Moral economy

Moral economy is a phrase used in a number of contexts to describe the interplay between moral or cultural beliefs and economic activities.

A just economy

A moral economy, in one interpretation, is an economy that is based on goodness, fairness, and justice. Such an economy is generally only stable in small, closely knit communities, where the principles of mutuality — i.e. "I'll scratch your back if you'll scratch mine" — operate to avoid the free rider problem. Where economic transactions arise between strangers who cannot be informally sanctioned by a social network, the free rider problem lacks a solution and a moral economy becomes harder to maintain.

In traditional societies, each person and each household is a consumer as well as a producer. Social networks create mutual understandings to promote the survival of these social units in the face of scarcity; these social ties operate to prevent the economic actors in traditional societies from behaving to maximize personal profit. Traditional understandings arise as to the relative value of various goods and services; they are not independently renegotiated for each transaction in an impersonal, anonymous market. These traditional understandings acquire the force of custom, and with increased social complexity may eventually acquire the force of law.

The Efficient Society by Joseph Heath discusses the nature of a moral economy in these terms, and argues that Canada has achieved the proper balance between social needs and economic freedom, and as such comes close to being a moral economy. Other economists such as John P. Powelson relate the concept of a "moral economy" to the balance of economic power; in their view, a moral economy is an economy in which economic factors are balanced against ethical norms in the name of social justice.

Right Relationship by Brown and Garver, discusses the urgent need for achieving an economy that is recognized to be a subsidiary of the overall ecosystem of the planet. They address key questions regarding the purpose, function, appropriate size, fairness, and governance of a world economic system and propose new ideas to place our economy in correct relationship with the Earth's ecosystem. They argue that such a moral economy is essential if we are to avoid systemic collapse as our growth economy outstrips the Earth's limited ability to recycle our waste, and as the Earth's inventory of critical raw materials and minerals is used up, in the face of growing population and growing affluence within those populations.

Economics and social norms

In a related sense, "moral economy" is also a name given in economics, sociology and anthropology to the interplay between cultural mores and economic activity. It describes the various ways in which custom and social pressure coerce economic actors in a society to conform to traditional norms even at the expense of profit.

Prior to the rise of classical economics in the eighteenth century, the economies in Europe and its North American colonies were governed by a variety of (formal and informal) regulations designed to prevent "greed" from overcoming "morality". In its most formal manifestations, examples such as the traditional Christian and Muslim prohibitions on usury represent the limits imposed by religious values on economic activity, and as such are part of the moral economy. Laws that determine what sort of contracts will be given effect by the judiciary, and what sort of contracts are void or voidable, often incorporate concepts of a moral economy; in many jurisdictions, traditionally a contract involving gambling was considered void in law because it was against public policy. These restrictions on freedom of contract are the results of moral economy. According to the beliefs which inspired these laws, economic transactions were supposed to be based on mutual obligation, not individual gain. In colonial Massachusetts, for example, prices and markets were highly regulated, even the fees physicians could charge.^[1].

Other forms of moral economy are more informal. In the sixteenth and seventeenth century, for instance, clergymen often preached against various economic practices that were not strictly illegal, but were deemed to be "uncharitable".^[2] Their condemnations of selling food at high prices or raising rents probably influenced the behavior of many people who regarded themselves as Christian and worried about their reputations.

Likewise, during the rapid expansion of capitalism over the past several centuries, the tradition of a pre-capitalist "moral economy" was used to justify popular action against unscrupulous merchants and traders. For example, the poor regularly rioted against grain merchants who raised their prices in years of dearth in an attempt to reassert the concept of the just price.^[3] The Marxist historian E. P. Thompson emphasized the continuing force of this tradition in his pioneering article on "The Moral Economy of the English Crowd in the Eighteenth Century" (1971). Later historians and sociologists have uncovered the same phenomenon in a variety of other situations, including peasants' riots in continental Europe during the nineteenth century and in many developing countries in the twentieth. The political scientist James C. Scott, for example, showed how this ideology could be used as a method of resisting authority in The Moral Economy of the Peasant: Subsistence and Rebellion in Southeast Asia (1976).

