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FRATERNITY: WHY THE MARKET NEED NOT BE A MORALLY FREE ZONE*

Published online by Cambridge University Press:  01 March 2008

Luigino Bruni
Affiliation:
Università Milano-Bicocca
Robert Sugden
Affiliation:
University of East Anglia
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Abstract

This paper reappraises the idea, traceable to Adam Smith, of a fundamental distinction between market transactions and genuinely social relationships. On Smith's account, each party to a market transaction pursues his own interests, subject only to the law of contract. Using the work of Smith's contemporary Antonio Genovesi as our starting point, we reconstruct an alternative understanding of market interactions as instances of a wider class of reciprocal relationships in civil society, characterized by joint intentions for mutual assistance. We consider the implications of our arguments for current debates about whether marketed personal care services can be genuinely caring.

Type
Essay
Copyright
Copyright © Cambridge University Press 2008

What is the nature of the relationship between trading partners in a market? Does this relationship, as perceived by the partners themselves, have any social or moral content? Whatever actual perceptions may be, could there be a world in which market relationships had social and moral content, and in which markets had the efficiency and wealth-creating capacities that generations of economists have attributed to them? Or must we accept the amorality of market relationships as a price we have to pay to benefit from those capacities?

The most widely accepted answer to these questions is encapsulated in Adam Smith's Reference Smith1976 [1776]: 26–7) remark that 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. The idea is this: it is intrinsic to well-functioning markets that the relationship between trading partners is that of separate individuals, each pursuing his own interests within the constraints of the law of contract. That this is how exchange is to be understood in a market society has long been common ground between defenders of the market and its critics: the defenders have been impressed by the capacity of markets to generate socially valuable consequences from the interplay of private interests, while the critics have deplored the tendency of markets to reward the pursuit of self-interest and, as a consequence, to crowd out genuine sociality. More neutrally, Smith belongs to a long tradition in economic and social thought in which market interactions are viewed as instrumental and impersonal, and are distinguished from truly social or communal relationships. In this paper, we reconstruct an alternative understanding of market interactions, assimilating them to a wider class of reciprocal relationships in civil society, whose orientation is characterized by the eighteenth-century word fraternity.

We present our account of fraternity by comparing Smith's ideas with those of another leading figure in eighteenth-century economics, Antonio Genovesi of the University of Naples. Both men sought to understand the social forces behind the emergence and growth of commercial societies. Despite many similarities between their respective analyses, there are subtle but significant differences between their representations of the connections between sociality and the market. Market relationships are fraternal for Genovesi in a sense that they are not for Smith.

We argue that Genovesi's understanding of market relationships remains viable today. By this, we do not mean that transactions in present-day markets are always perceived as fraternal, although we believe that many transactions are perceived in this way. Rather, our claim is that a fraternal orientation to market transactions is possible and compatible with market efficiency.

We propose that fraternity in market relationships can be best translated into modern terms by using ideas from the theories of team reasoning and collective intentionality. This approach allows us to understand a crucial feature of Genovesi's account, which might otherwise seem paradoxical: that a market relationship between individuals can be perceived simultaneously as a mutually beneficial exchange and as a genuinely social interaction. We illustrate this argument and demonstrate its significance by applying our analysis to a concrete issue in current social thought and public debate – the issue of whether services of genuine care can be supplied through markets.

1. CAN MARKET RELATIONSHIPS BE GENUINELY SOCIAL?

This paper is about moral understandings of market relationships. We use the word “moral” to refer to the set of general principles which, within a given society, govern the assignment of approval and disapproval, praise and blame. Our concern is with the moral content of economic relationships between agents in a market system, as these are in fact perceived by the agents themselves, and as they could be perceived by market agents in a feasible (but perhaps not yet existing) well-ordered society.

We must stress that our interest is in market relationships, not in the normative appraisal of the market as a system of economic organization. For example, Smith's question of whether a customer can properly appeal to a tradesman's benevolence falls within our area of enquiry. The question of whether competition promotes the public good does not, except in so far as beliefs about the overall effects of a market system impact on relationships within it. Nor are we primarily concerned with individuals’ behaviour as market agents. As we shall explain, current modes of theorizing in economics predispose one to think that if there is such a thing as a moral dimension to market relationships, it must reveal itself in distinct forms of behaviour, which are “moral” by virtue of being contrary to self-interest. But fraternity as we conceive it is not essentially about behaviour. Rather, it is a particular moral orientation towards a class of relationships. We will claim that it is possible to perceive a trading relationship as fraternal without feeling altruism towards one's trading partner. This is not to say that perceptions of fraternity have no effects on behaviour; to the contrary, we will argue that fraternity in market relations does show itself in certain characteristic behaviours. But at the most fundamental level, fraternity is not a mode of behaviour, or a type of preference. It is a way of perceiving a relationship.

We must also make clear what we mean when we use terms such as “sociality” and “genuinely social relationships”. In ordinary language, “society” and correlate expressions are sometimes used to refer to all aspects of the organization of a group of inter-related human beings (or even other animals). They are also used more narrowly to refer to human relationships that are characterized by some degree of intimacy, non-instrumentality, concern for others, or concern for the group.Footnote 1 It is self-evident, but uninteresting, that market relationships are social in the broad sense. Our concern is with sociality in the narrower sense. We prefer not to use an apparently more precise term such as “other-regardingness” or “other-orientation”, because we do not want to prejudge the issue of just how sociality might be exhibited in market relationships. Whether fraternity, as we understand it, is an other-regarding attitude will turn out to be an intricate question.

Our account of fraternity contrasts with prevailing understandings of market relationships. Two aspects of this conventional understanding are particularly relevant to our argument. The first aspect, which is clearly present in Smith's account of the butcher, the brewer and the baker, is the idea that trading partners are normally indifferent to one another's interests, and that this indifference is not a matter for moral criticism: in David Gauthier's (Reference Gauthier1986: 84) phrase, a perfectly competitive market would be a “morally free zone, a zone in which the constraints of morality would have no place”. The beneficial consequences of markets – their tendency to promote the ‘wealth of nations’ – are unintended by-products of individuals’ pursuit of their private interests; they play no essential role in those individuals’ own understandings of what they are doing. Thus, market relationships are not in any real sense social. Or, saying the same thing the other way round, if there is a realm of genuine social relationships, it exists outside the market, and is characterized by forms of mutual concern that are not found in markets. Economists have generally supposed that such a realm does exist, and have thought of it as including at least some elements of family life, friendship and civic engagement; but, for the most part, they have taken this realm to be outside the scope of economics.

The second aspect of the conventional understanding is a product of developments in economics after Smith's time. It is the idea that individuals’ concern or unconcern about one another is a property of their preferences. To say that one person A has concern for another person B is to say that A prefers that B's consumption or welfare is greater rather than less, and consequently that A is willing to sacrifice some of her own welfare in order to improve B's position. Thus, mutual unconcern between trading partners – such as between the tradesman and the customer in Smith's example – is represented by the assumption that neither partner is willing to incur costs to benefit (or harm) the other. The obverse is the presumption that genuinely social relationships and genuinely moral orientations are characterized by other-regarding preferences – that is, by dispositions for self-sacrifice.

At first sight, it might seem that A's concern for B is separable from A's disposition for self-sacrifice. Cannot A desire B's good without desiring to sacrifice her own? Perhaps so, but that objection misses the point. We are discussing what can be said in the language of preferences – that is, in the language of modern economics. Preference is a comparative concept. Think of ordinary consumption goods. A question such as “How much do you prefer apricot jam?” is ill-formed: it invites the response “Prefer to what?” Rendered in intelligible form, the question has to be of the form “Do you prefer this quantity of jam to that quantity of x?”, where x is some other form of consumption. Equivalently, the question is: “Would you be willing to give up that quantity of x for this quantity of jam?” In just the same way, we cannot talk about A's preference for B's welfare, but only about A's preference for B's welfare rather than something else – or, in other words, about what A is willing to give up in order to increase B's welfare. The most natural version of this question is to ask how much of her own consumption or welfare A is willing to give up in order to secure a given increase in B's. In this sense, other-regarding preferences are necessarily self-sacrificing.

