Economic System Reflects a Society’s Values

Many economists, Paul Krugman among them, argue that we must separate economics from values and morality.

However, I believe that an economic system is a direct expression of a society’s values.

The Republican Party has been known as the “party of values” for years now because they are obsessed with issues of sexuality: abortion, homosexuality, the “sanctity” of marriage, etc.

At the same time conservatives advocate a hard-line market capitalism which is brutal in its effects on society. Their wildest dream is to eliminate all federal regulations and the New Deal and Great Society social programs, making our economic system even more exploitative and unjust.

Morality doesn’t just mean issues of sex. Morality means ethics, principles, and values. How do our values inform our social interactions? How do we treat our neighbors? How do we care for the poor and the sick and the needy in our midst? Do we care about social justice? Do we care about the impact of our actions on the environment?

Free-market capitalism reflects a society whose values are based completely on greed and short-term self-interest: get all I can for myself and my family with no concern for the consequences to the society I live in and the world at large.

We have been convinced by economists and politicians that greed-driven capitalism is the best system on Earth, but there are new forms of economic interaction emerging that challenge this belief and reveal that people are driven by factors other than greed and self-interest.

Harvard University professor Yochai Benkler has just published a new book describing these new economic systems, “The Penguin and the Leviathan: How Cooperation Triumphs over Self-Interest.”

The publisher’s abstract from Amazon says:

For centuries, we as a society have operated according to a very unflattering view of human nature: that, humans are universally and inherently selfish creatures. As a result, our most deeply entrenched social structures – our top-down business models, our punitive legal systems, our market-based approaches to everything from education reform to environmental regulation - have been built on the premise that humans are driven only by self interest, programmed to respond only to the invisible hand of the free markets or the iron fist of a controlling government. In the last decade, however, this fallacy has finally begun to unravel, as hundreds of studies conducted across dozens of cultures have found that most people will act far more cooperatively than previously believed.

In the October American Prospect there is an article about companies that facilitate sharing of possessions, like cars, bicycles, and houses; “The Commons,” by Monica Potts, which quotes professor Benkler:

Yochai Benkler, a professor at Harvard Law School who has written two books on the subject, calls this type of economic model the social market, because it draws upon the obligations we feel to one another. The incentives to join and share go beyond monetary compensation…For Benkler, the rise and persistence of all of these services just shows that the social market is fundamental to human nature. Its existence is only surprising because economists have done such a good job convincing us that people need top-down control systems, as in state-run communist economies, or market incentives like raises or bonuses, to work for the benefit of a larger group. ‘They said everything could be understood through rational self-interest,’ he says, but it isn’t true. ‘We are more like how we tell our kids to be on the playground than what the economists say.’