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Econ 411
Moral Foundations of Capitalism
Spring 2021
Online this Semester
Instructor: Professor Roger D. Congleton .M/T 12:00 - 1:15
Office: B&E - 405
.Office Phone  3-7866 / 304 / 304 906 2209 (during office hours)

(e-mail is the most reliable way to reach me).
Office Hours: 2:00-3:30 Wednesday and Thursdays, and most other times by appointment
Required Texts: class notes provided on this website
Main Texts (Optional): Source Material for the Course*
.    Aristotle (350 bc) Nicomachean Ethics (Available as an E-book from Google, Liberty Fund, Amazon, etc.)
    Buchanan, J. M. (1997) Ethics and Economic Progress. Norman OK: University of Oklahoma Press.
    Mill, J. S. (1863) On Liberty. Boston: Ticnor and Fields. (Available as an E-book from Google and Liberty Fund).
    Rand, A.(2005) Atlas Shrugged. New York: Penguin. (Available as an E-book from Google and Amazon).
    Smith, A. (1776) An Inquiry Into the Nature and Causes of the Wealth of Nations. (Available as an e-book from Google and Liberty Fund).
    Spencer, H. (1896) Principles of Ethics. Appleton and Company, New York. (Available as an e-book at liberty fund and the Von Mises Institute)
Weber, Max (1930) The Protestant Ethic and the Spirit of Capitalism. (Available as an e-book from Google and Amazon.)
provided at the
class YouTube

Course Description: Tentative Syllabus (as a PDF)
. Moral Foundations of Capitalism is a lecture-based course that explores how some types of ethical dispositions--internalized rules--allow markets to become larger and more effective. They do so  by reducing unproductive conflict, simplifying contract enforcement,  internalizing externalities, and reducing principal agent problems. The course also demonstrates that norms that favor voluntary over coercive relationships and that include a place for material comfort in a good life often help to promote market processes, networks, and prosperity.
Whether then we suppose that the End impresses each man's mind with certain notions not merely by nature, but that there is somewhat also dependent on himself; or that the End is given by nature, and yet Virtue is voluntary because the good man does all the rest voluntarily, Vice must be equally so;
Aristotle (2012-05-17). Ethics (p. 82).  . Kindle Edition.
For not only is a developed sense of responsibility absolutely indispensable, but in general also an attitude which, at least during working hours, is freed from continual calculations of how the customary wage may be earned with a maximum of comfort and a minimum of exertion. Labor must, on the contrary, be performed as if it were an absolute end in itself, a calling. But such an attitude is by no means a product of nature.

Weber, Max (2012-10-21). The Protestant Ethic and the Spirit of Capitalism (Kindle Locations 311-314). Vook, Inc.. Kindle Edition.
The course is divided in to three parts. (1) The first part reviews theories of ethics from Aristotle through A. Pigou. This intellectual history introduces students to several theories of ethics and shows how major figures from philosophy and economics have used their theories to evaluate the merits of market-oriented careers and commercial networks. The overview also provides evidence that ethical theories in the West gradually became more supportive of commerce in the period before the great acceleration. (2) The second part of the course uses game theory and economic theory to show why a subset of ethical dispositions can increase the efficiency and extent of exchange and production. When such ethical dispositions become commonplace, trading networks become more extensive, larger economic organizations become feasible, and specialization and rates of innovation tend to increase. In this manner, a commercial society can emerge. (3) The third part of the course explores  how normative theories affect governance and market relevant public policies. It begins with the manner in which the ethical dispositions of rule enforcers  can make a government more likely to be "productive" rather than "extractive,"  It then examines how particular norms tend to promote (or discourage) public policies that tend to support the emergence of open prosperous commercial societies.

The main goals of the course are to induce students (1) to become familiar with an intellectual history and core ethical arguments concerning the proper role of markets in a good life,  (2) to introduce them to the idea of social dilemmas, and (3) to increase their understanding of the many ways in which normative theories ameliorate such problems and thereby affect the extent of commerce. Some societies are richer than others because their culture--their most commonplace ethical dispositions--accord a broader role for commerce in a good life and good society, and also support the behavior that make markets and governments work more efficiently.

Grades are determined by two examinations (50%), 6 quizzes (25%), and a final paper (25%).

This exchange society and the guidance of the coordination of a far-ranging division of labor by variable market prices was made possible by the spreading of certain gradually evolved moral beliefs which, after they had spread, most men in the Western world learned to accept. These rules were inevitably learned by all the members of a population consisting chiefly of independent farmers, artisans and merchants and their servants and apprentices who shared the daily experiences of their masters…. They held an ethos that esteemed the prudent man, the good husbandman and provider who looked after the future of his family and his business by building up capital, guided less by the desire to be able to consume much than by the wish to be regarded as successful by his fellows who pursued similar aims.

F. A. Hayek [1979/2011]. Law, Legislation and Liberty, Volume 3: The Political Order of a Free People [pp. 164–165]. University of Chicago Press; Kindle Edition.