It must be remembered, however, that sometimes a moral economy may not act in conformity to morality as it is now generally understood. Social pressures to enforce racial segregation even when willing buyers and sellers would erode the racial barriers, are clearly an example of cultural pressures imposing economic inefficiency, and therefore fall within the purview of moral economy.^[4]

Utopian moral economies

In modern times, "utopian moral economies" have arisen to systematically reorganize their economic system to reflect a particular moral or ethical code that rejects the free-market ethos of capitalist economies. Societies that pursue some derivative of Socialism or Communism are obvious examples of this impulse, along with small-scale attempts in the form of the Israeli kibbutz and the intentional communities of the 1960s and 70s.

Very few of these experiments - with the possible exception of the kibbutz - turned out the way their founders had imagined. Unsurprisingly, a revolutionary reorganization of some of the most fundamental parts of society often resulted in the severe dislocation of many people's everyday lives and the loss of whole generations to schemes like Stalin's failed policy of collective farming. However, many of the small and pragmatic attempts to make the capitalist economy more moral (e.g. fair trade, moral investment funds, the development of renewable energy sources, recycling, cooperatives, etc.) have grown from the same impulse that drove the utopian revolutionaries.

See also

• Economic anthropology
• Free rider problem
• Intentional Community
• Just price
• Moral hazard
• Non-market economics
• Perverse incentive
• Social dilemma

Notes

1. ^ Horwitz, Transformations in American Law, p. 173
2. ^ Collinson, "Puritanism and the Poor"
3. ^ Thompson, "Moral Economy of the English Crowd"; Randall and Charlesworth, Moral Economy and Popular Protest; Bohstedt, The Politics of Provisions
4. ^ Van Tessel, "Only the Law"

References

• Bohstedt, John: The Politics of Provisions: Food Riots, Moral Economy, and Market Transition in England, c. 1550–1850 (Ashgate, 2010).
• Brown, Peter & Garver, Geoffrey: Right Relationship: Building a Whole Earth Economy (Berrett-Koehler, 2009) ISBN 15767625.
• Collinson, Patrick: "Puritanism and the Poor" in Horrox, Rosemary; Jones, Sarah Rees (eds.), Pragmatic utopias: ideals and communities, 1200-1630 (Cambridge: Cambridge University Press, 2001), 242-58.
• Heath, Joseph: The Efficient Society: Why Canada is as close to utopia as it gets. (Penguin, 2005) ISBN 0-14-029248-9
• Horwitz, Morton J. The Transformation of American Law, 1780-1860 (Harvard University Press, 1977)
• Powelson, John P.: The Moral Economy (Univ. Mich., 1998). ISBN 0-472-10925-1
• Randall, Adrian; Charlesworth, Andrew (eds.). Moral Economy and Popular Protest: Crowds, Conflict and Authority (Basingstoke: Macmillan, 2000). ISBN 0333671848.
• Sayer, A. 'Moral Economy and Political Economy' in Studies in Political Economy, Spring 2000, pp. 79-103.
• Scott, James C.: The Moral Economy of the Peasant: Rebellion and Subsistence in Southeast Asia, (Yale, 1977). ISBN 0-300-02190-9
• Stehr, N., Henning, C. and Weiler, B. (ed) The Moralization of the Markets (Transaction Publishers, 2006)
• Thompson, E. P.: "The Moral Economy of the English Crowd in the 18th Century". Past & Present, 50 (1971), 76-136.
• Thompson, E. P.: Customs in Common: Studies in Traditional Popular Culture (New Press, 1993) ISBN 1-56584-074-7
• Van Tassel, Emily F.: "Only the Law Would Rule Between Us: Antimiscegenation, the Moral Economy of Dependency, and the Debate over Rights after the Civil War", 70 Chi.-Kent L. Rev. 873 (1995)

External links

• The Moral Economy. Review of the Powelson book, by Paul Heyne.
• Market Economy vs. Moral Economy: E. P. Thompson and the Craft of the Social Historian. Fred Donnelly, Albion Magazine Online, Winter 2009.
• Moral Economy. Dr James Kelly on the moral economy in eighteenth-century Ireland.
• Work and Society Network Scholars working on Moral Economy.
• Social Dilemma Network