Politics & Society

The best books on Moral Economy

recommended by Will Davies

Interview by Caspar Henderson

The sociologist Will Davies discusses five of the best books about moral economy: the study of norms, values, principles and ethics within the space of the economy.

  • 1

    The Protestant Ethic and the Spirit of Capitalism
    by Max Weber

  • 2

    The Gift
    by Marcel Mauss

  • 3

    The Passions and the Interests
    by Albert Hirschman

  • 4

    The New Spirit of Capitalism
    by Eve Chiapello & Luc Boltanski

  • 5

    Debt: The First 5000 Years
    by David Graeber

The sociologist Will Davies discusses five of the best books about moral economy: the study of norms, values, principles and ethics within the space of the economy.

Will Davies

Will Davies is a political economist with particular interests in neoliberalism, history of economics and economic sociology. He is Co-Director of the Political Economy Research Centre at Goldsmiths, University of London and the author of The Limits of Neoliberalism: Authority, sovereignty & the logic of competition (2014). The Happiness Industry: How the government & big business sold us wellbeing (2015) and Nervous States: How Feeling Took Over the World (2018)

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What is ‘moral economy’?

The term refers to the study of norms, values, principles and ethics within the space of the economy, within markets. That can mean something quite attractive and positive. Think of corporate social responsibility or fair trade, the drive to act ethically.  But what’s more interesting to me than that is that the study of moral economy has shown that areas of modern society and capitalism, as well as non-capitalist societies, that we think of as being governed by a wholly instrumental economic logic — efficiency criteria, markets, finance and so on — are actually utterly entangled all the time with moral notions of how one ought to act, and what is worthy. Economists say there is a sphere of the market that can be viewed in efficiency terms as purely separate from what they call equity — the whole issue of ethics, justice, distribution, fairness and so on. This is obviously not true because at the very simplest level when you go to, say, a supermarket checkout counter there is a moral obligation to reciprocate. When someone gives you the product you want to buy, you owe them the five pound note. There is a moral moment, which someone like Adam Smith was completely aware of when he wrote The Wealth of Nations. Few economists actually read Adam Smith so this is generally forgotten. And as you get into more complicated forms of production and exchange the forms of moral constraint, obligations, duties, debts and bonds becomes all the greater.

“Economists say there is a sphere of the market that can be viewed in efficiency terms as purely separate from what they call equity. This is obviously not true ”

Think of an employment contract. It requires a hefty amount of moral give and take. If you try to reduce it to something that is entirely instrumental and mechanical, well you might end up in Jeff Bezos’s warehouse, with humans being treated purely as machines — a deeply unhappy future that might be awaiting more and more of us — but by and large there is some sense of mutual moral reciprocity and recognition.  To a great extent these relationships of mutuality and obligation are codified in contracts and law, though never entirely. Even when one is deciding something like who to hire or taking an investment decision as a supposedly purely rational financial agent, one is constantly using various notions of value, of how the world ought to be, and who has earned your trust. Even if you think you’re not interested in, say ‘ethical investment’ there is still nevertheless a whole tacitly moral set of assumptions underpinning financial decision-making (of the value of prudence, say, or the credibility of a risk model) that the study of moral economy is trying to bring to light.

Tell us about your first book, The Protestant Ethic and the Spirit of Capitalism by Max Weber.

This is one of the most famous and influential works of sociology ever written and one of the founding texts of economic sociology. I’ve always found it inspirational. I’m fascinated by the fact that it recognises that our relationship to capitalism requires our consent and our engagement but that it is not one that makes us happy: we’re not necessarily forced to do anything or exploited in the way that some Marxists might assume, but we are compelled in certain psychological and moral ways that are internal to us. Capitalism harnesses what Kant called the ‘moral law within me’ in order to drive me to accumulate.

Weber’s contention — although it’s been contested by historians — is that capitalism as we know it began in areas of northern Europe where Protestantism was strongest. His interpretation is that under Protestantism there is a constant problem of how to prove oneself worthy in the eyes of God. He argues that the way in which Protestants dealt with this loneliness, this inability to achieve worldly recognition, was to work harder than they needed to. And it is in a religious ethic which said that work is good in and of itself that the beginnings of accumulation are found, because if you lived purely for what you needed you would stop after you had enough.

