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Cowen on business and imperfections

Summary:
I’m reading Tyler Cowen’s Big Business: A Love Letter to an American Anti-Hero and I can’t but agree with David Henderson: “the book is outstanding. There are valuable facts and/or bits of economic reasoning on virtually every page”. The book is written for the cultivated layperson and aims to address her concerns, to play with the wrong ideas she entertains and offer a better way to understand the reality that business is. By reading the book, you sense how Cowen has been thinking about these matters for quite a while; he knows inside out the arguments used by the anti-market forces as much as the ones typically waged by those who are friendlier to a market economy. He has mulled over the anti-business rhetoric for quite a while. The message of the first chapters

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I’m reading Tyler Cowen’s Big Business: A Love Letter to an American Anti-Hero and I can’t but agree with David Henderson: “the book is outstanding. There are valuable facts and/or bits of economic reasoning on virtually every page”. The book is written for the cultivated layperson and aims to address her concerns, to play with the wrong ideas she entertains and offer a better way to understand the reality that business is.

By reading the book, you sense how Cowen has been thinking about these matters for quite a while; he knows inside out the arguments used by the anti-market forces as much as the ones typically waged by those who are friendlier to a market economy. He has mulled over the anti-business rhetoric for quite a while.

The message of the first chapters is powerful and will shock anti-business people if they ever come to read the book. Business “makes most of the stuff we enjoy and consume” and is “what gives us most of the jobs”. It makes for a big part of our lives, and of our identity too: though some of us seem to forge their identity in their reproach of business.

Are critics of business always wrong? Certainly not. Cowen makes a cogent point: business is imperfect, fraudulent and rotten, yes, but because so are we. No fault of the market system is other than a fault of our being human- the readers of EconLog much less than anybody else, but still we’re imperfect. On the other hand, some institutions have the power to unleash the best of us while restraining the worst. The profit motive allows us to join larger and larger chains of cooperation, thereby satisfying a growing number of our needs and wishes. But we have problems to understand it, because it works in ways that are not consistent with the simpler, more straightforward, more easily intelligible realm of human relations we all live in. Larger chains of cooperation make “most of the stuff we enjoy and consume” but never win our sympathy.

Here’s a quote:

So many of the problems with business are in fact problems with us, and they reflect the underlying and fairly universal imperfections of human nature. Yet we respond to this truth somewhat irrationally. While we suspect business of wrongdoing, at the same time we expect corporations to give us jobs and take care of us, to give us a network of friends, to solve our social problems, and to give us risk-free consumption experiences.
This is another way of saying we judge companies as we might judge a person, sometimes even a family member: in terms of connection and standards of integrity. This is a mistake, because corporations are legal constructs and abstract entities, and they do not have purposes, goals, or feelings of their own. We would do better to think about the proper role and function of the corporation in the social and legal order, and how the behavior of companies can create jobs and produce goods and services. But precisely because we tend to judge corporations by the standards we use to judge people, it is hard for us to accept the partially venal or sometimes amoral pecuniary or greedy motives operating behind the scenes, and so we moralize about companies instead of trying to understand them.

Alberto Mingardi
Mingardi, one of the rising stars of European libertarianism, is the founder and Director General of the Italian free-market think tank, Instituto Bruno Leoni. His areas of interest include the history of economic thought and antitrust and healthcare systems. He is particularly well known for popularizing the work of past scholars under-appreciated by today’s libertarians. Currently an adjunct scholar at the Cato Institute, Mingardi has also worked with the Heritage Foundation, the Atlas Economic Research Foundation, the Acton Institute, and the Centre for a New Europe.

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