This is a research review that I wrote on a book, “The Bourgeois Virtues: ETHICS FOR AN AGE OF COMMERCE” by Deirde McCloskey.
This is a 13 page paper, and quite honestly very boring. But economics and an analysis of said factors is a key part of how our world works. Thus, we must engage in work that seems tedious at the time to grow in the future.
So please enjoy: An Economic Analysis of the Bourgeois Virtues
Capitalism is a key part of our human culture. It is in our nature to truck and barter, to deal with others in the exchange of goods and services. However, many critics view such a system as morally ill, a corrupted ideology that steals from the poor to give to the rich, leading to a sick society. They claim that there are no ethics in this free market, just the relentless pursuit of capital gains. Deidre McCloskey, in her book The Bourgeois Virtues, argues directly against this sentiment, claiming not only does this capitalistic structure enhance our moral values, but also provides us the very virtues that are the foundation of our society.
McCloskey begins with an analysis of the varying political views of the free market. The left and right view capitalism differently, as they normally do all things. The left sees business as vulgar and immoral, decrying the corruption that has spouted by way markets and materialism. The right view prices and trade as equalizers, and determine that the poor simply “get what they get”. In their eyes, capitalism is efficient, and gets the job done, even if that means some are left worse off. As McCloskey summarizes, “Liberals feel unworthy of their possessions. Conservatives feel they deserve everything they’ve stolen.” (6)
However, both sides agree that capitalism is the ruthless pursuit of self-interest in the name of profits. However, McCloskey argues that free enterprise is much more than that, much more than an “ethical catastrophe” as viewed by the left or a “practical triumph” as viewed by the right. Neither the conservatives nor the liberals are seeing bourgeois life on a whole and the nurturing of our virtues that it provides.
For example, consider a farmers market on a Saturday morning. Both the buyer of the good and the seller of the good have a self-interested goal (the “ruthless pursuit”), but they must cooperate in order to achieve it. The seller must offer a fair price in order for the buyer to accept it, and the buyer must accept the price as fair in order to get her good. The free market encourages this nonviolent, self-disciplined, mutual respect that provides a benefit both parties equally. It is an exchange of virtues, along with an exchange of money, which is much more than a ruthless pursuit of profits that capitalism has been boiled down to.
As McCloskey defines it, capitalism is “private property and free labor without central planning, regulated by the rule of law and by an ethical consensus, encouraging innovation.” (14) Capitalism and the bourgeois life has not stifled societal improvement; it has enriched it. It has not made the poor poorer, rather it has enhanced the quality of life for everyone. It has not destroyed our lives; rather it has allowed us to live longer and more ethically, amongst other things.
Our world population has expanded six fold since 1800. Our consumption of goods and services has increased 8.5 times. Our life expectancy has increased by 500%, which has allowed us to better invest in our society and ourselves. Because we are not constantly in the nasty, brutish, and short state of nature, we can improve upon our culture and our purpose, and construct personal identities. We have time to live more lives and the time to choose who we want to be. All of these factors enhance our individual freedoms and lead to economic growth.
But the true achievement of capitalism, as Joseph Schumpeter writes, “does not typically consist in providing more silk stockings for queens (but) in bringing silk stockings within the reach of factory girls for steadily diminishing amounts of effort.” (22) Capitalism allows us to move beyond the focus of our necessities, and instead direct our energies into improving the lives of those around us, and we (and they) are better humans because of it. The only way to create equality is to first create wealth, and then spread it to all.
Of course, poverty is still an inherent ill in our society. However, things have progressed, largely due to capitalism’s workings. As previously stated, free enterprise does not create poverty, rather, it alleviates it. Because we got rich, we argue against 16-hour workdays, environmental pollution, and unfair wages. Because we got rich, we allowed free enterprise to flourish and “capitalism and bourgeois virtues have been greater forces in eliminating poverty than any labor union or welfare program or central plan.” (27) Because we got rich, we are slowly overcoming the binds of poverty.
The world has not eroded because of the tenets of capitalism. The free market not only eases destitution, but it also encourages creativity, dignity, and independence. Work and trade has enhanced our lives, making us better people, allowing us to flourish based on transaction.
Critics of capitalism argue that this is hogwash. Capitalism, they claim, works poorly based on its lack of defined rules. They say it generates inequality through a reliance on the existence of the class of the impoverished, instilling bad values, making us greedy, vulgar, and depraved. Of course, there have been instances of attempted misuse. But one cannot blame the system for the reactions of its all-too-human users, that have used capitalism for greedy, vulgar, and depraved reasons. But for every example like that, in which humans act vulgar, greedy, and depraved, there is another outlining what the bourgeois life can truly offer a society- the virtues of justice, temperance, prudence, love, faith, courage and hope.
