Wednesday, December 28, 2011

The case for moral capitalism

Under this title, the Guardian offers a reminder that Keynes was keenly aware of the potential moral failings of capitalism. He once wrote: “To convert the business man into the profiteer is to strike a blow at capitalism … The business man is only tolerable so long as his gains can be held to bear some relation to what, roughly and in some sense, his activities have contributed to society.” But Keynes, who was not only an economist and speculator, but also an intellectual, feared the available alternatives to capitalism, so he wanted to save it.
He believed that in order to survive capitalism needed to become not only more stable, but also morally acceptable. So Keynes concluded that inequality had to be reduced, and unemployment was to be (almost) eliminated – thankless tasks he thought only the government could shoulder

With the wisdom of hindsight, we now know that there is a simpler solution to the problem Keynes worried about. Why not just make inequality itself morally acceptable? As Charles Blow’s numbers show, this has been largely accomplished, to the point where even many of the alleged “have-nots” have come to embrace the status quo – like those poor souls who have flocked to the Tea Party, disregarding the call to arms coming from the Occupy intelligentsia. David Brooks might be a bit selective in citing these poll results (“Midlife Crisis Economics”), but they are still curious: he says that “according to a Gallup survey, 64 percent of Americans polled said they believed that big government is the biggest threat to the country. Only 26 percent believed that big business is the biggest threat.”

Why has this remarkable moral revolution occurred? Here is an elegant theory. There is much recent research showing that moral judgment is strongly influenced by unconscious emotional reactions. And there are many theories associating social modernization and technological saturation with progressive emotional numbing. If this is the case, it would be only natural for economic inequality to lose much of its moral urgency. On the bright side, emotional desensitization may offer some unsuspected benefits – it can facilitate not only the acceptance of extreme inequality but other kinds of tolerance, too. Back in the 1950s, the majority of white Americans reported that they would be disgusted to drink from a water fountain after a black person; now this seems quaint, and rightly so. One could say a country and its people deserve not only the government, but the social and economic system they have. But, on the other hand, the country and its people are largely “shaped” (to use appropriately fuzzy social science lingo here) by the social and economic system they have. Oh, well – I guess this is becoming a bit too complicated for any neat causal explanation…