In economic theory, other-regarding motivations have most commonly been represented by the assumption of altruism – that is, a positive concern by one person about another person's consumption or welfare in general. Recently, more context-specific theories of ‘social preferences’ have been developed. For example, Fehr and Schmidt (Reference Fehr and Schmidt1999) and Bolton and Ockenfels (Reference Bolton and Ockenfels2000) have proposed that people have preferences about differences between outcomes for themselves and for others. Rabin (Reference Rabin1993) has proposed that people have preferences for benefiting those who benefit them and for harming those who harm them.Footnote 2 But it is common to all these theories that the social element of a person's preferences is revealed in her willingness to sacrifice her own interests in order to benefit or harm others.

The significance of this can be seen by looking at the theory of social preferences that seems to come closest to recognizing a morality of mutual benefit – the theory developed by Rabin. This is a form of game theory in which there is interaction between beliefs and preferences. Consider an interaction between two individuals, A and B. Each individual is modelled as choosing between actions, given his or her beliefs about which action the other will choose. Given A's beliefs about what B will do, A's menu of options can be classified in terms of their ‘material’ consequences for both A and B. If one action by A, say a 1, has worse consequences for A and better consequences for B than an alternative action a 2, then A's choosing a 1 rather than a 2 is said to be kind; choosing a 2 would be unkind. In a theory of simple altruism, A would derive utility from benefiting B, and this would provide some motivation towards kindness. Rabin's theory is more complex. In this theory, A derives positive utility from being kind to B if she expects B to be kind to her. This pattern of preference is combined with its mirror image: A derives utility from being unkind to B if she expects B to be unkind to her. This theory allows equilibria in which both individuals act contrary to self-interest, but the combined effect of their actions is beneficial to both (as when both players of a Prisoner's Dilemma choose their cooperative strategies). In such an equilibrium, the relationship between individuals, as perceived by them, might naturally be described as both social and moral. Extensionally, that relationship is one of mutual benefit. But, crucially, mutual benefit is not part of the intensional content of the relationship: the intensional content of each person's action is a sacrifice of his own interests to reward another person for sacrificing hers.

A similar structure can be found in Akerlof's (Reference Akerlof1982) account of how some labour contracts involve “partial gift exchange”. Akerlof's idea is that workers can come to have “sentiment for” the firm that employs them, and so “acquire utility for an exchange of ‘gifts’ with the firm” (543–4). If the employer pays more than the minimum wage necessary to attract the relevant type of labour, workers perceive the additional payment as a gift; in return, they are willing to work harder than self-interest would dictate, given the limited ability of the employer to monitor individual effort. Considered as a whole, this exchange benefits both parties to the labour contract, but self-sacrifice still plays an essential role. Each worker sacrifices his own interests in making his gift to the employer: his motivation is to reciprocate the employer's gift. The employer (who moves first) gives with the expectation of a return, but that expectation depends on the worker's willingness to reciprocate.

Intensional content becomes significant when one considers, not social dilemmas, but normal market transactions without externalities – such as those between Smith's baker and his customers. In such a case, each party benefits from his own participation in the transaction. In Rabin's sense, the baker is not being kind to the customer when he chooses to sell her his bread rather than not, since he makes no sacrifice by doing so. Similarly, the customer is not being kind to the baker by choosing to buy. On Rabin's analysis, then, reciprocity can play no part in the relationship between the baker and the customer: we are back with the idea that, in its ideal form, the market is a morally free zone. Or, to use Akerlof's conceptual framework, no gifts are exchanged in this kind of transaction. Putting this the other way round: Rabin's and Akerlof's theories show how morality, understood in terms of self-sacrifice, can overcome problems of market failure. Thus, they allow us to investigate the effects of certain kinds of morality on behaviour in imperfect markets. But, just as in Smith's account, the relationship between trading partners in perfect markets is treated as one of mutual disinterest and moral neutrality.

The distinction between extensional and intensional mutual benefit is also significant for the analysis of cases in which market transactions depend on trust. Consider a setting in which contracts are not effectively enforceable, either by law or by reputation, and then consider a potential transaction which requires one party to perform her obligation before the other (for example: A delivers goods to B, then B pays A). How do we explain the fact that such transactions sometimes take place? In theories of social preferences, B's conforming to the contract is represented as a sacrifice of his material interests in order to achieve greater equality of payoffs between him and A, or to reward A for her ‘kindness’ in performing her part of the transaction. Even though the transaction as a whole is mutually beneficial, B's supposed motivation for performing his part in it is self-sacrificing. Thus, the social preferences approach makes a categorical distinction between behaviour in enforceable contracts and behaviour in non-enforceable ones: the former is motivated by self-interest, the latter by some kind of social preference.

To sum up, the conventional understanding of market relationships can be expressed by two oppositions: market/social and self-regarding/self-sacrificing. These oppositions are not perfectly aligned. There are economic analyses of markets (such as Akerlof's) in which agents act on social preferences, and there are reductionist theories which explain apparently intimate social relationships in terms of self-interest. But the conceptual framework of modern economics does not provide a way of conceiving of a relationship between individuals as both a mutually beneficial exchange, in which neither partner makes a sacrifice for the benefit of the other, and a genuinely social interaction, carrying moral value by virtue of this social content.

The lack of such a conception impoverishes our understanding of both market and non-market relationships. Although market transactions are mutually beneficial for the parties involved, we are unable to represent this form of reciprocity as part of the agents’ own understanding of their relationship. The other side of the coin is that we cannot represent non-market relationships, such as those of family and friendship, as mutually beneficial exchanges without seeming to reduce them to ‘mere’ contracts, not so much explaining their moral content as explaining it away, exposing it as an illusion. Our paper is an attempt to fill this gap.

2. SMITH, GENOVESI AND THE NATURE OF COMMERCIAL SOCIETY

Smith's presentation of the market/social opposition has had enormous influence on subsequent economic thought: we might say that generations of economists have seen the market through Smith's eyes. Our aim is to offer a different way of seeing market relationships. The inspiration for this alternative perspective has come from the work of another eighteenth-century economist, Antonio Genovesi. In this section, we examine the similarities and differences between Smith's and Genovesi's understandings of market relationships.

We hope our readers will not think this an optional excursion into the history of economic thought. Coming to see some familiar feature of the social world in a new way is not just an analytical exercise: it requires imagination and intuition, and these are not easy to communicate. That Smith's metaphors and illustrations (the invisible hand; the butcher, the brewer and the baker) are so memorable is evidence of their power to communicate a pre-analytical sense of how markets work. We have found a corresponding suggestiveness in Genovesi's work. That Smith and Genovesi were contemporaries is particularly useful, since it allows us to consider an alternative to Smith's perspective without the risk of anachronism.

Smith and Genovesi have much in common. Both were philosopher-economists, writing in the third quarter of the eighteenth century, addressing common intellectual problems. Each was trying to understand the forces which, in this period, were generating the rapid growth of commercial societies. Each was trying to come to terms with the moral implications of those forces in a climate of unease about the decay of traditional social bonds.

The two writers’ responses are in many respects similar. In particular, both recognize the capacity of a commercial society to create wealth by allowing individuals to pursue their private interests within the constraints of laws protecting property and natural rights. In the discourse of the period, much of the unease about the growth of commerce is expressed in relation to the concept of “luxury”. There is a perception that old notions of rank and distinction, based on family lineage, honour and obligation, are being supplanted by new norms of conspicuous consumption and display. Both Smith and Genovesi explain what they see as the mechanisms by which the pursuit of wealth and luxury, even if not admirable in itself, produces real benefit as an unintended by-product.

