Samuel Bowles - The Moral Economy: Why Good Incentives Are No Substitute for Good Citizens

The Castle Lectures in Ethics, Politics, and Economics

THE MORAL ECONOMY

WHY GOOD INCENTIVES ARE NO SUBSTITUTE FOR GOOD CITIZENS

SAMUEL BOWLES

Yale UNIVERSITY PRESS

New Haven and London

Copyright 2016 by Samuel Bowles.

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Parts of this book were given as the Castle Lectures in Yales Program in Ethics, Politics, and Economics, delivered by Samuel Bowles at Yale University in 2010.

The Castle Lectures were endowed by Mr. John K. Castle. They honor his ancestor the Reverend James Pierpont, one of Yales original founders. Given by established public figures, Castle Lectures are intended to promote reflection on the moral foundations of society and government and to enhance understanding of ethical issues facing individuals in our complex modern society.

To my teachers

Alexander Gerschenkron

&

Charles E. Lindblom

Political writers have established it as a maxim, that in contriving any system of government... every man ought to be supposed to be a knave and to have no other end, in all his actions, than his private interest. By this interest we must govern him, and, by means of it, make him, notwithstanding his insatiable avarice and ambition, cooperate to public good.

... It is, therefore, a just political maxim, that every man must be supposed a knave: Though at the same time, it appears somewhat strange, that a maxim should be true in politics, which is false in fact.

David Hume, Essays: Moral, Political, and Literary (1742)

Contents

Preface

Any book in the making for almost thirty years is indebted to many helping hands. This one is based in part on my Castle Lectures at Yale University, where the critical commentary of Bryan Garsten, Phil Gorski, Laurie Santos, Steven Smith, and Chris Udry resulted in many improvements.

This is the second time that I have learned from Yales social science faculty. The first was as a student in the precursor to the Ethics, Politics and Economics major, which sponsored my Castle lectures. My first debt, then, is to my mentor and inspiration in that program, Charles Lindblom, who pushed me to think analytically while trespassing the well-guarded boundaries of the academic disciplines. (The tradition that Lindblom championed at Yale is still evident in the disciplines of those who commented on my Castle Lectures: a historian, a psychologist, two political scientists, and an economist.) My subsequent study of economic history as a doctoral student with Alexander Gerschenkron at Harvard convinced me that the large questions about how societies might be better governed and how they evolve over time are worth asking and sometimes might have answers, though not necessarily the answers I was hoping for at the time.

During my work on this project since the late 1980s, my thinking on these issues has been shaped by the members of the September Seminar past and presentPranab Bardhan, Robert Brenner, Harry Brighouse, the late Gerald Cohen, Joshua Cohen, Jon Elster, Suresh Naidu, Philippe van Parijs, Adam Prezeworski, John Roemer, Rebecca Saxe, Seana Shiffrin, Hillel Steiner, Robert van der Veen, and Erik Olin Wright, and by the Santa Fe Institute Working Group on the Coevolution of Behavior and Institutions (since 1998)Larry Blume, Robert Boyd, Herbert Gintis, and Peyton Young. Gintis doctoral dissertation on how society shapes our preferences and my collaboration with him since has profoundly influenced my thinking on these issues.

Many of the ideas in the pages that follow were first tried out during the late 1990s in the Norms and Preferences Research Network headed by Robert Boyd and Gintis, whose members I thank, especially Colin Camerer, Martin Daly, Ernst Fehr, Simon Gaechter, Edward Glaeser, George Loewenstein, and the late Margo Wilson. For their comments on earlier drafts of this work and other contributions to the research, I would particularly like to thank (in addition to those already mentioned) Mahzarin Banaji, Yochai Benkler, Ragnhild Haugli Braaten, Juan Camilo Cardenas, Wendy Carlin, Ruth Grant, Joshua Greene, Jonathan Haidt, Kieran Healy, Bernd Irlenbusch, Rachel Kranton, Ugo Pagano, Elizabeth Phelps, Sandra Polana-Reyes, Carlos Sickert Rodriguez, Daria Roithmayr, Paul Seabright, and, especially, Elisabeth Jean Wood.

My collaborators Sung-Ha Hwang and Sandra Polana-Reyes are virtual coauthors of parts of the book; I am grateful to them for permission to use the results of our joint work. include material published jointly with Polana-Reyes in the Journal of Economic Literature (2012).)

Susan Karr, Chiara Valentini, and, especially, Erica Benner helped me understand Niccol Machiavelli, a figure who plays a leading and complicated role in the story I tell. Translations from the Italian of passages in Machiavellis Discourses and The Prince are my own.

The Santa Fe Institute and the Certosa di Pontignano of the University of Siena have provided unsurpassed environments for research, reflection, and writing. Their staffs have made this research both enjoyable and possible, with particular thanks to Margaret Alexander, Joy Lecuyer, Barbara Kimbell, and Susan Macdonald of the Santa Fe Institute Library. I would also like to thank Nicole Villar Hernandez for assistance with the research, Davide Melcangi and Sai Madhurika Mamunuru, repectively, for creating the figures and the index, and the MacArthur Foundation, the Behavioral Sciences Program of the Santa Fe Institute, and the U.S. National Science Foundation for financial support. Finally, I am indebted to the late George Cowan and Adele Simmons for their abiding confidence in my research trajectory and for their support over the years.

In case you are wondering how such a little book could take so long to write, the short of it is that I had a lot to learn. Here is the story in brief. When I started working on the cultural effects of markets and incentives in the late 1980s, I found myself writing abstract models, which did not allow me to say anything about what had attracted me to the subject: the empirical challenges of designing better policies, institutions, and constitutions. I fell to doing models by default: available data were inadequate to test my hypotheses about peoples ethical, intrinsic, and other noneconomic motivations and how they might be affected by the incentives, legal constraints, and the other instruments of public policy. There was even serious doubtand not only among economists and biologistswhether such motives were common enough to warrant serious study.

in this book were beginning to take shape.

Around the turn of the millennium, I took up what seemed to me the obvious next question: if, as the experiments appeared to show, people are more generous and civic minded than either economists or evolutionary biologists assumed, this posed a puzzle. Neither natural selection nor any of the then-prominent models of cultural evolution provided a ready answer to how this could have come about.