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Whose Keeper? Social Science and Moral Obligation

University of California Press

Can Bourgeois Society Survive Bourgeois Man?

For all that has been said and done in its name, "the market" was rarely discussed by those presumed to have praised it. Adam Smith in The Wealth of Nations , which is generally considered a hymn to the efficiencies of the market, rarely uses the term, preferring instead the more general word exchange . (When Smith does use the term, he seems to mean it in a physical sense, as in his claim that the division of labor "is limited by the extent of the market," that is, by the size of the economic unit within which production or exchange is taking place.)1 Smith was not alone in his failure to discuss how markets actually behave. Joseph Schumpeter's massive History of Economic Analysis , as Bernard Barber has pointed out, contains no index entry for "the market," and Karl Marx, like Smith, generally assumed that circulation and exchange took place somewhere but never actually specified where.2

The tendency of eighteenth-century political economistsand even of those who came laterto ignore the workings of markets may well be because the societies in which they wrote did not have very many of them. Adam Smith witnessed the rise of the factory but was a stranger to a system in which markets were expected to constitute the sole method of exchange. Custom, trust, price regulation, personal contacts, and production for use were far more common in 1776 than was the exotic notion that people should maximize their self-interest through economic interaction with total strangers.3 As a consequence of the factory system national markets did develop, but only after a revolution in production filtered down

through society. A recent exploration of the capitalist transformation of the West notes that the development of markets took place gradually over a very long period, but picks 1880 as a date when "markets were taken for granted as a basic feature of modern economies"nearly 120 years after The Wealth of Nations. 4

If the classical political economists rarely talked about markets as concrete entities, they talked even less about "the market," an abstract process of calculating the economic gains and losses associated with individual decision-making. Their image of the individual was not as a solitary atom acting from rational choice, but as a person embedded in the kinds of social relations we associate with civil society. Adam Smith believed that a society could break through the restrictions imposed first by absolutism and then by mercantilism, thereby advancing human progress by liberating individuals to develop their own capacities. But this did not mean to Smith, any more than it did to his philosophical contemporaries, that all human action should from this point forward be based on the instrumental quest for self-interest. As Irving Kristol has pointed out, economic man was "never thought to be a whole man, only a man-in-the-marketplace. Smith never celebrated self-interest per se as a human motive, he merely pointed to its utility in a population that wished to improve its condition."5

The thinkers of the Scottish Enlightenment, Adam Smith among them, were sociologists as well as economists.6 As a protosociologist, Smith assumed that a traditional morality and a well-defined social structure would so curb human passions as to permit a realm in which people could be free to pursue their own self-interest; and this pursuit of self-interest was possible only because individuals could be sure that there was a social fabric responsible for all. "Man has almost constant occasion for the help of his brethren," Smith wrote, before adding, in the more often quoted second half of that sentence: "it is in vain for him to expect it from their benevolence only." It was not from any unalterable "original principles in human nature" that man got his famous tendency to "truck, barter, and exchange," but rather from "the . . . faculties of reason and speech"faculties that, requiring other people for their realization, are at least partly sociological.7

The "other" Adam Smiththe sociologist, not the economistis more easily perceived in The Theory of Moral Sentiments than in The Wealth of Nations , even though Smith saw both books as part of a unified system of thought. The very opening of Smith's work in moral philosophy establishes a sociological approach: "How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he

derives nothing from it except the pleasure of seeing it." To establish a moral framework while simultaneously respecting individualism, Smith developed the concept of the impartial spectator, who must "endeavor, as much as he can, to put himself in the situation of the other, and to bring home to himself every little circumstance of distress which can possibly occur to the sufferer." (Far from radical individualism, Smith's moral philosophy resembles the philosophies of the American social psychologists Charles Horton Cooley and George Herbert Mead.) We must, says Smith, learn sympathy through empathy. This great founder of capitalist economics even went so far as to suggest that a "disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks and order in society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments."8 Commercial society, from this point of view, was always on the brink of moral bankruptcy.

The political economists of the eighteenth century were not justifying a capitalist society; their aim was to provide the rationale for a capitalist economy within a society held together by a nonbourgeois (or, more precisely, early-bourgeois) morality. The difference between a realm of morality organized by economic principles and one organized by the principles of civil society becomes clear in Smith's treatment of friendship. In societies characterized by feudal or absolutist social relations, friendships were formed out of what Smith called necessitudo they were "imposed by the necessity of the situation." In more modern "commercial countries," however, people could join together based on "a natural sympathy" that would enrich and deepen their moral obligations to one another. As Allan Silver, on whose analysis of Smith's treatment of friendship I have relied, concludes, "Smith's model of friendship rests not on calculative and utilitarian exchanges between parties to interpersonal contractswhich, in the context of friendship, are redolent more of patron-client relations than of market exchangebut on generalized mechanisms of 'sympathy.'" Because sympathy "generates a kind of social lubrication throughout civil society," commercial societies are organized by a paradox: only by preserving a realm of morality against all forms of instrumentalism, including the instrumentalism of economic calculation itself, could a society be free to allow economic calculation to take place.9

Markets, then, could be reconciled with the early-bourgeois vision of the political economists, but the market could not. Specific markets made it possible for people to come together and "truck, barter, and exchange"

until they made the best mutual deal. But the market as a metaphor for a process of exchange that would serve as a moral model for all of society's interaction would have been a foreign idea to Adam Smith. In a market, friends can rely on their knowledge of one another and the trust they have developed to smooth over economic transaction. But in the market, friends are forced to treat one another as potential impediments to self-interest. If we organize all our social relations by the same logic we use in seeking a good bargain, we cannot even have friends, for everyone else interferes with our ability to calculate conditions that will maximize our self-interest. Take away the paradox that was clear to Adam Smith and one takes away what, to Smith, was one of the greatest sources of progress in the modern world: a private space in which authenticity and individuality could flourish. It is not simply that Adam Smith never thought to extend the principle of self-interest to all social relations; on the contrary, Smith recognized that to do so would destroy the very realm of morality that made economic self-interest possible in the first place.

