. Smith and Hume, who were contemporaries, were correspondents.

Digressions&Impressions
Smith, Design, Hume/Kant, and Transcendental Illusions
Eric Schliesser | Professor of Political Science, University of Amsterdam’s (UvA) Faculty of Social and Behavioural Sciences

Dirk Ehnts — Monti to Obama: “For Germans, economics is still part of moral philosophy”

The New Yorker had an article on Matteo Renzi – the Demolition Man, they called him – in late June. Towards the end, there is an enlightening passage about the intellectual problems of the German political elite:

Monti told me that, when he was Prime Minister and visited Barack Obama at the White House, Obama admitted to being at a loss to know “how to engage Merkel on matters of economic policy.” Obama asked his advice, and Monti replied, “For Germans, economics is still part of moral philosophy, so don’t even try to suggest that the way to help Europe grow is through public spending. In Germany, growth is the reward for virtuous economics, and the word for ‘guilt’ and ‘debt’ is the same.”

At least the Germans admit this. Other economists are moral philosophers, too, but they purport to be value-free scientists. Their assumptions, stated and hidden, belie that.

econoblog 101
Monti to Obama: “For Germans, economics is still part of moral philosophy”
Dirk Ehnts | Lecturer at Bard College Berlin

How To Use Economics & Not Be Used By Economists (2 & 3 of 6) — Lynn Fries interviews Ha-Joon Chang

Video and transcript

So talk now about the other type. Give us an example of a political assumption that's hidden.

CHANG: So in trying to make what they do a science, Neoclassical economists have adopted this ethical criteria called the Pareto principle. Now, Pareto principle, what it says is that you cannot call a social change an improvement if it hurts even one person. Now, this is an important attempt to defend individuals against the tyranny of the majority, because if you begin to say, well you know, you can override minorities, where do you stop? I mean, before you know it you're in the same bed as Hitler and Stalin. So you know, the Pareto principle is quite an important principle.

But it still is a political principle. Because it assumes that the existing distribution of income, wealth, and power is a legitimate one and it, more importantly, assumes that you cannot disturb that status quo. So go to the other extreme and imagine a case where one dictator or one small group of elite own, I don’t know, 50%, 70% of national income. In that kind of society you might say, well, if these people give up 5% of what they have, we can eradicate extreme poverty. Well, according to the Pareto principle you cannot do that kind of thing because it will make those that are a minority worse off.

So I mean, I'm not saying that this is an easy decision to make. I mean, taken to the extreme any ethical principle becomes a monster. That's my general view. So I'm not saying that the Pareto principle is necessarily right or wrong, but you have to realize that it has a particular political bias towards the status quo. And in that sense economics can never become a science because there's always this ethical and political judgment that you are making when you are doing this apparently, you know, technical, scientific analysis.

Real New Network
How To Use Economics & Not Be Used By Economists (2/6)

How to Use Economics & Not Be Used By Economists (3/6)

Lynn Fries interviews Ha-Joon Chang

Sister Simone Campbell — Why a “Faithful” Federal Budget Must Address Inequality

Then social justice faction is raising its voice on economic policy.

It is now almost a cliché when religious leaders state that the federal budget is a test of our nation’s moral values because it reflects our fiscal priorities. We have been saying that individually and collectively for decades.

How are we doing in this measure of morality?

A key moral issue of our times is extreme wealth inequality in the U.S., along with structures that block people from accessing what they need to rise out of poverty, such as a lack of affordable housing or access to healthcare. Like Pope Francis, we at NETWORK believe there is an urgent need to address these twin injustices. The federal budget is one of our country’s most important tools to make that happen.

However, most major budget proposals coming from Capitol Hill do little or nothing to address inequality – or, even worse, they exacerbate it. This is not a partisan view. In fact, powerful and wealthy voices motivated by self-interest have seen their influence greatly increase across party lines in recent years. Their voices drown out those of millions of people with less clout.

In 2011, appalled by years of skewed budget priorities, my organization joined a coalition of 37 faith groups representing Jewish, Muslim and Christian traditions. Our goal was to formulate a new budget plan rooted in our faiths’ teachings about compassion and justice....

Talk Poverty
Why a “Faithful” Federal Budget Must Address Inequality
Sister Simone Campbell | Executive Director of NETWORK, A National Catholic Social Justice Lobby, and author of A Nun on the Bus: How All of Us Can Create Hope, Change, and Community

Geoff Coventry — When good analogies go bad

We've all heard it.

"If I ran my business like the government I'd be bankrupt".

It sounds so intuitive; so moral. It would be irresponsible for a government to keep spending more than is earns. And for many governments, it really is true - all those cities, states, and the nations that do not issue their own currency (like Greece). Yep - they all have to get the money they spend because they are all users of a currency.
But what about nations that issue their own currency? After-all, that's most sovereign nations.

Let's go back to our analogy. We said if I ran my business like the government... stop right there. What business issues its own money? Businesses are currency users just like cities, but the United States is a currency issuer. In what way can a business ever run like a currency issuer? 

