2 The theory of social cooperation historically and robustly contemplated
Introduction
At the dawn of political philosophy, its goal was to support the guided perfection of human nature through religious piety, enlightenment, or heavy-handed repression (Hobbes [1651] 1962; Passmore [1970] 2000, 320; van de Haar 2009, 8). Plato, for instance, wrote on the necessity of granting political power to those graced with philosophic intelligence in order that they may rule over the “lesser natures” as philosopher kings (1985, 165). As Bernard Mandeville summarized of this historical project of political philosophy:
The Chief Thing, therefore, which Lawmakers and other wise Men, that have labored for the Establishment of Society, have endeavor’d, has been to make the People they were to govern, believe that it was more beneficial for every Body to conquer than indulge his Appetites, and much better to mind the Publick than what seem’d his private interest.
([1791] 1988, 42)
Rather than design institutions for man as he was, the project of political philosophy was to instigate a transformation of man through religious or moral appeal, or to force it through legal decree backed by force. Enlightened religious, moral, and legal authorities were necessary to carry forth this transformation, and thus the project of political philosophy became both to train enlightened leaders as well as to design political systems conducive to the top-down, imposed transcendence of human passions (Hirschman 1977, 16; Passmore [1970] 2000, 4). The tendency to barter and exchange was seen as just another demoralizing tendency; a baser component of human nature that was in need of divine perfection or heavy-handed repression (Levine 2011, 55).
The outcome of this project, rather than actually developing enlightened leaders, tended only to enshroud fallible leaders with the false infallibility of religious and moral authority. The realist wave that swept political philosophy beginning in the fifteenth century sought instead to take man as he was, not as he was aspired to be. Thus, the project of political philosophy shifted to that of discovering the nature of man. Institutions could then be designed that could channel man’s passions into socially productive, or at least not socially destructive, outcomes. The assumption of a perfectible man was gradually dropped in favor of a more realistic view of human nature (Hirschman 1977, 12; Passmore [1970] 2000). Adam Smith, for instance, at the later end of this period, grounded his moral philosophy in the empirical observation of man as he was, not as he should be (Forman-Barzilai 2011, 58).
This is not to say that the project of self-betterment through education, worldly experience, and study was dropped (Passmore [1970] 2000, 512). In fact, it remained – and remains – important part of political philosophy. The realist movement should be seen as an early endeavor toward a robust political economy (van de Haar 2009, 8–9). Robust political economy seeks to design institutions robust to deviations away from omnisciently and behaviorally perfect humans (Boettke and Leeson 2004; Leeson and Subrick 2006; Pennington 2011). As Hayek interpreted Adam Smith’s project in terms of robust political economy,
the main point about which there can be little doubt is that Smith’s chief concern was not so much with what man might occasionally achieve when he was at his best but that he should have as little opportunity as possible to do harm when he was at his worst. It would scarcely be too much to claim that the main merit of the individualism which he and his contemporaries advocated is that it is a system under which bad men can do least harm. It is a social system which does not depend for its functioning on our finding good men for running it, or on all men becoming better than they now are, but which makes use of men in all their given variety and complexity, sometimes good and sometimes bad, sometimes intelligent and more often stupid.
(1948, 11)
Rather than attempting to suppress human nature, by positing and attempting to encourage enlightened leadership, the role of political philosophy became to discover institutions that would channel human passions to the benefit of society. The new role of that state, rather than repressing human nature, would be to harness it, taking on the role of the civilizing agent (Hirschman 1977, 16). This transition was led by thinkers such as Machiavelli ([1532] 1995), Montaigne ([1580] 2003), Hobbes ([1651] 1962), Bacon (2008), Rousseau ([1762] 1978), and Descartes (2012), and later picked up by the Scottish Enlightenment thinkers, such as Hume, who stressed that “[s]overeigns must take mankind as they find them” ([1742] 1987, 260).1 Mercantilism, which held that the self-interest of individuals was necessarily out of alignment with the public interest, requiring corrective government control, can be seen as a project that emerged out of this development (Robertson ([1933] 1973, 66); as can the contractarianism starting with Hobbes ([1651] 1962).
