The Hindu Business Line : Moral science for those who can read the market signs

COME September, trade equations will change even as markets take a few more baby-steps towards freedom. "No, we are only plunging into free-doom," protectionists would argue. Rather than take sides in the debate, I choose to read Morality of Markets, a book of essays edited by Parth J. Shah and published by the Academic Foundation (www.academicfoundation.com) along with Centre for Civil Society (www.ccsindia.org). As if to assuage fears of breakdown of all things good when barriers to imports fall, Gurcharan Das writes in his foreword that human self-interest will go a long way to ensure good behaviour in the marketplace. "People are suspicious about capitalism partly because they mistake self-interest for selfishness," adds Das. "If it rains, I will carry an umbrella — nothing selfish about that." Perhaps, in a world without borders, a country's self-interest may lie in sacrificing some selfishness.

"Markets themselves are neither moral nor immoral," writes Peter J. Boettke. "But the rule within which markets are embedded should be held up to critical scrutiny." A simple test on what is moral is this: "Moral rules which promise justice, but deliver reduced liberty, lower levels of prosperity, and the breakdown of peaceful harmony do not deserve to be described by terms such as `just' and `moral'."

Go, not by promises, but realisations. Leonard E. Read's "I, Pencil" is a story that ends with a message: "Leave all creative energies uninhibited." But if you have seen the new movie I, Robot, you may rather like to reserve some discretion for governance.

Walter E. Williams writes, "For individual freedom to be viable, it must be a part of the shared values of a society, and there must be an institutional framework to preserve it against encroachments by majoritarian or government will." Trade restrictions are costly to consumers and cause a net loss of jobs, he would argue. Remember, "A majority vote does not establish morality." That does not explain the presence of tainted ministers even in a coalition government, does it?

To know why capitalism is hated, feared and despised, turn to Israel M. Kirzner's essay: "The market system is frequently criticised for features of contemporary economic society which are, in fact, to be attributed to state interference with the market." You need patiently teach and discuss, "to dispel the hate and the ignorance which surround the free market," he advises. Free classes on `free', that is. Murray N. Rothbard deals with "10 ethical objections to the market economy". He talks of "a fatal contradiction" that proponents of government intervention trap themselves in: "They assume that individuals are not competent to run their own affairs or to hire experts to advise them. And yet they also assume that these same individuals are equipped to vote for these same experts at the ballot box." In fact, the latter exercise is more complex!

Amartya Sen's essay titled, "How to judge globalism" argues that globalisation is neither new nor necessarily Western; "and it is not a curse". Sen emphasises that it is not enough for the poor to gain something from globalisation; they should get "a fair share and a fair opportunity." His punch line, therefore, is: "Globalisation deserves a reasoned defence, but it also needs reform."

D. McCloskey predicts that the 21st century will be the century of the universal middle-class and that it will exhibit the "bourgeois virtues". Jobs for peasants, proletarians, and aristocrats are disappearing, he writes. "The aristocrat gives a speech, the peasant tells a tale. But the bourgeois must in the bulk of his transactions talk to an equal." Business involves deals, discussions and persuasion. Edward W. Younkins' essay "Morality and character development" may seem sermonising, but here you would find insightful lines such as: "Social problems can provide profit-making opportunities. It is possible for a manager to value a socially responsible activity as a means to profit making." Social work is good business, pun intended.

Do not miss Milton Friedman's "The social responsibility of business is to increase its profits." For him, "social responsibility" is a "fundamentally subversive doctrine" in a free society. "There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." Cheating goes against morality; but it goes against business more. Alexei M. Marcoux opines that shareholder-oriented firms are not merely wealth-enhancing, they are good. In "Business ethics gone wrong", he writes: "Norms of honesty, integrity, and fair play, rather than an albatross around the neck of the free market, are a central, if neglected, part of the story of the success of the shareholder-oriented firm."

On ethics, again, Tibor R. Machan focuses on professionals. Writing codes of ethics is difficult, he concedes, because of continual changes in the profession. Therefore, "professional ethics depends mainly on constant vigilance, on sustained discretion and prudence, and on wisdom, rather than on certain set rules." Would that apply to the striking lawyers?

Brian Griffiths looks at a business corporation as a moral community. "A corporation with an effective moral standard will not only have lower transaction costs but will develop over time a strong culture based on trust, so that the adoption of a moral standard will become a source of competitive advantage." Moral, therefore, is that to be moral can be cost-effective. Dan Lavoie and Emily Chamlee-Wright write on the market order and the moral order: "Market is the arena in which socially motivated entrepreneurs and consumers can reveal and exercise their values and principles. To call this `mere commercialism' is to dismiss the ways in which meaning is being constructed in the market context." So, take your values to town.

Rulers will not like James A. Dorn's essay, "The rise of government and the decline of morality." People have become more dependent on the state and have sacrificed freedom for a false sense of security, he writes. For Paul A. Cleveland, business subsidies are immoral. How? "Subsidies tend to divert business decision makers from the development of their core businesses to competing for government dollars." Jeffrey Tucker's question is "Are antitrust laws immoral?" because economics questions have parallel moral concerns. "The economic costs imposed by antitrust laws are vast." That should cheer Bill Gates. The last part of the book deals with religion and markets.

Our future religion may well be free trade, where tariff may be as harmless as a tickle of the midriff. I guess it may not be too fashionable to talk about morality then. Or, perhaps, it may just be fashionable to only talk about it.

Economics@TheHindu.co.in

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