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Moral Markets The Critical Role of Values in the Economy
Princeton University Press
Copyright © 2008 Princeton University Press
All right reserved. ISBN: 978-0-691-13523-6
Chapter One The Stories Markets Tell
Affordances for Ethical Behavior in Free Exchange
William D. Casebeer
Opinions about free exchange have fallen on hard times. Major news magazines such as the Atlantic Monthly and the New York Times have devoted column-inches to the anti-market zeitgeist, and self-organized protests plague World Trade Organization meetings with regularity. Given the palpable benefits of markets for all involved in them, why is the term free market as likely to call to mind images of selfish and insensitive robber barons as it is to evoke scrupulous and other-oriented small business owners and neighbors? This is partly because cartoon versions of the nature and outcome of free exchange, for multiple reasons, have carried the day in the court of public opinion. These cartoons are typified by images of selfish capitalists exploiting labor with glee for the good of no one but themselves. These cartoons, when true, are only partially true, and present but one facet of the costs and benefits of free exchange. They do make for colorful stories, however. Sinclair Lewis, for example, would not have made his name writing about the friendly aspects of garden-variety market operations.
These cartoons, however, leave off the considerable moral presuppositions and ethical benefitsthat free exchange assumes and enables. Stories widely held to be true are not necessarily informed by the results of our best sciences, nor is colorful nature in storytelling tied to the likelihood of resembling reality in any law-like way. Cartoons that declaim free exchange as "selfish" or "exploitative" or "harmful" do have a point in some contexts. A fourth story, however, less cartoon-like and more consilient with what we know about the cognitive mechanisms that allow exchange to take place and which are affected by it, is a better story, more true, with more fealty to the phenomenon it professes to be about.
The Freytag triangle is a theory of story that will pave the way for a quick analysis of three cartoons illustrating that "exchange is bad": the Gordon Gekko greed-is-good, the Karl Marx all-trade-exploits, and the Joseph Stiglitz exchange-is-bad-all-round neo-Luddite narratives. When these stories score points in the popular imagination, it is often because they leverage some aspect of the ethos (credibility), logos (logic), and pathos (emotional) domains, which the venerable Greek philosopher Aristotle discusses in his Rhetoric. A counter-narrative that points out the relationship between free exchange and the development and exercise of moral virtue might best allow us to add nuance to the cartoons and revivify the Adam Smith of The Moral Sentiments in the public mind. Market mechanisms can often act as "moral affordances" as well as moral hazards, and this is something we should keep in mind as we explore the costs and benefits of free exchange.
What's in a Story?
Discussion of stories and narratives is hampered by the fact that there is no widely accepted definition regarding just what a story is. Indeed, an entire school of thought in literary criticism (postmodernism) is predicated on the idea that there are no necessary and sufficient conditions which a piece of text must meet in order to be a story, whether that text is verbal, written, or merely exists in the thoughts of a target audience. We can agree with the postmodernists that defining a "story" is difficult without thinking, however, that the concept plays no useful purpose. In that sense, the concept "story" is like the concept "game"-a game also does not require necessary and sufficient conditions for it to be a game, but that does not mean the concept is bankrupt nor that there cannot be "family resemblances" between games that would be useful to consider.
A good first hack, then, at a theory of stories comes from the nineteenth-century German writer Gustav Freytag; this is an admittedly Western notion of the structure of stories, and, though it cannot claim to be comprehensive, it is nonetheless an excellent place to begin. Freytag believed that narratives followed a general pattern: the story begins, a problem arises that leads to a climax, and the problem is resolved in the end. A coherent and unified story could thus be as short as three sentences providing the setup, climax, and resolution, for example: "John was hungry. He went to the store and bought a sandwich. It was delicious." Of course, this particular story is neither interesting nor compelling, but still it is a coherent narrative. This "Freytag Triangle," depicted in figure 1.1, captures the general structure of a story.
The contemporary literary theorist Patrick Hogan amplifies the basic Freytag structure, pointing out that most plots involve an agent (normally, a hero or protagonist) striving to achieve some goal (usually despite the machinations of an antagonist, or villain)-there is a person (or group of persons) and a series of events driven by their attempts to achieve some objective. This familiar analysis is supported by the study of mythology (recall Joseph Campbell's analysis of the structure of most famous legends from antiquity), and by consideration of many forms of storytelling, whether they are Oral, traditional, or contemporary.
