Shouldn’t We Align the Norms of Capitalism with the “Better Angels” of Our Human Nature?

Over the Memorial Day weekend here in the U.S., I read over a book of some past distinction which I had long overlooked. It is Karl Polanyi’s The Great Transformation. Writing in the middle of World War II, Polanyi credits market capitalism with changing human civilization through economic growth but at a cost which he considered to be too high.

His thesis, not unlike that of modern business ethicists from Kantian, Christian and socialist standpoints, is that the new, transforming, capitalist economy was divorced from society and humane values. He wrote: “If industrialism is not to extinguish the race, it must be subordinated to the requirements of man’s nature. The true criticism of market society is not that it was based on economics – in a sense every and any society must be based on it – but that its economy was based on self-interest.”

Echoing Karl Marx, Polanyi reacted very negatively to the power of markets to subject work and labor to price, not dignity. With the rise of capitalism, he said, the market had replaced community with an atomistic and individualistic form of social organization.

The fault of capitalism, according to Polanyi, was to allow an economic sphere within society to become the source of moral law and political obligation.

I was struck by this insight as the premise of the Caux Round Table for Moral Capitalism is that morality – the ethics of good stewardship – can be the source of rational action in the economic sphere. That is why we call our understanding of markets “moral” capitalism.

I also learned from Polanyi, to my surprise, that the intellectual origin of the proposition that, by a law of nature – that of the animal kingdom, self-interest and survival of the strong were the necessary drivers of capitalist success was the thinking of one Joseph Townsend who in 1786 wrote a paper on poverty wherein he described the survival of the fittest between goats and dogs on the island of Fernandez in the Pacific ocean off the coast of Chile. The story was myth. Nevertheless, according to Polanyi, Townsend’s inference that animal social justice is also the driver of human economic behavior was later picked up by Malthus, Herbert Spencer and Charles Darwin to form the a-moral basis of an absolutist capitalism free from regulation and social control.

The important point to note is that to Townsend and Spencer, a law of nature peculiar to animals was assumed to apply as well to our species of mammals.

If, to the contrary, we humans have a moral sense, then there is no necessary prohibition of our applying that human standard of judgment to economics, permitting society and the state to engage with market forces and the self-regarding temptations they engender.