1. Adam Smith, The Wealth of Nations (New York: Modern Library, 1937), 17.

2. Bernard Barber, "Absolutization of the Market: Some Notes on How We Got From There to Here," in Markets and Morals, ed. Gerald Dworkin, Gordon Bermant, and Peter G. Brown (New York: John Wiley, 1977), 19-20.

3. An examination of the economy of Smith's Scotland reveals modest growth, but primarily in the agricultural sector. See T. C. Smout, "Where Had the Scottish Economy Got to by the Third Quarter of the Eighteenth Century?" in Wealth and Virtue, ed. Istvan Hont and Michael Ignatieff (Cambridge: Cambridge University Press, 1983), 45-72. break

4. Nathan Rosenberg and L. E. Birdsell, Jr., How The West Grew Rich: The Economic Transformation of the Industrial World (New York: Basic Books, 1986), 183.

5. Irving Kristol, "Rationalism in Economics," in The Crisis in Economic Theory, ed. Daniel Bell and Irving Kristol (New York: Basic Books, 1981), 206.

6. It is now generally recognized that Adam Smith's moral philosophy was far more complex than a simple defense of self-interest. See, e.g., J. Ralph Lindgren, The Social Philosophy of Adam Smith (The Hague: Martinus Nijhoff, 1973); and Hans Medick, Naturzustand und Naturgeschichte der bürgerlichen Gesellschaft (Göttingen: Vandenhoeck and Ruprecht, 1973), 171-295. For a slightly different interpretation, see Nicholas Phillipson, "Adam Smith as Civil Moralist," in Hont and Ignatieff, Wealth and Virtue, 179-202.

7. Smith, The Wealth of Nations, 14, 13.

8. Adam Smith, The Theory of Moral Sentiments, ed. D. D. Raphael and A. L. Macfie (Oxford: Clarendon Press, 1976), 9, 21, 61.

9. Allan Silver, "Friendship in Social Theory: Personal Relations in Classical Liberalism" (unpublished paper, January 1987), 12, 29. The quotes from Smith are cited by Silver from The Theory of Moral Sentiments .

10. Among the important documents are Herbert A. Simon, "Theories of Decision-making in Economics and Behavioral Science," American Economic Review 49 (June 1959): 253-83; Kenneth Arrow, "Risk Perception in Psychology and Economics," Economic Inquiry 20 (January 1982): 1-9; Harvey Leibenstein, Beyond Economic Man: A New Foundation for Economics (Cambridge, Mass.: Harvard University Press, 1976); William J. Baumol, Welfare Economics and the Theory of the State, 2d rev. ed. (Cambridge, Mass.: Harvard University Press, 1965); and Francis M. Bator, "The Anatomy of Market Failure," Quarterly Journal of Economics 72 (August 1958): 351-79. The best critiques of neoclassical economic assumptions, in my opinion, are Martin Hollis and Edward J. Nell, Rational Economic Man: A Philosophical Critique of Neo-classical Economics (Cambridge: Cambridge University Press, 1975); and Amartya Sen, "Rational Fools," in Choice, Welfare, and Measurement, ed. Sen (Oxford: Basil Blackwell, 1982), 84-106.

11. On the question of perfect information, see Armen A. Alchian and Harold Demsetz, "Production, Information Costs, and Economic Information," American Economic Review 62 (December 1972): 777-95; and Sanford J. Grossman and Joseph E. Stiglitz, "On the Impossibility of Informationally Efficient Markets," American Economic Review 70 (June 1980): 393-408. On hierarchical and institutional decision-making, see, e.g., Oliver Williamson, The Economic Institutions of Capitalism (New York: Free Press, 1985).

12. This similarity of interest may help explain why at least some Marxist economists praise the research methodology of Chicago School economists. See John Roemer, ed., Analytical Marxism (Cambridge: Cambridge University Press, 1986).

