¹ Donald McCloskey, “Bourgeois Virtue,” The American Scholar 63 (1994): 177-91 [hereinafter, “Bourgeois Virtue”].

² Adam Smith’s concept of virtue is quite practically oriented, and this could be attributed to the influence of the Stoics (a school of philosophers that appeared on the scene following Aristotle) who held strongly to the importance of reason for guidance in their troubled times. Aristotle’s moral virtues related to practical considerations as well, but he also had in mind a distinct focus on “the good for mankind” as the telos, or purpose, of all our activity. Happiness was the end or aim of morally virtuous people. For Smith, happiness in this sense was not something that could be achieved by the kind of life we lived. In the view of Martin J. Calkins and Patricia H. Werhane, “Adam Smith, Aristotle, and the Virtues,” p. 14. (unpublished manuscript in possession of the author), it was something attributable to God, and it was available to every person in a never-diminished supply.

³ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Cannan ed. 1904), p. 15.

⁴ In the economic literature, or, more specifically, in the literature of “transactional cost economics” (TCE), opportunism is distinguished from self interested behavior in the following way: opportunism is not presumed to be constrained by obedience to rules or faithfulness to promises. Self-interested behavior is so constrained. See, Sumantra Ghoshal and Peter Moran, “Bad for Practice: A Critique of the Transaction Cost Theory,” Academy of Management Review 21 (1996): 17.

⁵ Perhaps the most frequently cited evidence of Smith’s endorsement of the “O’s” is the following: “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.” Ibid. However, in context with his other great work, The Theory of Moral Sentiments, ed. D.D. Raphael and A.L. Macfie (London: Oxford University Press, 1976), modern scholarship suggests that Smith understood such exchanges to take place within a community in which people knew each other, and dealt face to face, and were guided by certain virtues based on “fellow feeling” or “sympathy” (virtues such as self-command, prudence, justice, and benevolence). In such a community, sharp practices, and behaviors that were solely self-regarding, would not be the norm even though his captivating prose, cited above, would suggest otherwise if taken out of context. See generally, Patricia H. Werhane, Adam Smith and His Legacy for Modern Capitalism (New York: Oxford University Press, 1991) (examining The Wealth of Nations not as a stand-alone piece of work but in context with his collected papers on moral philosophy, including the Lectures on Jurisprudence and his earlier classic, The Theory of Moral Sentiments). See also, Laurence Berns, “Aristotle and Adam Smith on Justice: Cooperation Between Ancients and Moderns?”, Review of Metaphysics 48 (September 1994): 71-90; and Martin J. Calkins & Patricia H. Werhane, “Adam Smith, Aristotle, and the Virtues,” (unpublished manuscript on file with author). Compare, Amitai Etzioni, The Moral Dimension: Toward a New Economics (New York: The Free Press 1988)(theorizing that the tension between the individual and the community is best resolved by efforts that strengthen the moral force of the community).

⁶ Albert O. Hirschman, “Rival Interpretations of Market Society: Civilizing, Destructive, or Feeble?”, J. of Econ. Lit., XX (1982): 1473 [hereinafter, “Rival Interpretations”]. Further, according to Hirschman, economists have denied themselves the connection between their favored paradigm and “the social ties” because of “their attempt to emulate, in rigor and quantitative precision , the natural sciences” and because “those trained in the tradition of classical economics had only scorn for the concern of sociologists over the more disruptive and destructive aspects of capitalism.” Ibid. See also, Albert O. Hirschman, Rival Views of Market Society (Cambridge: Harvard University Press, 1992).

⁷ “Rival Interpretations,” at 1473.

⁸ Donald McCloskey, “Bourgeois Virtue,” American Scholar, 63 (1994): 177-91.

⁹ Ian Maitland, “Virtuous Markets: The Market As School of the Virtues,” Business Ethics Quarterly (1996). See also, Ian Macneil, “Exchange Revisited: Individual Utility and Social Solidarity,” Ethics 96 (1986): 578.

