Chapter 2. The Creation of Social Order is Irreducibly a Moral Project

Table of Contents

Assumptions Underlying Contemporary Public Policy Debates
How is Social Order Possible?
Social Order is an Evolved Complex Moral Order
The Maintenance of Social Order Also Involves the Creation of Moral Institutions
The Maintenance of Social Order Involves Moral Choice and Struggle

The wise and virtuous man is at all times willing that his own private interests should be sacrificed to the public interest.

— Adam Smith[1]

Assumptions Underlying Contemporary Public Policy Debates

In the first chapter, I argued that recent public policy debates have been impoverished by the failure of policy makers—under the influence of economic fundamentalism—to appreciate the extent to which the market system depends on, and is a sub-system of, the broader social system. Famously, it was Margaret Thatcher who claimed that there was no such thing as society. She had failed to notice that, by the very same peculiar logic, there was no such thing as a nation, an economy or a market, either. Rather, civil society, the political system, the market system and the broader culture are all involved in a complex mosaic of interlocking, mutually supporting structures and activities that provide the system of relationships, the social system within which we live.[2] The interactions between these elements resemble a complex, interdependent ecological system. Importantly, the complex system of moral, social and legal constraints that underpins our social order is an essential part of that ecological system. Threats to that social order are, therefore, threats to the whole system. Because of this interdependency, I argue that a healthy, just society that promotes human flourishing and actively mediates commercial relationships is an essential prerequisite to an effective, developed market system.

In contrast, economic fundamentalism tacitly assumes that social relationships are reducible to transactions between self-interested individuals—that is, economic relationships are the fundamental social relationships. It is this assumption and the reductionist tendency in Western thought that has allowed a particular economic methodology to become the dominant methodology for the evaluation of public policy choices in our society. Implicit in this assumption is the demeaning proposition that self-interest is the fundamental motivation of human beings. Contrary to popular belief, however, Smith, the father of economics, did not share this view, as the above quotation makes quite clear. Similarly, leading positivist economist and sociologist Vilfredo Pareto (1848–1923) acknowledged that ‘real men governed by purely economic motives do not exist’.[3]

Nevertheless, the vocabulary of mainstream economics and its values now provide the dominant vocabulary and values for policy evaluation, crowding out other vocabularies and other values. Furthermore, within that economic vocabulary, ‘economic efficiency’—the shorthand description of Pareto-optimality—has become the dominant value to be served by government policy. This has been true of most recent Australian policy debates, including the Australian fair-trading debate to which I will turn in the discussion on the doctrine of freedom of contract in Chapter 9. That debate raises in a direct fashion the relationship between the economic system and the social system, and the role of the State in supporting economic activity. It provides a good example of the influence of economic ideas on a fundamental legal institution that is backed by the coercive powers of the State, and which facilitates complex and longer-term economic exchanges.