Wendy Olsen: Moral economy and how economics is changing

Inclusive Economy01 Sep 2009Wendy Olsen

Moral economy has a growing place in economics. One of the main differences between old and new institutionalist approaches is their treatment of values. I am interested in reviewing how moral economy is being done by a range of economic authors. Three areas of new development can, so far, be noted: the moral economy of human capabilities; the moral economy of trust and how institutions develop in interaction with older norms, and; methodological questions about norms in economics, especially whether the standard economic agent is taken to be a moral actor or not.

My own approach tends to be of the ‘old institutionalist’ type and to study moral values in depth, while also expressing moral values in the choice of both topic and methods of doing development research. In the Development Studies Association (DSA) conference, I will be presenting with Jamie Morgan about the study of unfree labour from this viewpoint.

Our work derives, in part, from a conference on ‘Perspectives on Moral Economy’, organized by Andrew Sayer at Lancaster University in August 2005 (see also ‘Moral Political Economy and Moral Reasoning About Rural India: Four Theoretical Schools Compared’, Olsen, Cambridge Journal of Economics, online, 2009).

1st area – the human capabilities debate

Sen and Nussbaum threw down the gauntlet about what economic development is for by arguing that we need to reconceptualize human needs in terms of what the fundamental human capabilities actually are (Sen, 1993a; Nussbaum, 1993, 1999, 2000a; Nussbaum and Glover, eds., 1995). Nussbaum actually made lists of human capabilities in order to galvanize a concrete, rather than merely philosophical, debate (for example Nussbaum, 1999).

Nussbaum has been supported by other feminist authors in remaining rather critical of orthodox economics and its moral philosophy – for example, the criticisms of cost-benefit analysis and its foundations presented by Anderson (1993) and Nussbaum (2000b). Numerous authors have engaged in the ongoing debate at different levels, including Anderson (2000), who argues that there is a need to move beyond the concept of rational man, which permeates much of standard economics as taught in undergraduate programmes.

This whole literature tends to be moving in a post-structuralist, non-individualist direction. The post-structuralism arises when authors realize that agents within the economy do not simply reproduce it, but instead act after considerable reflection about their own role. Sen (1980) saw economists in just this way, as moral agents doing research. His contribution on ‘Description As Choice’ (1980) is still worthwhile reading.

Anderson (2003) argues that Sen has aimed for greater democracy in his work, highlighting a particular moral value that he has indeed expressed. The work of Wolfe on ethics shows, however, that having a single moral value is not sufficient for making ethical decisions; instead, one must balance out different competing values and every situation will tend to be subtly different (Wolfe, 1989; 2001).

Within the context of such debates, some critiques of capabilities approaches have provided interesting opportunities for showing just how complicated real-life ethics are. Nussbaum has been criticized for being either ethnocentric or paternalistic (Menon, 2002). Apart from such a critique, it is also rather difficult to marry up a universalistic list of human capabilities with the respect for individual differentiation that is usual in both Sen’s work and in standard economics. People are construed as all having preferences, but what the preferences are is allowed to vary considerably (see Ray and Sayer, 1999). Moral economy is usually both ‘moral’ and ‘about morals’.

An example of economic research in which the value judgements are slightly underground, but still present as connotations on complex statements ‘about’ the economy, is the work by Dickens, Gregg and Wadsworth (2000). They describe the New Labour policies and their effects during the first few years after New Labour came to power in the United Kingdom in 1997. At one level, the research is descriptive. On other levels, it also offers moral reasoning. A development economics book containing much more explicit normative content is Stiglitz (2002a; see also Stiglitz, 2002b). A case study with explicit normative content is Prayukyong (2005) writing about Buddhist economic practices.

2nd area – trust and institutions

The second major area of growth in moral economy is the study of trust and institutions. Papers on this are being offered in the DSA conference Panel 5 (see the other papers in the Cambridge Journal of Economics special symposium on moral economy, online, 2009).

3rd area – the socially embedded actor

The third growing area of research in moral economy takes the socially embedded actor as the main subject of fresh qualitative research. Doing moral economy does not just mean making superficial normative or ethical judgements, but richly exploring the tapestry of moral decision making. It stresses that economies are real and embedded in society, in culture, and in changing institutional norms (see the other papers in the Cambridge Journal of Economics special symposium on moral economy, online, 2009). We need funds to do field research to achieve more in this area.

Moral economy has, potentially, a large contribution to make to economic theory and to economic knowledge. It is helpful to define the ‘economic’ realm as modes of provisioning in human society, and ‘development economics’ as the study of ways to encourage and enhance human flourishing. The provisioning of people in society so that they can flourish is one aim of economics. It helps to see some other proximate aims, such as financial stability or perhaps growth, as means to this end. Discussions about both means and ends can be held. Moral economy supports the main aim by providing contextual information to support detailed policy analysis in particular contexts. The assumption the authors of this symposium make are, as stated by Sayer (2000), that ‘no single universal recipe would fit the whole world’.

The references used to construct this blog are available via email:

Wendy Olson, Lecturer in Socio-Economic Research, gives some background details about her presentation to the DSA: