The Bankwatch

Tracking the consumer evolution of financial services

Another example seeking better ways for the modern economy

Continuing along the theme of ‘medicine for modern finance’ here is another pointer that better approaches are sought, but not before we can understand what is wrong with the current system. You only have to look at Cleveland to understand something is not right.

On the recent interview of Premier Wen of China by Fareed Zakaria. Fareed asked his usual final question of which books Wen recommended. One of the choices was the unusual one of The Theory of Moral Sentiments, by Adam Smith. In the interview it came out that ‘Moral Sentiments’ was written 17 years earlier than Wealth of Nations, that bastion of modern capitalism. Yet Moral Sentiments was written first and provided Smiths moral backdrop to the eventual ‘Wealth’. This is yet another example of how we might learn from those who are apparently at odds with our beliefs, when he has picked the very author of modern capitalism as his regular read.

University of Chicago Press

Influential economist Deirdre N. McCloskey is in the midst of a multi-volume revisionist history of the whole of Western economics. In the first volume of the project she returns to Adam Smith and his largely overlooked discussion of moral sentiments. What is the moral code of capitalism? Is the free market moral? What are the virtues of the bourgeoisie? McCloskey takes on centuries of capitalism’s critics with her erudition and sheer scope of knowledge, affirming capitalism without ignoring its faults. The Bourgeois Virtues: Ethics for an Age of Commerce is fiercely contrarian intellectual history at its finest.  And—virtues of capitalism—it’s free.


(Incidentally if you sign up at UofC Press site, you can get the opportunity for free ebooks including one of the McCloskey volumes)

All this to say Deirdre N. McCloskey has written two volumes (one
two) on the topic of ethics for the age of commerce, and ‘Why economics cannot explain the modern world’. There over 1,000 pages to the two volumes, so this might take a while, but the premise is encouraging, and I am hoping may offer additional insight for different and alternative approaches to commerce that get closer to both sides winning, versus the winners and losers approach that currently exists in finance, and is beginning to look like 2 steps forward, one step back when viewed over longer time periods.

What I liked about this approach is that it goes back in history and to the very theory that forms the basis of modern capitalism and questions what we thought we know about what Adam Smith meant.

Written by Colin Henderson

November 1, 2010 at 16:14

Posted in Uncategorized

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