13. On marriage, see Gary Becker, The Economic Approach to Human Behavior (Chicago: University of Chicago Press, 1976), 205-50; on immigration, Julian L. Simon, "Auction the Right to Be an Immigrant," New York Times, 28 January 1986, continue

A25; on credit, Stephen M. Crafton, "An Empirical Test of the Effect of Usury Laws," Journal of Law and Economics 23 (April 1980): 135-45; on selling body parts, Lori B. Andrews, "My Body, My Property," Hastings Center Report 16 (October 1986): 28-38; on service and long lines, Francis T. Lui, "An Equilibrium Queuing Model of Bribery," Journal of Political Economy 93 (August 1985): 760-81; on surrogate motherhood, Anthony D'Amato, "Surrogate Motherhood Should be Privatized" (letter), New York Times, 3 March 1987, A26; and on suicide, Daniel S. Hammermesh and Neal M. Soss, "An Economic Theory of Suicide,'' Journal of Political Economy 82 (January--February 1974): 83-98, quote p. 85.

14. On the Marxist approach to morality, see Steven Lukes, Marxism and Morality (Oxford: Clarendon Press, 1985).

15. Murray Rothbard, Man, Economy, and State (Princeton, N.J.: Van Nostrand, 1962), 1:443, cited in Robert Nozick, Anarchy, State, and Utopia (New York: Basic Books, 1974), 86; and Nozick, ibid., 85.

16. John Kay, "Discussion," Economic Policy 6 (April 1988): 187-89, quote p. 188; and David F. Larcker and Thomas Lys, "An Empirical Analysis of the Incentives to Engage in Costly Information Acquisition," Journal of Financial Economics 18, no. 1 (1987): 111-26.

17. My approach in this chapter both overlaps and differs from that of Amitai Etzioni in The Moral Dimension: Toward a New Economics (New York: Free Press, 1988), which appeared just as this book was going to press. Although our critiques of neoclassical economic assumptions are similar, Etzioni views rationality as artificial and nonrationality as natural, whereas I tend to see the matter the other way around (see Chapter 8). In addition, he posits a dichotomy between self-interested or pleasurable motivations and moral ones, while I tend to view advocates of rational egoism as engaged in a discussion about morality, if of a particular kind. Finally, Etzioni's approach to moral obligation is more deontological than mine, as will become clear in the chapters that follow.

18. See Marvin B. Sussman, Judith N. Cates, and David T. Smith, The Family and Inheritance (New York: Russell Sage Foundation, 1970); and John A. Brittain, Inheritance and the Inequality of Material Wealth (Washington, D.C.: Brookings Institution, 1978). On discrimination against daughters, see Carole Shammas, Marylynn Salmon, and Michael Dahlin, Inheritance in America from Colonial Times to the Present (New Brunswick, N.J.: Rutgers University Press, 1987), 204.

19. B. D. Bernheim, A. Shleifer, and L. H. Summers, "The Strategic Bequest Motive," Journal of Political Economy 93 (December 1985): 1071.

20. Timothy H. Hannan, "Bank Robberies and Bank Security Precautions," Journal of Legal Studies 11 (January 1982): 83-92.

21. Richard Titmuss, The Gift Relationship: From Human Blood to Social Policy (London: Allen and Unwin, 1970); a recent effort to reinterpret blood donation from an economic perspective is Robert Sugden, Who Cares? An Economic and Ethical Analysis of Private Charity and the Welfare State (London: Institute for Economic Affairs, 1983). For a far more balanced, indeed charitable, view, see Kenneth J. continue

Arrow, "Gifts and Exchanges," in Altruism, Morality, and Economic Theory, ed. Edmund S. Phelps (New York: Russell Sage Foundation, 1975), 13-28.

22. On dueling, W. F. Schwartz, K. Baxter, and D. Ryan, "The Duel: Can These Gentlemen Be Acting Efficiently?" Journal of Legal Studies 13 (June 1984): 321-55; on symbols and clan names, J. L. Carr and J. T. Landu, "The Economics of Symbols, Clan Names, and Religion," Journal of Legal Studies 12 (January 1983): 135-56; on blackmail, Richard A. Epstein, "Blackmail, Inc.," University of Chicago Law Review 50 (Spring 1983): 553-66; on plea bargaining, Frank H. Easterbrook, "Criminal Procedure and the Market System,'' Journal of Legal Studies 12 (June 1983): 289-332; on quackery, A.W.B. Simpson, "Quackery and Contract Law: The Case of the Carbolic Smoke Ball," Journal of Legal Studies 14 (June 1985): 345-89; on photocopying, William R. Johnson, "The Economics of Copying," Journal of Political Economy 93 (February 1985): 158-74; on academic life, George J. Stigler, The Intellectual and the Market Place (Glencoe, Ill.: Free Press, 1963); on Eichmann, Albert Breton and Ronald Wintrobe, "The Bureaucracy of Murder Revisited," Journal of Political Economy 94 (October 1986): 905-26.