Political philosophy was further revolutionized over this period by the development of the defenses of commerce based on the grounds of economic efficiency, as well as on moral and religious grounds, such as natural rights. Not only was a commercial society robust to deviations away from idealized man; it was also economically efficient and not immoral. There were historical roots for this move in the scholastic literature. Thomas Aquinas can be seen as one of the first religious defenders of capitalism, a tradition that was carried on by the Late Scholastics of the fifteenth and sixteenth centuries (Boettke 2012, xvi; Nelson 2001, ch. 10). John Locke ([1690] 1980) advanced some of the first defenses of commercial exchange based on economic efficiency and also provided a natural-rights defense for the establishment of property rights. Smith ([1776] 1976), Maitland ([1804] 1967), and Hume ([1739] 1978) all played an important role in defending free markets based upon the economic gains achievable from the division of labor and economies of scale.
Yet another defense of a commercial society emerged during this period. This was the recognition in political philosophy that commerce itself played a civilizing role in society. This new paradigm was carried forward as a major tenet of the political philosophies written by the Scottish Enlightenment thinkers. They witnessed that market institutions, with no heavy-handed molding or transformation of human nature, aligned private interest with social interest. In order to benefit from the gains from the wider prosperity enabled through the division of labor, men needed to cooperate, and the establishments of property, promise-keeping, and justice facilitated such cooperation (Hume [1739] 1978, Book III). Adam Smith’s ([1759] 1976, [1776] 1976) “invisible hand” can be seen as the most famous articulation of this new perception of the coordinating benefits of such social institutions. Rather than attempting to perfect man, Smith argued that the market institutional environment would best harness man’s nature to realize social order. Even where reason failed, man’s passions could entice him to participate in socializing institutions. While John Calvin, Martin Luther, and Thomas Aquinas made some of the first defenses of a commercial society based upon moral justifications, the Scottish Enlightenment thinkers advanced the claim that not only could commerce be moral, but also that it was moralizing (See: Tawney 1926 [1954]; Stark 2005; Chafuen 2003; Rothbard 1995; Green 1959; Sirico 2011; Weber 1930 [1956].
This thesis, while being separately recognized by several Scottish Enlightenment thinkers, has been synthesized as the doux-commerce thesis. Originating from the word douceur, which Hirschman (1977, 59) translates as conveying calmness and gentleness (being the antonym of violence), this term signified the observation that peace and cordiality emerged precisely where there was commerce, and precisely in order to conduct commerce. While the moralizing aspects of capitalism were widely recognized as one of the major defenses of a commercial society at the time of its development, and deeply connected to the economic efficiency arguments for free markets being advanced at that time, they have been gradually dropped by economists in favor of an exclusive focus on the technical efficiency arguments for a commercial society (Hirschman 1986, 107). In an attempt to strengthen the economic efficiency arguments of a commercial society by focusing exclusively on advancing the technical arguments of efficiency, economists have lost their appreciation of both the civilizing role of commerce and its grounding in the project of robust political economy; thus they have lost much of the “moral high ground in public debate” (Sirico 2011, 3; Brooks 2010). We argue that this neglect – at least partially – explains the failure of the profession to convey even the most basic defenses of a commercial society to the general public, despite conclusive efficiency arguments (Epstein 2008; Boettke et al. 2011).
In what follows we seek to detail the acceptance, loss, and the dawning rediscovery of the doux-commerce thesis in political economy. The second section provides a history of the development of the doux-commerce thesis by the Enlightenment thinkers. The third section provides a history of the lost appreciation – or even denial – of the doux-commerce thesis in mainstream political economy in the twentieth century. The fourth section argues that there has been a growing rediscovery of this important aspect of a commercial society. This rediscovery is seen as being vital to a comprehensive understanding and articulation of a commercial society. The final section concludes.
