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Capitalism hard or soft Samuel Brittan Financial Times 04/07/06 Reviving the Invisible Hand by Deepak Lal, Princeton University Press, £18.95 The Bourgeois Virtues by Deirdre N. McCloskey, Chicago University Press The real rivalries in political economy, as in other subjects, are often between writers on the same side. This is illustrated by these two very different defences of global capitalism. The authors never mention each other. But they overlap in presenting data on the widespread growth of wealth associated with the historical and geographical spread of open competitive markets. Both books could have done with far more editing than they have received. The wise reader will make liberal use of the indices. The publishers have tried to highlight some extreme views of Professor Lal such as his his wish to abolish most international institutions, including the IMF and the World Bank, and his defence of child labour in the Third World. A twin volume arguing for a modern imperialism has thankfully already appeared separately. In fact much the greater part of the present text is a level-headed essay on the rise, decline and rebirth of “liberal international economic orders.“ Lal makes a very necessary distinction between individualist moral values and successful capitalist growth. Asian political leaders are critical of western liberalism however much they embrace the market model. Western anti-globalisers on the other hand claim to embrace universal liberal values, but disdain their capitalist aspect. Lal quotes De Tocqueille’s wise saying that those “who take up liberty for its material rewards have never kept it for long.“ Unfortunately many of Lal’s key arguments are buried in end notes where they are mingled with routine references. He covers an immense amount of ground, from the theory of international trade to the differences between Michael Oakeshott’s conservative opposition to the “enterprise state“ and that of the classical liberal Friedrich Hayek. He accepts that western unskilled or semi-skilled workers can lose from free trade. His message of “go back to school” is hardly a convincing riposte; but then he has no time for reformist ideas such as basic income. By contrast Professor Deirdre McCloskey’ book could have been designed to substantiate the plea of George Bush snr. for a “kindler, gentler“ capitalism. There is moreover a slightly better chance of her book achieving the desired aim of falling into the hands of the unconverted in view of her own colourful history. She was formerly known an Donald McCloskey and has written a book on her sex change. No striped pants Ivy League Republican here. The Bourgeois Virtues is meant to be the first of a four volume study, which will then go on to the spread of the capitalist ethic in England and Holland between 1600-1800; the anti-capitalist reaction of the intellectuals after 1848 and finally “the case for an ethical capitalism”. The best part of the initial volume comes towards the end where the author answers the argument heard on almost every broadcast arts programme that relentless output expansion is required to keep the wheels of commerce turning. She explains that if people adopted a pure Christian lifestyle those displaced from making prestige gadgets would find other employment or choose more leisure (page 456). She could have usefully brought in some aspects of Keynes in dealing with the transition. The greater part of this volume is concerned not with such problems but a controversy in academic philosophy between the advocates of universalist ethics such as Kant’s and the advocates of “virtue ethics“ - studying and learning from the behaviour of virtuous people. The two approaches are not necessarily incompatible. You can promote the brotherhood of man in a prudential or courageous way. More telling is the challenge of Isaiah Berlin who believed there was incurable tension between the virtues embodying different ways of life and that excellence in some could could come at the expense of achievements in the other ones. McCloskey argues that successful capitalism is based on seven bourgeois virtues -- the classical ones of justice, courage, temperance and prudence and the Christian ones of faith, hope and love. These would be valuable in themselves, quite apart from their role in enriching the world. The scoffer’s retort might be to ask which of the virtues are displayed by the hedge funds or the City executives who have recently received huge bonuses. At most it would seem to be the courage to enter and the prudence to leave in time. But if it is all so easy, why do not the scoffers have a go themselves. McCloskey clearly dislikes go-getting executives who are obsessive above the “bottom line“ or who exclaim “lunch is for wimps”. But the consequences need to be followed through. She writes about how in the Netherlands a business negotiation is not regarded as successful unless it takes up the whole afternoon, even if agreement could be reached in five minutes. Are not businesses behaving in this way liable to takeover bids? Not if the workers or shareholders are prepared for a slightly lower pecuniary return in return for preserving some traditional ways. Dull would anyone be of soul who could not find some interest in one or both of these volumes. But it would have take an uncritical person to swallow either of them whole.
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