23. Bruce Bueno de Mesquita, "The Costs of War: A Rational Expectations Approach," American Political Science Review 77 (June 1983): 347-57.

24. Becker, Economic Approach, 14. Becker claims that he is not trying to "downgrade" the other social sciences and is not even arguing for the superiority of economics. But he then proceeds to cite as evidence of the contribution made by other social sciences only those committed to the assumption of stable preferences, most especially, in his view, sociobiology. Recently Becker accepted an appointment in the sociology department at the University of Chicago to complement his appointment in economics.

25. Jack Hirshleifer, "The Expanding Domain of Economics," American Economic Review 75 (December 1985): 53-68.

26. Reuven Brenner, "Economics--An Imperialist Science?" Journal of Legal Studies 9 (January 1980): 179-88. A certain modesty in predictive claims might be entertained by the economics profession. One study compared the predictions made by the economists concerning GNP, inflation, and the balance of trade against so-called naive methods, such as estimating the future based on a linear extrapolation from the immediate past. The naive methods performed better. See D. J. Smyth and J.C.K. Ash, "Forecasting Gross National Product, the Rate of Inflation, and the Balance of Trade: The OECD Performance," The Economic Journal 85 (June 1975): 361-64. See also the discussion in Alasdair MacIntyre, After Virtue: A Study in Moral Theory (South Bend, Ind.: University of Notre Dame Press, 1981), 89.

27. Donald N. McCloskey, The Rhetoric of Economics (Madison: University of Wisconsin Press, 1985), 76, 82.

28. See Milton Friedman, "The Methodology of Positive Economics," in Essays in Positive Economics (Chicago: University of Chicago Press, 1953), 3-46. break

29. Gordon Tullock, "Economic Imperialism," in The Theory of Public Choice, ed. James M. Buchanan and Robert D. Tollison (Ann Arbor: University of Michigan Press, 1972), 324.

30. Michael S. McPherson, "Want Formation, Morality, and Some 'Interpretative' Aspects of Economic Inquiry," in Social Science as Moral Inquiry, ed. Norma Haan et al. (New York: Columbia University Press, 1983), 96-124.

31. George J. Stigler and Gary S. Becker, "De Gustibus Non Disputandum," American Economic Review 67 (March 1977): 76-90.

32. For a critique of Chicago school theory along similar lines, and moreover one that shows the linkages between behavioralism in psychology, sociobiology, and this version of economic theory, see Barry Schwartz, The Battle for Human Nature: Science, Morality, and Modern Life (New York: W.W. Norton, 1986).

33. For a discussion of the major ethical and moral issues raised by economic theories of the market, see Allen Buchanan, Ethics, Efficiency, and the Market (Oxford: Clarendon Press, 1985).

34. Becker, Economic Approach, 14.

35. Richard A. Posner, The Economics of Justice (Cambridge, Mass.: Harvard University Press, 1981), 2.

36. Elizabeth M. Landes and Richard A. Posner, "The Economics of the Baby Shortage," Journal of Legal Studies 7 (June 1978): 344-45.

37. Becker, Economic Approach, 8, 5, 14.

38. See, for example, Bernard Williams, "A Critique of Utilitarianism," in Utilitarianism--For and Against, ed. J.J.C. Smart and Bernard Williams (Cambridge: Cambridge University Press, 1973), 77-150.

39. Posner, Economics of Justice, 66.

40. Michael Walzer, Spheres of Justice: A Defense of Pluralism and Equality (New York: Basic Books, 1983).

41. Posner, Economics of Justice, 62.

42. Walzer, Spheres of Justice, 281-321.

43. Ibid., 119-20.

44. An interesting effort to argue that marketplace theories of rational choice are coercive may be found in Robin West, "Authority, Autonomy, and Choice: The Role of Consent in the Moral and Political Visions of Franz Kafka and Richard Posner," Harvard Law Review 99 (December 1985): 384-428. I also found helpful Larry M. Preston, "Freedom, Markets, and Voluntary Exchange," American Political Science Review 78 (December 1984): 959-70.