As Adam Smith's ideas have foreshadowed, there has never existed, properly speaking, such a thing as a capitalist society, since the rules that structured capitalist economic interactions required noncapitalist moral values in society as a whole. It can surprise only those uncomfortable with paradox that capitalism lived its first hundred years off the precapitalist morality it inherited from traditional religion and social structure, just as it lived its second hundred years off the moral capital of social democracy. From precapitalist traditions there developed an emphasis on self-restraint, charity, and the organic unity of society that held to a minimum the damage caused by the pursuit of self-interest. From the postcapitalist ideology of the welfare state there developed a concern with solidarity, protection of the weak, and the organic unity of society that filled in the moral gap at just about the same time that religious, family, and community bonds weakened. One reason capitalism was able to flourish was that it could always count on those not committed to its vision to provide the morality that made it work, whether they were the aristocrats of the passing order or the socialists of the coming one. Civil society has always made economic man possible.

Thus it is of more than passing importance that a number of contemporary economists have begun to argue that all social relations in modern society are (and should be) organized by rational decision makers seeking advantage over others. In the justifications for capitalism offered by Milton Friedman and his disciples, claims are made not for a capitalist economy

within a society held together by noncapitalist values but, for the first time in Western intellectual history, for a specifically capitalist society , in which market freedom will serve as the moral code defining every form of social interaction. Some contemporary economists, in other words, see bourgeois man as unconstrained by any form of noneconomic moral obligation. This new moral vision raises a question never contemplated by Adam Smith: can bourgeois society survive the advent of bourgeois man? An examination of what is being said by the University of Chicago school of economics suggests that it cannot.

Morality and the Market

Chicago school economists certainly do not represent the discipline of economics as a whole, since many leading economic theoristsHerbert Simon, Kenneth Arrow, Amartya Sen, and othershave pointed out the paradoxes of rationality, the possibility of market failure, the need for a welfare economics dealing with group benefits, and the limits of economic man.10 Even among economists who share many of the assumptions of the Chicago school there are major controversies and differences of opinion, such as whether one can assume that rational choosers have perfect information or whether individuals who make decisions do so within hierarchies and institutions.11 One should not, in short, assume that all economists, or even all adherents to an economic approach to moral regulation, teach or were students at the University of Chicago.

There is nonetheless good reason to pay attention to the theorists associated with the Chicago school of economics. In taking ideas about rational-choice egoism to degrees rarely contemplated before, these thinkers have about them the air of a revolutionary movement. (There are, in this context, many similarities between the Chicago school approach and most forms of Marxism. Both assign priority to economic motives and tend toward structural functionalism; they share similar conclusions with respect to certain theoretical mattersfor example, that government regulation is done in the interests of those presumably being regulated; and, as I will argue shortly, the Marxist theory of false consciousness and the Chicago school notion of optimality are basically the same idea.)12 As revolutionaries, Chicago school adherents are the first thinkers to give us some idea about how moral obligations would be structured if capitalism develops to the point where economic relations are no longer softened by ties of trust and solidarity in civil society.

Chicago school theorists insist that the tools of economic analysis can be used not just to decide whether production should be increased or wages decreased, but in every kind of decision-making situation. Thus we have been told (either by Chicago school theorists or by others writing in the same spirit) that marriage is not so much about love as about supply and demand as regulated through markets for spouses; immigration could be much better controlled by selling the right to resettle in the United States instead of by feeble efforts at enforcement of borders; laws prohibiting usury restrict credit for those who need it most; people should have the right to sell their body parts, after they are dead, to any willing buyer; corruption speeds up service and is therefore a rational option when lines are long; the best solution to the problems of surrogate mothering is to allow parties to contract freely on the market with no government regulation; and a man commits suicide "when the total discounted lifetime utility remaining to him reaches zero."13 From the perspective of the Chicago school, there is no behavior that is not interpretable as economic, however altruistic, emotional, disinterested, and compassionate it may seem to others.

The hypothesis that all behavior is motivated primarily by economic factors is revolutionary precisely because relations in civil societybased on such motives as love, a willingness to let others go first, and respect for traditionhave generally been viewed as constraints on people's selfish instincts. (That is why families and communities have traditionally had more moral stature than have markets.) In rejecting that understanding, advocates of pure laissez-faire often adopt a certain "naughty boy" tone, as if morality were of concern only to sissiesanother point of similarity with Marxism.14 Thus economists and moral philosophers influenced by laissez-faire perspectives have argued over whether blackmail ought to be legal because it represents only "the receipt of money in exchange for the service of not publicizing certain information" or have concluded that "someone writing a book, whose research comes across information about another person which would help sales if included in the book, may charge another who desires that this information be kept secret . . . for refraining from including the information in the book."15 In a similar manner, concerns about insider trading on Wall Street or the practice of hostile takeovers are approached not in terms of right and wrong but as questions of risk and information: we ought to be concerned about insider trading practices, according to one economist, not because "excessive resources are sucked into bribing officials . . . but because so few" are; according to another, ar-

bitragers receive high pay because the information they acquire is so risky to obtain.16

"Tough-mindedness" toward moral issues is generally defended on realistic grounds, based on the argument that the economist, rather than ethically justifying people's behavior, is really only scientifically describing it. Yet the economic approach does have a moral dimension, being characterized by an insistence that moral obligations to others can be satisfied only by first satisfying obligations to the self.17 One could illustrate the particular approach to moral obligation contained in the new economics with any of the above examples, but one other, because it deals with the problem of intergenerational moral responsibility that will be a major theme in the chapters that follow, seems particularly relevant. Suppose you have worked hard, experienced a bit of luck, and managed to accumulate a small fortune. Knowing that no amount of money can buy immortality, you have to decide how to distribute your fortune among your six children. You have three girls: should you treat them equally with the boys? One of your children is lazy and irresponsible: should he get a share equal to the others? Another has always been your favorite: shouldn't you encourage his talents by leaving him more? What makes questions of this sort interesting is that when the children receive the money, you yourself will be dead. Do you therefore have an "interest" in how the money is distributed?