¹⁰ Maitland characterizes as pessimists the following: Fred Hirsch, Social Limits to Growth (Cambridge: Harvard University Press, 1976); Alasdair MacIntyre, After Virtue, 2d ed. (Notre Dame: University of Notre Dame Press, 2d ed. 1984); Gertrude Himmelfarb, “A De-Moralized Society,” The Public Interest, 117 (1994). See also, Daniel Bell, The Cultural Contradictions of Capitalism (New York: Basic Books, Inc., 1976), and Irving Kristol, Two Cheers for Capitalism (New York: Basic Books, Inc. 1978).

¹¹ Maitland, “Virtuous Markets” at 6.

¹² Martin J. Calkins and Patricia H. Werhane, “Adam Smith, Aristotle, and the Virtues,” p. 14. (manuscript in the possession of the author).

¹³ Leon Walras, Elements of Pure Economics: Or the Theory of Social Wealth (Homewood, Ill.: Richard D. Irwin, Inc., Jaffe trans. 1954).

¹⁴ Alfred Marshall, Principles of Economics 9th ed. (London: Macmillan 1961).

¹⁵ See generally, Gary Becker, The Economic Approach to Human Behavior (Chicago: The University of Chicago Press, 1976) (arguing that any subject that involves choice can be conceptualized as economics).

¹⁶ James M. Buchanan & Gordon Tullock, The Calculus of Consent (Ann Arbor: Ann Arbor Paperbacks, 1965).

¹⁷ “Bourgeois Virtue” at p. 186.

¹⁸ Consumer purchases “equate the marginal utility per dollar spent on each product, and producers supply products so as to equate marginal revenue with marginal cost.” Daniel T. Ostas, “Law & Economics Revisited: Distinguishing Three Contemporary Approaches on the Basis of History and Policy,” The Journal of Legal Studies Education 10 (1992): 179.

¹⁹ Art Wolfe, “Reflections on Business Ethics,” Business Ethics Quarterly 1 (1993): 409-39.

²⁰ Hirschman, “Rival Interpretations,” p. 1465.

²¹ Maitland, at p. 7.

²² Hirschman, “Rival Interpretations,” p. 1467.

²³ There is an important mental, or calculative, element involved in both of these Enlightenment theories that the theories do not supply. The formalistic, Kantian analysis won’t help a person who is trying to decide which of two or more conflicting duties to universalize. Nor will the commitment to utility equip one with the vision to accurately project the consequences of one’s conduct.

²⁴ Edmund Pincoffs, Quandries and Virtues (Kansas, 1986).

²⁵ Insofar as one is inclined, on account of a proper upbringing, to react strongly against wrongful conduct and to set about remedying it in something like the manner described, that effort would find no moral worth in the view of a Kantian. What matters to a Kantian is that one act against inclination, not according to inclination. A utilitarian would ascribe moral worth to the effort only if it maximized utility. However, in Aristotle’s view, [T]hose who do not get angry at those things which they ought, and in the manner in which they ought, at the time and with whom they ought, are held to be fools: for they seem to be without feeling and without a sense of pain, and since he doesn’t get angry he is incapable of defending himself, and to put up with being insulted and merely to look around while one’s friends are insulted is slavish. Nichomachean Ethics 4.51126a5-9. cf. 6.3.16.

²⁶ Aristotle’s “views became unfashionable among those who sought to base moral or political philosophy on a single principle (e.g., utility, liberty, or self-preservation), . . . or who believed in the priority of the right over the good. But if one acknowledges that there is no single moral principle . . . , and that neither happiness nor virtue can be prescribed by rule, one is better prepared for a more complete understanding of man’s moral capacities . . . .” James Q. Wilson, The Moral Sense (New York: The Free Press, 1993), p. 236.

²⁷ Maitland at 7. (emphasis in the original).

