Economics Is Inevitably A Moral Science

I think that most people intuitively grasp the most prominent moral dimensions of economic discussions. Assume hypothetically an equal starting point in distribution of resources, a scheme of property, contract and tort rights, the need to engage in productive activity and exchange to survive, some sort of fixed metallic medium of exchange, and a perfectly effective government which enforces these rights (magically) at no cost. In such an arrangement, any subsequent distribution after the initial distribution will be the product of voluntary action by all participants. In such an arrangement, any attempt to modify the arrangement can only result in modifying an outcome which was voluntary for all to an outcome which was not voluntary for all. Opponents of such modifications could be said to manifest care about autonomy. I’ve been as explicit as I can in setting up the hypothetical to make clear that of course this is not the world we live in. But many believe that our world approximates it well enough to regard a range of proposals as threats to autonomy. Of course, whether that is the case depends on the actual arrangement, the proposal to change it, what it does. These are empirical questions.

In any such arrangement, some will end up with more and some with less over time, through the vagaries of talent, effort, and luck. When the result of such processes leads to someone suffering that isn’t ameliorated by voluntary action, and as a result some propose a modification to the above arrangement which impedes the autonomy of those who have resources by taking them away involuntarily and giving them to those who suffer, no more than is necessary to ameliorate the suffering and not enough to prevent the original owners from being unable to pursue any of their projects (this is important) such a person manifests concern for suffering that exceeds their respect for autonomy. Those who oppose this manifest respect for autonomy that exceeds their concern for suffering. A policy to alleviate suffering that hampers someone’s ability to pursue their projects involves more, however (concern for equality, resentment, attraction to austerity as an end in itself, etc.) which complicate matters.

Now I want to suggest that there is no objective basis for preferring one of these values to another, and that on the whole, we all see the point in each of them. Imagine an episode of Lost in which ‘Sawyer’ gathers a bunch of medicines from the plane crash, someone comes to need one of these medicines to survive, and he refuses to surrender it. Someone who uses force to take it from him isn’t exactly respecting his autonomy, but if he complains, we tend to say “tough.” That manifests one of our moral commitments. By contrast, we also find ourselves favorably disposed to someone who opposes a group plan to sacrifice some individual for the sake of the group. In any society these values will trade off of each other, thus opening up the possibility of endless debate about which should determine our decisions in any particular situation.

There are, however, many other more subtle ways that economic policies reflect moral concerns. Once you no longer have a metallic medium of exchange, you have the ability to increase the money supply in various ways. If you artificially lower the interest rate, you make people more likely to borrow and less likely to save. This is itself a moral preference that weights frugality less than whatever this hopes to achieve. But it does something else too: Keynes called it “animal spirits,” a somewhat mocking term for encouraging people to have confidence in the economic future so that they will make decisions they otherwise would not have made. Since using the levers of government to increase confidence, borrowing and spending over what they would otherwise be drives prices up and eventually discourages these very activities, it is ultimately a form of dishonesty. We are all opposed to dishonesty when it does nothing but facilitate exploitation, but we also are much more ambivalent about it in other settings. When a doctor tells a terminal patient that there is hope, this is benevolent dishonesty, and it too is motivated by a desire to lift the patient’s (animal) spirits by giving her false hope. Preferring hope to truth is a moral preference, as is its opposite.

There are many other examples of these sorts of things, especially in tax policies. What I hope to persuade you to entertain is the hypothesis that every economic policy decision is motivated by moral considerations and involves moral trade-offs of the preceding sort.

It is common in politics to do two things. The first is to identify the moral concern that animates one’s own policy preference while ignoring the moral concern that animates one’s opponent’s policy preference along with the trade-off, so that one can represent the conflict as one between good versus evil. This is tiresome to watch when one understands that it is occurring, but worse, it is dishonest. The second is to represent economic policy as exclusively a matter of knowledge and efficiency, as if there was no disagreement about ends, no moral trade-offs, and the conflict between those who favor one policy and their opponents was simply a conflict between knowledge and ignorance. To treat the economy as if it were a broken machine and to say “step aside and let the engineers fix it,” to treat those who resist you as the stubbornly ignorant whose refusal to step aside merely delays the repair, is to ignore the fact that the economy is made of people, and that every economic policy is an attempt to induce people to behave in some fashion or other because one prefers those behaviors. In short, every economic policy is a moral policy. Since one could not have failed to notice this, to pretend otherwise is also dishonest.


It still appears that Mitt Romney will be the Republican nominee. That means that there will be Democrats who say that you must judge a man by the religious company he keeps, and Republicans who say that you cannot judge a man by his community’s checkered history or more extreme voices. Speaking as a connoisseur of hypocrisy, I can’t wait.

Religion and Government

Religion and government. As long as the state, or more precisely, the government knows that it is appointed as trustee on behalf of a group of people in their minority, and for their sake considers the question whether religion is to be preserved or eliminated, it will most probably always decide to preserve religion. For religion appeases the individual soul in times of loss, privation, fear, or mistrust, that is, when government feels itself unable to do anything directly to alleviate the private man`s inner suffering; even during universal, inevitable, and initially unpreventable misfortunes (famines, financial crises, wars), religion gives the masses a calm, patient and trusting bearing. Wherever the necessary or coincidental failings of a state government, or the dangerous consequences of dynastic interests catch the eye of a man of insight and make him recalcitrant, the uninsightful will think they are seeing the finger of God, and will submit patiently to the directives from Above (in which concept, divine and human ways of government are usually merged). Thus the citizens’ inner peace and a continuity of development will be preserved. Religion protects and seals the power that lies in the unity of popular sentiment, in identical opinions and goals for all, discounting those rare cases when a priesthood and the state power cannot agree about the price and enter into battle. Usually, the state will know how to win the priests over, because it needs their most private, secret education of souls and knows how to appreciate servants who seem outwardly to represent a quite different interest. Without the help of priests, no power can become “legitimate” even now-as Napoleon understood.