Smith's invocation of the “invisible hand” is now part of our cultural heritage. In his Theory of Moral Sentiments (Reference Smith1976 [1759]), this metaphor appears in a discussion of agricultural improvement. According to Smith, the rich and ambitious are motivated only by “vain and insatiable desires” and “natural selfishness and rapacity”, but their pursuit of wealth leads them to increase the productivity of their land. Since the main products of agriculture are necessities of life, the demand for which does not vary greatly with income, agricultural improvements tend to benefit the poor. Thus, the rich “are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants” (183–5). Writing at around the same time as Smith, Genovesi offers a remarkably similar analysis. In his Delle Lezioni di Commercio o sia di Economia Civile (Lectures on Commerce, or on Civil Economy; Reference Genovesi2005 [1765–67]),Footnote 3 he argues that the pursuit of private wealth generates public benefits:

[T]he profit and comfort that people imperfectly foresee, and that they may actually reap, gives them the desire to work, trade and enrich themselves. And notwithstanding that when people try to enrich themselves they aim only at their self-interest, it is no less true than in enriching themselves they promote the public advantage by enriching the whole nation. (530)

As Smith does in his account of the invisible hand, Genovesi (418–19) claims that the demand for luxury goods induces a redistribution of wealth in the direction of equality. Thus, the pursuit of wealth and luxury by the few increases the welfare of the many.

If we look at commercial relationships from outside – from the viewpoint of a social theorist or a ruler – there is a clear message to be read in the work of both Smith and Genovesi. It is that we need to understand how the economic system works, and not confuse intentions and consequences. If we want to increase national wealth and to promote a free, peaceful and orderly form of society, we must make use of the motive power of self-love and the desire for conspicuous consumption.

But the moral problem of coming to terms with the growth of commercial society is not just a problem for social theorists and politicians; it is also a problem for private individuals as actors in the emerging market system. In the ordinary business of life, individuals seek to interpret and evaluate their own and other people's actions. From this viewpoint, invisible-hand arguments are liable to seem inadequate. If one has been taught to regard other-regarding motivations as morally praiseworthy, or to regard the desire to be envied for one's possessions as sinful, it does not seem enough to be told that private vices can generate public benefits. Vices are still vices, one can think, even if it is politic for rulers to encourage them. A stable commercial society needs an internal understanding of market relations – an understanding that can be held by the parties to those relations – and this has to cohere with prevailing ideas about how people should conduct themselves in the rest of their lives. Both Smith and Genovesi are concerned with the problem of integrating commercial motivations into a larger moral system. It is here that their understandings of market relationships diverge.

Smith is generally (and rightly) recognized as a proponent of the idea that the principal motivation for market behaviour is self-love. However, this is not to say that, in Smith's account, market relationships have no moral significance. For Smith, the emergence and growth of commercial society is a form of moral progress, valuable not only because it creates wealth, but also because of the nature of market relationships. Consider the famous passage from The Wealth of Nations that we referred to in our opening paragraph:

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. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chuses to depend chiefly upon the benevolence of his fellow-citizens. (1976 [1776]: 26–7)

The point of the passage becomes clear in the final (and less-often quoted) sentence. Smith is telling us that the market allows us to satisfy our economic needs without dependency, with dignity and self-respect. The market gives each of us the freedom to act on his own interests, subject to the constraints imposed on him by other people's acting on theirs. Market relations are free horizontal relations between equals: the tradesman and his customer are symmetrically positioned with respect to a mutually beneficial transaction, in contrast to the asymmetric relationship of inferior and superior between the beggar and the person from whom he begs. By virtue of this property, the market supports the virtues of independence and moral equality: liberté and égalité.

That market relations are characterized by impersonality and mutual unconcern is not a matter for regret: it is intrinsic to their role in promoting independence. In a pre-commercial society, Smith argues, a wealthy man has little choice but to spend most of his income on servants, each of whom is at his personal command. In a commercial society, in contrast, the equivalent income will be spent on an array of luxury goods, produced by the combined work of many different tradesmen. In this way, the rich man contributes to the maintenance of a large number of people, none of whom is dependent on him (419–20).

For Smith, the fact that each person in a commercial society trades with so many others implies that market relations cannot, in general, be construed in terms of friendship. Thus, in the passage which precedes the example of getting one's dinner, Smith notes that, when someone wants to induce others to act according to his own inclinations and has no other means at his disposal, he may try “to obtain their good will”. But:

He has not time, however, to do this upon every occasion. In civilized society he stands at all times in need of the cooperation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons. (Reference Smith1976 [1776]: 26)

In Smith's account, friendship and exchange are distinct kinds of relationship between people. By freeing us from dependency, commercial society creates a space in which friendship, construed as an intimate and chosen relationship between equals, can exist. In this sense, the market allows us to pursue and express sociality; but it is not itself a locus of genuine sociality.

In The Theory of Moral Sentiments, Smith provides a rich analysis of sociality, based on the hypothesis that benevolence and a capacity for fellow-feeling are fundamental properties of human nature. Crucially, however, he does not see these aspects of human psychology as fundamental to the workings of the market:

Society may subsist among different men, as among different merchants, from a sense of its utility, without any mutual love or affection . . . Beneficence, therefore, is less essential to the existence of society than justice. Society may subsist, though not in the most comfortable state, without beneficence; but the prevalence of injustice must utterly destroy it. (Reference Smith1976 [1759]: 86)

For the market to work, its participants must respect the principles of justice (whether from a sense of justice, a concern for reputation, or a fear of legal punishment: Smith recognizes the importance of each of these mechanisms). But the impersonal principles of justice are quite different from those governing intimate sociality.

Smith (Reference Smith1976 [1759]: 78–91, 152–3, 174–8) repeatedly emphasizes what, for him, is the fundamental distinction between justice on the one hand and beneficence and humanity on the other. Significantly, when he describes the “social passions” (listed as “generosity, humanity, kindness, compassion, mutual friendship and esteem, all the social and benevolent affections”), his principal examples are of the family. To illustrate the social passions, he draws a rose-tinted picture of what, for him, is an ideal family, characterized by “cheerfulness, harmony and contentment”, in contrast to a family in which the social virtues are absent (38–40). Significantly, too, Smith's distinction between justice and humanity is gendered: humanity, we are told, is “the gentle virtue”, “the soft virtue” (153), “the virtue of a woman” (190); it “consists merely in [an] exquisite fellow-feeling” which, because of its spontaneity, requires no self-command (190–1). In contrast, self-command is identified with “manhood and firmness”, while the “useless outcries” of men who fail to show this virtue are “womanish lamentations” (244). Recall that humanity is what we do not appeal to when we go out to buy our dinners. The suggestion is that the social passions are exercised in the softer and (we seem to be being told) optional domains of family and intimate friendship, and that these are separate from the harsher and more essential worlds of politics and economics.Footnote 4

The market/social opposition is deeply embedded in Smith's account of the moral content of market relationships. In Genovesi's account, in contrast, there is no such opposition. Like Smith, Genovesi sees the development of commercial society as a form of moral progress. But that progress does not involve the development of separate domains of commerce and sociality: for Genovesi, there is no fundamental distinction between market relationships and those of other domains of civil society. This conception of economics is expressed in the name Genovesi tries to give to the discipline: civil economy.

In place of Smith's (Reference Smith1976 [1776]: 26) assumption of a peculiarly human propensity “to truck, barter and exchange one thing for another”, Genovesi grounds his analysis of markets on an assumed human inclination towards mutual assistance. Genovesi claims that a sense of reciprocity is a fundamental property of human nature, prior to rational reflection. Arguing that the “primitive rights of man” are founded on “primitive properties of human nature”, he gives mutual assistance the status of natural law, in the form of “a reciprocal right to assistance and consequently a reciprocal obligation to assist each other in our needs” (Reference Genovesi2005 [1765–67]: 282–4). The final paragraph of the Lezioni sums up what Genovesi hopes his students will have learned from his lectures:

Here is the idea of the present work. If we fix our eyes at such beautiful and useful truths, we will study not for stupid vanity, nor for the pride of appearing superior to ignorant people, or for the wickedness of cheating, but to go along with the law of the moderator of the world, which commands us to do our best to be useful to one another. (890)

Notice the difference between exchange and mutual assistance. In an act of exchange, each party benefits from a transaction which is possible only because it benefits the other. Thus, exchange is mutually beneficial or mutually advantageous: each acts in a way that is to the benefit or advantage of the other. Still, neither party need have any concern for the other's interests. Mutual assistance implies more than this. The concept of assistance implies an intention on the part of the person who assists to benefit the person who is assisted. Assistance is intentionally directed towards helping another person in her needs, towards being useful to others. If assistance is mutual, these intentions are reciprocal: each stands ready to help the others in the expectation that they stand ready to help her.

