By James Halteman and Edd S. Noell
Key characteristics of Reckoning with Markets:
- Discussion of economic methods that views alternative approaches as complementary additions to existing methods.
- A literary style designed to connect with undergraduates or others who may not have extensive exposure to economic theory or philosophy.
- Vignettes relating various thinkers ideas to current issues with discussion questions included.
Undergraduate economics students begin and end their study of economics with the simple claim that economics is value free. Only in a policy role will values and beliefs enter into economic work; there can be little meaningful dialogue by economists about such personal views and opinions. This view, now well over 200 years old, has been challenged by heterodox thinkers in economics, and philosophers and social scientists outside the discipline all along the way. However, much of the debate in modern times has been narrowly focused on philosophical methodological issues on one hand or theological/sectarian concerns on the other. None of this filters down to the typical undergraduate even in advanced courses of the history of economic thought.
Reckoning with Markets presents the notion that economic thinking cannot escape value judgments at any level and that this understanding has been the dominant view throughout most of history. It shows how, from ancient times, people who thought about economic matters integrated moral reflection into their thinking. Reflecting on the Enlightenment and the birth of economics as a science, Halteman and Noell illustrate the process by which values and beliefs were excluded from economics proper. They also bring the reader up to date, given the changes over the last half-century.
With the advent of interdependency concepts and game theory, behavioral economics and the infusion of other social sciences, especially psychology, into economic considerations, the door is once again open to moral reflection. It is a sensitive subject that can be divisive for many and there is little if any assessable literature on the topic at the undergraduate level. One way to approach the subject is to follow the path of the great thinkers of the past and observe how they worked through economic issues from a set of values that was foundational to their thinking. This places moral thinking in a context illuminating the complexity and importance of moral reflection and illustrating its impact on the culture of the times. Reckoning With Markets follows this method with a deliberate effort to cast the material in terms that will engage the undergraduate student.
Publisher: Oxford University Press
Victor V. Claar on Journal of Markets and Morality wrote:
"Sometimes a book has considerable value for readers beyond its primary audience. Such is the case for a slender hardback written by two professors teaching business and economics at two Christian colleges (Wheaton in Illinois and Westmont in California). Not surprisingly, Reckoning with Markets seems aimed for Christian college students. Nonetheless, readers need not hail from collegiate environments to gain from moral reflections on economic justice and an exploration of developments in economic thought today. [...] In sum, the Halteman and Noell book tacitly builds a case for moral market design by conceding that purely competitive environments weed out those who do not shrewdly put narrow self-interest first. This acknowledgment enjoins the realization that there can be no lasting market freedoms without laws that constrain incentives to sell out the public interest. In this respect Friedrich Hayek came close to having the last word on 'economic gardening.' Unless we cultivate market designs that reward moral merit in relation to the value of merit's contribution to the enduring public good, we have little hope of outcomes apart from crony capitalism. Current dysfunctions of justice remind us that morality does not spontaneously evolve from competition. Moral reflections must be evident when we reckon with markets."
Paul Oslington on Journal of the History of Economic Thought wrote:
"Reckoning with Markets provides a brief history of the unhitching of economics from its roots in moral theory and discusses a few heterodox challenges to the neoclassical approach. It concludes by suggesting that a multidisciplinary approach to the modern practice of economics would provide a richer understanding of human choice and action than currently found in the discipline. [...] The book is organized around a fascinating and immediately engaging rhetorical trick: The entire project is framed as an academic conference attended by all major economic thinkers throughout history. [...] This book has obvious adoption potential as a text for advanced undergraduate economics students — especially those at Christian colleges and universities — and could serve as a springboard for meaningful discussion. Yet the book is not without its weaknesses. First, given the argument the authors are making, I am surprised that they do not refer to related arguments made by Reformed economists such as John Tiemstra (e.g., Reforming Economics, 1990). Second, I am perplexed by the authors’ willingness to portray J.M. Keynes as a voice sympathetic to the moral tradition of economic thought."
