I am on my way to Moscow and just read the first three chapters of your book. Let me now give you my first reaction because I am afraid I might go back to the rest of the book only in a week or so (i.e., after Moscow, since my program in Moscow is quite hectic).
I do not know much about biological evolution (biology was never my favorite subject in high school) and just a little bit more about pre-agricultural (or pre-historical) human societies. So there I learned a lot from your first three chapters, and I have nothing to add or comment. But when you discuss more recent, and dominant, economic ideology I do have an opinion. I actually find myself in sympathy with the operations of Gekko, Skilling etc., not because I like them as individuals but because I see an iron logic in their behavior. Let me explain that iron logic as composed of three elements.
- Personal ethics do not exist
- Laws exist and they are supposed to embody the general moral rules so that we know what we can do, insuring that the pursuit of our private interest leads to some greater social good
- We then just follow our private interests.
In a (less than ideal) metaphor, imagine the rules as fences around a path, like in bobsledding. You can do whatever you want on that path, and should never hit the fence. But the fence is designed by somebody else (society) in such a way that while you yourself, never caring about why the fence was set just where it was set, will maximize the speed of your own movement and the overall average speed of all actors. 1/
I am thus intellectually sympathetic to the view that personal morality exists only outside economics or capitalism. I might like the guys who are nice and ethical, but when it comes to economics I really do not expect them to be so. I even very much doubt when they claim they are. I tend to see them as hypocritical. This is not in their job description.
This is the philosophy that I think motivated Skilling and the others. It is what I called in the attached blog (“Kant and Henry”) the idea of outsourcing morality. Morality is embedded in the fence and I am going to play by the rules (but nothing more) and, even when I consciously do not play by the rules (as for example when I cheat and score a goal by hand), I do not have to feel bad about it. It is the job of the referee to catch me and punish me. In other words, there is no internal ethical mechanism to stop me from scoring a goal by any means I can find.
This is I think a very powerful ideology which motivates lots of people, all around the world, from China to Africa to the US. It goes back to the Fable of the Bees which I found quite sensible; as I found Smith’s denouncing of the Fable, while accepting its basic idea that private vices lead to public virtue, inconsistent, and actually badly argued in the Theory of Moral Sentiments.
This is also, I think, why capitalism can never inspire “admiration” or “love”. It is a system really built on the best use of our vices, including greed. The sad truth is that systems built on different principles have failed miserably because they accord less well with human nature. Actually, they do a great mischief by insisting on “morality” which is then used by the “bad guys” to pursue their own personal agendas while cloaking it under the name of common good or ethics.
Finally, this is why I also find all moral outrage about the behavior of Wall Street in the run-up to the crisis wrong-headed or hypocritical. The system is built in such a way that the only thing you need to worry about is law, and not being caught (if you fail to observe the law). Since these guys generally behaved within the law (as it was then, or as they helped, by funding it, define it), there is nothing to complain.
But let’s see if I change my mind by chapter 8…!
1/ This does not apply to what you describe as Skillings’ approach to internal organization of the firm which (as discussed in Chapter 4 with reference to sports and any organization) was deeply desctructuve. My three “iron logic” points apply to what I think is a view of individuals or companies competing against other individuals or companies.
Branko Milanovic is author of The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality (2010, Basic Books). He was formerly lead economist in the World Bank’s research department and currently is visiting presidential professor at City University of New York Graduate Center and an affiliated senior scholar at the Luxembourg Income Study.
Notes on the Margins: Published with Branko’s permission. I will be responding, but it may be a few days because I am off to Tampa to help run a Seshat workshop on China and for other Evolution Institute business. Meanwhile, comments are welcome!