Why Stories Are So Important
This working "theory of story" will enable us to gain insight into why stories are so important for structuring human thought. First, note that stories often are rich in metaphors and analogies; metaphors, in turn, affect our most basic attitudes toward the world. Suppose, for example, that I think of Islamic fundamentalism as a disease; a simple narrative about fundamentalist Islam might then be the following: "We want world communities to respect human rights. Fundamentalist Muslims disrespect some of those rights. We can prevent them from doing more harm by taking action now." This implies a series of actions I ought to do in reaction to fundamentalism: combat its spread; focus on this "public health problem" by inoculating people against it; consider those who try to spread it as evil agents up to no good-or, at the very least, modern day "Typhoid Marys"; and so on.
A research program by Mark Johnson, George Lakoff, Giles Fauconnier, and Mark Turner have explored reasoning by metaphor and analogy in a rich research program; they and others conclude that our most complex mental tasks are usually carried out not by the "classical mechanics" of rational actor theory (where stories really have no place in the details) but rather by a set of abilities that enables us to make analogies and map metaphors, which forms the core of human cognition. Exploration into the "storytelling mind" is a research program that combines metaphor and analogy into an examination of the powerful grip narrative has on human cognition; narratives can restructure our mental spaces in ways that profoundly affect our reasoning ability and, ultimately, what we make of the world. Think of the grip that the "Jihad versus McWorld" narrative has on the terrorist organization Al Qaeda and how this affects the way the group thinks about the future; or consider conspiracy theorists, springloaded to see the world of markets entirely in terms of "us" (downtrodden consumers) versus "them" (corporate robber barons). As Mark Turner noted, "Story is a basic principle of mind. Most of our experience, our knowledge, and our thinking is organized as stories."
Even if making stories foundational to thought seems a stretch, however, there is ample evidence that stories influence our ability to recall events, motivate people to act, modulate our emotional reactions to events, cue certain heuristics and biases, structure our problem-solving capabilities, and ultimately, perhaps, even constitute our very identity. Elucidating each of these points in detail, of course, is beyond the scope of this chapter, but it should be obvious here that the stories we tell ourselves about markets matter.
Some Stories about Free Exchange
At least three archetypical narratives exist about exchange: (1) it is selfish; (2) it is exploitative; and (3) it is, on balance, bad and ought to be rolled back in a neo-Luddite fashion.
The first narrative emphasizes the cutthroat nature of exchange, pointing out that it encourages selfish behavior in those who engage in it. This is the Gordon Gekko "selfish" cartoon. The fictitious Gordon Gekko, portrayed by Michael Douglas in the 1987 movie Wall Street, is a ruthless, heartless stockmarket trader. In his Gucci suits and slicked-back hair, Gekko's single-minded pursuit of the almighty dollar wrecks lives and subordinates all other values to the selfish lining of one's nest with green bills. As Gekko says in the movie, "Greed is good." The Freytag structure of this narrative is obvious: Gekko becomes involved in market exchange; his soul is corrupted and he becomes an insensitive and immoral boor, causing misery to those around him; he dies a lonely and corrupted man.
This story encourages us to view the world in an "us versus them" mode, where class differences define the in-group and out-group. It also emphasizes the profit motive, at the expense of the other motives that move people to engage in exchange. It goes hand-in-glove with a view of human nature that sees us as natural competitors rather than natural cooperators. It is also loaded with empirical claims about the effect on one's character of doing business. It is a superb example of the structural effects a narrative can have on just about everything, from how we reason about a situation even to how we think of our own identity.
The second cartoon is closely related. It emphasizes how free exchange, because it often involves the acquisition and accumulation of capital, necessarily exploits those involved, especially the line worker. As wealth accumulates, class distinctions are enhanced, and the owners of capital become distanced in multiple respects from those who labor on their behalf. Workers eventually become aware of these distinctions and, aside from a few under the spell of false consciousness, recognize their alienation from the products of their labor, and eventually rise up to reclaim the means of production on behalf of the people. This is the Karl Marx "exploitation" cartoon, and it exhibits a Freytag structure of "exploitation, rebellion, and reformation."
