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Editors’ Note:  This is truly a thoughtful essay, worth your time.  While the author’s focus is on economics, it is equally valid in the political realm, which is hard to separate from economics anyway. We are convinced that from both the Left and the libertarian right, there is an imbalance between “rights” talk and “responsibility” talk. If you think about it, you don’t have a right to be honest; you have a moral responsibility to be honest.  You don’t have the right to be truthful; you have a moral responsibility to be truthful.  Can these virtues be taught in the absence of religion?  Perhaps, but the older we get, the more doubtful we are of the proposition.  People don’t spend much time thinking about constructing their own moral order, and have to be taught virtues at a young age.  And for those that do spend the time, self-construction morality usually boils down to what is good for “me”. Yet being honest must be something more than just being a matter of personal opinion. Otherwise, rejecting that virtue is easy in the absence of a higher order, a Bible-based morality. If you don’t think such simple violations of rules cannot destroy a society, look at the welfare fraud that is bankrupting the nation, the drug stores that must lock up everything behind glass cases, the massive crime coming from single-parent households, and people simply not showing up for obligations, ghosting customers and employers.  Quite alarming is that polls show about a quarter of Democrat college students are OK with killing their political opponents. It is clear that not all ethical systems are equal, and some lend themselves more to wealth production and social harmony than others.  We have people today saying they are “marginalized” and not successful, and they blame race, gender, sexual orientation, and just about everything…except their failure to behave virtuously. And, we have quite a few trashing our Western values and embracing the moral and economic chaos of those from poor and undemocratic systems, based on the idea of cultural relativism. The quote widely attributed to John Adams is: “Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other”. We need to remember his words.

Economists have an old habit of assuming that people are strictly selfish and rational, maximizing their “utility.” In theory, everyone is “Max U,” as Deirdre McCloskey mockingly puts it. The assumption can be useful—people often do act selfishly, and belief in market efficiency sometimes clarifies moral choices—but it is false as a generalization. Virtue and capitalism need each other, and have long quietly collaborated to improve the human condition.

That truth is kept quiet, ironically, by economists themselves. They understand capitalism better than most, and generally defend it, but Max U is a moral blind spot that causes them to underrate capitalism ethically, and teach others to do so. With friends like these, capitalism hardly needs enemies.

In The Bourgeois Virtues (2006) and its sequels, McCloskey uncovers this virtue-capitalism nexus, and champions a richer economics grounded in the classical tradition of the seven virtues. Since the book consists in a quixotic quest to overthrow Max U and refound economics on virtual ethical foundations, it would have had to catalyze a sweeping reset of the discipline from the ground up to really succeed. Too many reputations are invested in the old orthodoxy, and Max U still rules. Yet McCloskey’s project remains vital. Capitalism will never be understood—or valued properly—while seen through the lens of assumed amorality. That misunderstanding is especially dangerous today, as the woke left and populist right feed each other’s doubts about the liberal order that undergirds modern freedom and prosperity.

McCloskey’s “virtue economics” (so to speak) also offends modern pieties by implying that some people, classes, and nations are poor partly because of a deficiency of virtue. Her argument that Western capitalists deserved their wealth because of their bourgeois virtues is a thumb in the eye to Marxists; Charles Murray’s similar thesis in Coming Apart (2012) also gave offense. If the seed of virtue economics ever takes root, it will grow up fighting.

Why Capitalism Needs Virtue

A simple parable can serve as proof of concept for why capitalism needs virtue.

Suppose a man wants a job as a cashier—the only work available. But he is dishonest. He’ll steal if he can get away with it. He is not a compulsive thief, only Max U: rationally self-interested. If he’ll be caught, he won’t steal; if not, he will.

Hiring managers see through him. They could monitor him constantly, but surveillance is costly. It’s more profitable not to hire him at all. Now suppose the man could truly change—coming to love honesty and hate theft. The same managers perceive it and give him the job. Virtue pays.

The story shows the limits of economists’ habit of treating preferences as the standard of value. Some preferences are simply better than others. Even by his former lights, the dishonest man should wish to become honest: the change makes him employable and happier.

Economists steeped in Max U may resist the idea that people can change their utility functions. They treat conduct as a function of incentives. Virtue ethicists know better. Conduct also flows from character, and virtue is habit-forming: act justly long enough, and you come to love justice.

The Bourgeois Virtues scales this lesson to society. McCloskey—at once a Chicago School economist and a humanist polymath—argues that capitalism depends everywhere on the virtues. Real markets are shot through with principal-agent problems that Max U theory cannot solve but ordinary virtue routinely does. Trust, self-command, and good faith keep commerce running where formal incentives fail.

Getting the List of Virtues Right

Which virtues matter, though? What’s fundamental? If our cashier needed a moral quality to be trusted, what is it, and how does it generalize? 

