Jagdish Bhagwati: The Free Market and Morality

Jagdish Bhagwati.



I have read, for instance, and I’m sure a lot of people have, Simon Schama’s great book on the embarrassment of riches about the Dutch [IB] who accumulated wealth but didn’t spend it on themselves. They spent it on social purposes. That’s sort of the Calvinist approach.

Where I come from, in India, I come from the state where the great Mahatma Gandhi was, and he inherited a tradition, didn’t create one, but basically people would accumulate wealth like mad. They wouldn’t pay you a penny more than the market would in terms of wages, but all the money they made went into education, health. They did even things like dry farming experiments to improve agriculture, and so relying on the government.

We have an enormous tradition in several communities.

They have lots of places from which you get the least important one, in my opinion, is where you work.



I found studies where people actually had responded to increased incomes as a result of improved export market earnings, not by saying wickedly that now I can get so much more money by putting my child to work that I’m going to take one more child out of school and put her into work.

Instead they were reacting virtuously and saying, look, now that I’ve got more money from the same amount of export of rice, for instance, from Vietnam, I’m now going to be able to take one child away from work and put her into school instead. So going the other way.



On the contrary, globalization, which of course depends on being able to exploit markets and people whose market is open and so on, where multinationals would naturally play a role because they go out and, create jobs and so on.

But all of this is actually good for you. It’s good for morality, because what is morality if it’s not about improving the lives of people?

And if you could create jobs and pull people out of poverty into more gainful employment on a sustained basis, that’s a good thing, not a bad thing. It has to be consistent with your moral value.



Poorer parents are even more mindful of this than rich parents, because rich parents will leave a whole lot of money behind for their children. But the poor parents do invest in children and, as we all know from the usual, [casual] empiricism, that a poor man will share his last burrito with you and the rich guy probably wouldn’t let you sit down at his banquet.



Adam Smith pointed out that men have self-interest. He didn’t say that was the only thing they have, because in moral sentiments, he does point out that man is a more complex creature. So he’s more like what Rabbi Hillel said, which is, if I’m not for others, what am I? And if I’m not for myself, who will be?

So we are all a mixture of self-interest and the less base mode, as it were, namely altruism and empathy. But it’s in different mixtures.

Adam Smith’s great genius was to say that insofar as you’re pursuing your self-interest, you’re basest motive as it were, you might say that we can devise an institutional structure, namely markets. But it wasn’t just markets in this case. It was more complex person on the economic design as well, but by and large, markets.

That is the way in which you translate that self-interest or greed, if you want to call it, into useful, socially desirable outcomes.

That was his genius.



It got frayed at the margin because of all these CEOs with large sums of money. But I don't think it was the inequality part that was really the problem. What they saw was people just getting out a failing enterprise with large sums of bonuses and payments, often with insider information, clearing out first.

The way I see it, it’s nothing to do with inequality or justice, but we Indians and Asians and so on, are not brought up like Americans and Western children. You guys actually are brought up on the notion that when a ship is going down, the captain should be on board and he would sink with the boat and the passengers go away in lifeboats. Here they see it exactly the other way around. The passengers are going down, the workers, etc., are going down with the ship and the captain is going away in the lifeboat.

I think that is viscerally, it’s just so clearly unethical in terms of the way you were brought up to think about what should be the way you behave in a crisis.

I was never brought up on this notion, being a good person. Well, I never even thought about it when I was a child. But all of you have been brought up that way. That is something which really created, finally, a big sense that somehow the system was unethical.



I think America’s ideology, I often say, is lack of ideology. Y

The editor of The Economist was asked [by] Sir Geoffrey Crowther at one time, “What’s the philosophy of your magazine?” He said, “We are in the extreme center.”

And that’s what Americans are, basically. And you look at the way they’re reacting to crisis, how to handle it.

[Nicolas] Sarkozy starts reading “Das Kapital,” and my reaction was, I thought every Frenchman, when he was at school, read Marx and Proust and Voltaire. How come he lost out on a good education and has to read “Das Kapital” now?

But he makes an ideological point, you see? Whereas I just settle down to business, you’re accused of socialism. Well, so be it. We’re just going to do whatever is necessary to get hold of this crisis.


Recorded on: November 11, 2008



The Columbia University author and economist answers the Big Question, "Does the free market corrode moral character?"

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Political division is nothing new. Throughout American history there have been numerous flare ups in which the political arena was more than just tense but incideniary. In a letter addressed to William Hamilton in 1800, Thomas Jefferson once lamented about how an emotional fervor had swept over the populace in regards to a certain political issue at the time. It disturbed him greatly to see how these political issues seemed to seep into every area of life and even affect people's interpersonal relationships. At one point in the letter he states:

"I never considered a difference of opinion in politics, in religion, in philosophy, as cause for withdrawing from a friend."

Today, we Americans find ourselves in a similar situation, with our political environment even more splintered due to a number of factors. The advent of mass digital media, siloed identity-driven political groups, and a societal lack of understanding of basic discursive fundamentals all contribute to the problem.

Civil discourse has fallen to an all time low.

The question that the American populace needs to ask itself now is: how do we fix it?

Discursive fundamentals need to be taught to preserve free expression

In a 2017 Free Speech and Tolerance Survey by Cato, it was found that 71% of Americans believe that political correctness had silenced important discussions necessary to our society. Many have pointed to draconian university policies regarding political correctness as a contributing factor to this phenomenon.

It's a great irony that, colleges, once true bastions of free-speech, counterculture and progressiveness, have now devolved into reactionary tribal politics.