This is essential. Human capital, based on our virtues, is what makes us truly wealth in the modern world, and this can only be cultivated though freedoms. Our brain is our best resource. One only has to look at the unfortunate state of things in countries like Sierra Leone and Venezuela to determine that natural resources do not directly cause wealth. Rather, it is the human-created infrastructure (and the proper management of property rights) from harvesting the oil, the oilrigs and drills and boats, that creates income, not the mere existence of oil itself.
But this economic growth can only thrive through the definition of personal freedom. This growth is halted when the powers of the modern state step in: the farm monopolies and a corrupt congress, a terrible tax system and electronic eavesdropping all work to inhibit growth. For an example, compare the effect of restricted press in Japan to the effect of free press in Europe in the nineteenth century. Japan was ruled by an all-encompassing Shogunate government, which repressed individual thoughts and ideas. Innovation and independence were stifled. Europe, on the other hand, which had free minds that were allowed to invent and progress, leading to their economic growth.
By 1820, Japan was more than a century behind Europe in academic knowledge. Europe’s free speech and uncensored publication standards “unlocked the doors of prosperity and threw them wide open.” (41) An Industrial Enlightenment emerged in those free European countries, based on the tenets competition, freedom, change, and innovation. An independence to choose to grow.
Moving up to modern times, our government seems to be erring on the Shogunate side of the matter. McCloskey, quite concisely, names our state the “voracious leviathan.” (42) Our government programs exist on the Golden Rule- those that have the gold, rule. Our tax dollars are meant to go towards the poor, aid the 34 million struck by hardship, amongst other things. But only 1/16th of every tax dollar accomplishes this. Not a very effective redistribution.
McCloskey argues that this failure can be avoided by allowing people to make deals in a law-respecting society with low taxes. Both the rich and the poor are allowed to flourish, materially and ethically. As Joseph Ellis writes, “some form of representative government based on the principle of popular sovereignty and some form of market economy fueled by individual citizens… have become the ingredients for national success.” (47)
The voluntary exchange of goods, information, fortune, and power equates to prosperity. One only has to look at the calamities of the 20th century attempts at socialism and fascism to see that excessive governmental interference is harmful. The Bourgeois deal is this: “leave me alone to buy low and sell high, and in the long run, I’ll make you rich.” (53) No reliance on a corrupt government working in favor of the crony capitalists, ruining economies by preventing economic growth, as seen Japanese Shogunate and the USSR.
One can make the claim that bourgeois life leads to economic success. The proof of it lies in the existence of the “bourgeois virtues.” As Alasdair Macintyre outlines,
A virtue is an acquired human quality the possession of which tends to enable us to achieve those goods which are internal to practices and the lack of which effectively prevents us from achieving such goods.” (64)
The virtues that Western society uses in ethical tradition are seven: hope, faith, love, (the Christian) justice, courage, temperance, and prudence (the Pagan). These are the virtues sewn throughout the capitalistic markets.
However, there is a reason that the businessperson is the only person that apologizes for his occupation. He has a self-loathing, a guilt over his success based on the moral ambiguity of the profit he accumulates. He does not believe that the commercial life can be virtuous, that these seven virtues could possibly apply to his chosen means of work. But McCloskey makes the argument that such a lifestyle can be righteous: dealing, managing, and advising can all be honorable work.
Our work creates our autonomy and our identity, allows for personal expression and self-actualization. Work is not a given thing. We want self-determination. There is a reason that at least 25% of the total labor force has or is self-employed, completely reliant on well-defined property rights and their own human capital to reach success. Our fortune, in this way, is earned through vigor, independence, and yes, virtues.
Of course work “does not automatically produce ethical salvation. But neither does (it) automatically produce ethical damnation.” (81) One must balance the moral ambiguities of materialism, learn to balance charity and profit, sales and love, supervision and justice, and science and faith. Because of this, capitalism is an ethically tense ideology, morally ambiguous as stated earlier, and a constant balance between conflicting thoughts. But that does not mean it is not honorable.
For example, love fuels our consumption, which is a decidedly “capitalistic” pursuit. Over half of all consumer purchases are for our wives, husbands, and children. But overall, love can be thought of as a commitment to the will to the true good of another (and sometimes this entails buying them nice things). It is ethical minds uniting, a mutual admiration of the other’s moral righteousness.