The Scottish Enlightenment
In the self-interest of engaging in trade with prospective trading partners, economic actors naturally evolve moral codes, manners, customs, and cordiality. Exchange and the division of labor not only encourage wealth production, they also encourage cooperation, as exchange creates mutually beneficial trades that foster cordial and mutually beneficial relationships in society. The incentives to cheat while conducting exchange are countered by the loss of future profits that will dissipate with a tarnished reputation.
Insights of this tendency began to be recognized where free markets started developing in the Industrial Revolution during what became known as the Scottish Enlightenment.2 The concept became widely recognized by political philosophers and early political economists. Voltaire observed,
Go into the Exchange in London, that place more venerable than many a court, and you will see representatives of all the nations assembled there for the profit of mankind. There the Jew, the Mahometan, and the Christian deal with one another as if they were of the same religion, and reserve the name of infidel for those who go bankrupt. There the Presbyterian trusts the Anabaptist, and the Church of England man accepts the promise of the Quaker. On leaving these peaceable and free assemblies, some go to the synagogue, others in search of a drink; this man is on the way to be baptized in a great tub in the name of the Father, by the Son, to the Holy Ghost; that man is having the foreskin of his son cut off, and a Hebraic formula mumbled over the child that he himself can make nothing of; these others are going to their church to await the inspiration of God with their hats on; and all are satisfied.
([1733] 2003, 26)
As Smith lectured, “[w]henever commerce is introduced into any country, probity and punctuality always accompany it … Of all the nations in Europe, the Dutch, the most commercial, are the most faithful to their word” ([1762] 1982, 538). This is not due to inherent differences of the Dutch, but because “[a] dealer is afraid of losing his character, and is scrupulous in observing every engagement. When a person makes perhaps twenty contracts in a day, he cannot gain so much by endeavouring to impose on his neighbours, as the very appearance of a cheat would make him lose” (538). Smith goes on, “[w]hen the greater part of people are merchants they always bring probity and punctuality into fashion, and these therefore, are the principal virtues of a commercial nation” (539). Smith argued that “commerce and manufactures gradually introduced order and good government, and with them, the liberty and security of individuals, among the inhabitants of the country, who had before lived almost in a continual state of war with their neighbours, and of servile dependency upon their superiors. This, though it has been the least observed, is by far the most important of all their effects” ([1776] 1976, 412).
David Hume argued that it was precisely because of the gains available from exchange that we develop property rights, just like we developed language, in order to promote social cooperation:
[n]o one can doubt, that the convention for the distinction of property, and for the stability of possession, is of all circumstances the most necessary to the establishment of human society, and that after the agreement for the fixing and observing of this rule, there remains little or nothing to be done towards settling a perfect harmony and concord.
([1739] 1978, 491)
Not only did the Scottish Enlightenment thinkers observe the cordiality and peace promoted by commerce among individuals; they also witnessed it extended to nations. Hume wrote, “nothing is more favourable to the rise of politeness and learning, than a number of neighbouring and independent states, connected together by commerce and policy” ([1742] 1987, 119).
Montesquieu observed, “[c]ommerce cures destructive prejudices, and it is an almost general rule that everywhere there are gentle mores, there is commerce and that everywhere there is commerce, there are gentle mores” ([1748] 2009, 338). Montesquieu goes on to argue that, as a result of the interaction of different mores in the global market place, mores are compared to each other and refined and the more barbaric mores are softened or dropped. Montesquieu writes, “The natural effect of commerce is to lead to peace,” by encouraging justice and discouraging banditry (338).