Many years ago, one could count on the fact that universities would be the first places where you could espouse and debate any controversial idea without consequence. The decline of staple subjects that deal with the wisdom of the ancients, historical reference points, and civic discourse could be to blame for this exaggerated partisanship boiling on campuses.

Young people seeking an education are given a disservice when fed biased ideology, even if such ideology is presented with the best of intentions. Politics are but one small sliver for society and the human condition at large. Universities would do well to instead teach the principles of healthy discourse and engagement across the ideological spectrum.

The fundamentals of logic, debate and the rich artistic heritage of western civilization need to be the central focus of an education. They help to create a well-rounded citizen that can deal with controversial political issues.

It has been found that in the abstract, college students generally support and endorse the first amendment, but there's a catch when it comes to actually practicing it. This was explored in a Gallup survey titled: Free Expression on Campus: What college students think about First amendment issues.

In their findings the authors state:

"The vast majority say free speech is important to democracy and favor an open learning environment that promotes the airing of a wide variety of ideas. However, the actions of some students in recent years — from milder actions such as claiming to be threatened by messages written in chalk promoting Trump's candidacy to the most extreme acts of engaging in violence to stop attempted speeches — raise issues of just how committed college students are to
upholding First Amendment ideals.

Most college students do not condone more aggressive actions to squelch speech, like violence and shouting down speakers, although there are some who do. However, students do support many policies or actions that place limits on speech, including free speech zones, speech codes and campus prohibitions on hate speech, suggesting that their commitment to free speech has limits. As one example, barely a majority think handing out literature on controversial issues is "always acceptable."

With this in mind, the problems seen on college campuses are also being seen on a whole through other pockets of society and regular everyday civic discourse. Look no further than the dreaded and cliche prospect of political discussion at Thanksgiving dinner.

Talking politics at Thanksgiving dinner

As a result of this increased tribalization of views, it's becoming increasingly more difficult to engage in polite conversation with people possessing opposing viewpoints. The authors of a recent Hidden Tribes study broke down the political "tribes" in which many find themselves in:

  • Progressive Activists: younger, highly engaged, secular, cosmopolitan, angry.
  • Traditional Liberals: older, retired, open to compromise, rational, cautious.
  • Passive Liberals: unhappy, insecure, distrustful, disillusioned.
  • Politically Disengaged: young, low income, distrustful, detached, patriotic, conspiratorial
  • Moderates: engaged, civic-minded, middle-of-the-road, pessimistic, Protestant.
  • Traditional Conservatives: religious, middle class, patriotic, moralistic.
  • Devoted Conservatives: white, retired, highly engaged, uncompromising,

Understanding these different viewpoints and the hidden tribes we may belong to will be essential in having conversations with those we disagree with. This might just come to a head when it's Thanksgiving and you have a mix of many different personalities, ages, and viewpoints.

It's interesting to note the authors found that:

"Tribe membership shows strong reliability in predicting views across different political topics."

You'll find that depending on what group you identify with, that nearly 100 percent of the time you'll believe in the same way the rest of your group constituents do.

Here are some statistics on differing viewpoints according to political party:

  • 51% of staunch liberals say it's "morally acceptable" to punch Nazis.
  • 53% of Republicans favor stripping U.S. citizenship from people who burn the American flag.
  • 51% of Democrats support a law that requires Americans use transgender people's preferred gender pronouns.
  • 65% of Republicans say NFL players should be fired if they refuse to stand for the anthem.
  • 58% of Democrats say employers should punish employees for offensive Facebook posts.
  • 47% of Republicans favor bans on building new mosques.

Understanding the fact that tribal membership indicates what you believe, can help you return to the fundamentals for proper political engagement

Here are some guidelines for civic discourse that might come in handy:

  • Avoid logical fallacies. Essentially at the core, a logical fallacy is anything that detracts from the debate and seeks to attack the person rather than the idea and stray from the topic at hand.
  • Practice inclusion and listen to who you're speaking to.
  • Have the idea that there is nothing out of bounds for inquiry or conversation once you get down to an even stronger or new perspective of whatever you were discussing.
  • Keep in mind the maxim of : Do not listen with the intent to reply. But with the intent to understand.
  • We're not trying to proselytize nor shout others down with our rhetoric, but come to understand one another again.
  • If we're tied too closely to some in-group we no longer become an individual but a clone of someone else's ideology.

Civic discourse in the divisive age

Debate and civic discourse is inherently messy. Add into the mix an ignorance of history, rabid politicization and debased political discourse, you can see that it will be very difficult in mending this discursive staple of a functional civilization.

There is still hope that this great divide can be mended, because it has to be. The Hidden Tribes authors at one point state:

"In the era of social media and partisan news outlets, America's differences have become
dangerously tribal, fueled by a culture of outrage and taking offense. For the combatants,
the other side can no longer be tolerated, and no price is too high to defeat them.
These tensions are poisoning personal relationships, consuming our politics and
putting our democracy in peril.

Once a country has become tribalized, debates about contested issues from
immigration and trade to economic management, climate change and national security,
become shaped by larger tribal identities. Policy debate gives way to tribal conflicts.
Polarization and tribalism are self-reinforcing and will likely continue to accelerate.
The work of rebuilding our fragmented society needs to start now. It extends from
re-connecting people across the lines of division in local communities all the way to
building a renewed sense of national identity: a bigger story of us."

We need to start teaching people how to approach subjects from less of an emotional or baseless educational bias or identity, especially in the event that the subject matter could be construed to be controversial or uncomfortable.

This will be the beginning of a new era of understanding, inclusion and the defeat of regressive philosophies that threaten the core of our nation and civilization.