Economists call all of this hogwash. There must be some motive behind love, a utility that we get from loving another. For example, the mother gets utilitarian pleasure when her child graduates from college, both directly, as her child’s brilliance reflects hers, and indirectly, as she receives a return on her capital investment through her child’s success. As the economist would say, the mother’s love is all about maximizing utility.
However, love isn’t reducible to functionality or benefits. Love is only a virtue when in context with other virtues- those of justice, temperance, humility, prudence etc. We care about things for their own sake, not always for the advantage they provide to us. Sheer love is disinterested and particular, identifying, and constraining. We must give and take to love, and in that way it restricts us. It isn’t always completely beneficial; it doesn’t always maximize our utility.
Disregarding love entirely, the economist puts the virtue of prudence, most closely aligned with business as the most “important virtue”. But this is a mistake- a community based on profit seeking alone cannot survive. Businesses achieve the most success (in the long run) by embracing an ideology of social responsibility, of love, while making as much money as possible while being ethically sound. As Miyake Sekian, a director of a bourgeois academy in Japan, explains “when righteousness is acted out in the objective world, profit emerges effortlessly and of its own accord.” (121) Business requires both excellence and ethics, both self-sacrificing love and self-interested prudence.
We are not profit-seeking robots. We are humans who strive after achievement, need an identity with a real life with real hazards and rewards. We cannot rely on an ‘experience machine’ to live our life for us. This humanness, this raw and real soul that we have creates our virtues, and those virtues, bundled together with free markets and personal freedom, creates capitalism.
As Alan Greenspan says, “our system works fundamentally on individual fair dealing.” (126). The capitalistic market is not only created by our virtues, but it is sustained by it. As McCloskey writes, “real economics depends on real virtues.” (128). The business world relies on trust and love, justice and faith. When dealing in commerce, people expect commitments to be honored and that a good product is being produced. Trust, with a mix of faith and love, sprinkled with prudence is essential to community building- prudence alone, as evidenced by the Dilbert comics, cannot create a successful business.
We expect love in our workplaces. We get offended when we are treated as simply revenue generators, for our prudent utility. We view our workplace as the extension of the home place, and thus, an extension of love. And the market encourages the love, in fact, McCloskey claims that “modern capitalist life is love-saturated.” (138) Likewise, a contract between two businessmen is simply the bare bones creation of the relationship between the two. There are normally expectations far more than what can be outlined in the legal sense- expectations of love and trust.
But despite all this love, capitalism is still viewed as a cold, texture-less structure that has been equated to a loss of solidarity in communities. We have been fragmented into little pods, transformed into individualistic creatures without moral meaning. But this fragmentation, McCloskey argues, is not the decimation of communities, but rather the creation of a bunch of little “occasions”. A NASCAR race or a cooking club, for example, is a little fraternity that ties us together, even though it is not broadly defined as a “community with strong ties”, as we have experienced in the past. However, these “weak ties allow us to mobilize more resources and create more possibilities for ourselves and others, and expose us to novel ideas that are the source of creativity.” (144)
This fragmentation does not lead to our moral decimation. In fact, Americans tend to not live up to these selfish, narcissistic stereotypes, according to a study of 200 people conducted by the Habits team. It was not that we don’t have values, the researchers found, but rather, we can’t say what they are. We are ethically disfluent- we can’t define what a “better” world is. As McCloskey summarizes, “Americans, bourgeois and working class, in fact exhibit an integrated set of virtues… but no ready formula for describing it.” (148)
The virtues that we find so hard to explain consist of two “supernatural” virtues: faith and hope. Faith is a spiritual courage, a courage to be a part of something and adhere to one’s commitments in the face of temptation. It can be considered our integrity or our identity. But bourgeois society is thought to have destroyed this idea of faith, faithful friendships and faithful transactions.
A paper by Paul Ingram and Peter Roberts in the American Journal of Sociology in September 2000 studied this notion of an inherent lack of faithfulness in capitalism. They found that compared to hotels with friendless managers, friendships among rival hotel managers generated $2.25 million of gross revenues. Friends can still exist in the marketplace, and they help each other out. Helping one another and trusting in the other leads to more profit for both parties. Faithfulness is not absent from the capitalistic society.
In a world governed by markets, we have the leisure to make real friendships. We have the leisure to trust in strangers. We place trust in others through division of labor, through “honorary friends”. Just look at our pyramids of credit- entirely based on belief in strangers. We have an entire system based on others honoring commitments, trusting in the immaterial and intangible! Likewise, we have the boom and busts in the market because we believe, because trustworthiness is created and broken down. This lends itself to the novelty of capitalism, the faithful trust spread across the market.
