Here’s one for all those with a philosophical bent, from Robin Hanson via Tyler Cowen. How does economics, which talks about the positive effects of self-interest, square with moral intuition?

we economists…seem to be constantly giving people excuses and social support for violating what most people see as moral boundaries. And we seem to have weak consciences ourselves. So we seem to be a big cause of evil people.

I believe that Armen Alchian once wrote an essay in which he argued that altruism is scarce, and that economists show how to economize on its use. Thus, unlike Robin Hansen, quoted above, Alchian treats the supply of moral intuition as fixed and views markets as a way of keeping people from having to waste it.

I think this is on the right track. I like to start with Alan Fiske’s anthropological model, in which there are four modes of human transactions: authority ranking; communal sharing; equality matching; and market pricing.

Of these, communal sharing is the one that requires the greatest moral intution. I believe that communal sharing is a good idea in familes and in other small groups where people know one another. But when it is extended to larger groups, and particularly to entire countries, it seems to degenerate into authority ranking, i.e., dictatorship.

Market pricing requires little moral intuition. However, as Hanson points out, it does little to reinforce moral intution. Thus, if you were to raise your children on a purely economic model, you might very well dull there moral sensibilities.

My feeling is that there are enough market opportunities to exercise one’s intution for calculation and impersonal exchange; and there are enough family and small-group opportunities to exercise one’s intution for communal sharing. I don’t think that economists need to worry about whether we are dulling the sense of morality. On the contrary, I believe that the moral sense is dulled in situations such as the Soviet Union, in which the market was replaced by Communist Party corruption.

UPDATE: See also this article by Jerry Z. Muller.

Self-interest is linked to mutual concern every time a sales clerk asks, “Can I help you?” That phrase is often derided as phony and manipulative–except by those who have lived in societies where sales clerks ignore customers. The sales clerk’s commercially motivated solicitude does lack true charity and altruism. But, seen historically, the market’s ability to create a self-interested regard for others is surely preferable to the alternatives.

For Discussion. Is there a case for Hanson’s concern that economists are undermining moral intuition by what we teach?