106. The Righteous Mind - Part 3

Note: This post is the one hundred and sixth in a series about government and commercial ethics. Click here for the full listing of the series. The first post in the series has more detail on the book 'Systems of Survival' by Jane Jacobs which inspired this series.

This week the topic is the book, "The Righteous Mind" by Jonathan Haidt. Having read the book, I highly recommend the NY Times review of it as an excellent summary.

Note that we have encountered the work of Jonathan Haidt before, albeit indirectly, in this earlier post which discussed an essay by Steven Pinker, which was written as a reaction to Haidt's work.

Today's post covers the second of Haidt's three main arguments, that:

a) There are (at least) 6 dimensions to human morality: Care/Harm, Fairness/Cheating, Freedom/Oppression, Loyalty/Betrayal, Authority/Subversion and Sanctity/Degradation.

and

b) "liberals" (in an American sense, think the Democratic party) are only concerned with Care/Harm, Fairness/Cheating and Freedom/Oppression whereas conservatives (think Republicans) are concerned with all 6 moral dimensions.

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Let's start by giving a little more detail on each of the 6 dimensions that Haidt identifies. Note that in each case, Haidt offers an explanation of how this moral value might have provided an evolutionary advantage, and notes that although the original evolutionary value may no longer be valid, the moral value can still be triggered in modern circumstances and may have value in modern society.

Care/Harm

"If blood will flow when flesh and steel are one
Drying in the color of the evening sun
Tomorrow's rain will wash the stains away
But something in our minds will always stay

Perhaps this final act was meant
To clinch a lifetime's argument
That nothing comes from violence and nothing ever could"

- Sting, "Fragile"

"Nothing comes from violence and nothing ever could" is a pretty fair statement of the Harm principle that Haidt describes. In Haidt's view, the evolutionary requirement to take care of our vulnerable children gives a desire to protect people from harm, and that our assessment that something is 'cute' is linked to this assessment of how much protection from harm someone (or some animal) needs.

--
Fairness/Cheating

"And now you're back from outer space
I just walked in to find you here with that sad look upon your face
I should have changed that stupid lock
I should have made you leave your key
If I'd've known for just one second you'd back to bother me
Go on now, go walk out the door
Just turn around now
('Cause) you're not welcome anymore
Weren't you the one who tried to hurt me with goodbye?
...
And so you felt like droppin' in
And just expect me to be free,
Now I'm savin' all my lovin' for someone who's lovin' me
Go on now..."

- Gloria Gaynor, "I Will Survive"

Haidt sees our desire for things to be fair as being necessary to secure cooperation without falling prey to cheaters. He relates the results of an experiment in which people could work together to increase their total payout by contributing to a public pool of funds, but where people could free-ride by not contributing to the public pool but still receiving their share of the public money.

In the experiment, people's willingness to contribute declines over time as they see free-riders taking advantage of their contributions. But when the experiment was modified to allow people to spend their own money to punish people who free-ride, people were more than willing to do so, and high levels of contributions to the public pool were sustained over time.

The willingness to take vengeance on people who try to take advantage of us, even when it costs us to take that vengeance, is necessary to sustain cooperation in the face of those who would try to take advantage of cooperative efforts.

In the song above, even if the singer might still be in love with her former lover, she knows that she needs to punish him for his past transgressions and that the long term goal of not being taken advantage of supersedes a short term desire for reconciliation.

In Haidt's view, conservatives focus more on ensuring that cheaters are punished, whereas liberals focus more on ensuring that people don't get cheated.

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Freedom/Oppression

"Here comes the helicopter, second time today
Everybody scatters and hopes it goes away
How many kids they've murdered only God can say
If I had a rocket launcher...I'd make somebody pay"

- Bruce Cockburn, "If I Had A Rocket Launcher"

Like Sting in the quote above, Bruce Cockburn was writing in response to Central American violence during the 1980's, but Bruce Cockburn drew a different conclusion. Cockburn decided that fighting back was a better approach than turning the other cheek (interestingly, they both followed the same template in writing about Pinochet's dictatorship in Chile, with Sting's 'They Dance Alone' suggesting the regime will fall when it runs out of money, while Bruce Cokburn's 'Santiago Dawn' invokes an armed rebellion with military thugs under attack, doors broken down, rocks flying and barricades in flames).

Arguably, I could have filed this lyric under 'Fairness/Cheating' as well, since Cockburn is suggesting that the government should 'pay' for what it has done, but the reaction here is not to being cheated, but rather to being bullied and oppressed, and it is that opposition to bullying and oppression (in Haidt's view, the force that makes human hunter/gatherer societies egalitarian in nature) which is what Haidt is getting at with the Freedom/Oppression moral value.

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Loyalty/Betrayal

"Police arrive -- muddy up the floor
Dig out half the plaster -- it's a .38 for sure
Kick the neighbour's door in
Saying better tell it all
Who put that bullet hole in Peggy's kitchen wall?