Hope, on the other hand, is more a movement towards the future. The ease of mobility in our society allows for freedom. When we can move from place to place, we are placed in the wider world. We can always hope when we have the ability to start anew.
As McCloskey writes, “the most characteristic virtues are not a rationality… that one can see plainly in ants or bacteria… they are hope and faith.” (168) But like all the virtues, they must be exercised in balance. The virtues of faith and hope are even harder to juggle because they are verbal virtues, requiring words and language to explain the imagined past and future. We can see courage, justice, prudence, love and temperance in a dog. We cannot see its faith or hope. We as humans cannot get along without faith in a past, hope for a future, the need for transcendence. It is essential.
Likewise, we cannot get along with humility. We need to aim high, but we must have the heart to listen to others as well. Ben Franklin is an excellent example of this virtue. McCloskey writes “In the Constitutional Conventions, he hardly spoke… out of a proper and habitual humility toward his fellows.” (189) Similarly, successful business relies on successful communication between the customer and supplier, on successful listening.
Listening and learning from people allows the businesswoman to determine what the consumer really wants. It enables her to avoid the expensive failure of not bearing witness to reality, which will inevitably happen if she does not follow market trends. She will succeed if she provides goods that people want. This requires humility. It requires recognizing one’s mistakes, responding to forces beyond oneself.
In this way, Americans show deep faith in progress, believing in the power of reason to guide the world. This belief has almost become a new religion, a religion of abundance. It consists of material salvation, based on worldly progress and problem solving. It is a theology that uses market incentives to persuade people to do the “right” thing. The religion of economics: a collection of beliefs based on our order of existence in the capitalistic world.
This success that stems from our beliefs can only be achieved through virtues. However, up until recently, some virtues have been ‘overused’. For example, courage is described as “the willingness and ability to do whatever it takes to acquire and maintain what one has acquired,” by Harvey Mansfield. (202) It is the basis of masculine identity, one’s success in their chosen field of play. But this relentless “courage” above all others is not sustainable, just as prudence above all isn’t.
Courage, like all virtues, must be upheld by other virtues. Success in business is not based on heroism in pursuits, of raw courage, but rather “efficacy”- as Sun Tzu writes “what the ancients called a clever fighter is one who not only wins, but excels in winning with ease.” (211) Courage is only truly “courageous” when combined with prudence and temperance, faith and love. Courage in business is not about brute strength. It is about cooperation and trusting in others.
But the romantic idea of ‘manly courage’ overtakes the bourgeois. They dream of glory. They look to “always be the best, my boy, the bravest.” Fantasies based on the childhood stories of Robin Hood and knights and cowboys motivate business and military and political leaders alike. They use those stories to stoke their competitive fire, but as Frank Knight observes:
Economic activity is at the same time (as being competitive) a means of want-satisfaction, an agency for want-and character-formation, a field of creative self-expression, and a competitive sport. While men are playing the game of business, they are also molding their own and other personalities (243)
Business is a game. But is also creates our character, and allows us to identify as something beyond ourselves. So yes, business is more or less “fun”, just as the joust is more or less “fun” for the knight. Both allow us to effectively define our skills and energies, permitting us to win proudly or lose nobly. The freedom of choice, that is, business and capitalism, molds us into who we are.
The exercise of prudence, as mentioned earlier, is considered the “economic virtue”. It is defined along the lines good judgment, caution, and knowledge, all of which are most definitely important in the business world. It can be looked as the obligation to self-development and a definition of one’s self interest. It seems strange that this self-interest, which can be looked at as a derivative of selfishness, is included with a virtue. But as Philippa Foot writes, “a reasonable modicum of self-interest is an Aristotelian necessity for human beings.” (254) We have to take care of ourselves too, along with other people, in order to be virtuous.
Prudence is an executive function, helping us to know what is good and what is bad, allowing us to judge what should and should not be done. Practical reasoning, in short. It isn’t practical to practice bad care towards oneself. Selflessness is unjust, as YOU are a person too, and have needs, that if disregarded, are the same thing as disregarding the needs of another. Utilizing one’s prudence to the optimal level allows the businessperson to be effective in producing profit and improving the world around them (as they improve themselves) to the greatest degree.