Condorcet similarly argued that “[m]anners have become more gentle … through the influence of the spirit of commerce and industry, those enemies of the violence and turmoil which cause wealth to flee” (1795, 238, as quoted in Hirschman 1982, 1465). This is perhaps best summed up by Samuel Ricard:
[c]ommerce attaches [men] one to another through mutual utility. Through commerce the moral and physical passions are superseded by interest … Commerce has a special character which distinguishes it from all other professions. It affects the feelings of men so strongly that it makes him who was proud and haughty suddenly turn supple, bending and serviceable. Through commerce, man learns to deliberate, to be honest, to acquire manners, to be prudent and reserved in both talk and action. Sensing the necessity to be wise and honest in order to succeed, he flees vice, or at least his demeanor exhibits decency and seriousness so as not to arouse any adverse judgment on the part of present and future acquaintances; he would not dare make a spectacle of himself for fear of damaging his credit standing which it might otherwise have to deplore.
(1781, 463, as quoted in Hirschman 1982, 1465)
Such recognition of the civilizing role of commerce was prominent in the influential writings of America’s Founding Fathers as well. They not only noted the civilizing role of commerce, but remarked on how government can impinge upon civil society. As Thomas Paine wrote,
[t]he landholder, the farmer, the manufacturer, the merchant, the tradesman, and every occupation, prospers by the aid which each receives from the other, and from the whole. Common interest regulates their concerns, and forms their law; and the laws which common usage ordains, have a greater influence than the laws of government. In fine, society performs for itself almost everything which is ascribed to government.
([1791] 2013, 357)
The doux-commerce thesis can, and should, be seen as a distinct contribution to political economy. It was advanced concomitantly with the economic efficiency arguments for capitalism, as an outgrowth of early attempts to establish a robust political economy. To the Scottish Enlightenment thinkers, these arguments were inherently linked. Not only did capitalism produce economic efficiency; it also channeled man’s self-interest towards peaceful and cooperative relations that would in turn strengthen the bonds and underpinnings of a capitalist society, which would, in turn, enhance the productive capabilities of a commercial society.
Lost appreciation in pursuit of ruthless efficiency
Despite the wide-scale recognition of the powerful civilizing role of commerce upon civil society, the doux-commerce thesis gradually fell out of favor among political economists. This was not due to an explicit rejection of the thesis by economists, but more to scholarly neglect. Economists gradually turned to increasingly refined technical models of efficiency and optimality, neglecting those aspects of the Scottish Enlightenment that were mathematically intractable, the comparative institutional analysis of robust political economy and the doux-commerce thesis (Boettke 2010; Boettke, Fink, and Smith 2012; Boettke, Leeson, and Smith 2008; Buchanan 1964, 214; Cornuelle 1991; Hirschman 1986, 122; Kreps 1997). In the late nineteenth and into the twentieth century, the “invisible hand” argument came to be exclusively associated with the pursuit of ruthless efficiency and the obtainment of optimality conditions.
As these foundational principles of capitalism were dropped by economists in favor of the sterility of mathematical expositions and ruthless efficiency, economists became increasingly vulnerable to the attacks of political philosophy.3 This is not to say that critiques did not appear prior to this point. On the contrary, many important critiques were levied against capitalism by thinkers such as Jean-Jacques Rousseau ([1762] 1978; [1750] 1964) and Karl Marx (1978) prior to this period. For Rousseau, the industrial organization of commerce led to inequality that would undermine the social relations necessary for civil society. For Marx, not only did the use of money atrophy social relations; the concentration of capital in the bourgeois class and the continual exploitation and alienation of the proletariat would inevitably lead to class warfare and a proletarian revolution (Roberts 1990, ch. 1). Rather, the diversion of scholarly attention toward increasingly refined technical expositions led to a lost appreciation for the project of robust political economy and the doux-commerce thesis, and thus created the vacuum for modern political theorizers to build on the market critiques of Marx and Rousseau.