Blaster on the back porch, shaking up the lane
They're drinking gin and joking -- laughter falling down like rain
Everybody wears a halo
Never saw nothing at all
So who put that bullet hole in Peggy's kitchen wall?"

- Bruce Cockburn, "Peggy's Kitchen Wall"

As we've seen in our extensive discussions of the Prisoner's Dilemma in this series, people who are willing to work together, even in a case where they would individually be better off betraying each other, can reap a collective benefit from this show of loyalty.

Haidt focusses more on 'big' loyalty, to a country, to a sporting team, than on 'small' loyalty (e.g. a group of people who agree not to tell the police who put a bullet hole in someone's wall) but the principle is the same. Haidt takes it as self-evident that a group with loyalty will have an evolutionary advantage over one that doesn't but, although I certainly agree, it would have been interesting if he had made the case (for example, a tribe of people who gather berries wouldn't seem to get much benefit from cooperation as compared to a tribe of hunters, a tribe with warlike neighbours might get benefits from loyalty that a tribe with no neighbours would not, etc.)

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Authority/Subversion

"Got in a little hometown jam
So they put a rifle in my hand
Sent me off to a foreign land
To go and kill the yellow man

Born in the U.S.A., I was born in the U.S.A.
I was born in the U.S.A., born in the U.S.A.

Come back home to the refinery
Hiring man said, "Son if it was up to me"
Went down to see my V.A. man
He said, "Son, don't you understand"

- Bruce Springsteen, "Born in the U.S.A."

At first, I couldn't think of any songs that invoked Haidt's notion of respect for authority (other than maybe 'Church of the Holy Spook', by Shane MacGowan)

But then I realized I should be looking for songs protesting the violation of this precept, not songs praising it directly. Why is Bruce Springsteen's protagonist so insistent that he was, 'Born in the U.S.A.'? - because he believes that he has fulfilled his part of the bargain, going off to fight for his country, but his superiors have neglected their side, leaving him unemployed and without prospects upon his return home. The moral value of Authority/Subversion that Haidt refers to is a two-way street, in Haidt's words, 'people who relate to each other in this way have mutual expectations that are more like those of a parent and child than those of a dictator and fearful underlings.' We see this in the song, which is a cry for a mutual expectation that has been betrayed.

Again, Haidt seems to take it as self-evident that support for a hierarchical structure will convey some sort of evolutionary advantage to groups that adopt it although he does not really specify what the benefit is (economies of scale? ability to cooperate across groups too large to bond with just loyalty? ability to distribute proceeds of cooperation without conflict?).

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Sanctity/Degradation

"In this cold commodity culture
Where you lay your money down
It's hard to even notice
That all this earth is hallowed ground"

- Bruce Cockburn, "The Gift"

The final moral value that Haidt identifies, 'Sanctity' seems the least useful at first glance. Haidt figures that this moral value was useful for helping us avoid poisons (like vegetables :) and activities that might carry disease or other harmful qualities.

He argues that, in a modern context, when we have science to tell us what is dangerous to eat or touch, this moral value is used to bind people together by allowing them to rally around some sacred item. To be honest, I didn't find this explanation particularly convincing, although I do think that this moral value can still be useful.

As the song lyrics above suggests, I think this moral value may lie behind what Jane Jacobs characterized as an almost inexplicable disdain for commercial activity that has existed throughout much of our history. In a modern context where the moral disdain for commercial activity has lessened, this value might still help us to see where certain things should not be for sale (body parts, votes, endangered species etc.) Of course, by the same token, it's likely this same value that propels the war on drugs and prevents legalization of, for example, marijuana.


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So that covers the 6 moral values that Haidt has identified to date. Let's talk about Haidt's second main argument in this section of the book, that there is a distinct difference between liberals / 'WEIRD' - W(estern) E(ducated) I(ndustrialized) R(ich) D(emocratic) people, who only place value on 3 moral dimensions (Care/Harm, Fairness, and Freedom/Oppression) and who mostly follow a 'no harm, no foul' morality, and conservatives who place value on all 6 moral dimensions.

There was a story on the CBC website the other day about a Dutch man who, after his cat had died in an accident, decided to turn his cat into a flying helicopter (see the video at the link). There were a number of comments on the story that were popular and uncontroversial (meaning few people clicked 'dislike' on the comment) and these comments were all some sort of humourous commentary on the story. But there were also a number of comments that were both popular and controversial (many dislikes) and these comments were along the lines of:

"sick"

"Gross!!!! How disgusting...."

"I find this disturbing and disrespectful. Whenever one of my pets has passed away, I've grieved. I believe that's a normal, sane response to losing a furry family member. Never would it occur to me to turn my pet into flying 'art'. *shudder*

"

"Being a former cat owner, having lost our guy who was 16 years of age, I find this completely disgusting and very disrespectful to the cat."

Invariably, comments on the disgusting, gross, disrespectful or profane nature of the dead flying cat were met with a rebuttal indicating that it was no big deal because the cat was already dead, and thus no harm was done. The last comment I quoted above provoked responses that flesh out the details of the argument in full.

