Moral and Market Economies Meet: Remaking Exchange

Abstract

Both Adam Smith and Emile Durkheim believed profit-oriented, instrumental rationality—behavior we associate with the stereotypical market actor—was not enough to sustain working economies. For Smith (2002 [1759]), sympathy was crucial for social or economic exchanges. Exchange for material gain alone was too cold a foundation for exchange, and only sympathy and shared values—and exchange of empathy, as it were—would reduce opportunism that would be a natural outgrowth of instrumental rationality. For Durkheim (1947), a utilitarian rationality could not explain how exchange persisted as continual practice, much for the same reasons Smith noted: self-interest and even the power of the state were insufficient to keep market exchange running in a consistent fashion. For Durkheim, “non-contractual elements of contract” were essential: self-interest and the state had to be augmented by shared norms of reciprocity and the sanctity of contract, else opportunism would be rife and the state would be overloaded with policing violations. Without shared norms of the sanctity of law and contract, economic life would disintegrate into a Hobbesian state of nature. While exchange in post-Soviet Russia between economic actors (firms, entrepreneurs, consumers) is on a relatively firm footing as of 2010—there are enough lawyers to prosecute contract violations, and banks helped contract defense by allowing seizure of assets—exchange was far from stable in the 1990s.