“ Weber argued that Protestantism compelled people to work beyond mere economic necessity”

Weber argued that Protestantism imposed moral constraints that operate at the level of the psyche, of morality and theology, that it compelled people to work beyond mere economic necessity. I think this is a devastating critique of a purely economic world view.  It upsets some core economistic fallacies and assumption about human beings because it ultimately says that even when we are acting in our most industrious fashion we are also being governed by some moral and metaphysical framework of belief. It also grounds the history of capitalism and modernity in a particular time and place – in northern Europe in the 16th and 17th centuries. And it denaturalises the attitude of the capitalist by showing there is actually something rather strange about the psychology and drive to accumulate — that there’s nothing remotely natural about it, that it is not even necessarily an economic mentality but is actually a somewhat self-punishing mentality.

What Weber does — and Emile Durkheim does this too — is debunk the idea that there is a sphere of rational activity — whether that be in financial markets, factories or wherever that might be — that stands alone. There is no Homo economicus — no purely hedonistic rational actor that someone like Jeremy Bentham built his whole philosophy and vision of law upon on. Think, for instance, of how a financial product like a pension gets sold. It doesn’t get sold in terms of it is a rational investment that will maximise your return, though it might include that. It will also include images of happy old age, of playing with grandchildren, of living by the sea or whatever. Internal to the promises of accumulation are certain ideals, norms — ideas of what is a worthwhile human being. That ultimately is the question that Weber poses for us.

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Ultimately he shows that instrumental economic rationality and moral ideals are entangled in each other in everyday life. We are always carrying around with us private ideas of what a good life is, and these are in play in the way we set about investing, exchanging working and so on. It helps to explain, for example, why sustainability is proving so hard to achieve. We all know our current model is unsustainable — or at least that has been argued for about forty years — and yet our notions of how we prove ourselves to be good people are tied up with consumption and displays of wealth. Viewed purely as an economic problem, climate change could be dealt with purely through altering incentives and accounting frameworks. But we are lodged in a dysfunctional moral economy.

Your second choice is The Gift by Marcel Mauss.

This is a classic of economic anthropology. Its central argument is that gifts of all kinds require reciprocity and that this plays a fundamental role in how societies cohere. And there is, as Mauss discovered in his ethnographic research, a competitive element in gift giving. Native Americans of the Pacific Northwest had an institution or ritual called the Potlatch whereby, in an effort to try and create a gift that could never be reciprocated by the other community, people would destroy all the property they owned in an act extreme self-harming generosity.  This is a complete contradiction to the core idea in neo-classical and modern economics that human behaviour is entirely self interested. But, again, it also helps to explain why economic institutions can achieve such a tight control over us.

Mauss was intrigued by the fact that we will go to extraordinary lengths to reciprocate, even to the extent that we will do harm to ourselves, in order to win the esteem of others. Another book that touches on this is Thorstein Veblen’s Theory of the Leisure Class, which is where we get the notion of conspicuous consumption. This is the idea that I may actually consume in ways that are more about getting status than satisfying any material need or desire. I may well spend money I barely have. The quest for status, which is reciprocal and relational because it involves the eyes of the other, is a far more compelling force than simple hedonistic self-interest. The reason houses and cars keep getting bigger is because the quest for social recognition turns into an arms race.

“We will go to extraordinary lengths to reciprocate, even to the extent that we will do harm to ourselves”

Mauss showed that in every society there is this drive to reciprocate and that this ties us in ways which are very binding. He suggested that gift exchange is where all exchange beings, and that market exchange is actually a particular derivative of gift exchange. Gift exchange is the norm while market exchange is the exception rather than, as economists assume, the other way round.

This point links us to the work of Pierre Bourdieu and to David Graeber’s Debt, which I’ll come to in a minute. Bourdieu says the key question posed by Mauss’s analysis is the length of time between outward and return gift. The longer the delay, he says, the more social cohesion there is. So, for example, if I buy a sandwich I hand over a fiver and it’s done, we walk away as strangers. But gifts take longer. If I give someone in the sandwich shop a book and a year later he gives me something that’s still an exchange but it connects us as friends or comrades rather than just as market actors. Meanwhile, society as a whole involves – or should involve – some kind of inter-generational reciprocity, where parties give and receive at different points in their life cycle. Marx’s principle of communism, “from each according to his ability to each according to his need,” is really an ideal of gift-exchange elevated to a societal norm.