The first response is,

"Then don't do this with your dead cat, and let this person be."

To which the response comes back,

"No Tyler, sugarpei is right, what this guy has done is sick. Had it been a human, he would had been arrested for causing an indignity to a corpse. This is no different."

In reply,

"... Its not up to us to judge this guy. The cat isn't getting hurt or suffering from this.

To repeat; cats are not equal to humans, and what someone does with the remains of their pet is up to them."

In general, there seemed to be widespread agreement that more than the principle of harm was at stake because there was general agreement that it would be wrong to do this with a human corpse, even though there would be no 'harm' done since the person was already dead. In addition, there was general agreement that it would be wrong to kill a cat just for this purpose because that would harm the cat. But where there was less agreement was on the point of whether the same moral value that prevents us from desecrating a human corpse should also apply to a cat. It wasn't clear to me reading the comments that anyone made the argument why cats should be protected from harm, like humans are, but not protected from degradation like humans are.
----

Haidt surveyed 12 groups of people from around the world and found that one group, comprised of people attending the University of Pennsylvania, was different from the rest, in that the participants resembled the folks in the comment thread on the dead cat who saw nothing morally wrong as long as no harm was done. The other groups were more willing to morally condemn actions even where no harm was caused. Haidt has found that the distinction between the two ways of seeing the world mostly came down to culture and class, with upper middle class people from Western countries ('WEIRD' people) showing the strongest tendency toward a 'Harm-based' morality system, and Americans being the strongest outlier in that direction even within the Western world.

Haidt argues that this flows from a upper/middle class Western world view premised around the notion of autonomous individuals vs. the rest of the worldview which is centred around relationships.

Unfortunately, Haidt seems mostly uninterested in why this might be the case. He does make a passing reference (page 122) that 'The virtues taught to children in a warrior culture are different from those taught in a farming culture or a modern industrialized culture' but he doesn't seem too interested in what those differences might be or why they might vary.

Over and over again, Haidt makes passing reference to ways that people's moral values have changed over time, almost always suggesting that they have become more 'liberal' or harm-focussed.

For example, on page 120, "As Western societies became more educated, industrialized, rich and democratic, the minds of its intellectuals changed. They became more analytic and less holistic." or page 124, "in the past fifty years people in many Western societies have come to feel compassion in response to many more kinds of animal suffering, and they've come to feel disgust in response to many fewer kinds of sexual activity" or page 142, "Until recently, Americans addressed strangers and superiors using title plus last name"

In all of these cases, the trend described by Haidt is towards a more liberal, harm-centred viewpoint. And at every instance I felt the urge to write in the margin of my copy of the book, 'Why?' but Haidt never goes into why.

It's a bit funny because in the latter part of this section of the book, Haidt argues that American liberals are at a disadvantage because conservative politicians make arguments that invoke all 6 moral values, while liberal politicians invoke only 2 or 3. But it doesn't seem to add up that the most liberal place is getting more liberal over time and that somehow this has started to become a problem for liberal politicians in the last few decades. Clearly there is more going on here than is covered by Haidt.


Of course, the whole point of this series of posts is to discuss Jane Jacobs' 'Systems of Survival' so I must point out that the 'WEIRD' morality that Haidt refers to sounds a lot like the commercial syndrome. Hierarchy, loyalty and prowess are all discounted, while shunning fraud and force (which would cause harm) and being honest (fairness, no cheating) take precedence. Haidt never references the 'solo' virtues that can be practiced without the presence of other people (thrift, innovation, hard-work, etc.) but as we'll see in the next post, Haidt eventually defines morality in the context of social cooperation, so this oversight in understandable.

Meanwhile on the conservative side (the non-Weird part of the world in Haidt's view), we have respect for hierarchy, obedience, loyalty, respect for tradition and taking vengeance, all good guardian virtues, per Jacobs.

Furthermore, Haidt identifies the commercial syndrome morality as being most prevalent among the wealthier parts of societies descended from what Weber described as 'The Spirit of Capitalism.'

Like so many others, Haidt never considers the possibility that morality might be context-sensitive, not just in the sense that some morals might be more useful than others in certain cultures (which he does acknowledge) but that even within one culture some actions might be moral or immoral depending on the context.

However, given that Haidt's main focus seems to be to get people who have a 'WEIRD' morality system to appreciate the value of recognizing all 6 virtues (i.e. to get people with a commercial cast of mind to appreciate the guardian cast of mind), and that the focus of his book ends up being two of the main guardian aspects of our society (The subtitle of the book is, "Why Good People are Divided by Politics and Religion") it seems that he may realize this unconsciously, even though it hasn't made its way into his writing yet.

