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Civil Economy: An Alternative to the Social Market Economy? Analysis in the Framework of Individual versus Institutional Ethics

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Abstract

The Civil Economy (CE) approach, as developed by Italian economists Luigino Bruni and Stefano Zamagni, aims at introducing reciprocity into the economy as a humanizing factor. Despite being presented as an innovative perspective, the CE approach shares many characteristics with the German model of Social Market Economy (SME). The present paper compares both approaches, showing that they in fact share a normative basis and similar aims but address them from diverse points of view; namely, CE addresses them from a virtue ethics perspective and SME from an institutional ethics one. This leads them to stress different aspects and to focus on diverse problems. Therefore, CE would not constitute an alternative to SME but a complement. Thus, a combination of both approaches should allow each to take advantage of their respective strengths and lead to a better result in terms of the common good.

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Notes

  1. The idea of “extension” is not strictly true, as the genesis of Civil Economy is independent of the development of the Social Market Economy.

  2. Individual ethics focuses on the agents’ intentions that directly influence their behavior in the market. Conversely, institutional ethics considers morality at the level of the regulatory framework governing market competition, exerting influence in an indirect way (Homann and Blome-Drees 1992, pp. 118–123).

  3. Bruni and Zamagni (2007, p. 168) borrowed this expression from Caillé (1998).

  4. For an extensive analysis of this perspective, see Sugden (2018).

  5. Gui and Sugden (2005, p. 15) even define ‘reciprocity’ in these terms, as “a relationship between the members of a group of individuals who share some common interest that can be pursued by collective action; each member is motivated to make a fair contribution to the collective action if the others do so too”.

  6. Bruni and Zamagni (2007, p. 183) prefer to use the term ‘civil enterprises’ in order to differentiate them from traditional cooperatives, which are usually identified as social enterprises.

  7. The Economy of Communion Project was created by the catholic Movement of the Focolare in Brazil in 1991, and today it involves around 860 enterprises in different countries (Bruni 2014, p. 38). These firms divide their profits in three parts, namely, one part to help the poor, the second part to re-invest in the firm in order to create new jobs, and the third part to promote what they call a ‘culture of giving’ (p. 37).

  8. These organizations can also be identified as ‘value-based organizations,’ which are defined as organizations, “whose guiding principle (at least at the stage of their foundation) is neither profit, nor some strictly material elements, but an ideal motivation, a mission or ‘vocation,’ which is related in different ways to the intrinsic motivations of those who promote it.” (Bruni and Smerilli 2015, p. 33).

  9. The authors use the expression ‘regulating principles’ in a different way than Eucken (2004) does. In the case of CE, those principles are associated with ‘logics,’ while Eucken refers to more concrete policies.

  10. The authors borrow the definition of practice from MacIntyre (2007, p. 187): “By a ‘practice’ I am going to mean any coherent and complex form of socially established cooperative human activity through which goods internal to that form of activity are realized in the course of trying to achieve those standards of excellence which are appropriate to, and partially definitive of, that form of activity, with the result that human powers to achieve excellence, and human conceptions of the ends and goods involved, are systematically extended.” In this sense, the author defines a virtue as “an acquired human quality the possession and exercise of which tends to enable us to achieve those goods which are internal to practices and the lack of which effectively prevents us from achieving any such goods.” (p. 191, italics in original).

  11. The translation was taken from van Suntum et al. (2011, p. 5).

  12. The terms in English are taken from van Suntum et al. (2011, p. 7).

  13. Grassl and Habisch (2011, p. 45) even state that Civil Economy and Economy of Communion are not just mentioned in the encyclical, but that they are strongly integrated into its theological argument.

  14. This does not mean that the conception of human being in SME is simply the ‘homo oeconomicus’ (see Röpke 1960, p. 121); however, that aspect of human intentions forms the basis for the SME’s approach to the economic problem as a PD.

  15. See Becchetti et al. (2017) for empirical findings according to this perspective.

  16. Bruni and Smerilli (2012) develop a repeated dynamic Prisoner’s Dilemma game intended to show that cooperation is favored by diversity of strategies and suggest that unconditional cooperators can operate as ‘starters’ of cooperation in an environment of non-cooperators and conditional cooperators. However, even though they show cases where this is possible, they also find many non-cooperative equilibria which do not turn into cooperative ones; in this sense, they even recognize “the fragility of cooperation” (p. 155).

  17. Recalling some aspects from Aristotle’s theory of sociality and the concepts of Hume and Smith (‘reverberating nature of sympathy’ and ‘self-reflection’), Pelligra (2005, p. 120) argues that trust responsiveness is mainly motivated by the desire for conformity to other’s expectations, which in turn is not only explained by the fear of the other’s reaction but also by a sense of self-worthiness, which is indirectly related to the other’s approval.

  18. “Self-discipline, a sense of justice, honesty, fairness, chivalry, moderation, public spirit, respect for human dignity, firm ethical norms—all of these are things which people must possess before they go to market and compete with each other. These are the indispensable supports which preserve both market and competition from degeneration.” (Röpke 1960, p. 125).

  19. “Diese kann nur erwachsen, wo eine rechte Individualethik das soziale und wirtschaftliche Leben erfüllt” (Freiburger Bonhoeffer-Kreis 1979, p. 140).

  20. Vanberg refers to Corporate Social Responsibility (CSR), but his arguments regarding the responsibilities assumed by enterprises should be similar concerning civil enterprises, which are, however, not strictly identified with CSR (see Bruni 2012, 25 ff.).

  21. Luetge (2005) considers that acting ethically would be an investment for firms (p. 114) that is, a form of self-interested behavior. However, he shows that the economy needs such ethical behavior, and this need could legitimate the action of civil enterprises even though they also have other incentives.

  22. Zamagni (2004) uses similar arguments referring to SME.

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Acknowledgements

I would like to thank Prof. Dr. Christian Müller and Prof. Dr. Marcelo Resico as well as the editor and two anonymous reviewers for their insightful comments and suggestions, while retaining the responsibility for any errors or omissions. I am also grateful to the KAAD for the financial support.

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This study was funded by Katholischer Akademischer Ausländer-Dienst (KAAD).

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  1. Institute for Economic Education, University of Münster, Scharnhorststraße 100, 48151, Münster, Germany

    María Guadalupe Martino

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Correspondence to María Guadalupe Martino.

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Martino, M.G. Civil Economy: An Alternative to the Social Market Economy? Analysis in the Framework of Individual versus Institutional Ethics. J Bus Ethics 165, 15–28 (2020). https://doi.org/10.1007/s10551-018-4069-x

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