This element of mutual expectation is crucial for Genovesi's analysis of the market, and of civil society more generally. In a chapter entitled “On Public Trust”, he repeatedly links the concepts of reciprocal confidence (reciproca confidenza), public trust (fede pubblica), mutual assistance (scambievoli soccorsi) and friendship (amicizia), arguing that these are essential preconditions for civil and commercial society (751–85). Genovesi's concept of “confidence” has a strongly moral content: each citizen has to be confident of the “probity”, “justice” and “virtue” of the others, virtue being construed to include not only the principles of justice that are built into commercial law, but also a general disposition to be useful to others. The following passage is typical:

Where trust is evaluated for nothing, with respect to reciprocal confidence among citizens, the certainty of contracts, the power of laws and the honesty and integrity of magistrates, the first two foundations of civil society and civil life, that is justice and humanity, cannot be found . . . Nor can there be humanity, since without reciprocal confidence, each person regards the other with suspicion and as an enemy; and could such a society, being so little connected that it seems to collapse at the first knock, like a heap of sand, inspire in the souls of individuals that friendship so necessary in order to enjoy humanity? And so the strength of contracts, of trade, of circulation, that flow that animates industry and makes peoples wealthy, will decay. Therefore one can say that trust in political bodies is what in natural bodies is the force of cohesion and reciprocal attraction, essential for a firm and durable mass. (751–2)

The essential idea is that reciprocity is the bond of society, and that although reciprocity takes various forms, these are all mutually reinforcing. In his analysis of the market, Genovesi puts great emphasis on the importance of public trust. In order for a commercial society to function, he argues, there has to be a general sense of confidence in everyone's intention to honour contracts and to eschew fraud, and in the effectiveness and integrity of the legal system. Thus, if a nation is to develop economically, a first priority for government is to cultivate public trust (753–4). Much more than Smith's, Genovesi's economics is grounded in an analysis of social capital.Footnote 5 Crucially, Genovesi does not treat these commercial forms of trust as independent of those dispositions towards others that are regarded as virtues in more private areas of social life, particularly friendship.

Genovesi uses the terms “friendship” and “trust” almost interchangeably, as descriptions of the force by which society is bonded together. For example, in the passage quoted above, he says that trust in political bodies is the analogue of the force of attraction in physical bodies. A few paragraphs later, he says: “reciprocal friendship is in the political body what the mutual attraction of elements is in natural bodies” (762–3). Clearly, he cannot be using the term “friendship” in the same sense that Smith is doing when the latter says that a whole lifetime can produce only a few friends. For Genovesi, the market relations of a civil society are characterized by friendship; but we cannot expect to find Smith's “exquisite fellow-feeling” between a shopkeeper and his customers. Genovesi is using “friendship” in a sense better captured by another word commonly used by Enlightenment writers: fraternity. Fraternity is universalistic and open. Two individuals have fraternal relations by virtue of their common membership of some group, typically a group identified by a common interest or avocation, such as a profession, political society, religious community or social class (the paradigm case being that of brothers, who are members of a common family). Fraternity does not have the connotations of intimacy that Smith attributes to friendship, but it does has affective content: fraternal relations are characterized by friendliness, goodwill, mutual respect and the kind of social ease that is engendered by mutual recognition of equality. It is not a purely cognitive concept, as “trust” is in modern game theory.

There is surely no doubt that Genovesi's understanding of market relations is different from Smith's, and correspondingly different from the understanding that is now generally accepted in economics. But is it credible? In particular, is it credible now? Or should we read it only as an episode in the history of economic thought, as a failed attempt to incorporate the realities of commercial society into a pre-modern moral framework? We will try to show that an account of market relationships as mutual assistance can still be coherent and credible. We must make clear that we are not claiming that the whole of the analysis we present is implicit in Genovesi's writings. Genovesi is not a systematic theorist, even in the eighteenth-century terms by which Smith might qualify for this description, and we cannot claim to reconstruct a theoretical structure that already exists in his work. Rather, we offer an analysis which captures some of the spirit of Genovesi's ideas. This analysis allows market transactions to be understood as fraternal relationships of mutual assistance without denying the essential role of private incentives in the workings of an efficient market.

3. MARKET RELATIONSHIPS AS MUTUAL ASSISTANCE: WE-REASONING BY TRADING PARTNERS

It is fundamental to market exchange, as represented in economic theory, that each transaction, considered in isolation, provides benefits to everyone who is party to it. This follows immediately from the assumption that transactions are voluntary, combined with the presumption that each individual acts in his own interests. This idea of mutual benefit is built into the concept of “gains from trade”, arguably the most fundamental idea in economics. In this sense, market transactions clearly are combinations of acts in which the parties are being useful to one another. If there is a difference between Genovesi's account of the market and Smith's, the difference is not about whether market relationships are in fact mutually beneficial: it is common ground that they are. What is at issue, we suggest, is the way in which this fact enters into individuals’ own understandings of the market relationships in which they participate.

Consider again Smith's account of how we get bread for our dinner. Smith says that we (the would-be buyers of bread) address ourselves to the baker's self-love, talking to him of the advantages he will gain from our business. Clearly, this requires that we understand that the transaction we are proposing will benefit the baker as well as ourselves. The suggestion is that, in making a business proposal to the baker, we are well advised to think about what would be advantageous to him as well as about what would be advantageous to us: there is no point in making a proposal to someone who has no interest in accepting it. Smith advises us not to bother telling the baker about the advantages we will get from the bread; but presumably he would advise the baker, when doing business with us, to think about those advantages. Thus, Smith's account of the market includes the idea that, between trading partners, there is mutual understanding of the mutual benefits of exchange. However, Smith seems to be treating this mutual understanding as something like common knowledge in game theory: it provides the background knowledge against which individuals strategically pursue their separate interests. There is no suggestion that the parties are jointly intending a combination of mutually beneficial actions. Once we and the baker have struck a deal, there is no further need for us to consider our interaction as mutually beneficial. Each of us can now pursue his own interests, subject to the constraints set by the contract that has been made. To the extent that each of us is motivated to respect those constraints, the motivation comes from a sense of justice or a concern for reputation, not from a desire to be useful to the other.

Genovesi's approach seems to differ by requiring that the parties to a market transaction have a more internalized sense of its mutually beneficial nature. Somehow, each party's understanding of his own part in the transaction must include the idea of the transaction as mutually beneficial. We suggest that the best way to formulate this idea is in terms of the concepts of team agency and collective intentionality.

The theory of team agency (or “team reasoning” or “we-reasoning”) was first developed in philosophy by Hodgson (Reference Hodgson1967) and Regan (Reference Regan1980) as a way of analysing some aspects of rule utilitarianism. Later contributions were made by Gilbert (Reference Gilbert1989), Hurley (Reference Hurley1989) and Sugden (Reference Sugden1993); Bacharach (Reference Bacharach, Gold and Sugden2006) presents a general, game-theoretic analysis. The essential idea is that, in relation to some problem of cooperation or coordination, each member of a group or “team” of individuals conceives of herself as acting as a member of the team, performing her part of a collective action by the team. Crucially, the individual does not treat other members’ actions as parametric and then choose her own action so as to maximize the value of some utility function – not even a utility function that represents the good of the team. Rather, she performs her part of a profile of actions which, if acted on by all members, promotes the relevant objective of the team. In this sense, each individual's intention is an intention to participate with the others in bringing about a collective action. There is a large literature in philosophy which analyses collective intentionality (e.g. Tuomela and Miller, Reference Tuomela and Miller1988; Searle, Reference Searle, Cohen, Morgan and Pollack1990; Bratman, Reference Bratman1993). Following Gold and Sugden (Reference Gold and Sugden2007), we suggest that collective intentions are best understood as intentions that have been generated by team reasoning.