These modern critiques latched onto the arguments that rather than commerce playing a civilizing role in society, commerce would bring about social discord, unrest, and dissolution of civil society. The loss of civil society, in turn, would threaten the very foundations of a capitalist society, necessitating government correction. Hirschman (1986, 110; 1982, 1466), summarizing this view as the “self-destruction thesis,” explains: “capitalist society, far from fostering douceur and other fine attitudes, exhibits a pronounced proclivity to undermining the moral foundations on which any society, including its own, must rest.”
Modern egalitarian ethicists have built upon similar themes. John Rawls (1971), Ronald Dworkin (2002), Charles Taylor (1985), and Iris Young (2002) can all be seen as outgrowths of the self-destruction thesis, arguing that material and structural inequality would lead to social dissolution and unrest. In order to preserve civil society, more communitarian or dialogical methods of decision making, rather than crude exchange relations, were thought to be necessary.
Fred Hirsch (2005) argues that in chasing after dollars in the “rat race” in order to obtain goods we desire due to the bombardment of advertising, economic actors give up the leisure necessary for the formation of civil relations.4 This decline in leisure time, Hirsch (77) argues, leads to “a decline in sociability and, specifically, friendliness,” in turn leading to decreased social contact and mutual concern, and a dearth of Good Samaritans. In addition, the social and geographic mobility inherent in capitalism would lead to underinvestment in sociability, and thus a decline in civil society. This occurs, Hirsch argues, because the returns on being social are lower if there is a probability that any given sociability may not be reciprocated due to someone moving on the social ladder or geographically. “The weakening of traditional social values,” Hirsch argues, “has made predominantly capitalist economies more difficult to manage” (117).
Similarly, Daniel Bell argues that capitalism itself unravels “the threads which once held the culture and the economy together.” According to Bell, the capitalist unraveling of the social fabric would eventually result in the loss of civil society’s protection “from the hedonism which has become the prevailing value in our society” (1976, xi). Even Joseph Schumpeter (2008, 61) in asking, “[c]an capitalism survive?” answered, “[n]o. I don’t think it can,” arguing that the very success of capitalism, by contributing to the degradation of the family (157), leads to the atrophy of the institutions that support it (61). In fact, many notable free market scholars in the twentieth century, such as Frank Knight, held that pure capitalism would lead to the dissolution of morals and civil society (Burgin 2012, 113).
More modern-day proponents of the self-destruction thesis include Michael Sandel (2012), who argues that extending market relations can corrupt attitudes and norms. Robert Skidelsky and Edward Skidelsky (2012), similarly, argue that capitalism has led market participants away from the good life, in particular emphasizing how advertising leads to a drive to acquire more goods, and thus a reduction in leisure time.
The shortcomings of the mechanical depiction of the market society as an efficiency-directed system, based on self-interest and optimality, have become more apparent in recent years, especially since strictly technical models failed to predict or provide a consensus explanation for the 2008 financial crisis. The focus on the civilizing nature of commerce largely faded from the analytical view, creating the philosophical vacuum for market critiques to emerge due to the loss of the appreciation and defense of the doux-commerce thesis.5 In fact, it is impossible to derive the doux-commerce thesis from the standard model of economists, because transactional mechanisms such as negotiation, mutual adjustment, and bargaining are beyond the scope of the perfect competition model (Hirschman 1986, 123). It has been only in recent years that economists have begun to undertake a more thorough reading of Adam Smith and to reconstruct the doux-commerce thesis. The civilizing function of commerce and the ability of the market system to produce social cooperation, especially among distant and different anonymous actors, were critical parts of Smith’s argument for the benefits of the commercial society. This lost appreciation for the role of commerce in promoting social cooperation and civil society was due to be rediscovered (Cornuelle 1991).
Re-enlightenment?
The financial turmoil of 2008, widely, if falsely, blamed on the greed of capitalist actors, has been accompanied by a period of political pessimism for classical liberal scholars (Allison 2012; Boettke et al. 2011). Defenders of the commercial society are thus beginning to realize the importance of not just a moral defense of capitalism, which has often been neglected in technical economic efficiency arguments, but also a recognition of the moralizing features of capitalism embedded in the project of robust political economy (Allison 2012; Brooks 2010; Pennington 2011). Attention is returning to the Scottish Enlightenment thinkers and those dissident scholars who have been advancing the defense of a market society not just on efficiency grounds, but also on the grounds of robust political economy and civil society.