²⁸ The Theory of Moral Sentiments, D.D. Raphael and A.L. Macfie, eds. (Oxford: Oxford University Press, 1976), VI.ii.3.3. This point is reinforced by Daryl Koehn in “A Role for Virtue Ethics in the Analysis of Business Practice,” Business Ethics Quarterly (1995): 537, as follows: “A thriving agent intent upon excellence must also have the willingness to give up material assets for important causes (liberality).”

²⁹ Robert C. Solomon, “Corporate Roles, Personal Virtues: An Aristotelian Approach to Business Ethics,” Business Ethics Quarterly 2 (1992): 326-27.

³⁰ I don’t intend to explore here the insights of Robert Frank’s Passions Within Reason (New York: W.W. Norton, 1988), but the core of his thesis is that “genuine altruism,” that is, an unselfish concern for the welfare of others, was an attribute more highly valued in business, not to mention other public or private endeavors, than “reciprocal altruism,” a concern that is expected to be returned or recompensed in some way. Frank’s thesis may not be free from criticism, but it appears to be more in keeping with an Aristotelian notion of character or virtue, i.e., something valued in itself, than anything advanced by Professor Maitland.

³¹ For a full development of these concepts, the reader is commended to Werhane, op cit. note 5, pp. 23-53, elaborating Smith’s moral psychology, and to Robert C. Solomon, “Beyond Selfishness: Adam Smith and the Limits of the Market,” Business Ethics Quarterly 3 (1993): 453-60.

³² Adam Smith, Lectures on Jurisprudence (B) R.L. Meek, D.D. Raphael, and P.G. Stein eds. (Oxford: Oxford University Press, 1978), pp. 538-39. (emphasis added).

³³ With regard to the control of the emotion of anger, or to the use of one’s resources (giving money, or spending), Aristotle advances the following position: “doing it to the right person, in the right amount, at the right time, for the right end, and in the right way” is not easy; in fact doing these things well “is rare, praiseworthy and fine.” Nichomachean Ethics, Book II, 1109a27-a30.

³⁴ Robert Axelrod, The Evolution of Cooperation (New York: Basic Books, 1984).

³⁵ A rule-oriented regime is one in which certain conduct is expected at a minimum. Rules define a “bottom line” below which certain conduct is forbidden and blameworthy. Conduct above that line is at least permissible, and perhaps even laudatory. If the conduct is laudatory, it is likely not to be regarded as essential. Altruism, and the fulfillment of imperfect duties, generally fall within this category. Moral rules, if they function in the way they are expected to, keep us from falling all the way to the bottom. It is not in their nature to push one over the top (to achieve excellence); excellence, however, is the very core of virtue ethics.

³⁶ Alasdair MacIntyre, A Short History of Ethics (New York: Macmillan Publishing Co., 1966), pp. 74-75.

³⁷ Nichomachean Ethics, Book VI, 1140a25-a32.

³⁸ Bill Shaw and Janet McCracken, “Virtue Ethics and Contractarianism: Towards a Reconciliation” Business Ethics Quarterly 5 (1995): 297-312.

³⁹ After Virtue, 2d ed. (Notre Dame: University of Notre Dame Press, 1984), p. 235.

⁴⁰ Theory of Moral Sentiments VI.iii.1. (emphasis added).

⁴¹ Ibid., VI.i.1.

⁴² Compare Larue Tone Hosmer, “Why Be Moral? A Different Rationale for Managers,” Business Ethics Quarterly 4 (1995), pp. 191-204, and Bill Shaw and John Corvino, “Hosmer and the ‘Why Be Moral?’ Question,” Business Ethics Quarterly (accepted for publication, 1996). R.M. Hare is concerned with the same problem—an undeserved reputation for fairness that masks cheating and inflicts the market with inefficiency—in, “One Philosopher’s Approach to Business and Professional Ethics,” Business & Professional Ethics Journal 11 (1992): 12-13.

⁴³ Maitland at 8. (emphasis added).

