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

David F. Ruccio — “The quality of owning freezes you forever into ‘I'”

“The quality of owning freezes you forever into ‘I'” is a fundamental teaching of perennial wisdom.

A key teaching of perennial wisdom is that as long as one believes that one owns anything, one cannot own everything, even though in reality, you ARE everything; for reality is indivisibly one. Wisdom is realizing this. Love is the great unifier. Spiritual maturity is the expansion of love.

Right living is based on stewardship rather than ownership. Ownership is the booby prize. It is also a booby trap.

An economic system based on pursuit of self-interest, acquisitiveness, and ownership of property can never be the basis for a highly functional society. Internal contradictions arising from clashing interests and asymmetrical distribution doom it. The childish game of king of the mountain goes on until the level of collective consciousness rises enough to transcend it.

The applicable perennial wisdom is summarized in Meher Baba's discourse, The New Humanity, to which I have link several times in the past. This is the nub of it: We are captured within our own ignorance collectively, and we must rise above it individually in order to shift the collective mindset. A spiritual awakening is needed for this.

The root-cause of the chaos which precipitates itself in wars is that most persons are in the grip of egoism and selfish considerations, and they express their egoism and self-interest individually as well as collectively.

This is the life of illusory values in which men are caught. To face the Truth is to realise that life is one, in and through its manifold manifestations. To have this understanding is to forget the limiting self in the realisation of the unity of life. 

With the dawn of true understanding the problem of wars would immediately disappear. Wars have to be so clearly seen as both unnecessary and unreasonable that the immediate problem would not be how to stop wars but to wage them spiritually against the attitude of mind responsible for such a cruel and painful state of things. 

In the light of the Truth of the unity of all life, co-operative and harmonious action becomes natural and inevitable. Hence, the chief task before those who are deeply concerned with the rebuilding of humanity, is to do their utmost to dispel the spiritual ignorance which envelops humanity.

Achieving spiritual understanding of true value based on the unity of existence and life is the practical aspect of the perennial wisdom that lies at the heart of all religions and wisdom traditions and has been imparted by sages from of all times and climes from time immemorial.

To understand the problem of humanity as merely a problem of bread is to reduce humanity to the level of animality. But even when man sets himself to the limited task of securing purely material adjustment, he can only succeed in this attempt if he has spiritual understanding. Economic adjustment is impossible unless people realise that there can be no planned and co-operative action in economic matters until self-interest gives place to self-giving love. Otherwise, with the best of equipment and efficiency in the material spheres, humanity cannot avoid conflict and insufficiency.

But what about individualism and freedom?

National, economic, religious and cultural freedoms are the reflections of the duality of existence. They exist only in varying degrees, subject to constant discordant adjustment. Even when won through persistent effort, they cannot be permanently maintained because the external conditions upon which they have been constructed are themselves subject to deterioration.

Only spiritual freedom is absolute and unlimited; when it is won through persistent effort, it is won forever. For, although spiritual freedom can and does express itself in the duality of existence, it is grounded in and sustained by the realization of the inviolable unity of all life....

One important condition of spiritual freedom is freedom from all wanting. It is wanting itself which chains life by attaching it to the conditions in environment which would fulfil that want. If there is no wanting, there is no dependence, and therefore no limitation."
The individual never achieves true freedom until he is no longer pushed or pulled by any inner compulsion. When he has worked through all the desires and worn them so threadbare that he can be, or not be — have, or have not — then he is free."

When the individualized soul breaks through the encasing steel armour of wanting, it emancipates itself from its illusory bondage to bodies, mind and ego. This is the spiritual freedom which brings with it the final realization of the unity of all life and puts an end to all doubts and worries....

It is only in spiritual freedom that one can have enduring happiness and unhampered self-knowledge. It is only in spiritual freedom that one finds the supreme certainty of truth-realization. It is only in spiritual freedom that there is a final end to sorrow and limitation. It is only in spiritual freedom that one can live for all, and yet remain detached in the midst of all activity.

Any other lesser type of freedom is like a house built on sand, and any lesser attainment is fraught with fear of decay. There is no gift greater than that of spiritual freedom, and no task more important than helping others to find spiritual freedom."

