Deirdre McCloskey

November 19, 2023

You are a distinguished economic historian. By studying history, you are part of a rare breed of economists that can claim to work with real-world evidence. As such, you help us distinguish fact from fiction and think critically about cause and effect. For instance, you remind us that greed or the accumulation of wealth has been part of the human condition long before capitalism. You also warn us of the romanticization of a poorer, rural life. You point out that richer, urban people are, for example, less violent and less materialistic than their impoverished ancestors. Why is it so hard to establish an accurate debate about the problems of modern-day capitalism versus the eternal flaws of humanity?


One problem is the word ‘greed’. On one hand, you get the infamous assertion that ‘greed is good’.  Greed is not good, it’s a sin. It’s corrupting of the soul and it’s bad for the economy. Greed should be defined as it is theologically, for instance, by Thomas Aquinas, as Prudence gone mad, Prudence without the other virtues in attendance. On the other hand, all life forms – plants, animals, bacteria, etc. – have to be to some degree self-interested or else they don’t live. Likewise, what actually works in the business world is a proper attention to self-interest and curiosity about the interests of others, but not a mad ‘screw you, I’m going to cheat every chance I get’ attitude. I also object to the word ‘capitalism’, which is scientifically inaccurate, and prefer the term ‘innovism’ instead. The massive betterment of our society during the last three centuries didn’t simply come from the accumulation of capital. What mattered foremost is human creativity, unleashed by equality of permission, which is the crux of real liberalism. We need to get liberalism straight: as a largely 18th century creation, it means allowing people to run the race, wherever they start or wherever they finish. Allowing women to have the same jobs as men. Allowing black people to build up more wealth in houses. Allowing colonized people to be free from demanding domination. Liberalism is not equality of outcome, or equality at the finish line, which was attempted under communism and didn’t work. Liberalism is not equality of opportunity, which sounds wonderful, but humans don’t start at the same point. Some of us are smarter, taller, have better parents, or are born in Germany instead of South Sudan. While we can implement neither equality of outcome nor equality of opportunity, equality of permission can be achieved tomorrow.

We need to get liberalism straight: as a largely 18th century creation, it means allowing people to run the race, wherever they start or wherever they finish.

Liberalism: allowing people to run the race.Illustration made using Midjourney.Liberalism: allowing people to run the race.
Illustration made using Midjourney.

In your book ‘The Bourgeois Virtues’, you state seven virtues as a coherent framework for ethics: Prudence, Temperance, Justice, Courage, Love, Hope and Faith. For any family, community or capitalist society to work, you need to combine all these virtues as if they were primary colors. Like red plus blue creates purple, Prudence plus Courage yields enterprise. Or Justice, Courage and Faith yield honesty. A single virtue, when left unchecked, can turn into a vice. For instance, in matters of money, Prudence alone can become greed. This set of primary virtues has been developed for two millennia in the West by, amongst others, the Greeks, the Romans and Christianity. Other belief systems such as Confucianism, Talmudic Judaism, Buddhism, or Native American Shamanism have developed very similar virtues. Today our economy feels inhuman, operating predominantly on Prudence or ‘maximum utility’ as economists like to call it. What can we do to expand our moral compass in business?


Sociology speaks of the economy being embedded in society. If the economy is run radically differently from how society runs, society will eventually expel the economy. In other words, if people come to believe that there’s a big gap between how we should behave as human beings and how the economy actually operates, we get a breakdown. That’s how fascism and communism started. A good example today of such friction is how the younger generations perceive a large gap between their ethical commitment to nature and what they think the economy produces. Without depreciating the ecological crisis, I would try to persuade them that the economy is actually working on solutions to the environmental problems. Innovism, or the system of trial and error that we have, works like natural evolution. It’s not always desirable evolution, but it’s such bottom-up processes that create progress. Innovism is consistent with the transcendent and feminine virtues of Love, Faith and Hope. Such virtues might be enough to rule small, intentional organizations, but they’re insufficient to run a large society. As Adam Smith famously said, ‘It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner but from their regard to their own interest’. If, like a bed of flowers, society is the soil in which the economy grows, we need to shift public opinion away from the contemporary hate towards commerce and an entire dependence on benevolence. An important way to develop a more sensible view of what the economy is about, is through the work of artists. For instance, film makers should stop painting a mean picture of people in business. Hollywood is notorious for being a collection of corporate executives making films that attack corporate executives.

If, like a bed of flowers, society is the soil in which the economy grows, we need to shift public opinion away from the contemporary hate towards commerce and an entire dependence on benevolence.

The complex scale of ethics mixing virtues like primary colors.Illustration made using Midjourney.The complex scale of ethics mixing virtues like primary colors.
Illustration made using Midjourney.


Virtues like Prudence (Practical Wisdom), Temperance, Justice or Courage are readily acceptable in today’s society. These four are the cardinal virtues of Stoicism, an ancient Greek philosophy regaining popularity, especially in entrepreneurial circles. Talking about some version of Love in a board meeting would require an unusually enlightened conversation, but it is conceivable. But Hope and Faith are likely a bridge too far. Why do Love, Hope and Faith make people so uncomfortable? 