⁴⁴ According to Groucho, “The secret of life is honesty and plain-dealing; if you can fake that, you’ve got it made.” Professor Maitland then capitalizes on Groucho’s wit to make the point that virtues must have economic advantages or opportunists wouldn’t mimic them. I couldn’t agree more, but that is absolutely no evidence at all for his thesis that the market generates virtue. The painful truth that Groucho reveals is that parents, family, friends, community, schools, churches and other individuals and institutions that do play a role in a young person’s character development are not getting the job done.

⁴⁵ Maitland at 7.

⁴⁶ Maitland at 16.

⁴⁷ In doing base things, e.g., adultery, theft, murder, “we can never be correct, but must invariably be in error. We cannot do them well or not well . . .; on the contrary, it is true unconditionally that to do any of them is to be in error.” Nichomachean Ethics, Book II, 1107a10-a20.

⁴⁸ If Michael M. Lewis’s Liar’s Poker (New York: W.W. Norton and Co., 1989) doesn’t offer good enough reasons to be skeptical of the norms prevailing in the securities industry (at least during the years that he writes about), the subsequent illegal activities of Salomon Brothers’ chairman Gutfreud, and senior officers at Salomon Bros., should at least raise one’s suspicions of the way that industry is conducted.

⁴⁹ A virtuous person would be one who habitually supported the laws of his or her community; on the other hand, one who obeyed the law solely out of fear of punishment would not be considered virtuous.

⁵⁰ Theory of Moral Sentiments, VI,iii.11.

⁵¹ Calkins and Werhane, op cit., note 2 at p. 5. Self-command may owe something to the Aristotelian virtues of courage, the mean between the vices of rashness and cowardice, and temperance, the mean between the vices of gluttony and abstention.

⁵² Robert Jackal, Moral Mazes (New York: Oxford University Press, 1988), is noted for the proposition that bureaucratization of the private sector (or portions of it) has severed the link between hard work and success.

⁵³ Arthur P. Brief, Janet M. Dukerich, Paul R. Brown, and Joan F. Brett, “What’s Wrong with the Treadway Commission Report? Experimental Analysis of the Effects of Personal Values and Codes of Conduct on Fraudulent Financial Reporting,” Journal of Business Ethics 15 (1996): 183-98.

⁵⁴ Dawn Blalock, For Many Executives, Ethics Appear to Be a Write-Off, The Wall Street Journal, March 26, 1996, at C 1, C 13.

⁵⁵ Werhane at 97.

⁵⁶ Ibid. See also, Werhane at 33, noting that Smith separates himself carefully from this understanding of the Hobbesian concept of sympathy, and citing Smith as follows: “Sympathy . . . cannot, in any sense, be regarded as a selfish principle.” Theory of Moral Sentiments VII.iii.i.4.

⁵⁷ Werhane at 33.

⁵⁸ Solomon, op cit. note 30, at 457.

⁵⁹ Maitland at 10.

⁶⁰ Any extended discussion of transaction cost economics (TCE) will at some point bring one to an examination of the literature of Professor Oliver Williamson. Among Professor Williamson’s contributions to this field of study is the concept of opportunism, hence the “opportunists” who are not presumed to be constrained by obedience to rules or fidelity to promises. The usual suspects of opportunism are, in fact, the entire universe of employees, including officers, of our private sector corporations, and, by plausible extension, employees in any bureaucratized institution. Opportunists will take advantage of every angle they can get away with in an effort to enrich themselves, whatever the detriment to the firm. The costs imposed on the firm by opportunists are collected under the rubric “agency costs,” and it is assumed by TCE that the way to reduce those costs is to introduce a system of “incentives and controls.” Fairness as a virtue, or, as both Aristotle and Smith have proposed, justice as a personal and public virtue, would have a positive impact on the reduction of agency costs. Professor Maitland recognizes this, but he doesn’t show how the market would generate these virtues.

⁶¹ Maitland at 19, citing James Q. Wilson, “The Rediscovery of Character: Private Virtue and Public Policy,” Public Interest 81 (1985), p. 15.