Some thoughts on economics and morality
Point 2: An attitude of detachment
yields a more rational balance between spiritual and material goods.
Another assumption is that actors in an economy behave rationally. This means that, all things being equal, a consumer faced with two identical products will buy the one that is less expensive. Once again, the supermarket provides a useful setting for imagining instances of rationality; one chooses the apple that is riper or has less spots, or the cheaper of two bags of sugar that are more or less the same. But economists know that in many cases, people simply don’t behave rationally as they might when shopping for apples or bags of sugar. A lifelong smoker with lung cancer, for instance, incurs health risks with each cigarette smoked, while receiving only a marginal, temporary benefit. And yet, addiction in this case is more powerful than rationality.
Many argue that religion by its very nature is irrational. What can not be proven by the scientific method, it is argued, is not worthy of belief. Believers in some metaphysical reality argue that God/gods/spirits/etc. can not be proven to be false, just as they cannot be proven to exist. This argument has merit because it reminds us that science and religion are not opposing phenomena, and that reason dictates that the two should be in harmony. But the term rationality in economics deals with behavior, not philosophy.
Focusing on behavior, in the realm of economics I believe that religion has a powerful potential to make human beings more rational, rather than less rational, in the economic sense of the word. I suppose it could be argued that religion’s emphasis on selflessness and deference to others’ wants and needs is irrational when viewed through the lens of a classical economic model. I say this with hesitation, however, knowing that Adam Smith, a Scottish Enlightenment philosopher who very much valued and wrote on the subject of morality, is now mistakenly portrayed as an advocate of cut-throat, Machiavellian attitudes.
The reason religion can fight irrationality is because it fights tendencies towards consumerism, materialism, and attachment to material goods that I consider irrational and sometimes contrary to our happiness as human beings. Again, I hesitated as I wrote that last sentence, because I know I sound like some Marxist/anti-capitalist/anarchist protestor.
I don’t personally lend any credence to the argument that free markets naturally and necessarily produce excessive materialism. But I certainly think that materialism is a characteristic of capitalist societies, for one reason or another (it may be a bigger or smaller problem, comparably, in countries with other economic systems… I just don’t know). I’ll never forget when, in February 2004 around Valentine’s day, I walked down Summer Street in Downtown Boston, past a series of Macy’s department store windows. In every window there was a different mannequin wearing different clothes, jewelry, and accessories, fixed in different poses. The backdrop in every window was the same, a giant red heart with a bold-lettered assertion: CUPID CAN BE BRIBED. Now, I’m not trying to say that this silly ad marks the end of the world. It’s supposed to be funny, after all. But I think it does say something alarming about conscious or subconscious beliefs we have about the relationship between happiness, love, and material things. The old cliché which states that “money can’t buy me love” is cute, but how much relevance does it have today?
Again, I’m cringing right now because I’m beginning to sound like a G8 protestor. But I don’t think my disdain for materialism and my trust for markets and economic models are mutually exclusive. Quite the contrary is true, in fact.
In order to see why this is
true, you have to understand that economists believe that some things have
value that are not bought or sold, and sometimes are not easily
quantified. Let me put it this way: if
you were offered a job in
Let’s look at another less-obvious example: Would you take an extra $10,000 per year if it meant you’d have five hours less per week to spend with family and friends? The answer to this question is different for different people. If you’re in serious financial trouble, taking the extra $10,000 is the best move. If you’ve got a big pile of money in the bank and you’re marriage is in trouble, I should hope you’d take the five hours. Whether or not you’d like to admit it, by making a decision in this case you latently make a statement about how much, in dollars, the five hours per week you spend with your family is worth to you, which is nothing to be ashamed about.
The problem is, somewhere along the line money and material things became really important to us as ends themselves, rather than as the means towards happiness and fulfillment that they’re intended to be. This overvaluation of material goods is simply irrational, and it yields sub-optimal outcomes. Certain individuals for whom those five hours a week are worth $11,000 still take the $10,000, and it results in the over consumption of material goods, and the under consumption of what I call, for lack of a better term, spiritual goods. And I personally think this miscalculation that so many of us so frequently make causes a lot of unnecessary unhappiness.
The spiritual goods I’m talking about are not things like crucifixes, yarmulkes, or prayer beads. By my definition, meeting a friend for lunch is a spiritual good. So is playing catch with your son or daughter. Relaxing with a good book on the weekend, for the purposes of this discussion, is a spiritual good. These things, just like material goods, have to be consumed in moderation. When you consume too many material goods at the expense of spiritual goods, you end up a filthy-rich but clinically-depressed divorcee who’s estranged from your kids. When you consume too many spiritual goods at the expense of material goods, you end up unemployed, unproductive, and unhelpful. These examples are harsh and exaggerated, and show that in my primitive model the terms “material goods” and “spiritual goods” can be substituted with “consumption” and “leisure.”
If we can succeed in looking more rationally at our choices and reject our common attachment to “stuff”, I believe they will shift consumption by some degree away from material goods in the direction of spiritual goods. Of course, who am I to tell others that they’re behaving irrationally, and that they need x, y, and z, not a, b, and c? I know this is patronizing. But if you accept the premise that we consume too much of what doesn’t make us happy, you’ve rejected the notion that human beings behave rationally, an important criterion for perfect competition.
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economics and morality summary
point 1: Greater honesty results in more symmetric and more perfect information, a requirement for perfect competition.