If the social sciences were sciences like biology or physics, they would approach these questions empirically. How, they would want to know, do people make decisions about their obligations to the next generation? We have a good deal of empirical information on this subject: for example, although daughters can face discrimination, people tend to divide their fortunes equally among their children, using a kind of commonsense morality that enables them to avoid difficult issues like whose behavior is to be encouraged and whose punished.18 But the social sciences are not just descriptivethey are also exercises in moral philosophy. And so it has proven impossible to resist asking a further question: how should people bequeath their fortunes? Economists have an answer: self-interest ought to follow us into the grave.

One recent study of these issues by a team of economists offers the hypothesis that people leave money in order to influence "strategically" the behavior of the recipients. Yet as we have seen, the empirical evidence on the matter seems to lean the other way. These economists respond by making three points. First, such nondiscriminatory patterns of bequeathing contradict "altruistic" theories fully as much as they do "economistic"

theories. Second, some counterevidence does support the strategic theory of bequeathing. And third (and most crucially for the present discussion), evidence of nondiscriminatory bequeathing "establishes that, for reasons not captured in our model, parents do not manipulate their children 'optimally.'"19

The concept of optimality transforms the economic approach from a descriptive science to an exercise in moral reasoning. People, it is alleged, will always act in a rational way when they possess full information. Therefore, if they do not act the way a rational model of behavior predicts they will, their aberrance must be due to an information failure, an inability to make the "optimal" decision. Scientifically, the concept of optimality makes no sense, for it introduces nonfalsifiable propositions into methodology; one can never not find rational conduct when such a handy way to explain away discrepancies is present.

To illustrate, consider Timothy Hannan's study of bank robbers. Hannan argues that bank robbers will not strike if bank security precautions are strong enough to deter them. Yet in a study he cites, only 6 percent of robbers knew of police procedures in the area in which they robbed, 82 percent did not know if the money was marked, and 59 percent did not know if the bank had a camera. He concluded that such ignorance was not "optimal" for the robber and that a rational bank robber would obtain such information to be more successful.20 It would seem that the concept of "optimality" is to the Chicago school what false consciousness is to the Marxist, a catchall that enables the theory to be preserved regardless of empirical evidence to the contrary.

If the notion of optimality makes little sense scientifically, it makes a great deal of sense morally. By upholding an ideal standard against which actual behavior can be found wanting, the notion of optimality asserts the primacy of what ought to be over the reality of what is. In the theorists of the Chicago school of economics, therefore, we find a combative style and mode of argument that is generally associated with moral fervor. There is a challenge in this literature: seemingly altruistic behavior, such as that explored in Richard Titmuss's study of blood donation, is addressed instead with the tools of rational self-interest.21 Despite the mathematical models, exuberance pervades the literature: political economists apply their models to all kinds of fascinating situations, such as dueling, symbols and clan names, blackmail, plea bargaining, quackery, photocopying, the conditions of academic life, and the deeds of Adolf Eichmann.22 There is, finally, aggressiveness in this literature, as if its participants were, in fact, at

war. (Not surprisingly, rational-choice theorists also think they can explain war.)23

If the Chicago school theorists are fighting a war, the enemy, it would seem, is sociology, which for most economists is the discipline least committed to the assumption of rational choice (even though, as I will discuss in Chapter 7, rational-choice theory has gained popularity in contemporary sociology). Gary Becker, for example, allows room for the other social sciencesincluding sociologybut only if they accept the terrain established by economics.24 Jack Hirshleifer speaks of the "expanding domain" of economics.25 Reuven Brenner goes further. He asks whether economics is an "imperialist" science and answers that, because it contains superior predictive ability, it indeed is. Brenner concludes that the efforts of the Chicago school to colonize the other social sciences by using the techniques of economics is not some passing fancy but may be a permanent shift in the hegemony of the social sciences.26 Science does not generally arouse such passion; only a moral vision can generate a literature so lively. Surely Donald N. McCloskey is correct in arguing that one finds in the Chicago school, especially in the "Kipling of the economic empire, Gary Becker," a form of rhetoric, even of literature, complete with conventions, metaphor, and symbolism. Of this literature McCloskey notes (as is true of all literature): "It is no use complaining that we didn't mean to introduce moral premises. We do."27

In the days of Adam Smith, moral philosophers addressed questions of economics. Under the impetus of the Chicago school, economists are now addressing issues of moral philosophy. Not all Chicago school theorists see themselves as engaged in moral reasoning. Milton Friedman, for example, is among those who, following in the tradition of positive economics, argues that the role of the economist is not to examine the ethical question of what people's wants ought to be, but instead to develop mechanisms that allow those wants to be maximizedirrespective of what they are.28 The whole problem of ethics and morality, Gordon Tullock has similarly argued, could be solved if we just developed an academic division of labor: sociologists, psychologists, and political scientists could concern themselves with how preferences are formed, leaving economists free to determine "the likely outcome of the interaction of individuals attempting to maximize their preference functions in a society where it is not possible for everyone to have everything he wants."29

This formulation, however, is not especially satisfactory, because ends and means are not so radically distinct; to choose efficiency or rationality

as the means is already to make a judgment about the kinds of ends sought.30 More recently, Chicago school theorists have begun to recognize that positive economics is not enough. If we believe that ultimately there is no accounting for tastes, then we run the risk of value relativism, of failing to examine where the deep structure of preferences begins. George Stigler and Gary Becker recognize the danger of value relativism to their theory and, quite appropriately (given assumptions of their theory), challenge it. All tastes must ultimately be subject to economic analysis, they argue, including tastes shaped by seemingly nonrational behavior such as addiction or fashion, for otherwise the tools of economics would have no special claim over the tools of the other social sciences.31 In other words, economics cannot be an imperial science unless, like all forms of imperialism, it is also a moral vision, one that asserts the primacy of certain fundamental valuesin this case the value of maximum freedom in making choicesover others. That people ought to have as much choice as possible, and that they ought to be given the means to realize their choices in as many areas of their lives as possible, are not scientific but moral objectives.32