Europe spent a couple of centuries fighting ferocious religious wars and by the late 17th to early 18th century they were mostly sick of them. In various ways, the Treaty of Westphalia in 1648 to begin with, the Europeans gradually set religion off, away from politics. In the United States, in 1791, the First Amendment of the Constitution of 1789 guaranteed liberty of religion in its first clause. So our society witnessed a segregation of supposedly religious virtues such as Love, Faith and Hope. You can see it vividly in Immanuel Kant, as for example in his ethics and his little essay, Beantworting der Frage: Was ist Aufklärung? But, as I have argued in my work, these three ‘theological’ virtues can be given an entirely non-religious interpretation. Hope, for instance, is in fact quite natural in a boardroom. One of the most prominent virtues of a successful entrepreneur is to have a hopeful, forward-looking conception of what can happen that works out good. Faith is, on the other hand, a backward-looking virtue. It looks back on your journey and constructs your identity. Every great business has a strong identity, a foundational concept of what it is doing. Finally, Love, understood as caring for people, is also a critical value in a successful business. If you treat your colleagues, suppliers and customers as unloved machines, it’s probably not going to turn out very well in the long run. Of course, there’s also a rhetorical problem in management, especially of men, I have to say. Male managers can feel tough, or masculine, if they say things like ‘it’s the bottomline that counts’ and the women in management have more or less signed on to such rhetoric. Obviously, it’s not as if toughness doesn’t have a function in business. But grown, mature men should have come to understand the importance of virtues like Love in life. If they haven’t, they’re nothing other than boys and you shouldn’t have them in your boardroom. 


A common belief is that, in order to keep our jobs going and for our economy not to collapse, we need ever more consumption. On the one hand you defend consumption from an anthropological perspective: goods can be carriers of meaning whether they are necessary to sustain life and health or they cater to the mind and heart. On the other hand, you are convinced that nothing would befall our market economy in the long run if we would curb our desires and adopt a more thrifty lifestyle. Such a ‘luxury-less economy’, would still encourage specialization to satisfy the remaining or new human needs and we would all find other employment or choose more leisure. Where would you draw the line between meaningful and vulgar consumption?


There’s a treacherous tendency for educated people to draw such a line from their own snobbish perspective. For instance, ‘Opera is better than football.’ Well, who says so? The way humans flourish is through a life of virtue. That doesn’t mean a puritanical denial of certain pleasures like watching a football game. For a virtuous life, we can ask ourselves where our desire to consume this particular good or service originates from. Are you watching television to see ‘the beautiful game’ and find pleasure in watching a football player score a great goal? Are you in the stadium to foster friendships or a sense of community? These would be motivations that can contribute to your growth as a human. Whereas if you came to the stadium only to win, or worse, from a hateful desire to embarrass or try to hurt the other side, this would be corrupting of your life. Likewise, if you’re going to the opera house from an inner drive to feel superior to other people, it becomes vulgar consumption. There’s also a role for entrepreneurs to play here. If your purpose in business is to simply make as much money as you can in order to spend it on stupid stuff, your soul is not going to age very well. Aiming to produce life-enriching goods and services instead can be a conscious business strategy. Go back to the football example. In the media industry, there’s a relatively big business of commentary on sports events. Now there’s two types of rhetoric you can choose: one is to focus on winning, the other, more meaningful approach, is to focus on the beauty of the event. Another media example is the way politics is being covered. One way is to focus on ‘the horse race’: who’s up, who’s down, which party is gaining dominance over the other? But the soul-enhancing way to talk about politics is to reveal the people behind these statistics: who are they, what are their values, what is it that they’re trying to achieve?

For a virtuous life, we can ask ourselves where our desire to consume this particular good or service originates from.


Observing the creative chaos of life.Illustration made using Midjourney.Observing the creative chaos of life.
Illustration made using Midjourney.


In ‘Bettering Humanomics’, a book in which you advocate a better economic science by including the humanities, you identify ideas as the ‘dark matter of history’ – essentially ignored by historians, let alone economists. The traditional, materialistic perspective on history led us to believe that it was sheer investment, or exploitation, as in the inaccurate word ‘capitalism’, that made the modern world. On the contrary, it was technology like the steam engine or institutions like universities. It was ideas, creativity. Yet Europe, the birthplace of the Industrial Revolution, had nothing special until the 1700s. The only novel element to ignite such immense progress was that uniquely 18th-century invention, liberalism – or the gradual articulation of the idea that ‘all men are created equal’, thereby giving permission to ordinary people from Benjamin Franklin to Thomas Edison. Witnessing the enormous power of ideas, how would you try to articulate humanity’s next big leap?


I recently reviewed a book by the economist Daron Acemoglu which makes the case of protecting people against artificial intelligence, or technological development in general. I think it’s a terrible idea. I understand that there’s a widespread belief that technological progress is accelerating, but I’m not so sure that in human terms it’s all that faster than what came before. The great movement out of agriculture, the most dramatic change in the human condition in today’s rich countries, happened in the course of just a few generations. Imagine being a farmer while your children become factory workers and your grandchildren end up studying law or medicine. That’s a much bigger shock than, let’s say, a new phone. A punch card in Belgian carpet making was an early form of artificial intelligence. Going much further down in history, the bow and arrow is also an artificial intelligence machine: it’s a calculating machine substituting the human labor and thoughtfulness of throwing a little spear. Even earlier, our language is an artificial intelligence. Artificial intelligence is what humans have always done. Historically, we have panicked about many different technological breakthroughs. In the late 16th century, Queen Elizabeth I tried to stop the inventor of the knitting machine because it would displace hand knitters. In the 19th century, trains moving at 50 km per hour were believed to go so fast people would suffocate. So I think today’s panic around artificial intelligence is beyond silly. It would be dangerous for us to think that we can lay down the future with reason. If you think you can plan everything, you’re not observing your own life. Take my life as an example. I’ve been everything you can be as an economist, except a stalinist or a fascist. Seeing some of the merits of different economic ideas, I kept moving in my career. Unplanned. I also didn’t plan to change gender. I have been wanting it in some suppressed way since I was a child, but only after many years of marriage did it strike me that I could do it and should do it. So I believe liberalism, or the toleration of people trying out new things, is still a very good idea.

It would be dangerous for us to think that we can lay down the future with reason. If you think you can plan everything, you’re not observing your own life.