Behavioural economists have unwittingly stumbled upon Mauss’s insight much more recently. They have discovered that if you really want to change someone’s behaviour it is often more effective to have them sign a contract saying, for example, ‘I promise not to smoke’ than if you fine or incentivise them. There is something about engaging in a relational moral act — an intra-subjective commitment – that binds people in ways that extend way beyond narrow economic self interest. The utilitarian, Benthamite vision of human psychology turns out to be absurdly naïve.

The title of your third book, Albert Hirschman’s The Passions and the Interests, alludes to a line from Montesquieu: “It is fortunate for men to be in a situation where, though their passions may prompt them to be wicked, they nevertheless have an interest in not being so.”

The core question in Hirschman’s book is actually in its subtitle: ‘Political Arguments for Capitalism before Its Triumph’.  Like Weber, Hirschman realised that, first, there is nothing natural about capitalism. Certain institutional and moral preconditions were required in order for initially mercantile capitalism and then other forms to arise over the course of the sixteenth and seventeenth century. Mercantile activity was initially a niche activity —  monarchs and churches were at best neutral about it and did not necessarily approve of it — and there was always the moral problem of how to justify the mindset of the trader and the money-handler. How was it that the making of money and trading over long distances could be seen as admirable and worthy pursuits?  What Hirschman does is to read back, particularly though certain political and moral philosophers of the seventeenth century to show that the core problem of political philosophy, particularly in Thomas Hobbes, is what they call passions or what we what we might now call emotions.  Reason may be true and good but that unfortunately, tragically humans are more likely to be drawn by their passions, and this created a serious threat to the social order.

“ Like Weber, Hirschman realised that there is nothing natural about capitalism”

Hirschman notes that over the course of the seventeenth century a new psychological and moral category begins to emerge. Before, there had been reason on the one hand, which is mathematically true but not very persuasive, and passion on the other, which is very seductive but rather destructive. The new category is called ‘interests’ and it refers to certain things we recognise as being in our interests and we will pursue them more or less rationally. This new category emerges around mercantile culture because it starts to make sense in an era when you are keeping account of assets and liabilities.
It doesn’t require us to be equipped with the brilliant rationality of Thomas Hobbes or Rene Descartes, but each of us nevertheless can recognise it will be in our interest to act in one way rather than another. It carves a path between reason and passion. And it then becomes a way of governing us.

Think of incentive structures. If you want to get people to eat more fruit or something like that you can cut the price of fruit or raise tax on things which aren’t fruit. But one way or another there is some attuned psychology there which is neither speaking to pure rationality nor simple emotion, although it might appeal to elements of both. But what is interesting in Hirschman’s work is that he shows it has a beginning – that it emerges in a particular time and place. And what made it an attractive category is that it pacified people and solved a problem that was tearing Europe to pieces — religious conflict. And that’s a key thing about interests: that they are secular, and bring together the moral and the scientific. You don’t all have to believe in the same God. It is the beginnings of an individualised, privatised and quite atomised culture because what you have is a moral agent oriented primarily to his or her own wellbeing —the beginning of the vision of Homo economicus.

Your fourth book, Luc Boltanski and Eve Chiapello’s The New Spirit of Capitalism, has been described as “an ideological and cultural analysis, a socio-historical narrative, an essay in political economy, a bold piece of engaged advocacy….and a ferocious critique of contemporary capitalism.” What does it add to an understanding of moral economy?

This book was a huge inspiration for me when writing my PhD and my first book The Limits of Neoliberalism. This is partly because it showed how capitalism is sustained, reproduced through what Boltanski and Chiapello call different orders of worth — the idea in keeping with Weber’s stance that what capitalism has to offer us is not just money or pleasure but ways of living worthwhile lives. A lot of people have argued that The New Spirit of Capitalism is very far from a critique of capitalism. Some Marxists hate it. Indeed, some people have used the book as a manual to think about how to moralise capitalism or make it more innovative! But what the authors do is to show that capitalism goes through phases — ways of validating people, of allowing them to achieve moral esteem. What’s very original about the book is that they show how capitalism develops these moral paradigms out of specific traditions of anti-capitalism.  They argue that socialists from the mid nineteenth to mid twentieth century saw capitalism as unfair, but that the reconstruction of capitalism in the 1920s and 1930s — Fordism, The New Deal and so on — accommodated aspects of that critique, learned from it, and met workers’ needs. Capitalism has found ways of reinventing itself by listening to aspects of that critique. This is partly what makes capitalism so hard to overturn. It is a system that learns from its critics. Critique becomes an animating force.

