Yesterday in our class on A Tale of Two Depressions, we discussed Robert McElvaine’s notion of “moral economy” (which he introduces in chapter 9 of his book, The Great Depression: America, 1929-1941). The idea is that, during the first Great Depression, Americans were engaged in an intense debate between different moral economies (which McElvaine characterizes as the difference between the “cooperative individualism” of workers and the “acquisitive individualism” of businesspeople).
As I explained to students, all economic theories—for example, neoclassical, Keynesian, and Marxian theories—represent moral economies. And they arrive at very different conclusions concerning the justice or fairness of capitalism. Thus, for example, neoclassical economists argue that everyone gets what they deserve and, through the workings of the invisible hand, the result will be full employment. In contrast, Keynesian economics is based on the proposition that, while everyone may get what they deserve (with the possible exception of coupon-clippers), it’s quite possible that will result in less-then-full-employment equilibrium, which then requires the visible hand of government intervention. Marxian economists propose a third possibility: even if everyone gets what they deserve in markets, in production things are different (because of exploitation)—and the consequence, whether there’s an invisible or visible hand, is inequality and instability. In other words, the three economic theories represent radically different moral economies.
One student then invoked the idea of moral economy and blamed greed for causing the current crisis. I responded by making the distinction between individual greed and economic institutions, which like the different notions of fairness among economic theories leads to quite different solutions: throw the greedy bankers in jail (which of course we haven’t done) or change the economic institutions (which we haven’t done either).
Chris Dillow makes a similar distinction between “greedy bankers” and “overly powerful bankers.” His view is that “the habit of over-emphasizing individuals’ traits and under-emphasizing situational forces” leads us to “to moralize inequality; the rich are rich because they are greedy whilst the poor are poor because they are lazy.”
What this effaces is the fact that inequalities in capitalism are instead the result of inequalities of power – a power which rests in part upon ideology. Moralizing inequality tends to blind us to this fact. It creates the illusion that capitalism would be acceptable if only those at the top were better people, when in fact the faults in capitalism are structural and not due to the flaws of passing individuals.
That’s pretty much the same distinction I was trying to make, although I still want to characterize the two explanations as different moral economies: one is a moral economy of flawed individuals, while the other is a moral economy of flawed institutions.*
*Although I’m willing to admit I’m sympathetic to Dillow’s view for another reason: because he invokes my favorite football club and blames Crystal Palace fans (who greeted Wayne Rooney with chants of “you fat greedy bastard”) for committing the error of “blaming Rooney’s salary upon his personal character rather than upon his situation.”