But of course, our personalities rely on the existence of all of our virtues, which are quite distinct. As such, all must be present for the others to be effective. Courage needs love to be a virtue. Temperance needs justice to be a virtue. And so on and so forth. To last throughout time, the virtues must be alloyed with each other. A personality governed by just one virtue is unbalanced. To truly be a successful bourgeois, we have to develop beyond just prudence or just courage, and move into a life where all the virtues work together to create our character.
Our virtues are defined by “the stories of our culture (that) give us models for acting courageously or lovingly or justly.” (270) For example, Ted Williams explains how to hit a major league fastball. When he was younger, he would watch the older boys swing. He would then go to bat, and swing just like them, over and over again. This is more than just a story of learning to swing- it is a story of his courage and temperance, his persistence, his ethical character. The willingness to keep swinging even when he missed the ball. His success was not on of a formula of instant achievement, but rather a witness of virtues that allowed him to persevere.
It is not enough to know what to do; one has to experience it. One has to swing the bat. Ethics cannot be a mathematical equation; do a + b blindly and achieve c, as moral knowledge cannot be acquired through a decision-making formula. It must be learned from stories or from personal outcomes, from pushing oneself through a run, or experiencing a business deal. To summarize, “guides to ethical life are achieved mainly through story and example.” (272)
We learn to be good and bad from example. We learn from other’s mistakes and successes, through books, movies, songs, etc. They are resources for behavior. A woman in the office, afraid of delivering a presentation to the Board of Directors, overcomes her fear by saying “Come on girl: be courageous” and that very word of courage invokes images and stories and songs and art that gives her the ethical tools to accomplish her task.
We build our characters in this way, story by story.
These virtues work best in our system and our community because the ethical stories in our culture support them. Each virtue has behind it volumes and volumes of human reports and accounts. That’s what makes courage and justice and love and faith applicable to us as humans; our familiarity with stories.
In this way, because each culture has their own stories and images, ethics is local, not universal, knowledge. Americans, for example, admire a bourgeois blend of virtues- loyalty (faith, love, justice) and honesty (courage, justice, faith). Our ethics are based on real life. As we are human, we also fall prey to vices, the virtues unalloyed by their counterparts. The inability to balance virtues is definitely a societal shortfall, but one that keeps us natural and functioning.
Interestingly enough, what might have been perceived as a vice now might have been entirely unquestioned a century ago. “Righteousness” varies with social conditions. Slavery, for example, was largely unquestioned in the name of justice until the 18th century. Justice, as defined by society, is not treating everyone with respect, it is the “virtue of treating with respect whomever should be treated with respect.” (288) Slaves were not considered to be deserving of such respect, so it wasn’t ethically irresponsible by society’s standards to treat them as human, unfortunately.
We are after all, human. We make big, big mistakes. Slavery, as terrible as it is, increases output. Put people to work for not much more than sustenance, and gross domestic product will increase. Unfortunately, our virtues at the time encouraged maltreatment of these individuals. But as we have ethically evolved, the bourgeois virtues don’t tend to envelop that sentiment anymore. Instead, they focus on what is ethically virtuous (once again, by society’s standards, which obviously produces a level of ambiguity), what is good for business, good for life. St. Albert the Great summarizes:
Every virtuous act has all four virtues: for the knowledge required argues for prudence, the strength to act resolutely argues for courage; moderating argues for temperance; and correctness argues for justice. (294)
These four pagan virtues, when applied to the bourgeois lifestyle, combine to produce honor and sincerity, the courage, justice, and faith to be reliable in making a deal, to be successful in the business world.
In conclusion, the four pagan virtues, the “manly” virtues of our bourgeois analysis are that of justice, temperance, courage, and prudence. Justice is a social balance. Courage is seen in the businessman’s emulation of the aristocrat or hero. Temperance is the individual balance we exhibit. Prudence is the know-how, the practical wisdom. All combine to not only produce economic success, but also societal improvement and personal development.
