Wholly Wrong or Holy Wrong is still Wrong

ZENIT, an International News Agency (‘The World Seen From Rome’) with the mission: “to provide objective coverage of events, documents and issues emanating from or concerning the Catholic Church”) published on 18 February an article, ‘Capitalism in the Dock: Debate Continues Over Effects of the Market’. In the article ZENIT discusses four books in a fluent, fair and focused review of problems, as seen by the Roman Church, associated with markets, or more correctly, capitalism.

The four books discussed are:

1 "The Battle for the Soul of Capitalism" (Yale University Press), John Bogle. Zenit reports that John Bogle:

“analyzes what he considers to be crucial failings in the financial markets. Bogle, former chief executive of the Vanguard mutual fund group, wants the system to be run in the interests of the shareholders and owners, rather than the managers;”
2 "Capitalism's Achilles Heel" (John Wiley & Sons) by Raymond Baker, ex-businessman and current guest scholar at the Washington, D.C.-based Brookings Institution’. Baker, Zenit reports:

“draws attention to problems such as bribery, money laundering, tax evasion and income inequality;”

3 "The Ethics of the Market" (Palgrave) by John Meadowcroft, deputy director of the London-based Institute of Economic Affairs.

Zenit says Meadowcraft argues that:

“the market is an important school for virtue, and that participation in a market economy strengthens rather than weakens institutions such as the family. The market does not impose a specific set of values. The market mechanisms as such, Meadowcroft observes, can be used just as easily by selfless altruists as by selfish hedonists;”

4 “The Compendium of the Social Doctrine of the Church” recognizes:

“the positive role played by markets, which allow economic potential to be developed efficiently. Yet, the Compendium urges that people also need to remember aspects such as ensuring justice and solidarity. They must avoid the error of seeing the accumulation of material goods as the only end of their activity.”

Read the article at: http://www.zenit.org/english/visualizza.phtml?sid=84684

Of interest to Lost Legacy readers, the article contains these two paragraphs:

“By requiring people to continually review their ends in the light of information about others, communicated through price signals, the market coordinates a myriad of competing ends and values into coordinated economic activity.

In this sense, it is not correct to think of the market operating, as Adam Smith described it, through self-love. It is not selfishness that drives the market. Rather, individuals are motivated to respond to the price signals generated. Economic coordination depends on people being alert to these signals, whether the ends they seek are selfish or altruistic.”

Adam Smith never asserted that ‘selfishness drives the market’. This is an error read into Smith’s ‘Wealth of Nations’ by confusing his use of ‘self-love’ (self-interest) with ‘selfishness’, and by taking selfishness as a motive for behaviour to an extreme. Smith taught moral philosophy at Glasgow University and within his classes he also taught jurisprudence and political economy, as was the norm in Scottish Universities in the 18th century. He taught the four subjects in tandem to the same class of students and did not consider them wholly separate.

Man as a social animal was not moral in one field and amoral in the other. Such a contradiction would have stood out for Smith (and his students), should he have been prone to teach it. He carefully stated his disagreements with Bernard Mandeville’s theme that selfishness was a public virtue because of its consequences (Fable of the Bees, 1705, 1714, 1724) in “Moral Sentiments” (1759) and he disagreed with his mentor, Professor Hutcheson, who argued that only unsullied benevolence was a virtue, anything less was vicious. Smith saw a virtuous role in self-interest – he instances a father who acts in his self-interest to earn money to feed his family.

Now, if ZENIT wishes to argue against selfishness in market dealings it may do so, but without dragging Adam Smith’s name into its case as if Smith was party to any notion that selfishness had a legitimate role in markets. On this count, ZENIT may call on Smith’s name to support the view that selfishness if not appropriate in markets; indeed, that ZENIT may quote Smith’s contrary assertion that mediated self-interest through bargaining (“Wealth of Nations”, Book 1) is appropriate in markets and therefore is a legitimate source for arguments against selfishness.

I suggest the worthy people at ZENIT read Adam Smith before making these wholly wrong assertions about his stance on the morality of markets.