David Colander on History of Political Economy wrote:
"James Halteman and Edd Noell have written a brief but wide-ranging book on moral reflection in economics. The structure of the book is historical, telling a story of the beginning of moral reflection on economic matters in ancient Greece and Israel, through Scholastic economics, Adam Smith, the secularization of political economy in the nineteenth century, and heterodox economics, and finishing with contemporary mainstream economics. It is clearly designed for use as an undergraduate textbook. [...] One thing that is strange about the book is the almost total avoidance of theology by authors who have written a great deal about relationships between theology and economics [...]. It is doubly strange because of the large amount of recent work on the influence of theology on the development of economics as a discipline, and on the thought of many of the economists the authors discuss [...] The book is clearly written in a lively style that will appeal to American undergraduates. Personally, I found that some of the stylistic devices grated [...] I also found that the ‘‘case studies’’ at the end of the chapters detracted rather than added to the material in the chapters. [...] My main concern about the book is that a morality tale often overwhelms the history. [...] Overall, the book will probably work well as a textbook for certain groups of students, and the discussions of the ancients, scholastics, and, to some extent, of Smith, will have value for other readers. This is a useful addition to the literature. On economics and ethics, students would find more stimulation for their moral imagination in Tomas Sedlacek’s recent contribution, and some others. Would I recommend it over Heilbroner or Backhouse or Vaggi and Groenewegen as an historical introduction to economics? Probably not."
"There is far too little moral reflection in economics, which makes this book a welcome addition to the literature. It explores the interplay between morality and economics over time, beginning with Greek thought and extending to modern times. And it does so in about two hundred pages. [...] Despite its shortcomings, the book is worth reading. Morals are fundamental to economic policy, and, while a given researcher’s particular normative views are usefully kept out of economic analysis, normative issues are not. Modern economics has not done a good job in handling the positive/normative divide, so simply asking the question about how morals and economic thinking interact is an advance."
About James Halteman and Edd S. Noell
James Halteman is Professor of Economics and Business, Wheaton College, and Edd S. Noell is Professor of Economics and Business, Westmont College.
Essay by the authors in the Montréal Review
Table of Contents
Chapter abstracts taken from Oxford Scholarship Online
Chapter 1: Setting the Stage
This chapter stages a group discussion with fifteen participants from all periods of history. A facilitator moderates the conversation, but the content of the session uses the words of the participants as quoted from their sources. Some involved are Aristotle, Thomas Aquinas, Adam Smith, Karl Marx, Jeremy Bentham, Alfred Marshall, J. S. Mill, Thorstein Veblen, J. M. Keynes, Milton Friedman, Friedrich Hayek, and Amartya Sen. The topics cover the nature of persons, whether the social order is mechanistic or engineered by human ingenuity, what role morals play in economic analysis, and the tension between individualism and community in social life. While it is recognized that history cannot be compressed into one context, the dialogue shows the various perspectives on common issues. Each participant appears in later chapters in his proper context.
Chapter 2: Moral Reflection in the Ancient Mediterranean World
After considering why modern economists pay little attention to ancient thinkers, the chapter explores the views of Aristotle with particular attention to his views on the moral life. Aristotle’s view of happiness focuses on what is really good for people rather than what is desired at any given time. Morality for Aristotle was not religious. His views on social organization, exchange and pricing, money and interest, and all other economic matters focused on justice and true happiness. Hesiod’s portrayal of the common person is then contrasted with Aristotle’s idealized vision. The chapter also describes the contribution of the Hebrews and some of the biblical teaching on economic relationships as well as the Stoic philosophy that caught the attention of Adam Smith many centuries later. The vignette at the end of the chapter is titled “Aristotle and the Purpose of Life.”
Chapter 3: Virtue and Values in Scholastic Economic Thought
The moral reflections of the medieval Scholastics on trade and loans are discussed in this chapter. Institutional change in thirteenth- and fourteenth-century Europe facilitated specialization, the widening of markets, and the spread of monetary exchange. Thomas Aquinas and others respond to these developments with instruction on the Christian duties of merchants, borrowers, and lenders. Drawing on Aristotle, Roman law, and the Scriptures, they identify the criteria for justice in a particular product exchange by focusing on its purpose and identifying practices of fraud and economic compulsion. Scholastic opposition to usury is grounded in the phenomenon of economic duress, though several extrinsic titles to interest are eventually extended. By the sixteenth century, Scholastics are laying greater stress on the impersonal dimensions of exchange and the manner in which competition fosters commutative justice in product and labor markets. The vignette “Medieval Scholastics and Moral Values for the Subprime Mortgage Crisis” is included.
