Wednesday, March 18, 2009

Good Commercial Faith and the City

Thank you welcoming me into this space to talk out loud about some of the aspects of commercial behavior that I have been thinking of for sometime. I'm delighted to be blogging here. In addition to talking about my article on consumer behavior, I hope to write some on other aspects of consumer decision making. But today, I want to talk about commercial virtues.

One of the troubling aspects of commercial dealings today is the focus on ethics. Truthfully, I despise the topic (perhaps because I was never very good at the subject in either theological classes or law classes -- like professional responsibility for one). But the real reason I despise ethics, my own discordant academic performance in the subject aside, is I think we are often times asking the wrong questions. We assume that by ethics, we mean some form of social responsibility, but more often than not, that responsibility is defined by communities of interest, rather than greater social values. Consider the problem with UCC 1-201 and the definition of good faith. Do we really mean good faith is "honesty in fact" when we combine that with the observation of "reasonable commercial standards of fair dealing". Which takes precedence -- clearly the latter. The secured lender that tells only part of the story to his debtor (your income statement is a mere formality) has not been completely operating with "honesty in fact" though his actions may well fit within the constraint of reasonable commercial standards of fair dealing -- after all, fudging your income was hardly the act of just a few bad apples. The subjective element of good faith gives way to the relevant community that defines what good faith means.

Deirdre McCloskey in her defense of capitalism, aptly named, the Bourgeois Virtues, makes many debatable claims that Capitalism makes the world better books.jpg(many of which I will not attempt to defend). But what McCloskey does get is that commerce (and commercial law) urges the continued development of social structures for the betterment of the individual within a community that is itself working to be better. Quoting Rabbi Starks, McCloskey writes:

It is the market -- the least overtly spiritual of contexts -- that delivers a profoundly spiritual message... The free market is the best means we have yet discovered... for creating a human environment of independence, dignity and creativity.

McCloskey's message of capitalism as a movement of social ingenuity is at its core the spiritual message of hope we find in some of our best religious literature. The prophet Jeremiah admonished the Israelites in Captivity:

This is what the Lord Almighty, the God of Israel says to all those I carried into exile from Jerusalem to Babylon: 'Build houses, settle down; plant gardens, eat what they produce, Marry and have sons and daughters; find wives for your sons and give your daughters in marriage so that they too may have sons and daughters. Increase in number there do not decrease. Seek the peace and the prosperity of the city to which I have carried you into exile. Pray to the Lord for it, for if it prospers, you too will prosper.

Ralph Waldo Emerson also saw that hope comes from capitalist engagement but only wh180px-RWEmerson.jpgen the mind is able to reflect upon its work. Emerson distinguishes between the Brute Economy, in which labor and strength build vast empires of material longing only (i.e. its good to spend money to relieve us of the pain of 911), with the capitalist economy which employs intellect in an analytical expansion of labor, material and wealth. What Emerson says the Capitalist lacks is the moral and spiritual wisdom of the poet - "who acts upon nature with his entire force -- with reason as well as understanding."

The virtue of McCloskey's work is that Commerce (and capitalism) share a common goal of enhancing our social order, instilling the hope that we might reshape "the city" into an image that is not of ourselves as we currently stand, but of the selves that we might one day hope to be, both individually and collectively. And that actions should be weighed and measured against both of these standards. Whether we segregate capitalists from capitalist poets, we nonetheless, come to the same conclusion as Emerson and McCloskey -- that commerce creates the potential for humans to be good.   

Which brings me back to 1-201. Do we really want good faith to be watered down by community constraints or is there a moment for reflection of the aspirational norms that commercial dealings might adhere to? I was much happier when good faith was simply "honesty in fact" without the burden of community differences, whatever that might mean -- even if the aspirational view of good faith was nearly impossible to enforce.

Marc (MLR)

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