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Afterthought 1: In Haidt's view, U.S. politics involves a harm-focussed, commercially minded left (the Democratic party) matched by a guardian minded conservative right (the Republican party), and from this he concludes that the harm-focussed morality is a left-wing morality. But I think his findings rather speak to the absence of a Guardian minded left party in U.S. politics, akin to the NDP in Canada or the Labour party in Britain. On reflection, it does seem that the Canadian system is more like a liberal centre with two guardian minded wings, whereas the U.S. system lacks political representation for guardian minded people with left wing politics.

Perhaps I am just generalizing from my own example, where Haidt's survey showed my moral compass aligning with a Conservative worldview in which almost all the moral dimensions identified by Haidt are valued, but yet you won't find me voting for the Conservative party in Canada any time soon. With that in mind, I took many of the song lyrics describing a conservative/non-WEIRD/guardian view of the world from Bruce Cockburn, a left-wing Canadian musician.

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Afterthought #2, here's another CBC article, that one outlying Haidt's views, the article itself isn't particularly useful, but the comments are mostly spot-on, in my opinion, and worth reading.

35. Creative Destruction

Note: This post is the thirty-fifth in a series. Click here for the full listing of the series.

I've talked a few times about the notion of trade being a win-win (pareto-efficient), and how the first welfare theorem of economics talks about how under conditions of perfect competition, nobody can be made better off without anyone being made worse off.

In my readings on economic topics, I find that people often therefore regard anything that interferes with perfect competition as a bad thing. Additionally, it is common to see people discuss markets as though they were in a mostly static state, where all that could vary was the price charged by a company, and that competition consisted solely of price competition¹. In this post I want to highlight how capitalism itself, at its core, depends, and is in some ways defined by beneficial breaches to conditions of perfect competition.

Weber covered this ground (as I discussed here), in contrasting the capitalist system with a traditionalist market based one, but the best known description comes from Joseph Schumpeter, who popularized the phrase 'Creative Destruction' in his book, 'Capitalism Socialism Democracy.'

Creative destruction is the process by which innovation (e.g. competition on some basis other than price) upsets the balance of a market. More accurately, it is not that innovation upsets a balanced competitive market, but rather that ongoing innovation prevents most markets from ever even approaching the notion of prefect competition in the first place.

Unlike the case of a typical trade which is a win-win for all involved, creative destruction is an inherently competitive process meaning that it creates both winners and losers.

As Wikipedia says with unusual eloquence,

Creative destruction can hurt. Layoffs of workers with obsolete working skills can be one price of new innovations valued by consumers. Though a continually innovating economy generates new opportunities for workers to participate in more creative and productive enterprises (provided they can acquire the necessary skills), creative destruction can cause severe hardship in the short term, and in the long term for those who cannot acquire the skills and work experience.'

The most famous example of people hurt by 'creative destruction', is the case of the Luddites who were (per Wikipedia),

a social movement of British textile artisans in the early nineteenth century who protested—often by destroying mechanised looms—against the changes produced by the Industrial Revolution, which they felt were leaving them without work and changing their entire way of life.

It wasn't just that they 'felt' that way, their way of life really was threatened by the innovation and price competition underway in their industry. You don't see a lot of textile artisans around nowadays.

Schumpeter is a great writer so here's a fairly lengthy excerpt to get the flavour of what his argument was:

Capitalism, then, is by nature a form or method of economic change and not only never is but never can be stationary. And this evolutionary character of the capitalist process is not merely due to the fact that economic life goes on in a social and natural environment which changes and by its change alters the data of economic action; this fact is important and these changes (wars, revolutions and so on) often condition industrial change, but they are not its prime movers. Nor is this evolutionary character due to a quasi-automatic increase in population and capital or to the vagaries of monetary systems, of which exactly the same thing holds true. The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers, goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates.

As we have seen in the preceding chapter, the contents of the laborer's budget, say from 1760 to 1940, did not simply grow on unchanging lines but they underwent a process of qualitative change. Similarly, the history of the productive apparatus of a typical farm, from the beginnings of the rationalization of crop rotation, plowing and fattening to the mechanized thing of today–linking up with elevators and railroads–is a history of revolutions. So is the history of the productive apparatus of the iron and steel industry from the charcoal furnace to our own type of furnace, or the history of the apparatus of power production from the overshot water wheel to the modern power plant, or the history of transportation from the mailcoach to the airplane.

The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation–if I may use that biological term–that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in.

. . .

Every piece of business strategy acquires its true significance only against the background of that process and within the situation created by it. It must be seen in its role in the perennial gale of creative destruction; it cannot be understood irrespective of it or, in fact, on the hypothesis that there is a perennial lull.

. . .

The first thing to go is the traditional conception of the modus operandi of competition. Economists are at long last emerging from the stage in which price competition was all they saw. As soon as quality competition and sales effort are admitted into the sacred precincts of theory, the price variable is ousted from its dominant position. However, it is still competition within a rigid pattern of invariant conditions, methods of production and forms of industrial organization in particular, that practically monopolizes attention. But in capitalist reality as distinguished from its textbook picture, it is not that kind of competition which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization (the largest-scale unit of control for instance)–competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives.

