I'll start by quoting from this article: "Markets in the next system" by Jesse A. Myerson | January 21, 2016
"Roughly 4,000 years before the emergence of capitalism, we were economizing our resources by haggling in markets which connected people thousands of miles apart.
...If we brought capital, labor, ideas, and land out of the market and into the democratic sphere, we could accommodate markets in goods and services without imposing on all of society the imperatives unique to capitalism."
"There are basically two strategies for de-marketing labor, and they work best together. The first is the aggressive encouragement of worker co-ops, including buying out (not bailing out) failing firms and leasing them to workers, giving workers the right to buy out their shops as an alternative to closure, and providing public financial and technological support for start-up co-ops. The more workers can become owners, the less they’ll have to work for wages, thus shrinking the labor market. The second strategy is to provide the option to exit the job market by filling out the welfare state: public health care, education, and “last resort” guaranteed employment, capped off with a basic income to subsidize culture- and community-production. The ability to survive without submitting to the dictates of the job market would incapacitate the capitalist imperative to compete with everybody else.
Co-ops also help to de-market capital, relocating ownership from stock market gamblers who are physically and sentimentally remote from the firm’s operations to workers who inherently give a damn about the fate of the firm and the labor they deploy for it."
"A socialism like this, with capital, labor, ideas and land brought out of the market and into the democratic sphere, could accommodate markets in goods and services without imposing on all of society the imperatives unique to capitalism. Mass liberation from capitalist market imperatives would effect reparations for the dispossession that incited the capitalist laws of motion. The system would no longer have the necessity, or perhaps even the means, to impose its relentless imperatives on you and me and the whole wide world. Then what will our schoolchildren think?"
http://www.thenextsystem.org/markets-in-the-next-system/
I agree with this. But beyond the issues raised in the article concerning economic organisation, the article got me thinking about markets and morality. Private vices and public virtues. I want to link this article with another: "Here Is Why Economics Is Built on a Monumental Mistake: It's time to update the invisible hand."
http://evonomics.com/here-is-why-economics-is-built-on-a-monumental-mistake/
"This is diablog 8 between the evolutionary biologist David Sloan Wilson (DSW) and me (JB).
1) JB: You’ve called an idea that’s cherished in economics “a monumental mistake.” Specifically, the belief that Adam Smith’s “invisible hand” ensures markets self-organize for the best overall outcomes.
2) JB: Biological self-organization — Darwin’s “invisible hand” — often delivers disaster. What can self-organization, or spontaneous order, in biology teach economics?
3) DSW: Self-organization isn’t intrinsically good (it can be functional or dysfunctional).
4) DSW: It is indeed a monumental mistake to think that unbridled self-interest will robustly benefit the common good. Instead, it can cause dysfunctional self-organization."
I agree with a comment someone makes below the article: "Adam Smith was far more nuanced than this implies "Nor is it always the worse for society that it was no part of his intention. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good."
At no point is he saying "greed is good"--he appears to be saying that it can be incentivised and (further) that direct attempts at centralised economic planning fail. Which is borne out by history."
Markets are a social institution like any other, very useful in connecting individuals up without the need for decision-making bodies and agencies. The latter are necessary too, but it's all about the right things in the right places. We need socially embedded markets, markets embedded in social institutions, trust relations, shared moral codes, community infrastructures. I was criticised for being a 'market socialist' for saying this. Markets are not the problem. It's the commodification of labour, enclosure, exploitative relations. Marx's target in Capital was not markets but the commodity form. Markets are perfectly compatible with the society of freely associated labour; the commodification of labour - and nature - is not. Instead of social labour being supplied indirectly through the value form, the associative society frees production and markets from accumulative imperatives and instead serves social use and environmental need.