The four pagan virtues must be completed by the other three ‘Christian’ virtues to truly achieve success in both the business and personal life. These other virtues are more emotion- and will-driven, more human. Faith, hope, and love are essentially beyond the realm of humanity. Alasdair MacIntryre summarizes it nicely:
The virtues that we need, if we are to develop from our initial animal condition of independent rational agents (prudence, temperance, justice) and the virtues we need to confront and respond to vulnerability in ourselves (courage, hope) and others (love, faith) belong to one and the same set of the seven virtues. (307)
We need all virtues to enjoy life. We need all virtues to experience the gratification of being part of a larger reality. We need all virtues to be successful, not only in business, but in our existence as humans. As McCloskey neatly summarizes,
(Life) depends on ethos, on agape (romantic love) and philia (friendship love), on character, on moral sentiments, on a philosophical anthropology and psychology, on being a particular (person) at a particular time, with particular loves and faiths and hopes (309)
Of course, the vices come back to haunt us: lust, gluttony, avarice, anger, envy, sloth, and pride. This is the lack of virtue. But what is interesting is that what we define as reality, or how we define our vices and virtues, is based on our human rhetoric. X is not essentially “true”, but our rhetorical community amounts to the fact that one should at least admit X. Ethical judgements are things that we should believe in. Reality is naught more than a group belief. As a society, we find ourselves under this presupposed moral law, “which they did not make, and cannot quite forget even when they try, and which they know they ought to obey.” (335)
The virtues we utilize must depend on the situation that we are in. We have access to “multiple characters” at different times. The derivatives of the virtues include those of reliability, honesty, sociability, enterprise, respect, and connectivity, among others. These are the townsperson’s virtues, the business versions of physical courage or spiritual love.
These virtues are seen in the rates of nonperformance on big loans to businesses. The bourgeois are nasty, greedy people, correct? So the default rates must be astronomical – at least 20% of these vulgar people must never pay back their loans! Au contraire- 2%. A promise from a businessman is his stock in trade. Trustworthiness is needed for business success. It is inherently capitalistic, and despite objections, the bourgeois and their virtues are the “new class” of the era.
The Utilitarianism ideology desires a universal theory of ethics, reducing our emotions in to a Good that can function as one utility. Benthamites advocate a “bundle of virtues” summing the seven virtues into one that can rationally deliver a unit of util. But McCloskey argues that this notion is not “True”, therefore, it cannot rationally apply to the virtues. Love is not True love if it requires an input into something else, if it is used for functionality alone. It has to be valuable in itself; love for love, not utility. As McCloskey argues “actions undertaken solely for external reasons cannot be considered virtuous, because they are coaxed or coerced” (340) Ethics is something more than a reducible index of utility, an algorithm for human life.
A formula doesn’t acknowledge the ethical dilemmas that we face, when two virtues pull us in two different directions. We face daily dilemmas with tradeoffs, from the mundane as prudently cooking our own dinner or hoping someone will call to eat out, to the ethically charged, the justice of the death penalty or love that leads to mercy. We have choices. Kantians and Benthamites ignore this impasse, advocating for a simple maximization of utility.
But choice is much more than that. Our decisions stem from, as John McDowell describes, “not by applying universal principles but by being a certain kind of person: one who sees situations in a certain distinctive way.” (356) Not just reducing thing to their greatest use. Of course, the choices we make differ across the social-cultural spectrum, as the stories that make us human, and in that sense, Chinese, European, Indian etc. differ.
Letting people alone to invent themselves in this regard is “a good in itself.” (357) Letting them adjust to stories based on their own rhetoric leads to a life that is best for them as a human. There is no “life” that can universally apply as a “best” for each and every one person. The virtues are not free from the strain and balances of ethical life. We admire contradicting virtues simultaneously, the Americans, valuing modern freedom (right to be left alone) and ancient freedom (right to participate). Our values collide at times, but they remain in our lives as historian Catherine Stock writes, as impulses:
Loyalties (faith) to individualism (courage) and community (justice, temperance) to profit (prudence) and cooperation (faith, love, justice), to progress (hope) and tradition (faith again). (360)
Moreover, as McCloskey tags on at the end. “And bourgeois.” (360) Human life is based on these virtues. These seven virtues cannot be derived from any other virtues, such as honesty or pity; rather, they create a base that allows the other virtues, to form. The virtues, all together, form an “interlocked system, not to be reduced to one.” (367). It relates to how we are as people, and compares our actions to that of a higher standard.
The seven virtues circulate throughout the world. In Buddhism, Buddha said, “evil deeds are committed from partiality, enmity, stupidity, and fear.” (389) Evil comes from lack of justice, lack of love, lack of prudence, and lack of courage. In the Vimalakirti Sutra, a bourgeois Buddhist is painted as a poster-child of the virtues. The common people honored him “because he helped them to gain wealth and power.” (389) Not so bad for the capitalistic merchant.
Confucian ethical philosophy follows a similar path, valuing education and cultivation of character. Confucius himself says, “Wisdom, benevolence, and courage, these three virtues are universally acknowledged in the Empire.” (388).