This kind of competition is as much more effective than the other as a bombardment is in comparison with forcing a door, and so much more important that it becomes a matter of comparative indifference whether competition in the ordinary sense functions more or less promptly; the powerful lever that in the long run expands output and brings down prices is in any case made of other stuff.

It is hardly necessary to point out that competition of the kind we now have in mind acts not only when in being but also when it is merely an ever-present threat. It disciplines before it attacks. The businessman feels himself to be in a competitive situation even if he is alone in his field or if, though not alone, he holds a position such that investigating government experts fail to see any effective competition between him and any other firms in the same or a neighboring field and in consequence conclude that his talk, under examination, about his competitive sorrows is all make-believe. In many cases, though not in all, this will in the long run enforce behavior very similar to the perfectly competitive pattern.

I haven't really made the connection with ethics clear so far, so a few comments on that may be in order. First of all, Jane Jacobs contrasted the desire for innovation under commercial ethics with respect for tradition, so this is another confirmation of that split.

Secondly, there is the recognition that the process of the market is not a pareto-optimal, win-win one where there are no losers and nobody has any real reason to complain, but rather is a competitive one where the essence of the system is people making voluntary transactions that have significant negative repercussions (externalities) for parties not part of the transaction (e.g. your boss and an Indian worker agree that your job will now be done in India).

The fact that we don’t suffer from more Luddite style violence, reflects that society makes an effort to assist those blown over by the gale of capitalism and, related, that a critical mass of people feel they have more to lose from fighting the system than by going along.

Also, the process of innovation itself relies heavily on the ethics that Jacobs outlined. Optimism to make one believe that the untried plan will work and a willingness to be thrifty and productive in order to save the resources that will be used to make the productive investments needed.



¹ In economics, but not in business books where simple models such as Porter’s Five Forces model present a more realistic assessment of the situation and discussion of pricing in the context of business strategy.

33. Prosperity Gospel vs. Austerity Gospel

A bit of a digression for this holiday season post...

Mike Konczal (of the blog Rortybomb), links toa pair of articles in The Atlantic on two different religious movements that involve questions of ethics, economics and debt:

The first is an article by Megan McArdle on Dave Ramsay, who preaches his gospel of living debt-free in evangelical churches and to the secular world as well:

"On a fine summer day at the end of August, I paid $220 for front-row seats on the floor of a minor-league hockey rink in Detroit, just to hear Ramsey talk for five hours. The ostensible topic: getting your financial life in order. Afterward, my fiancé, who grew up in the Bible Belt, called me to ask what I'd thought.

'I think I just attended my first prayer meeting,' I told him.

There was, of course, a great deal of talk about money, and what to do with it. But the format was more tent revival than accounting seminar, with the first 90 minutes or so mostly devoted to Ramsey’s personal story of ruin and redemption. We heard how, during the second half of the 1980s, a young Ramsey built up a multimillion-dollar real-estate empire—then lost it all as the bank got nervous and called his loans, ultimately forcing him and his wife into bankruptcy. How, searching for help in his hour of need, he turned to the Bible and discovered Proverbs 22:7: 'The rich rule over the poor, and the borrower is slave of the lender.' At that moment, he told an audience so hushed that we could hear the ice squeak, Ramsey decided to never borrow another dollar again."

The second is an article by Hanna Rosin on 'The Prosperity Gospel'

"That Sunday, Garay was preaching a variation on his usual theme, about how prosperity and abundance unerringly find true believers. 'It doesn’t matter what country you’re from, what degree you have, or what money you have in the bank,' Garay said. 'You don’t have to say, 'God, bless my business. Bless my bank account.' The blessings will come! The blessings are looking for you! God will take care of you. God will not let you be without a house!'

Pastor Garay, 48, is short and stocky, with thick black hair combed back. In his off hours, he looks like a contented tourist, in his printed Hawaiian shirts or bright guayaberas. But he preaches with a ferocity that taps into his youth as a cocaine dealer with a knife in his back pocket. 'Fight the attack of the devil on my finances! Fight him! We declare financial blessings! Financial miracles this week, NOW NOW NOW!' he preached that Sunday. 'More work! Better work! The best finances!' Gonzales shook and paced as the pastor spoke, eventually leaving his wife and three kids in the family section to join the single men toward the front, many of whom were jumping, raising their Bibles, and weeping. On the altar sat some anointing oils, alongside the keys to the Mercedes Benz."

Reading the two articles, I was struck by how the two different approaches picked up different elements from the commercial set of ethics that Jacobs described in Systems of Survival: Ramsay emphasizes thrift, and investing for productive purposes while the prosperity gospel emphasizes optimism and the promotion of comfort and convenience. Neither one really seems quite right on its own. Ramsay's approach would cutoff prudent borrowing to fund a business venture while the prosperity gospel seems to just encourage imprudent borrowing in the belief that God will provide one way or the other.

Anyway, it's some interesting reading.

