Source: Open Democracy, reprinted in Arts and Letters Daily, October 4
Samuel Bowles’ slim, fascinating, and thought-provoking book, The Moral Economy: Why Good Incentives Are No Substitute for Good Citizens, starts with two assertions. The first is that policymakers have over-learned Adam Smith’s lesson that people achieve collective good when they pursue private interest. Smith noted that pursuit of self interest often produces societal benefit. But Smith hedged his bets. Bowles charges that economists, jurists, and policymakers often don’t hedge theirs, and they have come to rely excessively on incentives based on the proposition that people’s behavior is entirely self-interested and amoral.
To be clear, most policymakers probably recognize that people behave from diverse motives. But standard economic analysis indicates that policy should normally be based solely on the self-interest assumption. Bowles’ second assertion is that policies based on the assumption that people are motivated primarily or entirely by selfish motives often work poorly and sometimes backfire. Worse, such policies may actually promote selfishness and amorality.
Put more positively, public and private policies often work much better if they are designed with the recognition that people act in part from self-interest and in part from “social preferences,” which include “altruism, reciprocity, intrinsic pleasure in helping others, aversion to inequity, ethical commitments, and other motives that induce people to help people more than is consistent with maximizing their own wealth or material payoff.” Furthermore, incentive-based policies may strengthen or weaken these motivations. Simply put, public policy can promote or erode civic virtue.
The view of government as moral tutor may seem odd today, especially to those on the political right. But not to all. The belief that government should shape and, in fact, cannot avoid shaping public character is the sum and substance of George Will’s 1981 Godkin Lectures, published two years later under the title Statecraft as Soulcraft: What Government Does. Writing soon after Ronald Reagan was sworn in as President, Will argued that government willy-nilly shapes public character by what it does. He warned that legislators, especially conservatives, should take that duty seriously and posed what has turned out to be a question of increasing relevance: “[C]an conservatives come to terms with a social reality more complex than their slogans?”