One of the core properties of theories of team reasoning is that they attribute agency to groups of people. In particular, such theories allow questions of the form “What should we do?”, and allow corresponding recommendations of the form “You (plural) should do A”, where A is a profile of actions, one action Ai for each group member i. The latter form of collective recommendation is construed as meaning something more than “Each of you severally should do his action Ai”. This “something more” is the idea (expressed in slightly different ways in different theories) that when each i performs Ai, he construes that action as a part of A, and acts in the confidence that the others will perform their components of A too.Footnote 6

Notice that the law of the moderator of the world, as interpreted by Genovesi, has the structure of a collective recommendation. It commands us to do our best to be useful to one another. This, we suggest, would not be properly translated as an array of separate commands, “Do your best to be useful to other people”, addressed to individuals severally. That translation would remove the sense of collective intentionality and reciprocity that Genovesi's formulation expresses. The theory of team reasoning allows us to understand the reciprocal nature of collective recommendations.

Still, there might seem to be a fatal objection to the idea that market agents act with the intention of being useful to one another. It is true that, in a market economy, individuals tend to act in ways that in fact are useful to others. But the mechanism that brings about this coordination of actions is the price system: each individual is induced to act in the ways that are most useful to others, as measured by those other people's willingness to pay for the goods and services they consume. These inducements work by engaging with each individual's private interests. And this is an essential part of the mechanism since, as Friedrich Hayek (Reference Hayek1948) has explained, it allows the “division of knowledge”: in a large economy, it is impossible for any individual to have all the information he would need in order to compute directly the value of his activities to other people. That value has to be transmitted through price signals. For this reason, it seems, the desire to be useful to others cannot substitute for the desire to promote one's own interests. Consider an example from the Wealth of Nations. Smith (Reference Smith1976 [1776]: 121–2) notes that the wages of coal-miners are higher than those of similarly skilled workers in other trades, and explains that trades with less desirable working conditions must offer correspondingly higher wages in compensation. In the absence of differential incentives, it would be naïve to expect that the desire to be useful to others would direct workers in eighteenth-century Newcastle to choose coal-mining rather than, say, carpentry in sufficient numbers to match the usefulness of coal to people in London.

The following conclusion seems inescapable: any account of the moral content of market relations must be consistent with the principle that individuals choose their economic activities in response to private incentives. How then can the idea of market relationships as mutual assistance be reconciled with that principle?

Our suggestion is that a market contract can be understood as constituting the contracting parties as a collective agent with respect to whatever joint enterprise is the subject of the contract. On this view, the contract commits each party to play her part in bringing about a collective goal. That goal is the joint benefit of the parties, within the specific confines of the relevant transaction. Each party, in fulfilling her own side of the bargain, acts with the intention of participating in a combination of actions directed at the benefit of them all. Thus, when the would-be buyer of bread addresses the baker, the content of her proposal is something like this: “Here is a plan for a joint enterprise which can benefit us both: you help me by satisfying my desire for bread, I help you by satisfying your desire for money. Let's act together on this plan.” If an agreement is made, the customer has the intention that the baker should benefit from the transaction, and vice versa. Thus, each has the conscious intention of being useful to the other; mutual benefit is what the transaction is about, not just a precondition for agreement to be possible. This is our rendering of Genovesi's concept of mutual assistance.

It should now be clear why, at the beginning of this paper, we resisted identifying “genuinely social” with “other-oriented” or “other-regarding”. If the baker and the customer perceive their relationship as mutual assistance in Genovesi's sense, the orientation of each of them to that relationship is neither self-regarding (taking the viewpoint of “I”) nor other-regarding (taking the viewpoint of “you”). Rather, each takes the viewpoint of “we”. This, one might say, is a fraternal orientation. There need be no self-sacrifice on either side – no “kindness” in Rabin's sense, no “gift-giving” in Akerlof's – and yet the relationship is social in a way that Smith's understanding of the contract is not.

Notice that, in this account, collective agency comes into existence in making a contract; it does not provide the motivation for the contract. In choosing which contracts to make, each individual is free to consult her own interests. (The customer doesn't go to the baker's shop with a desire to benefit the baker. It is only when the contract is made that she becomes committed to pursuing a joint goal.) Thus, the analysis of exchange as mutual advantage is compatible with a recognition of the role of market signals.

So what difference does collective agency make? Recall that our primary concern is not with behaviour in market relationships, but with perceptions of those relationships. Given this perspective, the first question to ask is what difference collective agency makes to people's subjective experience of market relationships.

Collective agency, we suggest, has implications for the affective tone of relationships. If the parties to an exchange perceive themselves as acting together in pursuit of a common goal, they will be conscious of what Smith (Reference Smith1976 [1759]: 13–23) calls correspondence of sentiments – joint awareness of shared affective responses to common cues. It seems to be a fact of psychology that such correspondences are pleasurable in their own right and that, by association of ideas, they tend to support other forms of inter-personal sympathy.Footnote 7 Thus, market relationships are more likely to be associated with feelings of friendliness and goodwill if they are perceived in terms of intentions for joint benefit rather than in terms of the separate and self-interested intentions of the individual participants. This conclusion allows an interpretation of Genovesi's conception of market relationships as fraternal.

Some readers of earlier versions of this paper have doubted whether market relationships can be fraternal unless they take place against a background of economic equality. (At this stage, our concern is with inequality of income and wealth, not inequality of market power or of information: we will discuss these other forms of inequality later.) Take the case of the baker and the customer, and suppose that the market for bread is reasonably competitive. Can the relationship of buyer and seller be fraternal if the baker is struggling to make ends meet, while the customer is a hugely rich person who just happens to like the baker's bread? Or, conversely, if the baker's products are so popular that he is hugely rich, while the customer is poor? In thinking about such examples, it is important to remember again that our concern is with the moral and affective attributes of market relationships, not with the normative appraisal of the market as a whole. What is at issue is whether individuals with very different levels of wealth can perceive their economic interactions as mutual assistance, intentionally pursuing joint benefit on terms of friendliness and goodwill. We suggest that this is possible. No doubt such fraternal sentiments are more easily generated, the more similar the relevant individuals are in terms of wealth. But it seems equally true that, other things being equal, fraternity is easier for individuals who are similar in age, education, social class or cultural background. Still, if civil society is to be fraternal, its members must be disposed to be friendly with people who are different from themselves in all sorts of ways – including how rich they are.

A related doubt is whether fraternity is possible when one or more of the parties to a market relationship is a business corporation. Modernizing Smith's illustrations of trade, suppose Joe is as a check-out assistant at a supermarket owned by a large firm. As an employee, he is in a market relationship with that firm. In personal terms, the firm's role as his employer is enacted by a supervisor – another employee of the firm. In his dealings with the customers, Joe enacts part of the firm's role as seller of consumer goods. What does mutual assistance mean in these contexts? In the first case, it means that Joe perceives his work as his contribution to a relationship with the firm, with the joint intention that he and the firm should be useful to one another. In directing Joe's work, the supervisor (playing her part in her own relationship of mutual assistance with the firm) takes on the firm's intention with respect to Joe. Thus, Joe and the supervisor perceive themselves as acting together with the joint intention of being useful to the firm and to one another. In the second case, Joe's relation to a customer is analogous with the supervisor's relation to Joe. The firm and the customer have the joint intention to be useful to one another; in his work at the check-out, Joe takes on the firm's intention with respect to the customer. We suggest that this network of intentions for joint benefit makes it easier for Joe to interact with the supervisor and with the customers on terms of fraternity.

So far, we have been concerned with the affective tone of market relationships. We now consider whether collective agency constrains the behaviour of individuals within those relationships. The most direct test case is one we discussed in Section 1, in which one party to a contract (A) performs before the other (B), and the contract is not subject to effective enforcement by law or reputation. In this case, individual self-interest provides no reason or motivation for B to honour the contract, even if A has already performed her part of it. In contrast, if a contract constitutes the two parties as a collective agent, each party thereby forms an intention to pursue joint benefit; in performing his part of the contract after A has performed hers, B acts on this intention.