26. The Protestant Ethic and the Spirit of Capitalism

Note: This post is the twenty-sixth in a series. Click here for the full listing of the series.

Other than Plato's 'Republic', the historical work that gets the most
discussion in Jane Jacob's 'Systems of Survival' is probably 'The Protestant Ethic and the Spirit of Capitalism' by Max Weber.

This isn't surprising since it turns out that Weber held a view quite similar to Jacobs':

"We will define a capitalistic economic action as one which rests on the expectation of profit by the utilization of opportunities for exchange, that is, on (formally) peaceful chances of profit. Acquisition by force (formally and actually) follows its own particular laws and it is not expedient , however little one can forbid this, to place it in the same category with action which is, in the last analysis oriented to profits from exchange."

In addition to distinguishing the ethics of force from the ethics of exchange, Weber also makes a clear (and somewhat unusual) distinction between capitalism and greed.

"The impulse to acquisition, pursuit of gain, of money, has in itself nothing to do with capitalism. The impulse exists and has existed among waiters, physicians, coachmen, artists, prostitutes, dishonest officials, soldiers, nobles, crusaders, gamblers and beggars. One may say that it has been common to all sorts and conditions of men at all times and in all countries of the earth, wherever the objective possibility of it is or has been given. It should be taught in the kindergarten of cultural history that this naive idea of capitalism must be given up once and for all. Unlimited greed for gain is not in the least identical with capitalism, and is still less its spirit. Capitalism may even be identical with the restraint, or at least a rational tempering of this impulse. But capitalism is identical with the pursuit of profit, and forever renewed profit

(bold face added).

Note the contrast with David Gauthier - where Gauthier viewed the perfect market as a morally free zone which allowed man to pursue his natural bent for 'more' without restraint, Weber sees capitalist activity as involving a restraint on the natural impulse for more, where the restraint serves to further the long term accumulation of capital. For Weber, there is a distinction between a rational calculation of how to accumulate as much capitals over time as possible, and an impulsive or irrational greed that can sabotage the accumulation of capital (although Weber later notes that there is a certain irrationality in just accumulating wealth without ever making any personal use of it).

Weber repeatedly makes the distinction between the man with a capitalist spirit and the 'adventurer' who seeks personal gain but by whatever means possible not within any specific capitalist approach.

"This kind of entrepreneur, the capitalistic adventurer, has existed everywhere. With the exception of trade and credit and banking functions, their activities were predominantly of an irrational and speculative character, or directed to acquisition by force, above all the acquisition of booty, whether directly in war or in the form of continuous fiscal booty by exploitation of subjects.

The capitalism of promoters, large scale speculators, concession hunters, and much modern financial speculation, even in peace time, but, above all, capitalism especially concerned with exploiting wars, bears this stamp even in modern countries. ...

But in modern times the Occident has developed, in addition to this, a very different form of capitalism which has appeared nowhere else: the rational capitalistic organization of (formally) free labour."

I think of this distinction Weber raises as the distinction between someone like Donald Trump - aggressive, ostentatious, frequently in bankruptcy, spendthrift, a promoter, large scale speculator and concession hunter - and Warren Buffett, mild mannered, legendary for his frugality and thrift, not particularly prone to self promotion, perennially focussed on increasing profits.


Much of the essay is devoted to Weber's notion that the restraint that serves the accumulation of capital, takes the form of a set of ethics that transforms a person's desires, as opposed to simply a technique that will best serve a person's pre-existing desires.

"The peculiarity of this philosophy of avarice appears to be the ideal of the honest man of recognized credit, and above all the idea of a duty of the individual toward the increase of his capital, which is assumed as an end in itself. Truly what is here preached is not simply a means of making one's way in the world, but a peculiar ethic. The infraction of its rules is treated not as foolishness but as forgetfulness of duty. That is the essence of the matter. It is not mere business astuteness, that sort of thing is common enough, it is an ethos. This is the quality which interests us." 

 (emphasis added)

Weber reinforces the point by looking at the writings of Benjamin Franklin, who was not particularly religious but was known as an exemplar of the early American dedication to the values of hard work and thrift.

"...all Franklin's moral attitudes are colored with utilitarianism. Honesty is useful, because it assures credit; so are punctuality, industry, frugality, and that is the reason they are virtues. A logical deduction from this would be that where, for instance, the appearance of honesty serves the same purpose, that would suffice, and an unnecessary surplus of this virtue would evidently appear to Franklin's eyes a unproductive waste.

And as a matter of fact, the story in his autobiography of his conversion to those virtues, or the discussion of the value of a strict maintenance of the appearance of modesty, the assiduous belittlement of one's own deserts in order to gain general recognition later, confirms this impression. According to Franklin, those virtues, like all others, are only in so far virtues as they are actually useful to the individual, and the surrogate of mere appearance always sufficient when it accomplishes the end view. It is a conclusion which is inevitable for strict utilitarianism. The impression of many Germans that the virtues professed by Americanism are pure hypocrisy seems to have been confirmed by this striking case. But in fact the matter is not by any means so simple. 
 
Benjamin Franklin's own character, as it appears in the really unusual candidness of his autobiography, belies that suspicion. The circumstance that he ascribes his recognition of the utility of virtue to a divine revelation which was intended to lead him in the path of righteousness, shows that something more than mere garnishing for purely egocentric motives is involved.  

In fact, the summumbonum of his ethic, the earning of more and more money, combined with the strict avoidance of all spontaneous enjoyment of life, is above all completely devoid of any eudaemonistic, not to say hedonistic, admixture. It is thought of so purely as an end in itself, that from the point of view of the happiness of, or utility to, the single individual, it appears entirely transcendental and absolutely irrational. Man is dominated by the making of money, by acquisition as the ultimate purpose of his life. Economic acquisition is no longer subordinated to man as the means for the satisfaction of his material needs. This reversal of what we should call the natural relationship, so irrational from a naive point of view, is evidently as definitely a leading principle of capitalism as it is foreign to all peoples not under capitalistic influence. At the same time it expresses a type of feeling which is closely connected with certain religious ideas. If we thus ask, why should "money be made out of men", Benjamin Franklin himself, although he was a colorless deist, answers in his autobiography with a quotation from the Bible, which his strict Calvinistic father drummed into him again and again in his youth: "Seest thou a man diligent in his business? He shall stand before kings" (Prov. xxii. 29). The earning of money within the modern economic order is, so long as it is done legally, the result and the expression of virtue and proficiency in a calling; and this virtue and proficiency are, as it is now not difficult to see, the real Alpha and Omega of Franklin's ethic"

So what virtues actually make up this ethic that Weber is describing? Weber never actually spells out (as far as I could tell) the specific virtues, but they can be easily extracted from various quotes.

A story Weber tells about how a 'traditionalistic' industry might be transformed to a 'capitalistic' one, captures many of the elements of the cpaitalist spirit.

"Until about the middle of the past century the life of a putter-out was, at least in many of the branches of the Continental textile industry, what we should today consider very comfortable. We may imagine its routine somewhat as follows: The peasants came with their cloth, often (in the case of linen) principally or entirely made from raw material which the peasant himself had produced, to the town in which the putter-out lived, and after a careful, often official, appraisal of the quality, received the customary price for it. The putter-out's customers, for markets any appreciable distance away, were middlemen, who also came to him, generally not yet following samples, but seeking traditional qualities, and bought from his warehouse, or, long before delivery, placed orders which were probably in turn passed on to the peasants. Personal canvassing of customers took place, if at all, only at long intervals. Otherwise correspondence sufficed, though the sending of samples slowly gained ground. The number of business hours was very moderate, perhaps five to six a day, sometimes considerably less; in the rush season, where there was one, more. Earnings were moderate; enough to lead a respectable life and in good times to put away a little. On the whole, relations among competitors were relatively good, with a large degree of agreement on the fundamentals of business. A long daily visit to the tavern, with often plenty to drink, and a congenial circle of friends, made life comfortable and leisurely. 

The form of organization was in every respect capitalistic; the entrepreneur's activity was of a purely business character; the use of capital, turned over in the business, was indispensable; and finally, the objective aspect of the economic process, the bookkeeping, was rational. But it was traditionalistic  business, if one considers the spirit which animated the entrepreneur: the traditional manner of life, the traditional rate of profit, the traditional amount of work, the traditional manner of regulating the relationships with labor, and the essentially traditional circle of customers and the manner of attracting new ones. All these dominated the conduct of the business, were at the basis, one may say, of the ethos of this group of business men.  

Now at some time this leisureliness was suddenly destroyed, and often entirely without any essential change in the form of organization, such as the transition to a unified factory, to mechanical weaving, etc. What happened was, on the contrary, often no more than this: some young man from one of the putting-out families went out into the country, carefully chose weavers for his employ, greatly increased the rigor of his supervision of their work, and thus turned them from peasants into laborers. On the other hand, he would begin to change his marketing methods by so far as possible going directly to the final consumer, would take the details into his own hands, would personally solicit customers, visiting them every year, and above all would adapt the quality of the product directly to their needs and wishes.

At the same time he began to introduce the principle of low prices and large turnover. There was repeated what everywhere and always is the result of such a process of rationalization: those who would not follow suit had to go out of business. The idyllic state collapsed under the pressure of a bitter competitive struggle, respectable fortunes were made, and not lent out at interest, but always reinvested in the business. The old leisurely and comfortable attitude toward life gave way to a hard frugality in which some participated and came to the top, because they did not wish to consume but to earn, while others who wished to keep on with the old ways were forced to curtail their consumption.  