While Mises ([1949] 2007, ch. 8) and Hayek ([1944] 2007, ch. 15, 1988) both recognized the importance of the doux-commerce thesis and its role in history, their particular contributions, while well articulated, were never widely recognized by the economics profession. Hayek, while acknowledging that competition is necessary to drive discovery and economic efficiency, argued that rules, values, and accepted practices evolve to allow the competitive process to operate beneficially (1988, 19). Mises argued that it is the efficiency achievable through commercial relations, that is, the division of labor, that makes society itself possible ([1949] 2007, 144).
Advancing this recognition by Mises and Hayek, new articulations of the doux-commerce thesis and empirical validations have been emerging in a rediscovery – so to speak – of the recognition of the civilizing role of commerce.
For example, Robert Sirico argues that commerce “serves as a moral tutor for entrepreneurs,” because markets require a “moral context in which to exist and function smoothly” (2011, 11). Consumers drive the market and, through their purchasing or abstaining from purchasing, force businesses to continually maintain a reputation for honesty, quality, and customer service. Any business that neglects these considerations will soon be voted out of the marketplace. Appiah (2006) argues that exposure to capitalism through commercial exchanges aids mutual understanding and cosmopolitanism between diverse groups. While qualifying her statement with the fact that many practices and social experiences affect the conditions for the emergence of cosmopolitanism, Jacob (2006) argues that the rise of cosmopolitanism in early modern Europe was assisted by the intermixing of culture, religion, and ideas, often as the result of mercantile or scientific activity.
Empirically, Henrich et al. (2004, 2005) find that small-scale societies that have had more exposure to Western-style capitalism, and thus exchange, exhibit less narrowly selfish behavior and more cooperative behavior than those that have had less exposure to Western exchange. McCloskey (2006, 2010), Ridley (1996, 2010) and Seabright (2004) all explore the concomitant evolution of capitalism and virtue throughout history. McCloskey (2010) argues that the dramatic increase in economic growth witnessed since the Industrial Revolution can be traced back to the change in rhetoric surrounding the merchant community; it was precisely the recognition of the positive role of merchants and markets that fostered the environment conducive to their operation. Axelrod (1984) and Bicchieri (2006) both delve into the emergence of cooperative norms and their particulars.
Not only has modern research been rediscovering that commercial relations strengthen civil society, it has also been rediscovering the observation that increased dependence on and interference from government can also have an adverse impact on civil society. For instance, Brown argues that as “community relations become more legalistic, the social distance among us lengthens even further” (1995). Even government interventions intended to help people can lead to decline in the prevalence and influence of traditional civil society roles previously filled by churches, charities, and fraternal societies (Beito 2000). The ironic paradox is that the more the government intervenes in the economy, and civil society atrophies, the easier it is to argue for further state intervention (Taylor 1987, 168). Instead of commerce diminishing the underpinning virtues necessary for civil society, a commercial society free of excessive government intrusion may in fact promote the very virtues that promote social cooperation in the first place (Williamson 2010).
Richard Cornuelle recognized this, and realized that the bonds of civil society that emerged in a capitalist society would need to be recognized and renewed after being weakened by government intrusion for over a century (Cornuelle 1965, 1991; L. Ealy (2011). The neglect of civil society in technical models led to doubt about its capabilities and neglect when it came to public policy. A rediscovering of the role of civil society thus becomes crucial “for the long-term well-being of civilization” (S. Ealy 2011, 45).