In the case of an explicit contract, the idea that each party has a moral as well as legal obligation to perform is implied by Smith's analysis of market relationships, just as it is by Genovesi's, although for Smith this obligation is grounded in justice and not in collective agency. But what about opportunistic pursuit of self-interest in cases that are not covered by the letter of a contract? For example, consider a case of asymmetric information. Suppose Alice is the owner-manager of a hardware shop. Bill comes into the shop as a potential customer, asking to buy a certain tool. Without actually asking for advice, he describes the job he is doing. Alice knows that the tool Bill wants to buy will be useless for that job, but nothing she stocks would be any good either. Should she tell Bill what she knows, thus losing potential profit, or may she treat this case under the rubric of caveat emptor? Of course, even if the market is a morally free zone, governed only by self-interest and the law of contract, a retailer may recognize the value of a reputation for giving good advice about the products she sells. But we can ask whether, independently of such far-sighted self-interest, Alice has an obligation to give unsolicited advice to Bill. In particular, does she have that obligation as a seller? And if so, what is the source of that obligation?

An analysis of market relationships as mutual assistance provides a framework for thinking about such questions. According to that analysis, a market contract between Alice and Bill constitutes those two individuals as a collective agent with the intention of joint benefit within a certain domain. Thus, if Alice is to be sincere in accepting the terms of the contract, she has to be able to construe her part of the transaction as contributing to the achievement of an intention that is jointly hers and Bill's. It is at least questionable whether she can reasonably construe things this way while knowingly taking advantage of Bill's ignorance.

Just how far collective intentionality constrains behaviour in market relationships depends on how broadly the corresponding joint intentions are interpreted. At one extreme, one might say that the intention is only that each party benefits, according to his or her own subjective preferences and beliefs at the moment of sale. That does not take us beyond caveat emptor. At the opposite extreme, one might assert that the trading partners must define mutual benefit in terms of a common conception of human well-being which they both endorse. Then a teetotal owner of a hardware shop might have problems selling a screwdriver to a customer who is making a wine-rack. For our purposes, it is sufficient to recognize that, if market relationships are understood as mutual assistance, trading partners can incur responsibilities to one another that go beyond the letter of their contract.

A similar analysis applies to opportunism in trading relationships that are extended in time. For example, suppose Annie is a builder who has accepted a contract to build an extension to Bob's house, to a specified plan. After the work has begun, Bob decides that he would very much like a small change in the plan, which would not add anything to the building costs. At this stage, Annie is in a monopoly position. She might exploit this position by refusing to work to the changed plan unless Bob makes a large additional payment. But if the original contract is construed in terms of a collective intention to achieve joint benefit, it seems natural to say that Annie's opportunism is inconsistent with that intention.Footnote 8

Notice that if market relationships are understood as mutual assistance, there is motivational continuity between, on the one hand, action in compliance with the letter of an enforceable contract and, on the other, action which keeps to the spirit of a contract by doing more than is strictly required. On this view, practices of trust are expressions of the same motivational orientation that underlies market exchange in general. In contrast, as we explained in Section 1, theories of social preference draw a sharp distinction between the two cases. That requires trust to be seen as expressing a self-sacrificing motivation that has no role in ordinary market relationships.

The foregoing analysis of behaviour within contractual relationships prompts the question of how individuals construe the process of bargaining which precedes the making of a contract. At this stage, potential contracting parties can haggle over the division of the gains from trade that will issue from their contract, if it is made. Does Genovesi's approach legitimate each party's pursuit of self-interest at this stage?

As a starting point, it is important to recognize that the pursuit of self-interest in the division of gains from trade is not an essential part of the mechanism by which markets coordinate economic activity. What is essential for the efficiency properties of markets is the realization of gains from trade, however they are divided. One way of dramatizing the point we want to make is to imagine that you can choose a maxim of behaviour which will then be followed by every person in some economy. Suppose you want to induce the efficiency properties of a competitive market. Your maxim will not have this effect unless it instructs people to be responsive to market incentives (remember Smith's coal-miners). But what ultimately matters is that it instructs people jointly to realize gains from trade. The realization of gains from trade does not require that each individual tries to extract for himself the largest possible share of the gains from trade in each transaction. In this sense, Genovesi's maxim, “Do your best to be useful to one another”, suffices.

If you were in a position to address people collectively, you might consider going further. Perhaps the following would be good advice: “When you see an opportunity to realize gains from trade, don't spend your energies haggling over how to divide them. Look for the most obviously fair or conventional or salient division, settle on that, and concentrate on the creation of mutual benefit”. Notice that this recommendation is addressed to potential trading partners jointly. It tells each person to be disposed to settle on fair, conventional or salient divisions when dealing with other people who reciprocate that disposition. People who act on this advice when dealing with one another will economize on bargaining costs, and their attempts to realize gains from trade will be less likely to end in bargaining deadlocks. Collectively, they will all tend to benefit from their all following this advice.

But, even if this is good advice to potential trading partners collectively, is it also good advice to them individually? That is at least possible. A person who follows this recommendation will sometimes end up with a smaller share of the gains from trade than he could have had by more robust bargaining. But, in recompense, he will spend less time and energy in haggling, and fewer opportunities for achieving gains from trade will be lost though deadlock.Footnote 9 And, as we now explain, there is a further source of benefit from not always using one's bargaining power to the limit.

Genovesi's approach requires that a proposal for trade made by one party (say, a proposal from the would-be buyer of bread to the baker) is presented as a proposal for a joint enterprise in which each party is useful to the other. That requires that the proposal gives each party at least some strictly positive share of the gains from trade. But that minimal condition may not be sufficient to ensure that, if the proposal is accepted, the resulting relationship will be perceived as mutual assistance. Suppose it is common knowledge that, if pressed, the baker would be just willing to accept £0.50 for the bread, while the customer would be just willing to pay £2.50. Suppose that (as in an ultimatum game) the customer is able to precommit to a take-it-or-leave it offer. If she acts on self-interest and expects the baker to do so too, she might offer £0.51 (ensuring that there is some incentive for him to accept). If she uses the Smithian language of mutual disinterest, she can make this offer in good faith, pointing out that it is in the baker's interest to accept and that, since he has neither positive nor negative concern for her, what she gains from the transaction is of no interest to him. But can she, in good faith, present the exchange of the bread for £0.51 as a joint enterprise whose purpose is to benefit both of them? That is much more questionable.

Another way of thinking about this issue is to ask whether, if one party has extracted almost all the expected gains from trade at the contract-making stage, she can expect the other party not to be opportunistic if the chance arises later. Take the case of Annie and Bob, in which Annie finds herself in a position to make an opportunistic gain at Bob's expense. We have argued that if Annie perceives their relationship as mutual assistance, she may choose not to exploit this advantage. But would she have that perception, and (if she did) would it be salient enough to overcome the temptation to be opportunistic, if Bob had driven the hardest possible bargain at the outset, leaving her almost indifferent between trading and not trading?

These examples suggest that, if a market relationship is to be perceived as mutual assistance, the distribution of gains from trade must not deviate too far from whatever standards of fairness are recognized by the parties concerned. Arguably, this implies that transactions whose terms reflect major asymmetries of market power are unlikely to be understood as mutual assistance. If that is right, it will not always be in the self-interest of economic agents to take full advantage of their market power. If there is a danger of opportunism within a contract, and if the perception of mutual assistance tends to counter opportunism, it may pay one party to take a smaller share of the (apparent) gains from trade than she has the power to extract.

We are now in a position to understand the combination of morality and prudence in Genovesi's concluding advice to his students in the Lezioni (quoted in Section 2 above). The students have completed a course of instruction in how a commercial society works. The fundamental lesson to be learned, he tells them, is that we should do our best to be useful to one another. We take him to mean this: A commercial society is a network of relationships of mutual advantage. By participating in this network, each person benefits both himself and others. The first step towards participation is to recognize that (to use modern language) we live in a world of positive-sum games: we are surrounded by opportunities for mutually beneficial transactions. Thus, if we are to promote our individual interests, we need to be alert to those opportunities, and ready to take advantage of them when they occur. This requires that we are ready to work jointly with others for mutual benefit.

