When I first read Deirdre N. McCloskey’s The Bourgeois Virtues a few years ago, I decided that it was the best argument for capitalism that I had ever read. A recent book review by James Seaton reminded me that that is still true today. (Anyone who thinks that Ayn Rand makes a good case for capitalism really needs to get out more!) Two main aspects of the argument are especially thought-provoking. First, is the idea that many attempts at helping the poor by intervening in the market have often had unintended consequences that hurt those most in need:
Minimum wages protected union jobs but made the poor unemployable. . . . Zoning and planning permission has protected rich landlords rather than helping the poor. Rent control makes the poor and the mentally ill unhousable. . . . Regulation of electricity hurt householders by raising electricity costs, as did the ban on nuclear power. . . . The importation of socialism into the third world . . . stifled growth, enriched large industrialists, and kept the people poor.
Of course there is an equally long list of examples where a lack of market intervention hurt those most in need, but it is an important point. Secondly, and the main argument of the book, is that capitalism is not only the more efficient and fair economic system. And not only that capitalism requires virtues in order to function successful. But in fact, capitalism itself promotes and encourages virtues:
Deirdre McCloskey is out to demonstrate that life under capitalism—bourgeois life—nourishes the virtues more than life under feudalism, socialism, or any other alternative. She claims that “actually existing capitalism, not the collectivisms of the left or of the right, has reached beyond mere consumption, producing the best art and the best people.” Even if capitalism were not able to do what almost all observers agree it does do—deliver the goods—McCloskey argues that it would, on moral grounds, still be the best economic and social system around: “Had capitalism not enriched the world by a cent nonetheless its bourgeois, antifeudal virtues would have made us better people than in the world we have lost.”
McCloskey constructs this argument by first placing the seven virtues – courage, justice, temperance, prudence, faith, hope, and love – at the center of moral life. Then, she goes on to demonstrate how each is encouraged in capitalist society, and how destruction will ensue when any virtue is not balanced by the others.
The book is especially thought-provoking for those of us who are skeptical of capitalism’s usefulness for our society. Even for those who do not agree with the conclusions to which McCloskey arrives, these are arguments that must be taken seriously.
Open Economics 