And, what is most important in this connection, it was not generally in such cases a stream of new money invested in the industry which brought about this revolution -- in several cases known to me the whole revolutionary process was set in motion with a few thousands of capital borrowed from relations -- but the new spirit, the spirit of modern capitalism, had set to work. The question of the motive forces in the expansion of modern capitalism is not in the first instance a question of the origin of the capital sums which were available for capitalistic uses, but, above all, of the development of the spirit of capitalism. Where it appears and is able to work itself out, it produces its own capital and monetary supplies as the means to its ends, but the reverse is not true. Its entry on the scene was not generally peaceful. A flood of mistrust, sometimes of hatred, above all of moral indignation, regularly opposed itself to the first innovator. Often -- I know of several cases of the sort -- regular legends of mysterious shady spots in his previous life have been produced. It is very easy not to recognize that only an unusually strong character could save an entrepreneur of this new type from the loss of his temperate self-control and from both moral and economic shipwreck. Furthermore, along with clarity of vision and ability to it is only by virtue of very definite and highly developed ethical qualities that it has been possible for him to command the absolutely indispensable confidence of his customers and workmen. Nothing else could have given him the strength to overcome the innumerable obstacles, above all the infinitely more intensive work which is demanded of the modern entrepreneur. But these are ethical qualities of quite a different sort from those adapted to the traditionalism of the past.  

(emphasis added)

Here we see the innovation, hard work, competitiveness, openness to new ways of doing things, frugality, and productive investment of the capitalist spirit contrasted with the leisure, respect for tradition and non-competitiveness of the old ways of business.

Weber notes the somewhat internally contradictory nature of the capitalist spirit in that on the one hand, pursuing it properly leads to the accumulation of wealth, yet the same spirit generally forbids spending that wealth on any sort of luxury or self-gratification that might justify (in rational terms) the work and hardship that went into accumulating it.

"This worldly Protestant asceticism, as we may recapitulate up to this point, acted powerfully against the spontaneous enjoyment of possessions; it restricted consumption, especially of luxuries. On the other hand, it had the psychological effect of freeing the acquisition of goods from the inhibitions of traditionalistic ethics. It broke the bonds of the impulse of acquisition in that it not only legalized it, but (in the sense discussed) looked upon it as directly willed by God. The campaign against the temptations of the flesh, and the dependence on external things, was, as besides the Puritans the great Quaker apologist Barclay expressly says, not a struggle against the rational acquisition, but against the irrational use of wealth.  

But this irrational use was exemplified in the outward forms of luxury which their code condemned as idolatry of the flesh, however natural they had appeared to the feudal mind. On the other hand, they approved the rational and utilitarian uses of wealth which were willed by God for the needs of the individual and the community. They did not wish to impose mortification on the man of wealth, but the use of his means for necessary and practical things. The idea of comfort characteristically limits the extent of ethically permissible expenditures. It is naturally no accident that the development of a manner of living consistent with that idea may be observed earliest and most clearly among the most consistent representatives of this whole attitude toward life. Over against the glitter and ostentation of feudal magnificence which, resting on an unsound economic basis, prefers a sordid elegance to a sober simplicity, they set the clean and solid comfort of the middle-class home as an ideal." 

Finally, although Weber tries to keep his own opinions out of it, his concerns about the effect of the capitalistic spirit do occasionally show through, especially in a passage near the end of the essay where he bemoans how once this spirit was a choice but now there is no choice but to adopt it,

"The Puritan wanted to work in a calling; we are forced to do so. For when asceticism was carried out of monastic cells into everyday life, and began to dominate worldly morality, it did its part in building the tremendous cosmos of the modern economic order. This order is now bound to the technical and economic conditions of machine production which today determine the lives of all the individuals who are born into this mechanism, not only those directly concerned with economic acquisition, with irresistible force. Perhaps it will so determine them until the last ton of fossilized coal is burnt."

The last line is interesting. Weber imagines that the capitalist spirit's drive for more and more will be unstoppable until it literally runs out of energy in the sense that there is no more natural support for further expansion of human activity. People largely moved on to oil and gas before we ran out of coal (although we've used up a lot of the best supplies of coal available to us, and continue to use more, all the same) but with peak oil a current topic of discussion, Weber's comment is as timely as ever.

Are those who see an end to our way of life because of peak oil (or global warming) simply looking for a saviour from the capitalistic treadmill we are unable to take ourselves off without outside 'help', or are cornucopians who see no real danger of running out of any resources or hitting any environmental constraints simply dismissing anything which might derail the capitalistic train that is driving progress and which we would be crazy to want to get off?


But back to the main point, which is that Weber viewed successful capitalism as involving a set of ethical restraints on behaviour. Where David Gauthier simply assumed that man always wanted more and that whatever action he took automatically reflected that desire for more, Weber sees that actually achieving a certain kind of more (more profits and wealth) required a form of ascetism and a set of ethics that privileges one set of desires (the desire for accumulation) ahead of another (the desire for consumption and ostentation).

This is how Warren Buffett, whose license place says 'Thrifty' is now one of the world's richest men while Donald Trump, whose license plate has his own initials, repeatedly ends up in bankruptcy.


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Note: All quotes from the Talcott Parsons translation, first published in 1930 as viewed here or here.