Friday, September 3, 2010

Morality and markets

Boyes writes of the morality of the market order. The letter he cites in his post reflects an important perspective dealing with personal responsibility and liberty.

This past week Mario Rizzo, in a post titled teaching classical liberalism writes:

I have been involved in teaching a course in classical liberalism at NYU for almost two decades. For most of this time I have taught an Honors Seminar for first-semester freshmen. More recently, I have been teaching a version for NYU law students (now cross-listed at the Columbia Law School). I am posting the syllabus for the law course with active links for those who may be interested. (Unfortunately, I cannot provide access to any readings that do not have the publicly-available links.)

The excellent set of reading for this course would make a wonderful discussion foundation thinking about the Morality of Freedom.

As the WSJ letter to the editor argued - there is a fundamental moral center to the responsibility, opportunity and liberty embedded in the market order.

Today a guest speaker at my introductory macroeconomics class prompted an excellent question from one of my students. The speaker was a 27 year old Swedish research analyst for the 5th largest hedge fund in Europe. He described the function of a hedge fund (to hedge risk) then described in favorable terms the social welfare state in his country.

Students focused on his career rather than positive comments about Sweden and one asked about the negative view of hedge funds. Karl's description of his industry was clear and accessible - to me. His use of beta, standard deviation, absolute v relative performance risk adjusted clearly eluded my students. The student asked, if hedge funds performed such an important function in society why did they receive such negative press. Karl correctly replied that hedge funds are demonized because the media most frequently does not understand basic economics and certainly could not describe the function of a hedge fund correctly or, in rare cases engage in populism. Setting aside the contradiction in his correct micro economic analyis of his vocation and his wide misconception of the social welfare state, he stuck at the heart of the moral dimension of classical liberal thought - the sytem of natural liberty that seems the only way to strive toward liberty, freedom and responsibility. The media is engaged in a series of immoral acts - irresponsibility and ignorance that result in tremendous current and future harm. That is the vice of the media is vicious.

Rizzon goes on to describe his course.

This course is multidisciplinary. One of the problems created by approaching classical liberalism from the economics perspective alone is that students get an incomplete and impoverished view of the philosophy (dare I say “ideology”). Worse still, when the economics is presented from a neoclassical perspective, there is the danger that students will get the idea that classical liberalism elevates something called Efficiency or Wealth Maximization to the status of a god – or, at least, an ultimate normative standard.

As you can easily see from the syllabus, there is much more going on. There are moral foundations – and not all of these foundations stem from the same intellectual tradition. Liberalism has been affected deeply by utilitarianism, natural law, and indirect (rule-following) consequentialism. There are important disagreements across these perspectives.

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