Many people would say that’s not a bad thing.

Yes. Clearly you’d rather been working in a Fordist factory in the 1930s than you would in a Manchester cotton mill in the 1820s. Lives were palpably improved. The second move the authors make, which I find extremely provocative and interesting, is that there was a crisis of the Fordist variety of closely regulated capitalism in the 1960s and 70s, and, once again, capitalism was reformed through internalising the demands and appeals of anti-capitalist critics. The reinvention of capitalism in the 1980s — what’s sometimes called ‘post-Fordism’ — involved accommodating what Boltanski and Chiapello call ‘the artistic critique’ of capitalism, which had grown louder over the of the 1950s and ‘60s, coming to a head in 1968. Critics and artists such as Guy Debord or Herbert Marcuse attacked the conformity of capitalism, its predictability, the model of ‘organisation man.’  And so when capitalism hit a crisis in the 1970s, the resources for its moral reinvention were already available, and the ‘new spirit of capitalism’ involved satisfying some of those demands, though inevitably then neglecting what the authors term the ‘social critique’ of the traditional Left.

‘Think Different.’

Exactly. Steve Jobs and large parts of Silicon Valley more generally are an example of this.  But the social critique has been forgotten, and as a result we see the rise of precarity and inequality. From 1960s onwards we dispensed with the moral force of egalitarianism  because we wanted to be free and individual. And we’ve gone to opposite extreme: you can live a creative life, turn up to work wearing whatever you like, but no one’s going to provide you with any security and your boss is going to be making three hundred times more than you.

Capitalism is shaped by questions of what is a worthwhile life. How do I fulfil myself, achieve social validation? We shouldn’t discount the fact that this internalisation critique has achieved progress, although I think one of the reasons why Boltanski and Chiapello wrote this book in the 1990s was to ask, why have critiques become so powerless? Long before the financial crisis they asked where has all the critique gone? Their answer was that it has been brought into the fold: anti-capitalism is now part of capitalist rhetoric. And, indeed, if you look at business schools you see a celebration of chaos, of entrepreneurship that wants to overturn things. Innovation, it is said, doesn’t come about by being a capitalist but by being your ‘own self’, by drawing on the artistic critique.

Your final choice is Debt by David Graeber.  One critic wrote that this book “aims to tear away the veil of money draped over the world and expose the credit system as so many naked human relationships, mostly violent and unjust.”

According to the story of economic progress told in text books, barter came first, then money was invented to make exchange more efficient, and that once you have money you can invent a system of credit. But Graeber argues it is the other way round.  And in some ways Debt picks up where The Gift leaves off.  Just as Mauss had seen, the first thing to happen is that people have moral debts to each other, remembering who has done what for whom.

Further, Graeber argues that all of us actually behave like ‘communists’ the entire time. It’s completely ordinary to act altruistically and cooperatively, to the point where we barely notice it as economic activity. ‘Economic’ life begins with debts, in a social sense, leading us to depend on each other in an ethical sense, although of course moral duties can also be burdensome and even enslaving, as Nietzsche argued. The next step is to start writing down credits and debts, which is how lots of small-scale commerce works – a shopkeeper keeps a tab that gets settled up in some way, rather than everything being an exchange. Money, which is fundamentally a note of credit that can be passed on to strangers, allows for norms of exchange to break free of everyday reciprocity and the ‘communism’ of reciprocity. Finally, Graeber points out that barter (which economists like to assume is the starting point of market relations) is actually a rather freakish and unusual phenomenon which typically emerges after a monetary market economy has broken down for some reason, for instance due to war or some other crisis.

“It’s completely ordinary to act altruistically and cooperatively, to the point where we barely notice it as economic activity”

What’s stunning about the book is how it brings this anthropological perspective to bear on such an expansive history and geography, bringing the story right up to the present day, at the precise moment when debt has become a hugely political, mobilizing and destabilizing issue. Its central argument is simple and easy to grasp, and has been seized by activists and critics of the financial sector. Once you see money in this way, you can no longer view it as an ordinary commodity. The question is then: how did something originally grounded in the best aspects of human psychology (the propensity to care, give, cooperate) morph into the highly destructive industry, that is modern banking. Graeber shows that, at every stage in the formalization of money and industrialization of credit, there was some kind of alliance going on between the financial sector and the military state. The same question that concerned Karl Marx, of how (what are ultimately) social relations have taken on a ghostly, seemingly autonomous power over human beings, is answered in a fresh way, by showing how modern finance and modern state have developed in tandem to dictate the terms on which debts are accounted for.

