Earlier it was argued that two key assumptions had been introduced into contemporary public policy debates by economic fundamentalists. These were the autonomy of the market and the primacy of the market over the social. It has been argued that the complex exchange necessary to a highly specialised division of labour requires a pre-existing state of social peace. That state of peace is dependent on our evolved cultural systems with their informal norms and formal rules backed by formal and informal means of coercion and by our own sense of guilt at the breach of internalised norms. Consequently, the market is a sub-system nestled within a more encompassing societal context. Of course, these systems are not independent of each other: they interact and condition each other. Indeed, social and economic institutions cannot be distinguished clearly.[70] Nevertheless, the process of economic competition is not self-sustaining; its very existence, as well as the scope of transactions organised by it, is dependent to a significant extent on the societal ‘capsule’ within which that competition takes place.[71]

It has been noted in passing that an evolutionary account of the existence of the social order will not seem to be a satisfactory account to some theorists, who will be looking for an ahistorical account analogous to the theoretical accounts given in the physical sciences. While doubts are entertained about the value of such accounts, and no dominant theory has emerged, a brief overview has been given of the types of theories being advanced in contemporary discourse. It is concluded, however, that there is no need to adopt a uni-causal approach and that all of the accounts discussed provide some insight into the human condition. Of particular importance is the account given by Elster, who concluded that social norms could not be reduced to any single principle and, in particular, could not be reduced to rationality or any other form of optimising mechanism. This brief survey of competing theories ends with an account of the approaches of prominent development psychologists, who have attempted a more empirical approach based on the moral development of children. In particular, Kohlberg’s unitary, rationalist conception of morality as justice is discussed and discounted as not providing a convincing account. Gilligan’s alternative account of the moral development of children suggests that moral development proceeds along two different but intersecting paths that run through different modes of experience and give rise to different forms of thought: an analytical logic of justice and an ethic of care.

The advocates of social-contract theory, however, work with a model of society that is a replica of the market. Their attempt to model society’s moral infrastructure as a social contract is an attempt to reduce all social phenomena to what is itself a particular social phenomenon. It is a contract that takes the simplest of transactions as its paradigmatic example,[72] but a simple exchange transaction provides only a poor model for complex long-term contracts. By trying to generate the rules of economic life internally and by viewing them as having emerged from rational, self-maximising individuals, such theorists have effectively assumed what they set out to explain.

Such a view argues that our long-term interests require the capacity to discipline our appetites—the suppression of our animality—but this argument does no more than incorporate some of our moral values within the concept of self-interest. While it highlights the frequent presence of considerable tension between our immediate desires and our long-term interests, these long-term interests incorporate only some of our moral values. In any event, this concept of self-interest is not descriptive of the real behaviour of real individuals, amounting to no more than idealisations of individuals and of their self-interest—idealisations that fly in the face of daily experience. In any event, as argued earlier, there is no historical basis for the view that fully formed individuals preceded communities and their shared rules, roles and beliefs. Indeed, contemporary society could not exist without the complex of social and religious norms that sustain it. The development of that society—indeed, the formation of complex communities generally, along with their associated norms and institutions—has been a long process of social evolution along with the development of supporting religious and philosophical beliefs. Of course, it could be said that this process of social evolution produced what amounts to a tacit social contact, but such an assertion would be mere sophistry, devoid of content.

The competition process itself is constrained and sustained by social and legal rules. The complex division of labour in modern societies involves a complex of relationships and institutions, which cannot be reduced to transactions. Rather state, ‘law and society are entwined in mutually reinforcing virtuous connection; rather than mutually reinforcing vicious competition. Or so it is when we are in luck.’[73]

The next chapter will focus first on the history of the concept of the social contract and the associated doctrine of freedom of contract as the central paradigms in economic fundamentalism. It will also point to the growing difficulty encountered in trying to justify these theoretical ideas as the original divine basis of natural law was secularised and attempts were made to naturalise it. This leads readily into the question of how economists perceive their own enterprise and how that enterprise fits in with the Enlightenment project.