Meher Baba in The Narrow Lane, edited by William Le Page, pp. 133-134

Occasional Links & Commentary

“The quality of owning freezes you forever into ‘I'”
David F. Ruccio | Professor of Economics University of Notre Dame Notre Dame

Bryan Caplan — The Evidence of Altruism

The logic of collective action versus the free rider problem. Take that, economic liberalism.

Each of these stories appeals to self-interest, but economists almost uniformly reject them as absurd. Why? Because they ignore another beloved economic insight: the logic of collective action. When actors have a small effect on big social outcomes, and their only incentive to act is the big outcome itself, selfishness urges them to stand down, twiddle their thumbs, free ride, and yawn "Let someone else do it."

Econolog
The Evidence of Altruism
Bryan Caplan | Professor of Economics at George Mason University, research fellow at the Mercatus Center, adjunct scholar at the Cato Institute.

Bryan Caplan is a Libertarian (anarcho-capitalist). But see his Why I Am Not an Austrian Economist.

Apparently, some Libertarians (right libertarians) get it about the logic of collective action and the free rider problem that arises from economic liberalism based on self-interest (rational pursuit of maximum utility).

On the other hand, all left libertarians get this, as well as social democrats and heterodox economics of the left — which is why they are on the left. Caplan links to the Wikipedia article on the logic of collective action, which is chiefly about the book of that title by Mancur Olson. What it fails to mention is Nobel laureate in economics Elinor Ostrom's collective action and social development. See her paper, Collective Action and the Evolution of Social Norms.

Oh, and contrary to Libertarian assumptions to the contrary, some people are actually motivated by altruism. Moreover, this is the normal path of human development toward self-actualization and unfolding human potential.

Altruism one manifestation of spiritual maturity. Caplan seems to think that his explanation is comprehensive, whereas it is only partial. Just as humans develop physically, emotionally and intellectually, they are also capable of developing spiritually, that is, the the direction of greater universality as the boundary of individuality recedes toward the horizon of wholeness.

Spiritually immature people imagine that altruism means giving up individual desire, choice and action, which kill one's individuality, one's sense of personal self, that to which one relates everything, which is what one is. However, the opposite is the case. As one grows spiritually through actualizing one's potential as a human being, one becomes more fulfilled, more complete, and happier. As Aristotle observed in Book One of Nichomachean Ethics, happiness or well-being (eudaimonia) is the by-product of excellence (arete). This is consistent with the perennial teaching of those to whom humanity looks to as sages about the spiritual path and the progressive realization of inherent potential. To miss this is to miss what is truly important in life.

Phil Thornton — Daniel McFadden: Understanding better how people really make choices

The classical economic of choice is therefore far too simple as it does not capture what goes on in people’s brain when they make choices. “It is also much too static to capture the sensitivity and dynamics of the process,” he said.

Lindau

Daniel McFadden: Understanding better how people really make choices
Phil Thornton

Daniel Little McFadden (born July 29, 1937) is an American econometrician who shared the 2000 Nobel Memorial Prize in Economic Sciences with James Heckman. McFadden's share of the prize was "for his development of theory and methods for analyzing discrete choice". He is the Presidential Professor of Health Economics at the University of Southern California and Professor of the Graduate School at University of California, Berkeley. —Wikipedia

RSA Animate - Drive: The surprising truth about what motivates us

RSA Animate - Drive: The surprising truth about what motivates us

(h/t Marc Chandler)

Lars P. Syll — What’s the use of economics?

Reprogramming economics students to think "rationally" and dupe the rubes with numbers as they are prepared for ordination into the contemporary secular priesthood. Same old sophistry and magical thinking posing as knowledge.

Lars P. Syll

What’s the use of economics?

quoting Alan Kirman | Professor Emeritus of Economics at the University of Aix-Marseille III and at the Ecole des Hautes Etudes en Sciences Sociales

Gavin Kennedy — Adam Smith on Self-Interest Not the Same as Found in Modern Economics

From: Philosophy Stack Exchange, 'a question and answer site for those interested in logical reasoning'

Adam Smith's Lost Legacy
Adam Smith on Self-Interest Not the Same as Found in Modern Economics
Gavin Kennedy | Emeritus Professor, Heriot-Watt University