What is your new book about?

Nervous States: How Feeling Took Over the World is an attempt to understand why emotion has become such a decisive and influential force in politics right now, and why the credibility of dispassionate, objective and representational institutions — whether they be the BBC, ‘official statistics’, independent experts, or parliamentary representatives — have lost credibility. I take a sociological and historical approach to this question, using the history of ideas especially, in the hope that I can avoid the kind of ‘oh dear, bad things are destroying good things!’ response to populism, that a lot of books on the ‘death of liberalism’ seem to fall into. I want to understand what’s going on, and not simply denounce it.

My central argument is that it’s not actually emotion that is the underlying problem we have to deal with right now — I’m not very sympathetic to the defence of ‘rationality’ that figures like Stephen Pinker et al. promote — but the speed with which information moves and changes. What’s happened — and it’s something that’s developed over decades and even centuries — is that an ideal of knowledge and power forged in the mid-17th century, aimed at promoting peace, has become gradually usurped by an alternative one that was forged in war. What figures like Hobbes meant by ‘reason’ was something that was slow, careful and deliberate, that could ultimately be the basis of a broad public consensus. By contrast, in the age of neoliberalism and the internet, everybody is focused on knowing (or, really, sensing) things as quickly as possible, so as to out-do one another. Think of high frequency traders or hedge funds which make money by beating the market by mili-seconds. The fact that our comfortable notions of truth and of government are in trouble is an effect of this valorisation of fast, real-time knowledge, which puts us all on high alert the entire time, as many smartphone users can also attest.

“My central argument is that it’s not actually emotion that is the underlying problem we have to deal with right now…but the speed with which information moves and changes”

There are a couple of ways in which this links back to the question of moral economy. Firstly, I think the sociological, moral-economic perspective I’ve always taken is quite good at explaining why orthodox economic perspectives ultimately fail politically. For example, liberal elites assumed that ‘Remain’ would would win the Brexit referendum because they believed the voters would generally act in a simple utilitarian fashion, to avoid economic harm. But if we understand the economy as a status game, governed by matters of recognition and reciprocity, as the authors I’ve mentioned above help us to do, it’s clear that people can suffer or feel resentment that doesn’t directly correlate to their objective economic welfare. I explore this point a bit in the book, as a way of understanding partly why the emotional aspect of the market has become so politically influential, and why the dispassionate, objective worldview fails.

Secondly, the book does offer a cautious defence of certain forms of expertise of the sort that developed in the seventeenth century, but on a moral, pragmatic basis, that they can help establish certain conventions. Economic and social statistics, for example, aren’t simple objective truths of the sort the natural sciences offer. They provide a moral framework for designating what should be valued and how. I think that, ultimately, while the populist surge cannot be reversed, if it is to end in something more stable and peaceful, it will have to involve the reconstruction of some version of those seventeenth century institutions, such as statistics and technocratic government, which create generally accepted frameworks and rules and facts about society. But that does have to be viewed as a political and moral project, of re-establishing the criteria by which things are valued, measured and judged. The alternative, to which we’re currently headed, is to live in a society where every claim is met with suspicion or derision, and each political faction has its own separate form of truth, that it conceals from the others. As I argue in the book, I think neoliberalism has pointed in this direction for some time. But it is an explosive situation, that needs to be carefully understood and, where possible, defused. What can’t happen is for the ‘liberal elites’ to just dismiss it as ‘irrational’ or ‘stupid’, when there is clearly an internal logic to it, that – as I argue in the book – originates in forms of propaganda, espionage, encryption and code-breaking that are some of the core tools of modern war.

Interview by Caspar Henderson

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Will Davies

Will Davies is a political economist with particular interests in neoliberalism, history of economics and economic sociology. He is Co-Director of the Political Economy Research Centre at Goldsmiths, University of London and the author of The Limits of Neoliberalism: Authority, sovereignty & the logic of competition (2014). The Happiness Industry: How the government & big business sold us wellbeing (2015) and Nervous States: How Feeling Took Over the World (2018)