Incorporating civil society under the purview of economics has proven difficult for most economists (Garnett 2011). Traceable back to the perceived “Adam Smith Problem,” most economists can’t square Smith’s Theory of Moral Sentiments, with its emphasis on moral sympathy, with the self-interest-driven Wealth of Nations (Boettke 2012, 6; Paganelli 2008; Smith 1998). Unable to reconcile these two views, the economics profession often embraced scholarship advancing the second project while neglecting the first.
However, this distinction between the two irreconcilable sides of Adam Smith was a false dichotomy. The market economy, driven by the division of labor, operates in the realm of strangers and anonymity – a realm that our moral sympathy cannot be assumed to extend to in a project grounded in robust political economy (Bruni 2012, 124; Forman-Barzilai 2011). To operate in the extended order, rules of just conduct – related to property rights and the rule of law – which allow individuals to pursue their own ends rather than submit their efforts to ends forcefully chosen by others, is necessary to imbue competition and discovery, and call into use widely dispersed information (Boettke 2012, 17; Hayek 1945, 1988, 18).
While some philosophers decry the thin moral framework of markets – consent and contract – it is precisely the thinness of the market system that allows widely disparate groups to voluntarily subscribe to it. A thicker moral system would not be encompassing enough to provide for the vast divergence in culture, moral philosophy, and religion that is an empirical fact of the world (Pennington 2011, ch. 3–4). The thin moral framework of markets provides the framework for even individuals holding dichotomous moral philosophies to engage in mutually beneficial exchange (Bruni 2012, 62). This in turn creates the shared social space for the observation and exchange of culture, moral philosophy, and religion, and opens the door to the formation of more intimate relations; relations that would never have the opportunity to emerge through the imposition of a conquering thicker moral framework (Forman-Barzilai 2011, 126, 179, 188–192; Storr 2008). The thin moral framework of markets fosters impartiality and an ethic of tolerance, disciplined by the pursuit of profit and the avoidance of loss, in precisely those areas where animosities in culture, morals, and religion are likely to be greatest (Forman-Barzilai 2011, 216). In addition, reliance on the extended order means less material strain is placed on intimate order relations, allowing for more authentic and voluntary relations at the intimate level (Bruni 2012, 109–110).
Thus, any attempt to transfer the rules of the intimate order, the realm within which our moral sympathy does extend, to the extended order, the realm beyond which the limits of our moral sympathy cannot be assumed to extend in a world of diverse agents, will sacrifice the gains from social cooperation under the division of labor. Isolationism, imperialism, and even cronyism and political nepotism can all be seen as attempts to operate in the extended order with the rules of the intimate order.
By understanding this perspective – that there is no Adam Smith problem – economists can realize the importance of the doux-commerce thesis. Economists are not strictly positing a world with strictly self-interested actors and no moral sympathy. In fact, we witness far more human cooperation than these sterile models can predict (Powell and Wilson 2008; Smith 1998). But we are also not positing a world where all human interactions can, or should, be assumed to be conducted via the moral sympathy of the exclusionary intimate order. Rather, a cosmopolitan society requires rules for the realm in which our moral sympathy extends, and rules for the realm beyond which our moral sympathy does not extend.6 The Scottish Enlightenment thinkers realized that private property and the rule of law would engender social cooperation in the extended order, as the pursuit of profit and the avoidance of loss would encourage reputation, reciprocity, and civility.
Rather than attempting to religiously or legislatively extend – impose – our moral sympathy on others (a project that failed abysmally), the Scottish Enlightenment thinkers discovered a method more conducive to human nature for fostering social cooperation: market institutions that would harness our own self-interest towards socially productive ends. In a sense, market institutions could shore up many deficiencies in our moral sympathy when it comes to the extended order, fostering social cooperation under the division of labor in a world of strangers, allowing civil society to flourish. Thus, it is not Smith’s moral system that has the proclivities to reach beyond one’s own group, but Smith’s economic system (Forman-Barzilai 2011, 182). Without the intergroup proclivities of commerce, communitarians find themselves advocating for an exclusionary ethic that only engenders suspicion and hostility (Bruni 2012, 48–49; Forman-Barzilai 2011, 194).
Furthermore, charity administered through a market context, rather than through a coerced regime, allows the emergence of civil society in charitable contexts. Rather than a uniform state-administered social safety net, charity becomes more localized and thus more capable of addressing the underlying causes of poverty rather than alleviating the physical symptoms through anonymous programs (Forman-Barzilai 2011, 155). Coerced charity eradicates both the intent of the giver, and thus the formation of sympathy, and the dignity of the receiver (Bruni 2012, 107–110; Grosby 2009, 2010; Olasky 1992; Salamon 2003). Whereas Marx and Rousseau would prevent disparities in wealth to address social maladies, this comes at the cost of capping prosperity across the board.
While there is much research left to do in order to fully understand the many manifestations and implications of the doux-commerce thesis of the Scottish Enlightenment, hope can be seen in the growing body of research advancing our understanding of civil society and the doux-commerce thesis. It is research along these lines that is leading to the rediscovery of the doux-commerce thesis and bringing the profession to the realization that the doux-commerce thesis should be reincorporated into the corpus of economic research and firmly embedded in the project of robust political economy. In the end, our technical models, no matter how well calibrated, will fall short of convincing the general public about the social benefits of a free commercial society if they do not recognize the moralizing aspects of commercial relations.
Conclusion
While the doux-commerce thesis was initially an important development in the recognition of the benefits of a commercial society, the acknowledged moralizing aspects of capitalism fell out of favor while the economic profession focused exclusively on technical efficiency. More recently, there has been resurgence of scholarship bringing back this important consideration of political economy. If the economics profession is to advance as a science that has practical relevance, it lies not in increasingly sophisticated articulations of efficiency arguments but in the recognition of the benefits of a commercial society, including the moralizing features of commerce.
Future scholarship exploring the relationship between commerce and civil society is necessary to fully articulate and reincorporate the doux-commerce thesis into political economy. Both theoretical and empirical work needs to be pursued to show the limits of technical articulations in capturing the civilizing effects of commerce and the benefits of expanding this model to bring this important phenomenon into the scholarly purview of economists.
Acknowledgments
The authors would like to thank Lenore Ealy, Robert Garnett, and Paul Lewis for helpful comments. We thank Robin P. K. Aguiar-Hicks and Liya Palagashvili for valuable research assistance.
Notes
1 See also Levine (2011, 68) and Robertson ([1933] 1973, 58). Though related, the dropping of the assumption that the self-interest of rulers would naturally align with the interest of the general public would wait until the advent of public-choice economics for more explicit formalization (Buchanan [1979] 1999; Mueller 1976), and the more explicit adoption of methodological individualism would wait until Schumpeter (1909), Hayek ([1952] 1979), and Weber (1949, [1956] 1978).
2 While David Hume, Adam Smith, and Adam Ferguson are widely recognized to be part of the Scottish Enlightenment, James Steuart (1767), John Millar ([1771] 2006), and James Maitland ([1804] 1967) are also part of this tradition.
3 The pursuit of ruthless efficiency in formal models also made economists susceptible to market socialism and market failure critiques (Pennington 2011, ch. 2).
4 Thorstein Veblen ([1899] 2009) also made similar arguments. More recently, Skidelsky and Skidelsky (2012) echo these criticisms.
5 This is not to say that these ideas were not developed or spread, but that they largely fell out of fashion among academic economists.
6 This is not to say that these separate realms are necessarily fixed. Each individual has the unique ability to decide the limits of their own moral sympathy. The project of Smith and Hume was to recognize this and realize a set of institutions for the extended order that would lead to social cooperation and prosperity. Over time, the realms of moral sympathy can, and have, expanded and shrunk. For example, the increase in economic prosperity since the Industrial Revolution has arguably decommodified the family as decisions such as marriage and childbearing are increasingly made based upon moral sympathy considerations rather than economic considerations.
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