Tuesday, June 26, 2018

Civil Economy: Another Idea of the Market by Luigino Bruni and Stefano Zamagni (Agenda Publishing)

This is an excellent introduction to an alternative tradition in economics

Civil economy (CE) is a vision of economics with a fundamentally different anthropological assumption from the one underlying the teachings of Adam Smith. Far from emphasizing the role of self-interest and an "invisible hand," CE emphasizes reciprocity, the idea that each member of a society is entitled to rely on others for help, and obligated to provide help to others.

The phrase "civil economy" comes the writings of Antonio Genovesi, a professor of economics in 18th Century Naples, and Smith's exact contemporary. The authors of this book (LB and SZ, or B&Z) have been the leaders in the revival of the work of Genovesi and many others in the CE tradition. (Full disclosure: I'm personally acquainted with the authors.) Currently numerous scholars, especially in Italy, are engaged in this work from historical, theoretical and practical perspectives. This book provides a clear and stimulating exposition of some key ideas of CE, and also represents an evolution of the authors' ideas since their first book on the subject in 2004. B&Z's earlier writings tended to emphasize overlaps and continuities with Smith's moral philosophy, and even with some other aspects of mainstream (neoclassical) economics. In this work they're much more assertive about the contrasts. And while many of the sources of CE come from the Catholic faith, and B&Z themselves are very active in Catholic causes, this book also considers such influences as John Ruskin (brought up as an evangelical), and Achille Loria, Giorgio Fuà and Adriano Olivetti (all of Jewish origin).

The book is in two parts. The first takes an historical approach to presenting some of the philosophical "pillars" of CE. B&Z see CE as being more or less continuous with the Catholic tradition of Thomas Aquinas, who emphasized Aristotle's perspective of man as an inherently social being. On the other hand, they see mainstream economics as strongly influenced by the Protestant Reformation, including Martin Luther's origins as an Augustinian priest. St. Augustine, the founder of that religious order, emphasized man's sinful nature; this has some resonance with the pessimistic views of Thomas Hobbes about human nature, and ultimately with Smith's emphasis on self-interest. The difference in views boils down to the two Latin epigrams at the beginning of Chapter 2: "Homo homini lupus," i.e. "Man is a wolf to man" in the expression of Hobbes; and "Homo homini natura amicus," "Man is by nature a friend to man," per Genovesi.

It's not a far jump from this to other contrasts. For example, the ethical perspective of mainstream economics is utilitarianism, which denies the existence of community. According to Jeremy Bentham, the utility of a community is reckoned simply as the sum of the utilities of individuals in it. CE, on the other hand, is built on Aristotle's virtue ethics, which are relational: we express virtues through how we act with regard to others. Another example is the notion of reward developed by Giacinto Dragonetti, also a Neapolitan, who was a generation or so younger than Genovesi. A reward is meant to follow a virtuous action, but it's not something that's promised to you ahead of time, nor it it something you can expect to receive. As B&Z explain, reward is thus very different from the mainstream economics notion of an incentive. A true incentive is like a contractual expectation that arises *before* you do something -- it's something without which you wouldn't do the incentivized action or activity. This works in the calculation-based worldview of utilitarianism but not in Aristotelian ethics: if you had done the action in expectation of a reward, then it wouldn't truly be a virtuous action -- and no reward would be deserved.

Similar reasoning underlies the distinction between reciprocity in the CE sense and altruism in the sense of neoclassical economists like the late Gary Becker. According to Becker, the incentive to an altruist to do a good deed is that the altruist expects some boost to her own personal utility in consequence of doing that deed. For example, I help an older person across the street either because I expect that person will do me a favor in the future, or perhaps simply because it gives me pleasure to see that particular person on the other side of the street. In the latter case, mainstream economics assumes that my pleasure is the motivation for helping the other person. With reciprocity à la CE, though, I don't expect that the person I'm helping now will help me in the future - rather, I trust that *someone* will help me in the future when I need it. That isn't a reward, but rather just a natural outcome of the bonds of community, as described in the first paragraph of this review.

The second part of the book covers some more "applied" topics: GDP, the commons, the welfare state, and the social responsibility of corporations and consumers. Throughout, B&Z adopt a nicely critical attitude toward much received wisdom, such as when they point out that capitalist markets "do not satisfy needs, but preferences that can be paid" (@108). Still, this isn't a book that rejects markets -- rather, it articulates a different approach to them. (See also SZ's work, often in collaboration with his wife Vera Zamagni, on worker-owned cooperatives, a type of market actor that is outside of capitalism.)

This book is a translation from the Italian. In general it reads better than some other translations of B&Z's works. However, it differs from the Italian original in a number of places, for reasons that are hard to fathom. For example, in Chapter 4 the brief phrases describing Achille Loria as being from Mantua and of Jewish origin are omitted in the English; on the other hand, an entire paragraph has been inserted into the translation's Chapter 3 that includes a perplexing reference to US President Andrew Johnson as a critic of capitalism. In the book's concluding paragraph, B&Z's contrast between "il pensiero calcolante" and "il pensiero pensante" (literally, between "calculating thought" and "thinking thought") is rendered as being between "a computational mindset" and "engaged thought" -- perhaps clearer in one sense, but with diminished contrast. Nonetheless, the English version stands pretty well on its own.

All in all, this is a very readable introduction to an alternative and important approach to economics. I'll be using it as a text in a course I'll soon be teaching on sustainability. If you're interested in that sort of topic, you may find this book especially worthwhile.

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