Nevertheless, of course, the virtues are not universal. However, as Peterson and Seligman conclude, “there is a strong convergence across time, place and intellectual tradition about certain core virtues.” (392) Ethics is a local ideology, something that applies to our little circles of friendship and trust. However, the ideas seen in our little circles can be seen in little circles all over the world, a universality perhaps not in ethical philosophy, but in simple recognition of a “good person”.
Prudence is viewed as the key virtue of the bourgeois. McCloskey argues against this sentiment, stating that “there has to be a transcendent goal to a career in business.” (411) There must be some devotion to more than profits, as economic interest never fully reconciles with social interest. We desire much more than the ends to the mean, the accumulation of endless amounts of capital. In fact, gain in business is constricted, as we have the need (and desire) to work with those around us. McCloskey states that “accumulation is not the heart of modern capitalism… its heart is innovation.” (413) We build a successful commercial society out of application of the virtues, out of love and justice, creating wealth and trust that allow us to grow both individually and economically.
McCloskey defines this life balance as:. Behavior is equal to the actions of both the Solidarity (S) and the Prudence Only (P). Prudence Only ranges from price to pleasure, from property to profit, whereas Solidarity is society and sympathy, spirit and stories. The Sacred and the Profane. Society requires both to function. The world cannot run on P alone- we desire some end for its own sake, a telos, which transcends simply material or economic interests.
In business, the value of a product depends not just on the “P variables” of price, profit, and purchase, but also on the S variable tastes of the consumer (sentiment, society). As David Hume explains, “P variables come to be experienced only because of the exercise of an S variable.” (420) Profit means nothing without sentiment- emotion and what we care about keeps the markets turning. Business, in that sense, is a faith, having prudent motives that are achieved by sacred means. As Nancy Folbre says, “the invisible hand of markets depends on the invisible heart of care… it is built on the values of “love, obligation, and reciprocity” (432)
Capitalism’s goal, as labeled by Robert Heilbroner, is “accumulation for its own sake… earning more and more money is the purpose” (412). However, McCloskey argues against that, as “running a business would teach anyone that gain is limited… desires must be limited by the need to coexist with others.” (413) Not by Prudence alone does capitalism work. Capitalism and the successful commercial society are built out of love and justice, seeking not instant profit but long-term survival, through the very foundations of trust.
The clerisy, however, simply does not buy this rhetoric. They attribute of spending habits as a result of the distinctly “immoral hidden persuasion” (452) of advertising. McCloskey doesn’t understand the public’s hostility towards the industry, citing the American adoration of private free speech. Yet, when free speech is applied in the commercial sector, it encourages “motiveless, gormless, (and) stupid” (452) purchases, buying stuff simply to have stuff.
McCloskey argues, however, that in consumption, we do much more than just accumulate. We reveal our values and relations, purchasing goods that nourish us in life and health, and in mind and heart. The reason that Americans consume so much is because we produce so much- we are simply capitalizing on the good luck that we had to be born in a country with “honest courts and reasonably secure property rights and reasonably non-extractive governments and reasonably effective education systems.” (454) This is not a sign of an immoral market that takes from the poor to give to the rich; rather, it is capitalism working for the people as a whole. We can do good by doing well, and we can do well by doing good. Consumption isn’t inherently evil.
However, there is a “paradox of thrift”, of stagnationsim, that asserts that we must continue to buy and buy and buy, or else the entire economy will collapse. People think that economics is about “keeping the money circulating” (458). They believe that consumption keeps the poor employed, and applaud big, expensive projects that “create” new jobs and “generate” local sales. But most of the time, these projects turn into capital drains (the Big Dig in Boston, for example), which is not the optimal working of the market.
McCloskey argues that the jobs created by these capital drains are not meaningful employment, stating that it isn’t economically prudent to work people simply to work them. It would be better for everyone if talents were instead directed towards “improving the science and art of making houses and automobiles” rather than “raising the Great Wall of China”. (459) Meaningless employment, in McCloskey’s view, is just as detrimental to the economy as unemployment.
His argument makes sense. The cost of employing these people, in addition to the sunk costs of many of the outrageously expensive projects (the Big Dig, for example, originally estimated at 2.4 billion will end up costing more than $22 billion) Luxuries like this, wherein the project ends up costing exponentially more than the expected benefit, simply do not make economic sense. Sure, the workers spend their income, which contributes to the consumption portion of GDP, but this spending will unfortunately not even begin to cover the costs of the project. A lose-lose situation for the both the market and the employees, in the grand scheme of things.