When the focus of inquiry shifts from an empirical examination of hypotheses to assertions about the nature of wants, the criteria by which arguments are evaluated change as well. Prediction (or even logical rigor) becomes less meaningful than alternative visions of a model of man, a sense of who we are and why we come together with others to fulfill our needs. That such visions differ so widely may explain why debates over rational-choice theory and whether it can serve as a model for all the social sciences, not just economics, tend to be so passionate. When neither religion, tradition, nor literature is capable of serving as a common moral language, it may be that the one moral code all modern people can understand is self-interest. If social scientists are secular priests, Chicago school economists have become missionaries. They have an idea about how the world works. This idea seems to apply in some areas of life. It therefore follows, they believe, that it ought to apply in all.

Markets and Social Constraint

The moral energy that inspires the Chicago school and contributes to its impressive vigor surely stems from the collective sense of its members that they are trying to expand the realm of human freedom.33 Yet because, in their view, the only serious threat to freedom can come from government, they are, unlike the thinkers of the Scottish Enlightenment, insensitive to

the idea that if freedom is a product of civil society, it can be destroyed by the market as well as by the state. If all behavior is viewed as self-interested, then all relationships are instrumental. If we cannot escape rational calculation, the realm of what Smith called necessitudo is once again expanded, only now it is the necessity to act out of rational self-interest in everything we do, rather than the necessity imposed by arbitrary political power, that has the potential to threaten the autonomy of civil society. There can be no "natural sympathy" in a world without civil society, and there cannot exist, as a result, social relationships that are worthwhile simply because they are what they are, with no thought given to what they mean in terms of personal gain.

Chicago school theorists do not, of course, directly discuss the nature and character of civil society; indeed, they never even use the term. That they nonetheless manage to indicate their hostility to the idea of a realm of autonomy into which the calculating mentality of the market should not be permitted to enter is illustrated by the notion of compartmentalization. "The heart of my argument," Gary Becker has written, "is that human behavior is not compartmentalized, sometimes based on maximizing, sometimes not, sometimes motivated by stable preferences, sometimes by volatile ones, sometimes resulting in an optimal accumulation, sometimes not."34 Can we really believe, Richard Posner asks, that "the individual's decisional processes are so rigidly compartmentalized that he will act rationally in making some trivial purchase but irrationally when deciding whether to go to law school or get married or evade income taxes or have three children rather than two or prosecute a lawsuit"?35 From the viewpoint of these theorists, human beings are presumed always to act in the same way. No area remains outside the scope of the market, for there is only one compartment in social life: the one defined by self-interested action.

How far Chicago school theorists are willing to take their arguments against compartmentalization can be illustrated by Elizabeth Landes and Richard Posner's argument for a free market in babies. At the present time, they suggest, revulsion against the buying and selling of babies, combined with ineffective legal efforts to regulate such activities, has caused a massive number of social problems: irregularities in adoption procedures, dismal foster care, a scarcity of white babies and a surplus of black babies, and excessive abortion. If women were allowed to sell their babies on the market, abortions would decrease because it would be economically feasible for (especially poor) women to carry their babies to term and then sell them: "The emphasis placed by critics on the social costs of a free market

in babies blurs what would probably be the greatest long term effect of legalizing the baby market: inducing women who have unintentionally become pregnant to put up the child for adoption rather than raise it themselves or have an abortion." Foster care would be unnecessary, or at least only a last resort, because the demand for and supply of babies would reach equilibrium. Problems of racial discrimination would be taken care of by the market, for blacks would buy black babies and whites would buy white ones: "Were baby prices quoted as prices of soybean futures were quoted, a racial ranking of these prices would be evident, with white baby prices higher than nonwhite baby prices." Baby breeding would be encouraged, but such activity would be of limited importance: "Baby selling may seem logically and inevitably to lead to baby breeding. . . . However, so long as the market for eugenically bred babies did not extend beyond infertile couples and those with serious genetic disorders, the impact of a free baby market on the genetic composition and distribution of the human race at large would be small." In short, Landes and Posner argue that direct moral restraints on the exchange of babies are ineffective regulators; encouraging people's rational action through the market would do a superior job in solving many of the existing problems that social workers and sociologists have failed to solve.36

Landes and Posner's article, like so much of the Chicago school oeuvre, reads as if its authors were deliberately flouting conventional morality in asserting the strength of their new vision. (It also contains a Swiftian sense of irony, but that is presumably unintentional.) By choosing babies as the subject of their analysis, they no doubt wanted to emphasize their objection to sentimentalism, to the idea that there are precious things that are not possible commodities or that do not have economic value. They could hardly have picked a more appropriate example, for to most people the relationship between parents and children is the very definition of civil society: an intimate realm in which caring will serve as a relief from the demands of self-interest reinforced in the economy.

The objection to compartmentalization is thus an objection to the notion that people will develop different moral rules appropriate to different spheres of conduct. Since the meaning of civil society lies precisely in the fact that it establishes realms of intimacy, trust, caring, and autonomy that are different from the larger world of politics and economics, to abolish compartments in favor of one moral model is to abolish civil society. That prospect is what makes the theory of the Chicago school so controversial. Few doubt that economics is a powerful tool, that it has an appropriate

place in society, that there ought to be markets that organize some aspects of life, and that encouraging rationality and self-interest can be an appropriate moral guide in some of what we are called upon to do. But to break down all compartments so that only rational choice remains is another matter entirely.

