Market Economy

The father of economics, Adam Smith, believed in an open market economy, because he thought that division of labour can lead to increased productivity and open markets can facilitate more division of labour.

Adam Smith noted that the tendency to trade is peculiar to humans. Dogs do not exchange bones for cookies. He called this peculiar tendency, the propensity to truck, barter and exchange:

"The propensity to truck, barter and exchange one thing for another is common to all men, and to be found in no other race of animals."

Wealth of Nations

The father of modern economics, Alfred Marshall, noted that for men to be able truck, barter and exchange effectively, the spiritual life of men should not be ignored:

"The economist does not ignore the mental and spiritual side of life. On the contrary, even for the narrower uses of economic studies, it is important to know whether the desires which prevail are such as will help to build up a strong and righteous character. And in the broader uses of those studies, when they are being applied to practical problems, the economist, like every one else, must concern himself with the ultimate aims of man, and take account of differences in real value between gratifications that are equally powerful incentives to action and have therefore equal economic measures."

Principles of Economics

He understood that it becomes impossible even to exchange goods if men themselves are not good and trustworthy:

"Methods of trade imply habits of trustfulness on the one side and a power of resisting temptation to dishonesty on the other."

Also, the Nobel prize winning economist, Kenneth Arrow, has stressed the importance of virtue for the working of any economy and in particular the modern market economy:

"More basic yet, I will say, is the idea that the price system, in order to work at all, must involve the concept of property (even in the socialistic state there is public property). Property systems are in general not completely self-enforcing. They depend for their definition upon a constellation of legal procedures, both civil and criminal. The course of the law itself cannot be regarded as subject to the price system. The judges and the police may indeed be paid, but the system itself would disappear if on each occasion they were to sell their services and decisions. Thus the definition of property rights based on the price system depends precisely on the lack of universality of private property and of the price system. This ties in with the third hypothesis put forward in section I. The price system is not, and perhaps in some basic sense cannot be, universal. To the extent that it is incomplete, it must be supplemented by an implicit or explicit social contract. Thus one might loosely say that the categorical imperative and the price system are essential complements.”

Gifts and Exchanges

Practice of virtue

In one of Agatha Christie's detective novels, private detective Hercule Poirot is on the way to a country house, because somebody has threatened to kidnap a child. The police don't believe that it is anything serious, so they don't send anyone to protect the child even if Hercule Poirot and his assistant insist. Hercule Poirot and his assistant, Captain Hastings, however are convinced and have evidence to show, that the situation truly is a serious one. Now, Captain Hastings and Hercule Poirot sit in the train and Captain Hastings complains to Hercule Poirot saying that the police can't do anything right, but Hercule Poirot says that the police can do many things right and that the particular police they are talking about is a particularly good police. Also, he says, that the police can't protect everyone, not everyone can have their own little police with them all the time, but then he points to his own head, and says, but luckily most of us have our own little police in here, and continues, let us hope that the kidnappers also would.

Even the old economists seem to have had their own little polices in their heads. The father of economics, Adam Smith, did understand enough of the moral law to state it in a form that humanity has probably always understood it. He did understand that one ought to love one's neighbor as one loves oneself:

“We begin, upon this account, to examine our own passions and conduct, and to consider how these must appear to them, by considering how they would appear to us if in their situation. We suppose ourselves the spectators of our own behavior, and endeavor to imagine what effect it would, in this light, produce upon us. This is the only looking-glass by which we can, in some measure, with the eyes of other people, scrutinize the propriety of our own conduct. If in this view it pleases us, we are tolerably satisfied. We can be more indifferent about the applause, and, in some measure, despise the censure of the world; secure that, however misunderstood or misrepresented, we are the natural and proper subjects of approbation.”

Theory of Moral Sentiments

Whether he cared for loving God above all as is the center of Christian morality, it is harder to say. The father of modern economics, Alfred Marshall, certainly had some notion of this part of morality as well:

"The dignity of man was proclaimed by the Christian religion."

Principles of Economics

I think that all happiness comes ultimately from a good heart and the natural result of that - acting virtuously - and not from a certain or even unlimited amount of material goods available. Alfred Marshall believed also that the supreme aim of the economist is develop unselfishness in men. He says that economic incentives are important in forming human character. The way a man works and acts in the ordinary business of life affects very much the way a man becomes morally. But Alfred Marshall did not ignore the importance of religion and relation to God:

"Their life (of the poor) is not necessarily unhealthy or unhappy. Rejoicing in their affections towards God and man, and perhaps even possessing some natural refinement of feeling, they may lead lives that are far less incomplete than those of many, who have more material wealth."

He said that economic and religious influences were the greatest forming agents of human morality and did not deny that that religion might be the greater of the two:

"Man's character has been moulded by his every-day work, and the material resources which he thereby procures, more than by any other influence unless it be that of his religious ideals; and the two great forming agencies of the world's history have been the religious and the economic."

So, Alfred Marshall believed in the practice and development of virtue and gave the Christian religion it's due place in such a task:

"History in general, and especially the history of socialistic ventures, shows that ordinary men are seldom capable of pure ideal altruism for any considerable time together; and that the exceptions are to be found only when the masterful fervour of a small band of religious enthusiasts makes material concerns to count for nothing in comparison with the higher faith."