Anyone who has taught economics knows how much difficulty most people, even now, and even in long-established market economies, have in appreciating the reality of gains from trade, and how easily they slip back to thinking of economic life as a zero-sum game. Many writers on social capital have suggested that, within a society, a tendency for people to think in zero-sum terms is a marker of economic backwardness and an obstacle to economic development (Gambetta, Reference Gambetta1993; Putnam, Reference Putnam1993). Genovesi's lesson really is important, to modern readers as well as to his students in eighteenth-century Naples.

4. CARING RELATIONSHIPS AND THE MARKET

So far, our discussion has been abstract and our examples stage-managed. We now consider how the concepts we have analysed apply to a specific issue: whether market relationships are compatible with the supply of services of genuine care.

The question with which we began this paper, “What is the nature of the relationship between trading partners in a market?”, becomes salient whenever there is a perception that the domain of the market is expanding. Such a perception prompts people to ask whether something valuable is lost when non-market modes of interaction are replaced by market ones. As we have explained, Smith and Genovesi produced their analyses of market relationships in a climate of public anxiety about the expansion of commerce in eighteenth-century Europe. The issue we now consider generates anxieties of an analogous kind.

The last few decades have seen major changes in the provision of personal care services – for example, child care, nursing care and the care of the elderly. Care services which formerly were provided within households and extended families, usually by female relatives of the recipients, are increasingly being supplied by paid workers, whether employed by profit-seeking firms, non-profit organizations or government, or self-employed. At the same time, there have been changes in service delivery – the outsourcing of services formerly supplied by public-sector agencies, the introduction of “internal markets” in the public sector, the more explicit use of financial incentives, the encouragement of consumer choice – which have been widely perceived as substituting the values of the market for those of profession and vocation. For critics of these changes, something of value is being lost in the expansion of the market. The suggestion is that personal care, by its very nature, can be delivered only in relationships of sincere caring, and that these are incompatible with market motivations. As Nelson (Reference Nelson, Gui and Sugden2005: 258) reminds us, the real anxieties underlying this debate can be appreciated by anyone who has thought about putting a young child into day care or a parent into a nursing home.

A recent strand of economic analysis has tried to explain how caring is possible when services are delivered through markets. The idea is that a person may be motivated by the intrinsic goals of her work, as well as by the external reward of a money wage: the physician's goals may include the health of her patients, the teacher's may include the education of his students. Thus, authentic care can be supplied by paid workers who have the right kind of intrinsic motivation. A common theme in this literature is encapsulated in the revealing slogan “getting more by paying less” (or, in another version, “Why is a badly-paid nurse a good nurse?”). Intrinsic motivation is assumed to lead to better performance on the job, to be a characteristic of a subset of the population of potential suppliers of labour, and to be not directly observable by potential employers. Crucially, intrinsic motivation is interpreted as a willingness to forgo external rewards in pursuit of the internal goals of one's work. Thus, there can be wage rates which intrinsically motivated workers are willing to accept, but which their externally motivated fellows reject. So by offering low material rewards, employers can separate the better workers from the worse – they can get more by paying less (Brennan, Reference Brennan and Goodin1996; Katz and Handy, Reference Katz and Handy1998; Heyes, Reference Heyes2005). Brennan also notes the possibility of separating intrinsically motivated workers by providing on-the-job benefits tailored to their non-material goals (for example, by offering academics low salaries but generous research funding). The underlying thought is that market relationships can take on some of the personal or social qualities of non-market ones to the extent that economic agents are willing to forgo their own interests for those of others, or are willing to substitute intrinsic for material rewards.

This line of analysis nicely illustrates the market/social and self-regarding/self-sacrificing oppositions we discussed in Section 1. The first of these oppositions appears in the idea that care services are different from ordinary economic commodities, and that we should expect markets in these services to have correspondingly special properties. The second appears in the identification of genuineness in caring with self-sacrifice by carers. The perceived problem of incompatibility between market relationships and caring is resolved by showing that self-sacrifice is possible in markets.

Nelson (Reference Nelson, Gui and Sugden2005) has subjected this analysis to a feminist critique. As she points out, the idea that genuine caring requires self-sacrifice has been a traditional cover for dominance and exploitation in the family. By drawing a sharp distinction between the world of labour and commerce and the world of home, and by idealizing the role of women in the home as loving wives, mothers and daughters, social thought has made acceptable what, viewed objectively, are relations of exploitation. If care services provided within the home were to be seen as just another type of labour, the inferior economic position of women would be made uncomfortably obvious; instead, inequality between the sexes can be pictured as female virtue. Nelson sees the “getting more by paying less” model as a re-working of this old theme, adapting it for a period in which care services are supplied through the market and in which paid care workers are disproportionately female. The mistake, according to Nelson, is to think that an activity can be performed either “for love” or “for money”, but not for both at the same time.

This line of thought appears to be leading towards an understanding of market relationships which allows them to have genuinely social content. But Nelson takes a different track, postulating a form of motivation which belongs to neither side of the self-regarding/self-sacrificing opposition, but which needs to be protected from contamination by relations of market exchange.

What does it mean to work both for love and for money? In another paper, Folbre and Nelson (Reference Folbre and Nelson2000) treat sincerity in caring as an instance of intrinsic motivation towards one's work. Following Frey (Reference Frey1997, especially 88–102), Folbre and Nelson interpret intrinsic motivation as a matter of individual self-identity and authenticity: a person has an intrinsic motivation for an activity if she undertakes it “for its own sake”, rather than as a means to some other end. Frey in turn is strongly influenced by the psychological theory of Deci and Ryan (Reference Deci and Ryan1985). Ryan and Deci (Reference Ryan and Deci2000: 56) give the following definition:

Intrinsic motivation is defined as the doing of an activity for its inherent satisfactions rather than for some separable consequence. When intrinsically motivated a person is moved to act for the fun or challenge entailed rather than because of external prods, pressures, or rewards.

In opposition to the “getting more by paying less” model, Folbre and Nelson (and Frey) argue that monetary rewards can support intrinsic motivations if they are perceived as acknowledging the worker's efforts rather than as a means of controlling them. The implication seems to be that authentic caring is compromised by the perception that carer and cared are in a “mere” exchange relationship:

. . . too direct a pay-for-specific-services approach to the compensation of caring activities could shift the perceived locus of control outside the worker, so that the activities are no longer ‘work’ in the sense of expressing will and agency and building a relational network, but become merely ‘labour’ motivated by pay alone (Folbre and Nelson, Reference Folbre and Nelson2000: 133).

If genuine caring is to be supplied for payment, Folbre and Nelson seem to be saying, carers and cared must not see their relationship as that of seller and buyer. Their distinction between exchange relations (in the form of “pay for specific services”) and “building relational networks” as an object of intrinsic motivation can be seen as another reworking of the market/social opposition.

Some of the implications of identifying sincerity in caring with intrinsic motivation emerge in a case discussed by Nelson (Reference Nelson, Gui and Sugden2005: 257–60). Nelson suggests that a disproportionate number of the employees of community service organizations are women with financially successful partners. These organizations are able to get high-quality labour at low wages, not because their low wages select workers with self-sacrificing preferences, but because of cross-subsidization. As a result of what is effectively unfair competition, women who are “strongly motivated by an internally generated desire to care for children” but who “need to support themselves and their families” are forced into less intrinsically rewarding forms of work. Nelson favours higher wages for care workers but, significantly, she cannot approve of them simply as incentives. For Nelson, higher wages have a positive effect in making it possible for intrinsically motivated people to work as carers, but their effect in inducing “non-caring people” to do the same work “for the money” is evaluated negatively. Notice how Nelson separates the would-be carer's need to support her family from her “internally generated” desire to be a carer. The carer's authenticity is shown by her hypothetical willingness to do the work for its own sake (if she had a rich partner, she too would accept low wages); the wage merely releases her from the burden of other commitments.