Many of those advocating such a course recognize how unprecedented their proposals are. Gary Becker could never be accused of misunderstanding Adam Smith, for he points out how often Smith refused to extend the logic of self-interest into noneconomic, especially political, matters. In contrast to Smith, who strove to delineate different realms with different moral rules, Becker believes that market assumptions are "applicable to all human behavior, be it behavior involving money prices or imputed shadow prices, repeated or infrequent decisions, large or minor decisions, emotional or mechanical ends, rich or poor persons, men or women, adults or children, brilliant or stupid persons, patients or therapists, businessmen or politicians, teachers or students." The assumptions of the market posit individuals as utility maximizers who operate from a stable set of preferences and obtain satisfaction in a market equilibrium with others. If used "relentlessly and unflinchingly," Becker writes, such assumptions provide "a valuable unified framework for understanding all human behavior," yielding insights "for understanding behavior that has long been sought by and eluded Bentham, Comte, Marx and others."37

If, as Gary Becker claims, Smith was an insufficient Smithian, other market enthusiasts seem to feel that Bentham was not Benthamian enough. The utilitarian calculus Bentham invented was supposed to solve many sticky problems of ethical and moral theory by reducing them to individual decisions about pleasure and pain; for this reason, utilitarianism has generally been criticized by moral philosophers for its insensitivity to the moral and ethical issues that have long dominated Western discourse.38 To the pure theorists of the market, however, Bentham is an inappropriate guide because his philosophy has too much moral content. Richard Posner sees no contradiction in the fact that many leading Benthamites, especially John Stuart Mill, could switch to a socialistic philosophy once they deduced that a market system was not maximizing pleasure and minimizing pain. Pleasure, pain, and happiness, key terms in the utilitarian calculus, are value-laden terms, Posner argues, containing the totalitarian implication that one can determine for another what is pleasure. This constraint could be eliminated if we substituted for utilitarianism a different set of calculations, which Posner calls "wealth maximization." Any action that

increases the wealth of a society is morally grounded, and any action that detracts from the maximization of wealth is ethically dubious. For Posner, then, the problem with utilitarianism is that it does not respect individualism enough : "the pursuit of wealth, based as it is on the model of voluntary market transaction, involves greater respect for individual choice than in classical utilitarianism."39 Rarely before has the notion that fulfilling one's obligations to oneself is sufficient to fulfill one's obligations to society been so strongly articulated.

Chicago school economics thus represents what could be called a second generation of marketplace enthusiasts. The first generation, from Adam Smith through (perhaps) Herbert Spencer, were pluralists who accepted what Michael Walzer has called "separate spheres";40 in their theories, as I have argued, morality provided a framework within which economic activity would take place. For the second, more monistic, generation of market enthusiasts, there is only one sphere, the economic. Its fundamental assumption that people seek to maximize their self-interest applies to all behavior, even when markets do not exist. Richard Posner, for example, has argued that judges, faced with a decision in which no way of calculating costs and benefits exists, should nonetheless create what he calls a "hypothetical-market approach" to guide their decisions.41 There is in his view no separate sphere of justice. Indeed, there are no separate spheres at all, not even one for markets, if we understand those as physical places where people socialize as well as buy and sell. In the second generation of capitalist justification there is only the market, a mental process through which people calculate what is advantageous to them and what is not.

However theoretical and abstract the writings of the Chicago school of economics are, they illustrate what would happen if the realm of civil society were to disappearin this case, under pressure not from the state but from the market. A world without civil society is a coercive, not a libertarian world, because it would destroy the noninstrumental ties between individuals that make freedom possible. Why, for example, do societies prevent the buying and selling of babiesor, for that matter, depending on the society, the running of nursing homes for a profit, advertising on television, the selling of blood, or the ability to avoid military service through payment?

The answer to this question lies, to paraphrase Oliver Wendell Holmes's comment on the law, not in logic, but in the social experience that shapes our lives. Modern people live under conditions in which ties of family,

community, and friendship are weakening under the impetus of the market, as I will argue in the two chapters that follow. If we knew that civil society were securethat we could expect that friends would live in the same places they grew up, that families would rarely divorce, that voluntarism and charity were strongly ingrained obligationswe might not worry so much about the intrusion of the market. But we know that these realms of intimacy and community are threatened; we seek to compartmentalize, therefore, for that is the only way to prevent civil society from being weakened further. Compartmentalization, in that sense, represents our recognition of the gift of society, our understanding that some things are too valuable to be associated with value. Hence it is not that people are by nature too "good" to sell their own childrenmake them desperate enough and they might even contemplate eating them. Rather, we create social rules to restrict the freedom of a few to buy and sell as they please in order to protect everyone else from buying and selling.

Michael Walzer calls these efforts to prevent the intrusions of the market into civil society "blocked exchanges," and he presents us with a fairly comprehensive list of what they are, including the selling of human beings themselves, political power, criminal justice, freedom of speech, marriage rights, exemptions from military service, divine grace, and "trades of last resort."42 (That some of the items on Walzer's list have been put up for sale, such as police protection, which is increasingly private, or justice, which is increasingly corrupted, indicates how vulnerable civil society is under modern conditions.) Compartmentalization, it would seem, is necessary for freedom; only by isolating the most sacred of our common possessions can we be sure that we can keep them. To eliminate this ability to compartmentalize is not to increase our freedom but to subject us to obedience to rules over which we have little control. This is why Walzer, always judicious in his choice of language, can write that "a radically laissez-faire economy would be like a totalitarian state, invading every other sphere, dominating every other distributive process. It would transform every social good into a commodity. This is market imperialism."43

Because they seek the abolition of civil society, Chicago school theorists illustrate not the dangers that follow when people are given too much freedom, but the vulnerability of a realm of freedom to a realm of coercive authority.44 A pure market society becomes, in Charles Lindblom's appropriate metaphor, a prison.45 To the degree that a society chooses to organize all its affairs, not just its economic ones, by the logic of the market, to

that degree would be created a society of nonautonomous individuals, unable to decide how they should live, though retaining, insofar as the market will allow them, the right to decide where.