45. Charles Lindblom, "The Market as Prison," Journal of Politics 44 (May 1982): 324-36.

46. The novelist is Richard Powers, Prisoner's Dilemma (New York: William Morrow, 1988).

47. Robert Axelrod, The Evolution of Cooperation (New York: Basic Books, 1984).

48. Tournaments are of special interest to the Chicago school; see, for example, continue

Jerry R. Green and Nancy L. Stokey, "A Comparison of Tournaments and Contracts," Journal of Political Economy 91 (June 1983): 349-64.

49. Axelrod, Evolution of Cooperation, 193. Tullock evidently did not enter the second round.

50. For introductions to the economics of time, see Gordon C. Winston, The Timing of Economic Activities (Cambridge: Cambridge University Press, 1982); and Clifford H. Sharp, The Economics of Time (Oxford: Martin Robertson, 1981).

51. See Robert Frank, Choosing the Right Pond: Human Behavior and the Quest for Status (New York: Oxford University Press, 1985), 42-55, for an explication of this point.

52. Murray Malbin, Night as Frontier: Colonizing the World After Dark (New York: Free Press, 1987), 105.

53. Eviatar Zerubavel, The Seven-Day Circle: The History and Meaning of the Week (New York: Free Press, 1985), 88, 109.

54. See Gary Becker, "A Theory of the Allocation of Time," Economic Journal 75 (September 1965): 493-517.

55. Axelrod, Evolution of Cooperation, 126-32.

56. Leon Mann, "Queue Culture: The Waiting Line as a Social System," American Journal of Sociology 75 (November 1969): 341.

57. Niklas Luhmann, Trust and Power (New York: John Wiley, 1979), 20.

58. Mann, "Queue Culture," 342. For another sociological study in the same vein, one that (in my opinion) concedes too much importance to economic theories, see Barry Schwartz, Queuing and Waiting: Studies in the Social Organization of Access and Delay (Chicago: University of Chicago Press, 1975).

59. Charles W. Smith, Auctions: The Social Construction of Value (New York: Free Press, 1989).

60. A standard work in the economics of space is R. W. Vickerman, Spatial Economic Behavior (London: Macmillan, 1970).

61. Jon P. Nelson, "Residential Choice, Hedonic Prices, and the Demand for Urban Air Quality," Journal of Urban Economics 5 (July 1978): 357-69; and Douglas E. Hough and Charles G. Kratz, "Can 'Good' Architecture Meet the Market Test?" Journal of Urban Economics 14 (July 1983): 40-54.

62. Larry A. Sjaastad, "The Costs and Returns of Human Migration," Journal of Political Economy 70 (October 1962 supplement): 80.

63. Charles M. Tiebout, "A Pure Theory of Local Expenditures," Journal of Political Economy 64 (October 1956): 416-24.

64. Donald Lowe, History of Bourgeois Perception (Chicago: University of Chicago Press, 1983), 55-60.

65. Kwang-kuo Hwang, "Face and Favor: The Chinese Power Game," American Journal of Sociology 92 (January 1987): 944-74, esp. 963.

66. Posner, Economics of Justice, 146-227. break

67. Harold Garfinkel, Studies in Ethnomethodology (Englewood Cliffs, N.J.: prentice-Hall, 1967).

68. Jon Elster, Ulysses and the Sirens: Studies in Rationality and Irrationality (Cambridge: Cambridge University Press, 1979).

69. Charles Taylor, Hegel (Cambridge: Cambridge University Press, 1975), 561, 563.

70. Steffan B. Linder, The Harried Leisure Class (New York: Columbia University Press, 1979), and Tibor Scitovsky, The Joyless Economy: An Inquiry into Human Satisfaction and Consumer Dissatisfaction (New York: Oxford University Press, 1976), explore this theme.

71. E. M. Forster, Howard's End (London: Penguin Books, 1971), 316.