This approach dispenses with the self-regarding/self-sacrificing opposition, but substitutes the opposition between intrinsic and instrumental motivation. An action is instrumental if it is performed as a means to some other end, while, in the ideal form imagined by Folbre and Nelson, an intrinsically motivated action is an end in itself. In contrast, some degree of instrumentality in market relations is fundamental to the workings of the market system. Prices can work as signals, directing each person towards those activities in which he can be most useful to others, only if people are motivated by what they receive in exchange for their activities; and that requires that what Deci and Ryan call “separable consequences” are a source of motivation. If authentic caring and genuine sociality are understood in terms of intrinsic motivation, there is a fundamental opposition between them and the market.

Like the proponents of the “getting more by paying less” model, Folbre and Nelson are trying to find a way of expressing the idea that payment for care services is compatible with genuine caring. Significantly, all these theorists are presupposing that the paradigm exchange relations of the market are not in themselves genuine social relationships, and hence that some additional ingredient is required if caring is to be supplied through markets. But if market relationships are characterized by mutual assistance and fraternity, as Genovesi's account maintains, that presupposition is mistaken.

Genovesi's approach would lead to a different understanding of markets in care services. Suppose Arthur is an elderly and infirm widower with a good pension, who can live at home only with the support of regular visits from a carer. Betty is a single mother who needs a source of income to support herself and her family. She is an experienced, capable and sympathetic carer of old people, but is not so intrinsically motivated that, were she not to need the money, she would do this kind of work for nothing (as the members of some charitable organizations and religious communities do). Arthur can be useful to Betty by providing her with money; Betty can be useful to Arthur by providing him with personal care. Recall Genovesi's maxim: “Do your best to be useful to one another”. Its implications in this case are self-evident.

Suppose that, acting on this maxim, Arthur and Betty agree mutually advantageous terms of employment. When Betty makes her care visits, she and Arthur interact on terms of friendliness, goodwill and mutual respect. Neither of them invokes the letter of their contract in an opportunistic way, but both recognize that contract as jointly committing them to the promotion of their mutual benefit. Each accepts that the demands that he or she can make on the other are ultimately constrained by the collective intention that the relationship is to be beneficial to both of them. Betty feels a sense of satisfaction in her work, both because she is earning money to support herself and her family and because she knows she is being useful to Arthur. Arthur feels a sense of satisfaction from employing Betty, both because her care helps him to maintain his independence and because he knows that the money he pays her is useful to her and her family. Isn't this authenticity?

Imagine a different Arthur who complains that he is not receiving genuine care because, although he gains from the transaction, Betty gains too: he doesn't just want a carer, he wants a self-sacrificing carer. Or suppose that Arthur's complaint is that Betty is providing care only because she needs the money: he wants an intrinsically motivated carer. Or imagine a different Betty who complains that, by having to earn a living as a care worker, she is not able to realize her self-identity in some more enjoyable or challenging activity – say, rock-climbing or oil-painting – for which, given her talents, there is no demand. From the perspective of a theory of mutual assistance, complaints like these display an ultimately childish refusal to accept the implications of living with others on terms of freedom and equality. We can say to the complainants: You are not entitled to expect the satisfaction of your wants to be someone else's vocation. You are not entitled to expect other people to sacrifice their interests in order to support your sense of authenticity. You must learn to live in the world as it really is – the world in which water runs downhill and civil life is structured by reciprocity.

We do not mean to deny that the supply of care services – both inside and outside the market – can sometimes involve elements of intrinsic motivation and self-sacrifice. Workers can feel an intrinsic satisfaction in their work that is additional to the sense of being useful to others who are being useful to them. Having this attitude to one's work is undoubtedly a source of happiness. It is to an employer's advantage, too, that workers find satisfaction in their work. Thus, the pursuit of mutual advantage in labour relations may involve choosing workplace practices that foster intrinsic motivation. Equally, there can be self-sacrificing care workers – people who are willing to incur losses in personal well-being in order to benefit those for whom they care. Our claim is not that intrinsic motivation and self-sacrifice do not exist, but that they should not be used to define genuineness in caring relationships. We might be pleased or grateful to find such motivations in others with whom we interact; but, in a free and equal society, we must accept that much of the sociality we will enjoy will be in relations of mutual assistance and fraternity.

For readers who are used to the market/social opposition, all this may read as an argument for introducing the market into all areas of social life. But the whole point of Genovesi's approach is that, properly understood, market relations are not different in kind from other relations of civil society. The fundamental characteristic of market relations is reciprocity, and reciprocity is the governing principle of civil society.

It may be tempting to think that there must be some level of intimacy – perhaps within the immediate family, and between close friends – at which mutual assistance gives way to altruism as the force of cohesion. A discussion of this issue would take us too far from the topic of this paper, which is the nature of market relationships. But we end by suggesting the possibility that reciprocity does – or should – go all the way down. It is at least an open question whether even the most intimate relationships are best understood, not in terms of unconditional altruism on each side, but in terms of joint commitments to mutual support and joint experiences of the pleasures, pains and challenges of facing life together.Footnote 10 Of course, such commitments must be stronger and more personal in intimate relationships than in the market, and the affective experiences those relationships induce will be stronger too. But still, there may be no ultimate opposition between “market” and “social”. As John Stuart Mill (Reference Mill1988 [1869]) argues in The Subjection of Women:

[T]he only school of genuine moral sentiment is society between equals. . . . The moral training of mankind will never be adapted to the conditions of the life for which all other human progress is a preparation, until they practise in the family the same moral rule which is adapted to the normal constitution of human society. (45–47)

In this perspective, the family is not a domain separate from the market, governed by a different set of motivations. The family and the market are both parts of civil society, subject to the same fundamental standards of reciprocity, trust and mutual respect. When these standards are upheld, whether outside the market or within it, genuine caring is possible.

Footnotes

1 The definitions of “society” in the Concise Oxford Dictionary include “social mode of life, the customs and organizations of a civilized nation” and “companionship, company”.

2 In the literature of social preferences, this motivation is often called “reciprocity”. However, this is a different concept of reciprocity from that used by Genovesi (discussed later). In the economics of non-selfish behaviour, the theory of reciprocity proposed by Sugden (Reference Sugden1984) comes closer to Genovesi's account. In Sugden's theory, individuals act jointly in the pursuit of common ends, but each individual's willingness to join in is conditional on the assurance that enough others will do so too.

3 Translations from Italian are by the authors.

4 These quotations from the Theory of Moral Sentiments illustrate the two meanings of “social” that we discussed in Section 1. For Smith, the relationship between merchants who pursue mutual advantage without benevolence is “social” in the broad sense: it is sufficient for the subsistence (but not the comfort) of “society”. But, although Smith claims that there is a natural sentiment of justice, this is not included in his list of “social passions”. To the contrary, the sentiment of justice is understood in terms of the propriety of resentment, and resentment is classified among the “unsocial passions” (pp. 34–8, 78–82). Here, “social” is being used in the narrow sense.

5 Bruni and Sugden (Reference Bruni and Sugden2000) and Bruni (Reference Bruni2006) compare the roles played by social capital in Genovesi's and Smith's analyses of markets.

6 For a review of alternative understandings of team reasoning, see Gold and Sugden (Reference Gold and Sugden2007).

7 Sugden (Reference Sugden2002, Reference Sugden, Gui and Sugden2005) reconstructs Smith's theory of the correspondence of sentiments and argues that it is broadly confirmed by the findings of modern psychology and neuroscience.

8 Compare Bratman's (Reference Bratman1993) idea that when “shared intentions” are extended over time, the relevant individuals are “mutually responsive” in adapting their behaviour to changing circumstances so as to achieve their common objective.

9 Frank (Reference Frank1985: 19–20) offers the opposite advice. He claims that it pays to cultivate a positional disposition towards bargaining – that is, a disposition to seek to do better than the person one is bargaining with. Frank's argument is that an “inherent concern about position”, if credibly signalled, works like a precommitment to refuse unfavourable take-it-or-leave-it offers. That is true, but Frank does not consider the losses that are incurred when bargainers precommit to incompatible positions.

10 For more on this, see Sugden (Reference Sugden2002).

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