Situated Freedom

Economists, strategic theorists, and even an occasional novelist have been fascinated with a game called "the prisoner's dilemma."46 This game envisions a situation in which two people arrested for a jointly committed crime are held in different cells. Each is told that if he blames the other, he will go free. If each one acts out of self-interest and testifies against the other, however, both will wind up worse off. For any given player, therefore, the dilemma is whether to pursue self-interest or seek cooperation. The former avenue can mean big winnings but also big losses. The latter rewards both players, but in lesser amounts.

One question that the prisoner's-dilemma game addresses is whether people are better off when they make decisions based on what they think is in their own interest or instead try to take other people's points of view into their moral accounting. Robert Axelrod, a political scientist, demonstrated one answer to this question through the deceptively brilliant device of asking prominent economists and game theorists to enter a prisoner's-dilemma tournament themselves.47 The program that won the first round, submitted by Anatol Rapaport, was called "Tit for Tat." The strategy involved deliberately losing the first round of the game and then simply repeating the other player's moves indefinitely. At some point the opponent receives a signal that communication is expected and returns the moves of the first player. Once cooperation is established, both players benefit more than they would under any alternative strategy. When Axelrod submitted a request for a second round in the tournament, informing all applicants that "Tit for Tat" had won the first time, the same strategy won again, even though some players attempted deliberately to beat it.

Reflecting on the results of his research, Axelrod argued that cooperation can produce more rational results than the more conflictual strategy of relying on self-interest. His results have been interpreted as suggesting that it is possible to resolve conflict without having to resort to all-out violence. No doubt this is a correct interpretation, but another conclusion also follows from his experiment. Suppose, for example, that a Chicago school theorist were invited to play in this tournament.48 Would his submission, in accord with the theories of the school, base each move on the

logic of self-interest? If so, would it fare well? It turns out that one of those who responded to Axelrod's initial invitation was Gordon Tullock, who, while not at Chicago, is a fairly extreme exponent of the idea that rational self-interest can be used to explain noneconomic behavior. Tullock did in fact submit a strategy based on optimizing self-interest: it finished next to last, barely beating out random responses.49

What seems clear from this experiment is that in any given situation there are two different ways to think about freedom. Those who followed Rapaport's winning strategy operated out of a situated understanding of their freedom. "This is where I am," they were saying, "in this game now with this potential opponent also in the game. I can deny the reality of my opponent and act as if my motives were the only ones that mattered, but if I do that, my freedom is reduced because he will act in the same way. If I instead recognize the reality of interdependence as the defining situation for my action, I can increase my freedom, but only by considering the point of view of others in making my decisions." Tullock, in contrast, operated from a conception of freedom which demands that the agent ignore the actual situation and make choices based on an a priori rule, in this case the rule that one try to maximize self-interest. His understanding of freedom seems to work by the rules of logic and clear thinking, but when applied to a specific situation it led only to frustration.

Modern people do not live in the tightly bound world of unalterable ties that characterized traditional society, but they do live in situations nonetheless. When people make decisions, they tend to look not to a mathematical formula to determine what is to their best advantage, but to what others do, to what they have traditionally done, or to what they think others think they ought to do. As with the prisoner's-dilemma game, a theory of moral obligation can either ask people to recognize the situations in which they find themselves and to develop their moral rules accordingly, or it can insist that they act out of principles that deny the limits imposed by situations. Modern people usually find themselves in three situations in particular: they live in time; they occupy space; and the rules that define their interaction are the product of a specific culture. Chicago school economics is premised on an effort to escape the limits imposed by all three of these givens.

Because we can do only a finite number of things at any one time, it is not difficult to conclude that economics, which is concerned with scarcity, can study the allocation of time just as well as any other good for which demand exceeds supply.50 Clearly, in that sense, time has always been

money. But time is also a constraint, a limit imposed on human activity by the fact that people need time to sleep, to vary their routines, and even, in a variety of circumstances, to wait. Because time imposes limits on what we can do, it plays havoc with assumptions about perfectly rational economic behavior. Wages, for example, tend to be determined by how long one has worked for a firm, not by one's contribution to the output of that firm.51 Schemes to organize factories and offices to operate around the clock invariably fall victim to higher rates of absenteeism and turnover than occur in more "normal" nine-to-five work.52 Invariably, more hospital "emergencies" take place on Mondays than on Sundays, and not even induced labor can explain why so many more babies allow themselves to be born on workdays than on weekends.53

Although time is money, therefore, not all time is, if for no other reason than that the number of hours in a day is limited while the amount of money available to society is not. Both biology and society guarantee that there will always be some time that is protected against the emergence of twenty-four-hour rational maximizers. Rather than accepting situations defined by time, however, theorists associated with the Chicago school resist all such constraints; from their perspective, there is no real distinction between time spent in economic activities, as generally understood, and all other time, such as weekends or periods spent sleepingthe latter are simply less associated with utility.54 Yet because time is situational, any effort to maximize one person's time at the expense of another's means that neither of them can sleep. To live in time rather than against time requires shared rules that determine its distribution, rules that presuppose cooperation over time. Thus Axelrod discovered that when players viewed the prisoner's-dilemma game as a one-time-only event, they tried to act out of pure self-interest; but when they recognized that they would be playing the same opponent over and over again, they agreed to the rules of "Tit for Tat."55

There exists, in all societies, a commonsense understanding of moral obligation that warns people of the dangers of trying to escape the constraints imposed by time. To put the matter another way, people are often willing to wait. Yet why would one wait, when it is as clear to that person as it is to a Chicago school theorist that not waiting often has monetary advantages? We wait because we expect that most others will also wait. (People are generally willing to let one or two persons jump a line, but they recognize, often through acts of spontaneous collective definitions of the situation, that past a certain point the line breaks down.)56 Waiting, in

short, depends on the existence of the expectations of trust and solidarity that characterize civil society; through trust, as Niklas Luhmann has written, an individual "binds his future-in-the-present to his present-in-the-future."57 Only when people have some sense that they share a common fate with others will they be willing to wait, even if their common fate is as minimal as entering a theater. (This is why societies always have implicit or explicit waiting rules, as I shall call them in Chapter 9priorities that determine who gets what when.)