The debate for over a century now has split between the extremes of free markets and state control, as though these are the only alternatives. It bears no relation to practice, apart from anything else. Too many ideologues chip in on this. Adam Smith himself was clear that markets only work in the context of strong social institutions, provision of public goods, moral codes, virtues. Tomas Sedlacek's book the Economics of Good and Evil (2011 Oxford) makes it clear that Smith was part of the tradition that made economics a branch of ethics. The view that "private vices" produce "public virtues" was Mandeville's satire, not Smith's. That view horrified Smith. In The Theory of Moral Sentiments, Smith refers to this view with the words "debauched teachings" (Of Licentious Systems], precisely because they remove the differences between vice and virtues. That's not what Smith meant by self-love and that's not what Smith's markets were about. Free marketeers today abuse the great man's thought, much as some marxists have distorted Marx's thought. Smith was not the individualist and utilitarian he is portrayed as. Smith was a moral philosopher, writing the Theory of the Moral Sentiments before he came to The Wealth of Nations. His ethics are built to a large extent on the philosophy of the Stoics, dividing the moral schools into three lines, which are defined as the terms propriety, prudence, and benevolence. For Smith, moral teachings based on mutual kindness (benevolence) and restraint (self-command) were the main building blocks of society. He refers to Augustine and Plato and to the church teachings of Dr. Hutcheson. The social ethics of St Thomas Aquinas fall within the same category. Smith's concept of societal coexistence builds on Hume's view that human moral sentiment is stronger and deeper than the principle of utility. The (emotional) sentiment connecting human beings as social beings is stronger than (rational) calculus that takes place between individuals concerned with their own private gains. The norms of human behavior existed before the creation of the state, the state does not create them as avered in social contract theory. "Compelled by these instances, we must renounce the theory, which accounts for every moral sentiment by the principle of self-love," (Hume, An Enquiry Concerning the Principles of Morals, from Hume, Selections, 215), Hume concludes. Social ethics the realm of emotions, feelings—not rationality, and certainly not rational calculations of private advantage. That mentality came with a later market society premised on instrumental relations between individuals. As Marx put it here, the individual: "in civil society, .. is active as a private individual, regards other men as means, debases himself to a means and becomes a plaything of alien powers." (Marx, On the Jewish Question). Alien powers as collective forces beyond human control and comprehension, a monetary totalitarianism all the more oppressive for being anonymous and invisible. Not the invisible hand that Smith wrote of. Read Raj Patel's book, The Value of Nothing. Smith used the phrase "invisible hand" four times, in the context of small communities closely knit by morals, customs and social proximity, a far cry from the global markets we have today. Proximity is key. "Unlike modern economists Adam Smith assumes that people are highly interdependent as they consider the alternatives they face. Because people share similar feelings and passions, they can identify with others as others express their passions in behaviour." (Halteman, "Is Adam Smith's Moral Philosophy an Adequate Foundation for the Market Economy?").
Smith largely shares the same views as philosopher David Hume here. Hume agrees with Aristotle and Aquinas that human beings are "zoon politikons", social/political animals, political in the expansive sense of "politikon bion", the public life that social animals need in order to realise their healthy potentialities. This is not a homogeneous collectivism, this is the social context social beings need to individuate themselves. It is natural for a person to be part of a society. Aristotle, Aquinas, Hume, Smith, Hegel, Marx are coming at this from the same source. This runs against atomism and contractarianism and utilitarianism. The individual does not "choose" as a discrete reasoning entity rationally "choose" to be a part of a contrived "society" on account of it bringing a calculable utility, s/he join because it is in his nature. Society is something we are born into, join naturally as social beings. Human beings have a natural tendency toward good and a strongly inherent social sympathy, even empathy. "Everything, which contributes to the happiness of society, recommends itself directly to our approbation and good-will. Here is a principle, which accounts, in great part, for the origin of morality." (Hume, An Enquiry Concerning the Principles of Morals, from Hume, Selections, 215). He simply considers this characteristic as a "principle of human nature." (Hume, An Enquiry Concerning the Principles of Morals, from Hume, Selections, 216).
"The human heart (...) will never be wholly indifferent to public good." (Hume, An Enquiry Concerning the Principles of Morals, from Hume, Selections, 229). He writes elsewhere: "No character can be so remote as to be, in this light, wholly indifferent to me. What is beneficial to society or to the person himself must still be preferred." Hume, An Enquiry Concerning the Principles of Morals, from Hume, Selections, 230).
Hume summarizes the idea neatly: "It appears that a tendency to public good, and to the promoting of peace, harmony, and order in society, does always (...) engage us on the side of the social virtues (...) principles of humanity and sympathy enter so deeply into all our sentiments, and have so powerful an influence, as may enable them to excite the strongest censure and applause." (Hume, An Enquiry Concerning the Principles of Morals, from Hume, Selections, 219).
Both Hume and Smith would reject the view that society is founded on hedonistic principles and on the principle of individual rational choice. Human anthropology contradicts the utilitarian and contractarian view - human beings are social beings, social individuals who associate naturally on the basis of innate feelings. We are born with that social instinct, and require no rational proof to justify the existence of a public life.