However, employment is a key part of the American identity. As Benjamin Hunicutt writes, “the job resembles a secular religion, promising personal identity, salvation, purpose, direction, (and) community…” (461) This is a specifically bourgeois offense, as the bourgeoisie think of work as their calling- the reason that they are alive. The system encourages this type of thinking, as the capitalist system provides a perfect place for people to exercise their abilities, and reap the benefits from them.
Work provides an opportunity for us to live a ‘flowful’ life- in which “our skills are fully involved in overcoming a challenge… in the exhilaration of creativity.” (470) There are two sides to the economy- the profit side, and the ‘meaningful’ side, encouraging hope, faith and love through the market. It is a place for individualistic expression and innovative triumphs. Basically, it “is a matter of being able to live as you wish and work as you wish and not as they order you.” (472) A capitalistic society provides the perfect platform for such a lifestyle, allowing participants to test their skills and embrace the ‘flow’ in their day to day careers. We have the choice to be excellent at whatever we choose- and that shapes not only our character, but the identity of the entire society.
This freedom of choice and the benefits that come along with it are, of course, is provided by capitalism’s protection of property rights. As Pope Leo XIII said, “private possessions are clearly in accord with nature… the right of private property must be regarded as sacred.” (466) As Pope John XXIII says, “the exercise of liberty finds both a safeguard and a stimulus in the right of property.” (467) Private property rights are the foundation to our economic success- it enables us to benefit from exercising our abilities, encouraging further application, and thereby contributes to overall economic growth.
The rich are the people that appear to benefit from this system of rights and choice the most. People imagine that the economy, in this way, is a zero-sum game- the rich are the winners, and the poor, or working class, are the losers. McCloskey argues exactly the opposite, stating that “free markets are positive sum” (479) The things that make the economy work against the populace are stealing and taxes, and not (directly) the gains experienced by the rich.
Wealth is not something to be redistributed, rather it is the “real ability of the arm or brain or machine to produce more stuff.” (480) Wealth is our ability to produce, not simply a pile of finished goods. The real wealth of the economy lies in our productive power, in our ability to exchange. A collectivist method, which relies on the definition of wealth as material goods, redistributes and almost always fails to deliver goods to the people who need it most.
The collectivist method underserves everyone, including the poor. But the capitalist system does not make “losers” out of the impoverished, rather, it makes them better off. When a rich person pursues something for profit, there are often more resources available and allocated more efficiently, making both parties better off.
Buying low and selling high is the only way to achieve a just deal, making both the buyer and the seller better off. This makes the market a positive-sum game, in which both parties benefit. Such an outcome cannot be achieved through redistributive nature of socialism. The producer must constantly be aware of the needs of the consumer. Profit comes from being alert, from noticing what people want to buy, from being aware of them as people. The marketplace has an invisible heart created through the cooperation, integrity, leadership, and motivation of business that works to provide good services and low prices to the consumer.
People balk at such a sentiment. Saying that the robber barons, for example, were actually “Robin Hood” barons, goes against everything we were taught in school. But the robber barons didn’t get rich from destroying consumers, rather, they got rich through being alert of profit opportunities and providing their products at a lower price than their competitors- listening to the invisible heart of the market.
These barons also did more than just create industries. They funded public institutions and artistic collections, donating both through both financial capital and cultural capital. They made use of the money that they earned, and reinvested it back into the market that gave so much to them. The fact that they simply utilized the buy low-sell high ideology does not make them bad people. Intelligence does not equate to deception.
The world needs to reshape their conception of the bourgeoisie, as we are all slowly melting into the class. As Adam Smith said, all the way back in 1776, “everyone nowadays becomes in some measure a merchant.” (502) We are becoming a world of small businesspeople, as jobs for peasants and aristocrats are shrinking. Innovation has allowed the world of business to explode, expanding the world of the bourgeoisie, growing our economies, and making the world better off for everyone.
All of this growth and movement and expansion is achieved through the seven bourgeoisie virtues. We must have the Prudence to “buy low and sell high… trade rather than invade… to pursue the good with competence.” (507) We must have the Temperance to save and educate, to listen to the customer and act with integrity. Thirdly, we must have the Justice to enforce private property rights and honor labor with just wages. We must have the Courage to go forth into the business world, and the Courage to overcome the possibility (and sometimes inevitability) of failure. We must Love both our competitors and our customers, and have the Faith to honor the community of business. Finally, we must have Hope. The Hope to “see the future as something other than stagnation or eternal recurrence… seeing one’s labor as a glorious calling.” (508) This is the way that capitalism allows us to live.