When people wait, they often do so in a specific place. Space is, like time, either a defining feature of the situation we are in or something from which premises of rational conduct demand we escape. Perhaps because of its link to civil society, contemporary sociology tends toward the former approach. People who examine the symbols created through mutual interaction are spatially oriented, because some physical placewhat Erving Goffman called a "stage"is necessary before people can work together to create their social realities. The very lines that people wait in form somewhere: at movie theaters, unemployment centers, or bus stops. These queues contain their own cultures, their own rules, their own dynamics. They bring together people who have something in common and put them in a situation conducive to the ritualistic expression of shared norms and interests. These factors may explain why people sometimes wait in line even when they do not have to; in his study of Australian rulesfootball queues, Leon Mann found that people will line up twenty-four hours in advance of the match even though they could buy tickets two hours beforehand without problem. Because the queue is a small-scale society, "lining up to get tickets for the event . . . almost becomes an end in itself, with its own intrinsic rewards and satisfactions."58 In a similar way, auctions, which to an economist are abstract mental processes through which prices are established, are viewed by sociologists as lived experiences, located in specific regions of the country and even in particular halls and auditoriums, where generally like-minded individuals come together to define value through a process of social negotiation.59

In contrast to the sociological view that specific spaces contribute to the definition of group identity, the economic point of view tends to stress that people cannot appreciate a specific place for sentimental, emotional, or social reasons when rational calculation leads them to put a price on what that space, as a commodity, is worth to them.60 Clean air and good architecture, both qualities associated with specific spaces, are, according to some economic theories, valuable only to the degree that they can be

translated into monetarily quantifiable benefits.61 It therefore follows that if ties to a particular place, rooted in family life or love of community, interfere with an individual's ability to act by rational choice, that individual will move; thus migration, which can be so disruptive of social ties, is "a means of promoting efficient resource allocation."62 Similarly, "consumer voters," as they have been called, will choose a place to live based on how local services meet their preestablished preferences.63

The early political economists, Donald Lowe has written, contributed to the idea that a sense of space (and time) could be liberated from the limits imposed by stagnant societies.64 Yet liberation from space, like liberation from time, can have unexpected consequences. The whole point of liberating space was to create an opening within which different interests could flourish. Yet when space is valuable only because of the price into which it can be converted, it can have no meaning outside its costs and benefits. Without compartments in life, without emotional ties to specific places, without restraints on the mobility of labor and capital, all space becomes indistinguishable, valuable not because of its inherent symbolic meaning, but only because others consider it worthwhile purchasing. Space, which was brought into calculations of political economy by the eighteenth-century theorists, is factored out again by late-twentieth-century adherents of the Chicago school of economics. (To protect space or, more correctly, specific spaces against the market, societies need what I call "entrance and exit rules," which will also be further discussed in Chapter 9.)

A third feature of situated reality for most people is culture. People do not think of themselves as decision makers located outside the categories that define their similarities with others; indeed, they tend to understand their identity primarily as a cultural one, as representative of a group that has a shared language, common symbols, certain sacred practices, and a history. Culture, by definition, can never be universal; it is a form of compartmentalization, a way of differentiating one group from another. The assumption of rational choice, by contrast, is put forward as cross-cultural, applicable to all people in all places at all times, even though, as Kwangkuo Hwang has pointed out, models of economic man are of little help in deciphering rules of social interaction in non-Western societies.65 Not surprisingly, therefore, the University of Chicago tradition in economics is hostile to culture, viewing it as an obstacle to the ability of people to make their decisions as rationally as possible. From its point of view, culture is an impediment to freedom. Like separate compartments, or indeed like time and space, it ought to be broken down.

One will not find in the writings of the Chicago school of economics an explicit theory of culture, even though some thinkers, such as Richard Posner, have tried their hand at understanding the rules of "primitive" society.66 But just as its hostility toward compartmentalization can be read as a distrust of civil society, the attitudes toward culture contained in contemporary theories of the market are revealed by discussions on another matter entirely: the assumption of stable preferences. Preferences, after all, come from culture. Since we cannot, at least without great frustration, prefer what we do not know exists, our preferences are shaped by the social world in which we live. Any theory of preferences is a theory of culture, and any theory of culture is a statement about preferences.

Economists associated with the Chicago tradition assume that individual preferences are not whimsical but reflect some consistent internal structure. Although many economists take pains to point out that the assumption of stable preferences is only an assumption, that their use of the concept is not meant to describe real behavior, the vehemence with which the assumption is asserted indicates a certain reluctance to abandon the idea that people's behavior is in fact predictable. In that sense, the assumption of stable preferences is more than just a fine point of methodology; it contains a model of man, a theory about the kinds of persons that certain economists believe should exist if the world is to become a more understandable place. To envision a society with stable preferences that are presumably shaped by "human nature" or basic acquisitive drives is not to transcend culture but to express the values of a society where culture is already weak and unable satisfactorily to bind. Since people already know what they prefer, they have no need to turn to institutions, traditions, other people, literature, or even television advertising, which might reveal new preferences.

In few other areas are the differences between Chicago school economics and most forms of sociology sharper than in that concerning the stability of preferences. Sociologists often begin with the assumption that, in the absence of social interaction with others, one can never know what one's own preferences are. In Harold Garfinkel's world, for example, we view individuals so complex that they can assume nothing; not even their sexual-preference schedules, as we see in his treatment of the transvestite Agnes, are fixed. All our preferences, even those one would assume to be determined by biology, change as we present ourselves to the world around us.67 If Agnes is not sure whether she is a man or a woman, how can anyone be certain whether he prefers washing machines or blenders, much less know what is moral or just? Because we do not know who we are, let alone

what we prefer, we have to interact with others to find out. Making demands on others is a way of making demands on ourselves. We cannot know what we want unless we know what other people want.