The dishonest cashier might be cured by justice, or by love toward his employer. Another man might need prudence or temperance to succeed—but these are virtues Max U already possesses, though economists often mistake them for automatic traits rather than acquired ones. Courage keeps the other virtues steady when things grow difficult; faith steadies a person and keeps them true to their convictions and identity through fluctuating moods and situations; and hope transforms mere toil into labor for a goal.

Courage, justice, prudence, and temperance (the classical “cardinal virtues”) and faith, hope, and love (the Christian “theological virtues”) represent a kind of “periodic table” of moral goodness, the qualities needed both for effectiveness and for expanding human happiness and giving life meaning. Other terms of moral praise, if valid, are synonyms, applications, or combinations. To infuse one’s life with these virtues is the higher self-interest that makes oneself interesting, one’s life story worth telling.

Not stealing is pretty basic, but at a higher level, capitalism is full of use cases of virtue like:

• Mentoring an employee who’s likely to move on (hope and love);
• Fulfilling the exact terms of a contract with a party not likely to sue or provide repeat business (justice and faith);
• Maintaining an orderly, respectable “bourgeois” lifestyle and settling for slow, long-term success (temperance, prudence, and hope);
• Tipping for good service in a restaurant you’ll never come back to (love and justice);
• Maintaining excellence in an indispensable but underappreciated specialist role, instead of getting into a turf war for a more prestigious and upwardly mobile function (temperance, justice, and love);
• Launching a business or trying to invent a new technology (prudence, courage, and hope);
• Persisting in a job search despite a hundred rejections (hope);
• Writing a reference for a colleague who’s not likely to have an opportunity to return the favor (love);
• Guarding product quality when customers would take a long time to notice a quiet downgrade (faith); and
• Making executive decisions in shareholders’ interests when they’re not looking and couldn’t understand the stakes (justice).

In Managerial Dilemmas: The Political Economy of Hierarchy (1993), Gary J. Miller channeled a lot of economics literature to laboriously prove that it’s impossible to design a firm in which employees’ self-interest is aligned with the firm’s profit maximization. Actual firms run on morale and solidarity. Virtue makes capitalism thrive, and makes people thrive in capitalism.

Such things were better understood when the premodern tradition of the virtues was in health, but unfortunately, as Alasdair MacIntyre discerned in After Virtue (1984), that tradition was largely lost when the Enlightenment, having lost faith in an older, Christian-infused metaphysics during the wars of religion, tried to rebuild moral philosophy on mechanistic rationality. Since that failure, there have been many attempts to fill the virtue-sized hole in the intelligentsia’s understanding of human nature. Much of The Bourgeois Virtues aims to retrieve and refine scattered modern attempts to rebuild moral philosophy, reintegrating them with the classical tradition. 

A sweeping rhetorical revaluation of commerce in the seventeenth and eighteenth centuries, especially in England and Holland, changed people’s motives and priorities and set the stage for modern economic growth.

Two such efforts since McCloskey’s work deserve brief notice. Jonathan Haidt’s “moral foundations theory” (The Righteous Mind, 2012) lists care, fairness, loyalty, authority, and sanctity; Charles Murray’s Coming Apart highlights marriage, industriousness, honesty, and religiosity. Both schemes are helpful in navigating survey and demographic data, but are rough substitutes for the classical seven virtues. They are like octagonal wheels—serviceable but clumsy compared with the original circle. When a society has forgotten the wheel, archeology is more useful than tinkering.

It’s not just amnesia that makes people forget the seven classical virtues and invent weaker substitutes. Social scientists struggle with ethics because they inherit the fallacy that one “can’t derive an ought from an is,” often traced to Hume, even though MacIntyre refuted it by showing the teleology inherent in language and reason. But the habit of trying to enforce sharp fact/value distinctions runs deep. The very name “social sciences” expresses an attempt to cross-apply, from the natural sciences, a paradigm of post-teleological, mechanistic objectivity to the study of human society. Max U appeals because it’s as simple as gravity, but that’s not what people are actually like.

A physicist learns externally, detaching his feelings and biases. But economists and sociologists cannot and should not do that. Since we are human, our introspection and conscience are crucial evidence about what humans are like. To ignore them in imitation of the natural sciences makes us duller, not wiser. Tradition, meanwhile, is in part humanity’s harvest of introspection, lessons learned from the moral experiments of generations. By learning from tradition through sympathy and imagination—not only data—we broaden our minds beyond what reason or personal introspection can achieve.

MacIntyre and McCloskey show how to redeem the social sciences through erudite moral realism and respect for tradition and the past. And part of that project is learning to think in terms of the old seven virtues.

The Christian and Chivalric Roots of Western Virtue

McCloskey’s ambition reaches beyond the constitution of present capitalism to illuminate its historic backstory, and is extended through two sequels to The Bourgeois Virtues, of which one, Bourgeois Dignity (2010), has the subtitle, “Why Economics Can’t Explain the Modern World.”