Chapter 4: Adam Smith and the Prospects for Moral Reflection in Enlightenment Thinking
This chapter begins with a description of changes that were occurring in the European world and the way they led to the Enlightenment climate of scientific discovery. Most of the chapter develops the moral philosophy of Smith by showing how sympathy, the impartial spectator, and the “all-seeing eye” filter the human passions to make behavior virtuous and workable in an economy based on self-regard. But Smith had a role for rules that evolve and become accepted, forming effective social glue. Ultimately Smith’s economic system was a complex arrangement of conformity to moral principles and the pursuit of self-interest. Two vignettes conclude the chapter: “Adam Smith and the Moral Prerequisite of Markets” and “Adam Smith and Deceitful Conspiracy in the Marketplace.”
Chapter 5: The Secularization of Political Economy
Following Adam Smith’s vision of a self-regulating moral economy the focus turned toward these self-regulating features and away from moral concerns. The chapter traces the development of the classical and neoclassical economists who emphasized the rational discovery of underlying natural principles in a social order and the fitting of human law to those principles. The Industrial Revolution brought with it issues of income distribution and controversy over whether poor people should receive public assistance. Population growth was viewed by many as an inevitable deterrent to increases in living standards. Bentham’s utility view of value and Marshall’s merging of supply and demand cemented the neoclassical view of value and left moral questions to the philosophers and theologians. Finding equilibrium states rather than economic processes became the research agenda. Vignettes on “Alfred Marshall and the Value of Something” and “Mill: The Life of Homo Economicus Is Depressing at Best” conclude the chapter.
Chapter 6: Moral Reflection in Heterodox Economics
Heterodox economics presents alternative critical explanations for the driving forces behind capitalism. The chapter examines the distinctive moral reflections expressed by Karl Marx, Thorstein Veblen, and Friedrich Hayek. Marx’s historical materialism relies on dialectical reasoning to explain class struggle and economic change. His valuation of human autonomy, as ultimately manifested in communism, drives his moral critique of capitalism. Veblen’s understanding of the complex instincts underlying economic activity lays a path for more extensive incorporation of moral reflections in economics. Yet his evolutionary economics posits no final purpose in human economic activity. Hayek challenges the perfect information assumption of neoclassical economics, finding that competitive markets continually generate new information that creates disequilibrium. His reflections on the origins of moral codes and critique of collectivist planning affirm the superiority of the norm of liberty. The chapter concludes with the vignette “Karl Marx: Can a Materialist Produce a Moral Critique of Capitalism?”
Chapter 7: On Methods and Morals
Is economics like car building or car repair? Are we working toward a finished product, or are we attempting to answer pertinent questions that arise and change from time to time? These questions are entertained in this chapter in order to explore the nature of the methods economists employ. The subjective nature of data and the relevance of predicting from past trendsis explored. The proof that rational choice analysis predicts better than any alternative process is seen to be less than definitive by typical standards of proof. Welfare economics comes closest to philosophy when it optimizes social welfare with a social welfare function, but the ramifications of that model are rarely explored. Finally, it is suggested that key questions change and economic thinking then adapts to deal with the new challenges. The vignette for this chapter looks at John Maynard Keynes and his rethinking of mainstream macroeconomics.
Chapter 8: Expanding and Reorienting the Scope of Economic Thinking
This chapter traces efforts to expand the approach of economic thinking to political, legal, social, and religious institutions. Using rational choice analysis, these efforts move the discussion closer to value-laden areas of life. One important concern is the nature of the utility function, how it is formed, and what is utility or happiness? Social norms, cooperation models, game theory, behavioral economics, and neuroeconomics all have something to say about human behavior,and they also have important moral ramifications. While some claim that behavioral responses in these cases are merely self-interest disguised, outward behavior seems to work best in the long run if it is heartfelt. Character traits that signal trust are strongest when backed by moral commitments, and there is evidence that human brains are hardwired with some empathetic tendencies. The work of Dan Kahneman and Amartya Sen is highlighted in the closing vignettes.
Chapter 9: Predicting, Explaining and Understanding: An Interdisciplinary Approach
This final chapter sketches a framework that includes interdisciplinary considerations in decision making. First, five different contexts for behavior, from the family to the global environment, are analyzed with the observation that motivations vary in each. Then an interdisciplinary grid is constructed beginning with Smith’s passions and Veblen’s instincts to form a decision process that allows for a more holistic approach to understanding, explaining, and predicting behavior. The various passions and the instincts are linked with the social institutions that best socialize them. By considering the market, political sphere, civil society, and religion as important in behavior, it is still possible to do discipline-specific work while accounting for interdisciplinary impacts. The chapter concludes with a vignette describing the concerns of Thomas Malthus as a case study with interdisciplinary impacts and questions about long-term energy availability.