The world according to Garfinkel (and also to Erving Goffman) is a world in which reality and appearance never seem to coincide. Exactly the opposite could be said of theories of stable preference: there, appearance and reality are always the same. Consequently, the world of Chicago school economic theory is, for all its libertinism and radical secularism, a world without melody or frivolity. It would be enormously difficult to imagine great novels being written about people with stable preferences, for they would undergo no Bildung , either as a result of their internal moral development or of their confrontation with society. A world of stable preferences would be one in which there was no language, no persuasion, no history, no art, and no meaning. Strip away man's capacity, indeed his willingness, to interact with others and so alter their preferences (and therefore take the risk that they will alter his) and the ability of people to develop thickly textured lives is also stripped away. Such sterility may be why, despite theories of rational choice and their arguments to the contrary, most people accept the limits defined by culture. Not only are these bounds enormously difficult to resist, but they also make freedom, or any other value, possible by giving it a name and establishing rules for its use.

Because Chicago school theorists paint a picture of individuals struggling to liberate themselves from situations defined by time, space, and culture, there is in their work a touch of the Nietzschean bermensch . The image of Ulysses at the mast, used to illustrate some of the problems of rational-choice theory, is appropriate, not only because Ulysses must bind himself in order not to respond to the sirens, but also because Ulysses is an epic hero who has escaped the circumstances of bounded life.68 This promise of freedom from the ties of situation is what gives Chicago school economic theory its appeal, but it is also a major source of its difficulty as a moral theory for modern society. Freedom in an interdependent world, as Charles Taylor has argued, is not an abstract right, but a product of circumstance and context. Unlike pure individualism, which leads to a self that "is characterless, and hence without defined purpose, however much this is hidden by such seemingly positive terms as 'rationality' or 'creativity,'" the concept of situated freedom, as Taylor calls it, understands free activity "as grounded in the acceptance of our defining situation."69

It ought, therefore, to be clear why Gordon Tullock, who followed a strategy of pure self-interest, continually lost in the prisoner's-dilemma tournament to Anatol Rapaport, who accepted that the situation required

taking the point of view of the other into account. Even though the prisoner's-dilemma game involves only two people and modern societies involve the interaction of enormous numbers, we nonetheless all find ourselves in situations where the pursuit of rational self-interest lessens people's ability to protect time, preserve space, and utilize their cultural tools. Civil societyconcrete relations located in specific times, places, and culturesallows people to define who they are.

Quasi-Modernity

Gary Becker, Richard Posner, and other enthusiasts for the market find it puzzling that people do not apply rational choice to everything they do. Yet, they seem to feel, given time, information, the right inducements, and the freedom to calculate what is and is not in his own interest, modern man will be able to dispense with old-fashioned moral restraints and, for the first time in human history, live purely by his own efforts. He has the possibility of becoming rich, but, even more important, he is modern. He ought, therefore, to be happy.

Yet unlike the optimistic welcoming of modernity one finds in the work of Adam Smith and his philosophical contemporaries, the world of Chicago school theory is not a happy one. Struggling to liberate ourselves from time, space, and culture, we are too busy to be satisfied.70 We are engaged in a desperate struggle to be rational, even while recognizing that the more rational we are, the less fulfilled we seem to be. We are free in everything we do except defining, with others, who we areyet that one exception, to our surprise, turns out, in a society characterized by the need to work together with others, to be the very definition of freedom. Bourgeois man without bourgeois society can enhance his wealth or self-interest, but he loses his ability to negotiate his way through the complex moral difficulties that modernity brings in its wake. He is logical in everything he does, but, as E. M. Forster concluded in Howard's End, "one's hope was in the weakness of logic."71

The promise of economic rationality is that, by following their own self-interest, individuals will automatically contribute to the social goal of a coordinated division of labor. There is an obvious need, with the modern condition so complicated, to believe that invisible hands, self-interested behaviors, and unanticipated consequences will do for society as a whole what they once seemed to do for markets, that is, coordinate diverse behaviors into a harmonious whole. One can understand the appealsocial coordination seems less abusable when made less visible. Put coordination

out of sight; sublimate the collectivity through the actions of the individual; transform the irrational by emphasizing the rational. Let me keep my own and I will become, without ever being conscious of it, my brother's keeper. Scale down the moral demands, lower the ethical horizon, and bring people's behavior more in accord with how they are, not how they should be. Rather than being an affirmative manifesto of progress, reliance on the market under modern conditions is a message of resignation, an admission that the problems of complexity in society are so enormous that they can never be approached directly.

By eliminating from its moral vision a place to which people can go to escape the demands of rational choice, the Chicago school of economics reveals that the concept of moral agency associated with civil society is as essential to twentieth-century life as it was to the conditions in which Adam Smith wrote. We may want to believe that we can live without having to consider the needs of others when we act, but the moment we extend the dynamics of self-maximizing behavior to all areas of life we begin to realize our dependency on what others do. By denying the moral complexity that follows from the need to take account of others, economic models make fewer demands on the moral capacity that people, as social creatures, are capable of possessing. The price we pay for using these models is that, in denying the social in favor of the natural, we lose the very modernity they once gave us.

At this stage in their development, Western liberal democracies have by and large settled their accounts with nature. What they need is not a moral code first developed when the natural world threatened the social, but instead a moral code that incorporates the understanding of society and how it works which the past centuries have given us. We may have been wise, given the negative record of some of the experiments with collectivization in the twentieth century, to keep our faith in the promise of the market. But irrationality is not solved by calling it rationality. Coordination is not made easier by calling it freedom. Abuses of power are not curbed by redefining them as morally permissible. People do not satisfy their responsibilities to one another by thinking only of their responsibility to themselves. Economic man, so modern in his freedom, is only quasi-modern in his obligations; he is responsible for his own fate but, to the degree that he follows economic models of economic choice, has little sense of how to treat others. To create a society as modern as the individuals who compose it, we must look beyond rules that emphasize self-interest to rules that enable people to take account of who they are and who they want to be.

Excerpted from Whose Keeper? Social Science and Moral Obligation by Alan Wolfe Copyright 1991 by Alan Wolfe. Excerpted by permission.
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