By “the modern world,” she means the “Great Enrichment,” the dramatic and sustained rise in living standards beginning in the early nineteenth century. And the subtitle really means “why Max U economics can’t explain the modern world, but virtue economics can.” She illustrates how a sweeping rhetorical revaluation of commerce in the seventeenth and eighteenth centuries, especially in England and Holland, changed people’s motives and priorities and set the stage for modern economic growth. But this story should be braided together with others to enrich the picture.

McCloskey pushes back, rightly though too strongly, on “institutional” stories that credit the origins of modern economic growth to changes in modern society mainly intended to secure property rights, rule of law, and representative government. These are overrated, but they still have some merit. There was more rule of law and respect for individual and property rights in eighteenth‑century England and Holland than in most societies through most of history. It’s true that institutions aren’t the whole story, partly because they rest on moral and cultural foundations. But McCloskey argues mainly from timing that institutions couldn’t have been decisive, noting that many Western institutional advantages predated modern growth by centuries. And that misses a key point, because the timing actually doesn’t need to match closely.

Think of modern economic growth like an airplane taking off. The West accelerated down a runway of commercial, technological, and educational progress for centuries before it gained enough momentum to escape Malthusian gravity. Then at last poverty retreated—but there may have been no sharp discontinuity at the moment of takeoff. The West was far ahead of other societies in most fields of endeavor, from warfare to navigation to astronomy to linguistics to law, and more fundamentally in its moral, political, and scientific understandings, long before GDP per capita began its sustained rise.

We remain willfully blind to the moral foundations of prosperity because we hesitate to admit that virtue often produces wealth, and vice, poverty.

Once we’re past tripping over the timing issue, another key factor, revealed by the astute Joseph Henrich as the central argument in his magisterial book The WEIRDest People in the World (2020), comes into focus. Westerners, he shows, became psychologically distinct because the Catholic Church’s “marriage and family program” (MFP) dismantled the kinship-based societies that dominated most of history. Kin groups had ensured property transmission through clear lineage and practices such as cousin or levirate marriage and polygamy. From the early Middle Ages, Christian churches—especially the Roman Catholic—suppressed these customs, partly for bequests but also from conviction, breaking up clan systems and fostering more individualist societies that value fairness over loyalty and guilt over shame. It drove a profound psychological shift that still distinguishes Westerners dramatically in survey research and behavioral studies. It is a key factor in Western success and the difficulty of exporting it.

Henrich, unlike McCloskey, adopts the nonjudgmental tone of the social sciences and avoids moral language, even when describing tendencies to lie or cheat. Yet his work is really a story of how Christianity nurtured virtue. It dovetails with McCloskey’s account, though with different timing and causes. Rodney Stark’s The Victory of Reason (2005) and Tom Holland’s Dominion (2019) trace other ways Christianity advanced virtue, but the MFP remains central. Katy Faust’s Them Before Us (2021) is a recent statement, lucid and activist, of the well-established truth that the stable two‑parent family long upheld by the Church is still the best setting for children’s flourishing and the transmission of virtue.

Finally, Gregory Clark, in A Farewell to Alms (2007), examines inheritance data showing that the better-off in medieval England had more children. From this, he infers a hereditary—genetic or cultural—advantage that shaped the British character by the Industrial Revolution. McCloskey, favoring the bourgeoisie, resists this view because it credits knights more than merchants. Yet modern liberal institutions—Magna Carta and Parliament—were indeed born from knightly revolts against royal tyranny. The bourgeois virtues, then, may partly descend from chivalry, as the evolution of the word “gentleman” suggests.

Virtue Economics vs. the Myth of Equality

If mechanistic objectivity and science envy are one source of resistance to virtue economics, another is modern thought’s obsession with equality. It resists any suggestion that wealth or poverty might reflect differences in virtue, often resorting to moral outrage or conspiracy thinking when the argument gets difficult. Democratic and communist ideals have long glorified the poor at the expense of the rich, while fascism and populism twist the same theme for their own ends. We remain willfully blind to the moral foundations of prosperity because we hesitate to admit that virtue often produces wealth, and vice, poverty. 

Instead, the deserving rich, classes and nations alike, should remember that much virtue is inherited: you do well by doing good because that’s what you were taught. Practice noblesse oblige towards others who were not so fortunate.

Virtue economics is an uphill battle, but it’s worth the fight. It warns against killing the goose—virtue—that lays the golden eggs. Virtue must be maintained through families, churches, and honorable institutions. And while the quiet collaboration of virtue and capitalism has done much to better the human condition, it could do much more if we were more intentional about making virtue and capitalism work together. Although noblesse oblige endures—billions flow each year from the wealthy who want to give back—the modern bias is not to trust it, but instead, to stand up government bureaucracies to do what noblesse oblige could do better. A brighter future awaits if we let virtue economics unlock it.

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This article was published by Law & Liberty and is reproduced with permission.