Tentative Course Outline .
Dates Topic
Supplemental Readings
.January 19 (Zoom Class) Introduction to Online Version of the Class

. I. Commerce and the Good Life

1. Introduction to Moral Foundations of Capitalism

January 19 Norms as personal motivations and self restraint. Two approaches to norms: positive--the study of the effects of norms, and normative--the application of normative theories to assess private behavior, societies, and market outcomes. Norms that help and hurt economic growth. Capitalism as a name for contemporary market-based networks and lifestyles.
Why MBA's Read Plato (WSJ)
Vonnegut: Harrion Bergeron
January 21, 26
2. Aristotle's Ethics and Political Theory as Private Ethics Ethics as the pursuit of lifetime happiness, rather than short term pleasure. Aristotle's principle of moderation in all things.Wealth as a means to an end. Aristotlian virtues. Aristotle as the foundation of contemporary secular ethics.
Quotes from:

January 28, February 2
3. The Early Enlightenment and Market Supporting Ethics.  Three major disruptions of the medieval order. Nature law and the moral sense. Markets as a dissipating or supporting system for ethical development. Rising importance of life on earth. Baxter and Barklay on duties on earth. Locke and the division between theological and civil ethics. (E-campus Quiz 1) Quotes from:
Erasmus, More,
Grotius, La Court,
Baxter, Barklay
February 4, 9
4. Classical Liberalism, Ethics, and the Market. Montesquieu and the importance of political virtue. Franklin and the "spirit" of capitalism. Smith: moral sentiments and the impartial spectator as the source of ethics and virtue. Kantian duties and the moral imperative. Bastiat on market support for ethics. 
Montesquieu, Franklin
Kant, Bastiat
February 11, 16
5. Utilitarian Foundations for Private and Social Ethics. Another secular core principle for the development of ethics. Bentham and the utilitarian revolution, Mill's extensions. Spencer's evolutionary approach. Do ethics improve survival prospects? Emergence of social ethics along with democratic politics. Ideology as social ethics.(E-Quiz 2)

Mill, Spencer

II. Ethics and the Extent of Commerce
February 18, 23, 25

6. Civil Ethics and Civil Society: A Game Theoretic Analysis
(1) Introduction to Game Theory: Strategy Choice and Nash Equilibrium with Applications to Ethics and Civil Society, (2) Escaping the Hobbesian Dilemma, ethics and law as substitutes. (3) Solving  coordination games, (4) Internalizing Externalities
(E-campus Quiz 3)

WP-Contemporary Hobbesian Dilemma
WSJ-Importance of Civic Virtue

March 2
Review for Midterm Exam (Zoom Class)
Study Guide I
March 4
Midterm Exam (Zoom Class)

March 9
Exams Returned and Reviewed (Zoom Class)

 March 11, 16, 18
7. Market Dilemmas and Ethical Solutions: The Ethical Foundations of Commerce
(1) Economics of gains to trade and trading networks, (2) Problems of Team Production, how the work ethic improves team production and promotes specialization. How selecting ethical persons can improve profits and encourage some types of ethical behavior. (3) Transaction and Enforcement costs as a limit on the extent of trading networks and specialization. How ethics reduces contract complexity and enforcement costs and expand markets. Evidence of the importance of Trustworthiness. (E-campus Quiz 4)
Weber on the Work Ethic
Congleton on the Work Ethic
Buchanan and Yoon on the Work Ethic
Taylor on Scientific Management
March 23, 25, 30
8. Neoclassical Economics with Ethics. Bringing ethics into the Marginal Benefit Marginal Cost Framework, Marginal Revenue Product as a consequence of team production and private ethics.  Equilibrium investments and  distributions of Virtue. Ethics and Commerce are codetermined.
Franklin on Ethics in the Work Place
April 1
9. Ethics and Economic Progress. Ethical aspects of progress. Economic growth requires solving social dilemmas associated with specialization, capital accumulation, and innovation. Ethical and/or support for economic development. (E-campus Quiz 5)

III. Politics, Ethics, and the Good Society
April 6
10. Ethics and Governance. The simplest form of government: customary law enforcement.  Corruption and the moral mitigation of corruption. The role of ethics in simple productive governments. Customary and Common Law. Extractive versus productive governance. Quotes from:
La Court, Hobbes
Bentham, Pigou
Mises, Buchanan
April 8, 13
11. Ethics and Democratic Public Policy.  Norms and Institutions for Good Governance. The median voter theorem(s). The democratic indecisivenss problem. The democratic poverty trap. The problem of holding the next election. Normative solution to democratic dilemmas..(E-campus Quiz 6)
Quotes from:
April 15
12. Ethics and Political-Economy System Choice. Ethics and the relative performance of political and economic systems. On the logic of a bounded domain for governance under different mixes of ethical disposition in government and markets. 
Quotes from:
Olson, Tullock
Mises, Rawls
April 20
Review for Final
Study Guide II
April 22
 Second Midterm Exam

April 27
Exams Returned and Reviewed / Paper Workshop

April 29
Last Day of Class, Overview of Course and Paper Workshop
Paper Topics

May 5
Papers Due by Midnight (to be e-mailed to

“Look around you,” he said. “A city is the frozen shape of human courage—the courage of those men who thought for the first time of every bolt, rivet and power generator that went to make it. The courage to say, not ‘It seems to me,’ but ‘It is’—and to stake one’s life on one’s judgment. You’re not alone. Those men exist. They have always existed.

Rand, Ayn (2005-04-21). Atlas Shrugged (pp. 473-474). Penguin Group. Kindle Edition.
Midterm Exam
and Endterm Exams
6 Ecampus Quizzes
Term Paper

Marginal extra credit for extraordinary class participation (up to 5% bonus)

Institutional Policies and Services: Students are responsible for reviewing policies on inclusivity, academic integrity, incompletes, sale of course materials, sexual misconduct, adverse weather, as well as student evaluation of instruction, and days of special concern/religious holiday statements.

E Link to WVU Policies and Syllabus Addenda