If anyone remembers anything from Adam Smith’s Wealth of Nations (apart from the number of distinct operations required to make a pin, which greatly impressed me at the time), it is that famous sentence that describes human motives for trade:
It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.
Until recently, I thought this very simple point had become commonsense, at least in educated circles. But then, at a recent dinner in pleasant and civilized company, as I was reflecting how it is such a Good Thing that we have the likes of Samsung, Google and Apple battling it out and giving us ever better products, several people turned to me and said something like: “Poor lamb, are you really that naive? Do you really think they’re trying to make stuff for your benefit? Don’t you know all these people ever want is to make more profit?”
Let us call this the moral-economic fallacy, the notion that the moral tenor of motives for economic action (people want to have more for themselves, which seems both “natural” and not very virtuous) contaminates, so to speak, the effects of such economic action, which cannot really be positive if their are rooted in base motives.
The moral-economic fallacy seems widespread. In a recent draft paper, Amit Bhattacharjee and colleagues report that people intuitively associate profit and social harm. As they say, “otherwise identically-described organizations are seen as providing less value and doing more harm when described as “for-profit” rather than non- profit […] Study 4 demonstrates that people hold a zero-sum conception of profit”. The ever prolific Bryan Caplan posted an economist’s comment on these striking results.
Here I am more interested in the psychological makeup involved: What triggers this kind of belief? From an evolutionary cognitive standpoint, I can see two conflicting perspectives on the question.
If you consider human moral psychology, it seems unsurprising that people would generally expect bad intentions to lead to bad outcomes. That is generally the case, after all… So this would be simply a case of people extending ordinary moral intuitions to a domain where they do not actually apply.
But that’s not quite satisfactory, After all, trade has been going on for eons, certainly before we reach anatomically modern H. sapiens, and capacities for social exchange are certainly part of the evolved cognitive tool-box. Besides, we are told by eminent evolutionists that an important part of moral intuitions evolved as tools for the establishment of mutually advantageous social interactions. But freely transacted trade is the quintessential mutually advantageous interaction.
So what gives? In our cognition and culture perspective, we generally expect that theoretically informed cross-cultural comparisons can provide important evidence concerning cognitive architecture, so I would like to ask the community the following questions:
Q1. Is the moral-economic fallacy widespread in different places, with different degrees of market integration, different economic institutions?
Q2. Is it even actually widespread in modern Western places? After all, there may be important differences depending on social roles, with e.g. shopkeepers being in touch with their inner Adam Smith, while public servants are not?
Q3. If as I suspect we do not have much evidence, why aren’t we studying all this?