“The Moral Economy” by Samuel Bowles

Bowles wants to take down the idea that homo economicus rules. Of course, behavioral economics (as well as sociology, anthropology, psychology, and the other social sciences) have already posited that man does not always act in his longterm monetary self-interest alone. This might be because of lack of information, because of framing issues, time preference, or because of altruism. Nonetheless, the starting assumption in economics is that it is often best to think of man as a rational actor acting in his own best interest. Therefore, when designing a form of governance it is best to assume that men are selfish, acting for their own gain over the general weal. What is best is to restrain their motives and channel their selfish individual desires in a better direction for the group as a whole: to create a Constitution for knaves. Political theorists from Machiavelli, Thomas Hobbes, David Hume, Jeremy Bentham, Adam Smith, and James Madison felt that it was better to design a system based on the assumption man acted more as knaves than as angels. Bowles suggests, “what the classical economists (and most economists since) missed is the possibility that moral and other prosocial behavior would be affected- perhaps adversely- by incentive-based policies designed to harness self-interest.” Are incentives and morals additively separate as basic economics suggests or is Bowles onto something? Can we separate moral and economic worth? Do economic incentives, in fact, change people’s moral calculus? Does putting a price on something (be it a fine or a reward) change how an issue is framed? Does the moral sphere of society get crowded out by the economic sphere? The bottomline: if you put a price on something, make sure you are willing to accept it when someone is willing to pay it.