Dialectical libertarianism: the unintended consequences of both ethics and incentives underlie mutual prosperity

Abstract

In Bourgeois equality, Deidre Nansen McCloskey argues, as advertised in the book's subtitle, that Ideas, not capital or institutions, enriched the world (2016). This ambitious historical project takes its position in opposition to the political left and right. McCloskey understands the left to reflect the opinion that accumulated capital enriched the class by exploiting the working class who will only be included in the capitalist vision of perpetual accumulation as a result of state mandated redistribution. She understands the right to be the contemporary neo-institutionalists who argue that economic growth will be achieved with the appropriate incentives to reward rational action. McCloskey's argument is primarily historical. It spans the seventeenth through twentieth centuries, focusing on the European invention of capitalism and what she argues are the attendant virtues of prudence, temperance, and justice (p. 189). The strength of the project is its re-visitation of the ideals and development of classical liberalism. Its weakness is McCloskey's failure to engage with or recognize that markets and rationality are historically contextualized cultural forms. Hence latter day late-twentieth century political economy represents a different set of challenges to an advocate of bourgeois liberalism than did early modern nobility. The preeminence of rational choice social science threatens the bourgeois that McCloskey seeks to defend as the basis for a prosperous capitalist global order and it provides the most compelling contemporary rationale for markets and politics.In view of the current preeminence of neo-institutionalism and game theory, I find Bourgeois equality particularly illuminating for reminding readers of the theoretical principles characterizing modern liberal market theory such as those evident in Adam Smith's Theory of modern sentiments (1982 [1759]). Thus, in focusing critical attention on contemporary neo-institutionalism, McCloskey provides the means to clarify the distance between contemporary markets and their classical liberal predecessors. One reward for achieving this understanding is to grasp the significant differences between contemporary market ideology and that of early liberalism. Another is to fruitfully pose the question of whether McCloskey is correct: perhaps, beyond incentives, the motivating ideas and animating virtues of agents are directly correlated to whether a market society generates inclusive prosperity?In this review, I quickly rehearse McCloskey's historical argument that modern capitalism is best understood as a period of 'Great Enrichment'. i discuss her core thesis that ideals concerning human dignity are fundamental to inclusive economic growth. After this I address McCloskey's particular intervention in rejecting what she takes to be the left's assertion that redistribution is essential (e.g., Thomas Piketty), and the right's focus on institutional structures to facilitate economic growth and inclusive prosperity (e.g., Douglass C. North). I make the following points. First, I agree that McCloskey is correct in arguing that the neoliberal institutionalists concentrate on incentives to the exclusion of ethical reasons for action. Second, I suggest that the neoliberal institutionalists are more accurately viewed as extending from the right to the left sides of the political spectrum. Finally, I investigate whether perhaps the position McCloskey develops may best be characterized as 'dialectical libertarianism' because both ethical ideals and prudential incentives are fundamental to inclusive free market prosperity. Thus, I invite McCloskey to consider whether on the one hand theorists from both the left and right could endorse ideals alongside with prudential incentives. On the other hand, I ask McCloskey to take a position on whether ideals should be accompanied with a commitment to a minimal safety net, to ensure the inclusion of the least well-off in the opportunities for development. …