We are wired to connect. Our neural system comes alive in encounters with others. We live in an interpersonal world. Neuroscientists are now detailing the neural mechanics at work in these relations and interactions which make up this world. They have discovered that the brain is sociable by design. There is a neural bridge which connects us brain-to-brain whenever we encounter and engage with another person. At the base of our social interactions are a series of neural linkups which enable us to affect the brains, and hence the bodies, of each person we interact with, those persons affecting us just the same. Our brains are therefore involved in an interaction of emotions and feelings. Our social encounters are therefore regulated by interpersonal modulators which coordinate our emotions in tune with our brain function. The feelings which are inspired by such encounters with others flow through our bodies, sending out torrents of hormones that order our biological systems, from the heart to our cells.
We live in a world of social intelligence, social relationships and social experiences. These shape who we are. Through repeated brain-to-brain linkups, our key social interactions and relationships mould our neural circuitry, shaping our brains. Neuroplasticity refers to the way that our neuronal systems are formed, the shape, size, and number of neurons and their synaptic connections being sculpted by repeated contacts with others. This means that our brains are shaped and reshaped by our encounters and interactions with others.
With the conception of the social brain, rationality takes on a new meaning. Intelligence is thus something that emerges socially and is expressed in relationships. We can thus move from an abstracted, intellectualised philosophy to a more socially embodied, relational conception. The implications are of more than academic philosophical interest, but entail a revaluation of all those things we consider essential to the living of the good life.
Other economists may endorse the mythical figure of homo economicus, the rational, self-maximising, purely self-interested individual - but not Adam Smith. Smith's individual is self-interested but not entirely so: Smith's individual knows that s/he depends on others as well as her/himself, possessing social sympathies and emotions that bind him/her to others and all together in society as a whole.
It is worth restating Hume's view that this association is not the result of a rational calculus or contract; it is innate feelings that lead human beings as social beings to social virtue in a public life. These virtues are not the products of pure reason, and do not require rational justification, as in the tradition of the social contract.
Immanuel Kant used reason to circumscribe the limits of reason. "Pure reason, however, cannot command any ends a priori." (Kant, The Metaphysical Elements of Ethics, 41. (Chapter 9: "What Is a Duty of Virtue?") We are miles away from a position which sees virtue as a principle of a priori rationality imposed downwards from the political heavens of the abstract state. Here, public life and virtue is constituted from entirely the other direction. Reason is in cooperation with feeling, showing the best means to an end. (Rawls, Lectures on the History of Moral Philosophy, 31-32; Hume, An Enquiry Concerning the Principles of Morals, from Hume, Selections, 198). Reason alone is insufficient, generating paradoxes when separated from the sympathies or the passions: "It is not contrary to reason to prefer the destruction of the whole world to the scratching of my finger. Tis not contrary to reason for me to chuse my total ruin, to prevent the least uneasiness of an Indian or person wholly unknown to me.... In short a passion must be accompanied by some false judgement, in order to its being unreasonable; and even then it is not the passion, properly speaking, which is unreasonable, but the judgement." (Hume, A Treatise of Human Understanding, 298). Reason alone will never be in control.
Here's my point with regard to Adam Smith, markets and morality. The dominant school in economics, which claims to be the heir of Smith, misread and misinterpret Smith. In neglecting ethics and arguing that economics is a positive science, they lose the concern with good and bad that was uppermost in Smith's work as a moral philosopher. To read Adam Smith's justification of free markets in terms of the egoistic, self-centred homo economicus is plain wrong. He set markets and individuals within a social and moral matrix which canalised individual actions for the public good. You have to read Smith's Wealth of Nations alongside his The Theory of Moral Sentiments to fully grasp this. Smith understood the central importance of ethics and did not make public good or virtue merely the unintended consequence of untrammeled individual choices and actions.
So markets and morality are perfectly compatible then. So where is the problem? The problem is that our social sympathies and cooperative instincts have been hijacked by free-riders and diverted to private ends rather contributing to a genuine public life. Cooperation as such is not enough. It matters a great deal with whom we cooperate to what ends. We can take markets back from their subordination to exchange value and make them work as they should, bringing individuals together in satisfying social need and use; we can take Smith and Marx back from the ideologues; we can recover public life and public virtue from what Marx called the "abstraction of the modern state", the big state, the capitalist state in contradistinction to a genuine public life; we can transition to a cooperative mode of production in which individuality and sociality are the two essential sides of the same human coin.
In a line, in my work, I rework the tradition of "rational freedom" as a socio-relational freedom, one that proceeds from our common moral reason or innate universal moral grammar. There are only human beings and the social forms they engender. It's the right relations that matter. Markets are social institutions that can work for us or against us, depending upon whether we succeed in embedding them in an environing social, institutional and moral matrix.