Daily Archives: August 8, 2008

Having ignored the story for months, the press descends with barely contained glee on the John Edwards confession. Far be it from me to moralise (let him without sin…) but the episode surely takes a prominent place in the annals of male insanity. It’s not the affair; it’s not even the fact that his wife was ill. These aspects are unremarkable. It’s the fact that he was running for president and his marriage was the larger part of his campaign. His rock-solid decades-long partnership with Elizabeth was the essential antidote to his boyish good looks and aw-shucks southern charm. And didn’t he know it. He kept his marriage in voters’ faces all through his fight for the nomination. Now this. Incredible.

I will be interested to see how the hypocrisy angle plays out. You remember the exultation over the downfall of Larry “Wide Stance” Craig. “It’s not what he did,” said column after column, “it’s the hypocrisy.” In early coverage of the Edwards case, the regretful “it’s an inexplicable tragedy” motif seems to be far outdistancing the “what an outrageous hypocrite” line—with a particular affectation of sympathy for Elizabeth. Maybe that’s right. Maybe it would have been right in the Larry Craig case too. (He has a wife.) Some kinds of hypocrisy, it seems, are easier to put up with than others.

I’ve mentioned the Bill Gates/Mike Kinsley/Conor Clarke creative capitalism project before. A new highlight on the site is a piece by my esteemed colleague Martin Wolf. (This is what Martin does on his holidays.) I’m not entirely sure what Martin’s note has to do with “creative capitalism”–the idea is mentioned and dismissed in the last paragraph–but he has written the best short essay on the political preconditions for capitalism I have ever read.

Consider a society in which everybody was a profit-maximizer. What would it be like? It would be one in which rulers, soldiers, judges, bureaucrats would take whatever they could. It would be one in which bribery and corruption were the norms. It would be one in which market capitalism of the kind Professor Landsburg (and I) extol would be impossible. It would be one in which almost everybody would be poor. And because it would be one in which almost everybody was very poor, it would also be one in which the only way to obtain wealth would be to join in the race for political power. This would be all too natural. It would also be a negative-sum society, in which life tended to be nasty brutish and short.

Profit-maximization is not a generalizable norm for a successful capitalist society. Indeed, it is not an ethical principle at all, for it violates Kant’s categorical imperative — that one should “act only according to that maxim whereby you can at the same time will that it should become a universal law.” Profit-maximization is a situational ethic, applicable only to economic activity — that is, activity carried out under competitive conditions. Monopoly providers of public goods — security, justice and so forth — must not act under profit maximization.

We do not even want people engaged in private business to be profit-maximizers tout court. Let us suppose, for example, that a business knows of an undetectable way of dumping poisonous waste, thereby saving itself vast sums of money. Do we believe that it ‘ought’ to do this? I certainly do not. Do we believe businesses ought to create cartels? No, again. Do we regard it as right for business leaders to manipulate their pay — by back-dating stock options, for example — in order to steal as much as possible from their shareholders? No, yet again. Yet all these people are doing is maximizing their personal profits, as individuals in the market economy supposedly should

So the big problem with competitive capitalism is not that it is uncreative. It is certainly highly creative. The problem is that it is unnatural. There have to be rules, ethical norms and institutional constraints governing profit-maximizing behavior, to ensure that the maximization operates for the social good. Of course, pure libertarians would deny this. They believe that a society could be constructed on the basis of voluntary exchange, with no coercion. I think that would last until the first well-organized gang came over the hill, as Thomas Hobbes argued. We need the Leviathan. The question is how we tame it.

Reluctant as I am to follow that performance, it so happens I have posted a new contribution too. Mike and Conor asked me earlier for some thoughts on what Adam Smith would make of creative capitalism. If you’re interested, and with all due diffidence, I’ll post what I sent them after the jump.

Clive Crook’s blog

This blog is no longer updated but it remains open as an archive.

I have been the FT's Washington columnist since April 2007. I moved from Britain to the US in 2005 to write for the Atlantic Monthly and the National Journal after 20 years working at the Economist, most recently as deputy editor. I write mainly about the intersection of politics and economics.

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