A Moral Economy
It is useful to remember that Franklin Roosevelt developed and mobilized the language of activist government well before Keynes and others came up with an economic justification for it. Roosevelt made the initial break with Market Fundamentalism on his own, and it was only later that the Keynesian revolution in economics legitimized his path. Similarly, it was not the economic research of men like Friedrich von Hayek and Milton Friedman that made the revival of Market Fundamentalism possible. It was the fact that their economic ideas could be easily expressed in familiar and simple moral terms. In both cases, the key to changing the dominant story has not been economic theory but the power of a moral language.
This suggests that we could make the phrase "moral economy" serve as the organizing narrative for a revival of progressive ideas. The term has a long and rich history, but it is also shorthand for the argument that sustainable prosperity must be built on strong moral foundations. This is something that Adam Smith, one of the patron saints of Market Fundamentalism, understood, but it is a lesson that his contemporary followers have completely forgotten. Smith recognized that the pursuit of self-interest can only serve the common good if individuals are systematically constrained by moral sentiments.
The essential idea was brilliantly expressed in the title of a 1980s bestseller, All I Really Need to Know I Learned in Kindergarten. The guiding principles of a moral economy are familiar rules such as don't hit, take turns, play by the rules, listen to the teacher, don't waste food and art supplies, and be prepared to share. These principles produce order in the elementary school classroom, and they can also assure order and prosperity in our nation's economy.
These kindergarten rules, in fact, translate directly into the four key principles that would be an integral part of a moral economy. "Don't hit" and "take turns" are about the principle of reciprocity; we need to behave toward others as we want them to act toward us. We should avoid force and coercion in our economic relations, including the quiet violence that occurs when we exploit someone's vulnerability or ignorance. Reciprocity is the foundation upon which trust is built, and high levels of trust are indispensable for economic prosperity.
"Play by the rules" and "listen to the teacher" express the principle of responsible competition. In the world of sports, competition pushes people to elevate their performance beyond all expectations. But the competition is so productive precisely because it is structured by rules and because the referees are on the field waving penalty flags. Economic competition is the same; it leads to elevated performance only with clear rules and when the regulators are able to call fouls and march off penalty yardage. And these rules must be continually updated to discourage unfair and injurious competitive strategies.
The injunction against waste is the principle of conservation of all resources, including human beings, nature and the built environment. Providing the maximal opportunity for each person to develop his or her capacities is the best way to avoid wasting our human resources. Conservation of both nature and constructed materials is central to the vision of a sustainable economy that no longer assumes that fossil fuels and minerals can be indefinitely wrested from the earth.
Finally, sharing exemplifies the principle of cooperation. Market ideology focuses only on competition, but a productive economy depends on cooperation. The most productive firms are those that create high levels of cooperation between employees and managers, and most large-scale economic efforts require complex webs of cooperation between different firms and public-sector agencies. An economy's capacity to generate and exploit innovations is a direct result of its ability to facilitate cooperation among these different actors.
These four principles--reciprocity, responsible competition, conservation and cooperation--interact and reinforce one another to enhance a moral economy's effectiveness. But Market Fundamentalists understand nothing of this. In fact, their policies have weakened our economy by deliberately ignoring and violating all these principles.