Yep, some analogies are just bad. So bad, in fact, that they can mislead whole nations into thinking something false is true, and something true is false. Or, to put it in moral terms, they lead us to believe that something very destructive to our economy is actually the only righteous solution, and that the very thing that could help society and people is deemed irresponsible and even evil.

That's what happens when good analogies go bad....

It's the people's money
When good analogies go bad
Geoff Coventry

Paul Krugman — Money Makes Crazy

You see, in the conservative worldview, markets aren’t just a useful way to organize the economy; they’re a moral structure: People get paid what they deserve, and what goods cost is what they are truly worth to society.… 

Modern money — consisting of pieces of paper or their digital equivalent that are issued by the Fed, not created by the heroic efforts of entrepreneurs — is an affront to that worldview. Mr. Ryan is on record declaring that his views on monetary policy come from a speech given by one of Ayn Rand’s fictional characters. And what the speaker declares is that money is “the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. ... Paper is a check drawn by legal looters.” 

Once you understand that this is how many conservatives really think, it all falls into place. Of course they predict disaster from monetary expansion, no matter the circumstances. Of course they are undaunted in their views no matter how wrong their predictions have been in the past. Of course they are quick to accuse the Fed of vile motives. From their point of view, monetary policy isn’t really a technical issue, a question of what works; it’s a matter of theology: Printing money is evil.

And the corollary is the gold and silver are virtue.

Paul Krugman gets this very right. It's a moral issue with some people since money and morality are joined at the hip if not synonymous. Which the basis for the double standard that allows those with wealth to follow different rules than those that don't have wealth, moral worth being equated with financial worth.

BTW, notice that Krugman uses the term "modern money."

Economist’s View
Paul Krugman: Money Makes Crazy
Mark Thoma | Professor of Economics, University of Oregon

Richard Murphy — The morality of taxation, or David Cameron got this one wrong

It may come as a shock to many, including David Cameron, to realise that tax is a massively multi-facetted tool. What is more, he might even be even more shocked to realise that the primary purpose of tax is not to pay for government spending, and yet his comments clearly reveal that he thinks this is the case. So before it can be decided whether or not tax is moral the uses of tax have to be explained. There are at least five of them. - See more at: http://www.taxresearch.org.uk/Blog/2014/11/01/the-morality-of-taxation-or-david-cameron-got-this-one-wrong/#sthash.RXSsUx3A.WpoINIqG.dpuf

David Cameron has said there is a moral duty to cut tax and in the process reveals, yet again his lack of understanding of tax, morality and the economy.

Tax is an economic tool. That is all. Let’s not overstate its importance, however excited I get about it. And, like all tools, the only question that can be asked of it is whether or not it is being used to do the right job, in the right way at the right time. The morality of tax comes from answering that question. Tax itself is as neutral as money is in itself: it’s how it is used that matters.

It may come as a shock to many, including David Cameron, to realise that tax is a massively multi-facetted tool. What is more, he might even be even more shocked to realise that the primary purpose of tax is not to pay for government spending, and yet his comments clearly reveal that he thinks this is the case. So before it can be decided whether or not tax is moral the uses of tax have to be explained.

Tax Research UK
The morality of taxation, or David Cameron got this one wrong
Richard Murphy
h/t Andy Blatchford

The morality of taxation, or David Cameron got this one wrong - See more at: http://www.taxresearch.org.uk/Blog/2014/11/01/the-morality-of-taxation-or-david-cameron-got-this-one-wrong/#sthash.RXSsUx3A.WpoINIqG.dpuf

The morality of taxation, or David Cameron got this one wrong - See more at: http://www.taxresearch.org.uk/Blog/2014/11/01/the-morality-of-taxation-or-david-cameron-got-this-one-wrong/#sthash.RXSsUx3A.WpoINIqG.dpuf

The morality of taxation, or David Cameron got this one wrong - See more at: http://www.taxresearch.org.uk/Blog/2014/11/01/the-morality-of-taxation-or-david-cameron-got-this-one-wrong/#sthash.RXSsUx3A.WpoINIqG.dpuf

The morality of taxation, or David Cameron got this one wrong - See more at: http://www.taxresearch.org.uk/Blog/2014/11/01/the-morality-of-taxation-or-david-cameron-got-this-one-wrong/#sthash.RXSsUx3A.WpoINIqG.dpufThe morality of taxation, or David Cameron got this one wrong - See more at: http://www.taxresearch.org.uk/Blog/2014/11/01/the-morality-of-taxation-or-david-cameron-got-this-one-wrong/#sthash.RXSsUx3A.WpoINIqG.dpuf

Jesse — Unrestrained Capitalism and The Will To Power and Possession

Excerpt of Pope Francis speaking on priorities and the moral compass. (Here is the speech in its entirety.)

Jesse's Café Américain

Unrestrained Capitalism and The Will To Power and Possession

Jesse

Lars P Syll — ‘Just desert’ and neoclassical income distribution theory

John Maynard Keynes, Amartya Sen, and Robert Solow contra Greg Mankiw.

Lars P Syll's Blog

‘Just desert’ and neoclassical income distribution theory
Lars P. Syll | Professor, Malmo University