Thus, absolute tutelary government and the careful preservation of religion necessarily go together. It is to be presumed that ruling persons and classes will be enlightened about the benefit provided them by religion, and thus feel somewhat superior to it, in that they are using it as a tool: and this is the origin of freethinking.

But what if a quite different view of the concept of government, as it is taught in democratic states, begins to prevail? If one sees in government nothing but the instrument of popular will, no Above in contrast to a Below, but solely a function of the single sovereign, the people? Then the government can only take the same position toward religion that the people hold; any spread of enlightenment will have to reverberate right into its representatives; it will not be so easy to use or exploit religious energies and comforts for state purposes (unless powerful party leaders occasionally exert an influence similar to that of enlightened despotism). But if the state may no longer draw any use from religion itself, or if the people think so variously about religious matters that the government cannot take uniform, unified measures regarding religion, then the necessary alternative will appear to be to treat religion as a private matter and consign it to the conscience and habits of each individual. At the very first, the result is that religious feeling appears to be strengthened, to the extent that hidden or repressed stirrings of it, which the state had unwittingly or deliberately stifled, now break out and exceed all limits; later, it turns out that religion is overrun with sects, and that an abundance of dragon`s teeth had been sown at the moment when religion was made a private affair. Finally, the sight of the strife, and the hostile exposure of all the weaknesses of religious confessions allow no other alternative but that every superior and more gifted man makes irreligiosity his private concern. Then this attitude also prevails in the minds of those who govern, and gives, almost against their will, an antireligious character to the measures they take. As soon as this happens, the people who are still moved by religion, and who used to adore the state as something half-divine or wholly divine, develop an attitude decidedly hostile to the state; they attack government measures, try to impede, cross, disturb as much as they can, and because their opposition is so heated, they drive the other party, the irreligious one, into an almost fanatical enthusiasm for the state; also contributing secretly to this is the fact that, since they parted from religion, the nonreligious have had a feeling of emptiness and are provisionally trying to create a substitute, a kind of fulfillment, through devotion to the state. After these transitional struggles, which may last a long time, it is finally decided whether the religious parties are still strong enough to resurrect an old state of affairs and turn the wheel back-in which case, the state inevitably falls into the hands of enlightened despotism (perhaps less enlightened and more fearful than before)-or whether the nonreligious parties prevail, undermining and finally thwarting the propagation of their opponents for a few generations, perhaps by means of schools and education. Yet their enthusiasm for the state will also diminish then. It becomes more and more clear that when religious adoration, which makes the state into a mysterium, a transcendent institution, is shaken, so is the reverent and pious relationship to the state. Henceforth, individuals see only the side of it that can be helpful or harmful to them; they press forward with all the means in their power to get an influence over it. But soon this competition becomes too great; men and parties switch too quickly; too impetuously, they throw each other down from the mountain, after they have scarcely arrived at the top. There is no guarantee that any measure a government puts through will endure; people shy away from undertakings that would have to grow quietly over decades or centuries in order to produce ripe fruit. No longer does anyone feel an obligation toward a law, other than to bow instantaneously to the power that introduced it; at once, however, people begin to undermine it with a new power, a new majority yet to be formed. Finally (one can state it with certainty) the distrust of anything that governs, the insight into the uselessness and irritation of these short-lived struggles, must urge men to a quite new decision: the abolition of the concept of the state, the end of the antithesis “private and public.” Step by step, private companies incorporate state businesses; even the most stubborn vestige of the old work of governing (for example, that activity which is supposed to secure private parties against other private parties) will ultimately be taken care of by private contractors. Neglect, decline, and death of the state, the unleashing of the private person (I am careful not to say “of the individual”)-this is the result of the democratic concept of the state; this is its mission. If it has fulfilled its task (which, like everything human, includes much reason and unreason), if all the relapses of the old illness have been overcome, then a new leaf in the storybook of humanity will be turned; on it one will read all sorts of strange histories, and perhaps some good things as well.

To recapitulate briefly, the interests of tutelary government and the interests of religion go together hand in hand, so that if the latter begins to die out, the foundation of the state will also be shaken. The belief in a divine order of political affairs, in a mysterium in the existence of the state, has a religious origin; if religion disappears, the state will inevitably lose its old veil of Isis and no longer awaken awe. The sovereignty of the people, seen closely, serves to scare off even the last trace of magic and superstition contained in these feelings; modern democracy is the historical form of the decline of the state.

But the prospect resulting from this certain decline is not an unhappy one in every respect: of all their qualities, men`s cleverness and selfishness are the best developed; when the state no longer satisfies the demands of these energies, chaos will be the last thing to occur. Rather, an invention even more expedient than the state will triumph over the state. Mankind has already seen many an organizational power die out, for example, associations by sex, which for thousands of years were much more powerful than the family, indeed held sway and organized society long before the family existed. We ourselves are witnessing how the significant legal and political idea of the family, which once ruled as far as Roman culture reached, is growing ever fainter and feebler. Thus a later generation will also see the state become meaningless in certain stretches of the earth-an idea that many men today can hardly contemplate without fear and abhorrence. To be sure, to work on the spread and realization of this idea is something else again: one must have a very arrogant opinion of his own reason and only a superficial understanding of history to set his hand to the plough right now-while there is still no one who can show us the seeds that are to be strewn afterwards on the ravaged earth. So let us trust to “men`s cleverness and selfishness” that the state will still endure for a good while, and that the destructive efforts of overzealous and rash pretenders to knowledge will be repulsed! — Nietzsche, Human, All-too-human, § 472 (1878)