Economic Justice and the Spirit of Innovation - Edmund Phelps

The current debate on economic and financial reform assumes that man is strictly interested in optimising consumption and is risk-averse – a homo economicus, in other words. As such, economics as a tool in policymaking becomes a purely technical exercise and never touches on morality in its own right. However, this is inaccurate, argues the author, as humans possess a ‘restlessness of heart’ which drives them to innovate and take on risks in those endeavours. By facilitating our restlessness and directing it towards wealth creation (a socially beneficial end) there is a ‘morality of the marketplace itself’. Economics can help shape our institutions to correspond to our true human nature and correct failures that often occur in the market. This has wide implications for policymaking and requires us to acknowledge there is more to being human than distributing material goods.

© First Things (New York)