Many have criticized the Karl Marx cartoon, roundly and justifiably. Among this narrative's other cognitive effects, it encourages us to view even consensual exchange suspiciously, as masking exploitative relationships. It emphasizes a certain kind of identity, encouraging solidarity based upon class interest and one's position in the exchange relationship. It comes with a Manichean worldview, and provides a powerful "workers will rise" punch line, which in turn provides a pleasing justice-related climax to the setup.
The third cartoon is perhaps more moderate than the first two. It emphasizes the negative effects, on balance, of allowing free exchange to occur. Although it may reject the extreme Marxist view, and may have a more sanguine take on how the involvement in markets colors one's character, it nonetheless emphasizes the harmful effects of the operation of market mechanisms. If we allow markets to continue to operate, free exchange will lead to such dreaded occurrences as the destruction of the environment, a growing rift between the developed and undeveloped worlds, and an over-reliance on technology. This is the neo-Luddite "unhelpful" cartoon, and, at its most extreme, it would have us roll back the clock to a pre-Adam Smith state of affairs.
The neo-Luddite cartoon has powerful appeal. In its moderate form, it points out some of the faults that inflict capitalist manifestations of the free exchange ethos. Negative externalities exist; what are we to do about them? Sensible development is difficult; how does it progress? Joseph Stiglitz and others make neo-Luddite appeals in their writings. This narrative structure encourages us to be suspicious of progress, to look for hidden agendas behind trade and exchange, and to worry-perhaps to a fault-about the effect of globalization on myriad issues ranging from cultural authenticity to the gap between rich and poor.
To prevent misinterpretation, I do not contend that every aspect of these three cartoons is false. A fair examination of the benefits and burdens of exchange will probably include truthful elements from all three critiques (markets sometimes can corrupt; even exchange that is not coerced sometimes does dehumanize; unhampered, poorly thought out development can produce harmful consequences). Generally, however, these pictures of what free exchange does to us and to others are probably not fair, nor are they borne out by empirical examination. Most especially, all three, in their extreme forms, rely on unrealistic expectations regarding what "plot climaxes" will bring relief to the tension that drives their Freytag triangle-like plot.
Two explanatory burdens present themselves at this point. We need to understand why these narratives capture the public imagination, and to move toward an understanding of how we can redress the cartoons so they become more true and hence probably more useful.
An Aristotelian Evaluative Model: Ethos, Logos, and Pathos
In practice, an effective "counter-narrative strategy" will require understanding the components and content of the story being told so we can predict how it will influence the action of a target audience. In other words, we need a sophisticated understanding of strategic rhetoric. This is difficult to come by. Nonetheless, even well worn and simple models of this process, such as that offered by the ancient Greek philosopher Aristotle in his Rhetoric, can be useful for structuring our thinking. Aristotle would have us evaluate three components of a narrative relative to a target audience:
1. What is the ethos of the speaker or deliverer?
2. What is the logos of the message being delivered?
3. Does the message contain appropriate appeals to pathos?
Consideration of ethos would emphasize the need for us to establish credible channels of communication, fronted by actors who have the character and reputation required to ensure receipt and belief of the message. "You have bad ethos" is merely another way of saying, "You won't be believed by the target audience because they don't think you are believable." Consideration of logos involves the rational elements of the narrative. Is it logical? Is it consistent enough to be believed? Does it contain, from the target's perspective, non sequiturs and forms of reasoning not normally used day to day? Finally, pathos deals with the emotional content of the story. Does the story cue appropriate affective and emotive systems in the human brain? Does it appeal to emotion in a way that engages the whole person and that increases the chances the story will actually motivate action?
Thomas Coakley has summarized the Aristotelian model:
Ethos: these are appeals the speaker makes to the audience to establish credibility. Essentially, ethos is what a speaker uses-implicitly or explicitly-to ensure that the audience can trust him or her. An example in advertising is an athlete endorsing an athletic product. Pathos: these are appeals the speaker makes to the audience's emotions. An example of this would be an advertisement for tires that emphasizes safety by portraying an infant cradled within the circle of the tire. Logos: these are appeals to facts. More doctors recommend toothpaste X than any other brand.
(Continues...)
Excerpted from Moral Markets
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