The Moral Foundation of Economic Behavior.

• Author: Otteson, James R.
• Position: Book review

The Moral Foundation of Economic Behavior

By David C. Rose

New York: Oxford University Press, 2011.

Pp. xiii, 269. $49.95 cloth.

Who is this David Rose, and where has he been? Such was my initial reaction after reading Rose's book The Moral Foundation of Economic Behavior. It is so provocative, so carefully constructed, and so potentially pathbreaking, especially for a first book, that it seems to have sprung fully formed like Athena from Zeus's head.

The book is an extended thought experiment launched by this question: "If a society's sole objective is to maximize general prosperity and it can choose its own moral beliefs, what kinds of moral beliefs would it choose?" (p. 4, emphasis in original). The author proposes a sophisticated, novel, and compelling answer to this question. It therefore deserves to be read by anyone with an interest in how to promote human prosperity.

It is not possible to sketch all of Rose's argument in this brief review, so let me instead focus on one central part of it, which is connected to an unappreciated but deep problem with respect to harm-based moral prohibitions. The problem is that in many cases an action that might cause obvious harm in one-on-one interactions and thus would be prohibited by an injunction to "do no harm" either does not cause harm or causes no perceptible harm in larger communities. Thus, if I defraud you when you and I have made an agreement, the harm I cause you is likely to be both real and apparent. When I defraud an insurance company, however--say, I have the body shop repair a ding on the passenger door even though the accident for which I am filing a report did not affect that part of the car's body--not only is there no perceptible harm to anyone, but there is a real sense in which there is no harm to anyone. The extra $500 charged to my insurance company is distributed across so many people (hundreds of thousands, perhaps even millions) or is part of such a large budget (perhaps billions or tens of billions of dollars), that it may as well have been zero. No one will notice because no one can notice. Thus, although a system of moral prohibitions based on avoidance of harm will restrain people in many, mostly small-scale cases, in many other instances it will be simply inapplicable--and these latter instances only increase as globalization increases. If, therefore, we wish to advocate a set of moral beliefs that will maximize general prosperity, it will have to be based on...