The Story of Economics 'Gods'

Summary

More or Less – The Story of Economics 'Gods'

BBC Radio 4 | Presented by Michael Blasland | First aired March 16, 2011

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Episode Overview

This episode, the first of a three-part series, explores the deep historical roots of economics as a fundamentally moral enterprise. Michael Blasland, with the help of economists, historians, religious leaders, and everyday people, traces economics back to Ancient Greece, investigating how foundational moral questions shaped early economic thought, and how those debates resurface amid today’s crises. The episode is framed around the idea of economics as "gods"—that is, as a story about human values, fairness, and trust, not simply mechanics or cold calculation.

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Key Discussion Points and Insights

1. The Moral Origins of Economics

• Location: The Lyceum, Athens, where Aristotle taught ([00:29])

• Context: Ancient Greek economics was inseparable from morality, with the gods ever-present in daily life and trade.

• Relevant quote:

  "Greece is arguably where economics as a discipline began. And it was an economics that was in many ways deeply moral, with the gods much in mind."
  —Michael Blasland ([00:29])

• The current economic turmoil in Greece is likened to a modern morality tale, echoing age-old debates about justice in economic life.

2. Aristotle’s Distinction: Value in Use vs. Value in Exchange

• With Professor Nikos Theocris at the Lyceum ([03:10–04:15])
• Key thought: Aristotle saw trading for need as proper, but profit-driven trade as "unnatural."
• Relevant quote:

  "He makes a very clear distinction between what we would call now value in use and value in exchange...If you make exchange in order to make money, and then another exchange in order to make more money, this, according to Aristotle, is unnatural."
  —Professor Nikos Theocris ([03:43])

3. The Ancient Suspicion of Making Money from Money

• There is a perennial skepticism regarding financial speculation and profit from purely financial activity ([04:34–05:03])
• Roger Backhouse explains how merchants (often viewed as outsiders) aroused suspicion for producing value seemingly "from nothing."

4. Trade as a Moral Leap Forward

• Trade’s role in encouraging trust and cooperation.

• Paul Seabright at the London Zoo draws analogies between human and primate cooperation ([05:49–08:12]):

  • Humans have developed intricate systems of trust, like financial systems, that allow for peaceful cooperation.
  • Quote:

    "We're the primates...who have cornered the market in cooperative behavior...Most people think...we live in a dreadfully violent world...But in terms of the relative risk of dying violently...we're in the most peaceful century the world has ever known."
    —Paul Seabright ([06:21])

  • Michael Blasland’s prompt:

    "Because of economics."
    —Michael Blasland ([08:11])

• Seabright’s historical example: Trade between Libyans and Carthaginians was based on the gradual build-up of trust, overcoming the temptation to "take all the goods and run" ([08:33–09:40]).

5. Economics, Trust, and Morality in Practice

• Everyday examples: letting a stranger into your house because of a badge, trusting taxi drivers ([10:00])
• The idea that trade encourages moral behavior: "And if you don't [behave], you won't be long in business or out of jail." —Michael Blasland ([10:17])

6. Innate Fairness: The Ultimatum Game

• Experiment with students at Warwick University highlights that people often reject unfair offers, even at personal cost ([10:29–12:01]).
• Memorable exchange:
  • Michael offers 50p, which is refused:

    "I'd rather keep my pride. I feel scammed."
    —Julie ([11:58])

  • Narrator’s takeaway:

    "Game theory...suggests that fairness can trump even what looks like self interest."
    ([12:01])

7. Adam Smith: More than a Market Mechanic

• Smith as a moral philosopher (with insights from Mary Morgan and Roger Backhouse) ([12:30–13:37]).
  • Humans’ propensity to "truck, barter and exchange" distinguishes us from animals, but our interests are more than narrow self-interest.
  • Smith’s disdain for luxury:

    "He refers to the luxuries consumed by the rich as baubles and trinkets, which is hardly disdainful. Yes, completely disdainful."
    —Roger Backhouse ([13:19])

8. The Parting of Morality and Economics

• 19th and 20th centuries: shift to "positive economics" (how the world works) vs. "normative economics" (how it should work) ([14:10]).
• Economists as "amoral technicians," separating description from values.

9. The Dog’s Birthday Cake: Modern Moral Dilemmas

• Charles Whelan (author, Naked Economics) tells a story about buying a cake for his dog ([15:13–16:02]).
• Quote:

  "Economics is amoral, it's not immoral. We gotta make sure we get our prefixes right here."
  —Charles Whelan ([15:13])

• Raises question: Is our spending in rich societies (e.g., cakes for dogs) morally defensible when there is global need?
• The limitations of markets, moral quandaries of pharmaceutical research.

10. Government, Philanthropy, and Market Incentives

• Whelan discusses how government and initiatives like those of the Gates Foundation can "fix" market failures for moral objectives (e.g., incentivizing a malaria vaccine) ([16:14–17:48]).

11. Ethics in Economic Policy: The Archbishop’s View

• Interview with Rowan Williams, Archbishop of Canterbury ([18:52–20:23]):
  • Denies that any part of life (including economics) lies outside ethics.
  • Quote:

    "I don't want to lose sight of the fact that economics is something which is about human relations at the end of the day, and therefore about human choices."
    —Rowan Williams ([19:07])

  • Expresses concern about the "virtualization" of finance and the sense of detachment and irresponsibility it creates.

12. Economists on Morality and Markets

• John Kay critiques the idea that efficient outcomes are always acceptable, especially regarding bankers' bonuses ([20:46–21:24]).
  • He supports legitimacy of public moral revulsion.
  • Quote:

    "It's true that an awful lot of economic models are predicated on the assumption of self interest. And actually for a lot of behavior that's not a bad description. But it's perfectly obvious that actually economies function only by virtue of a lot of behavior that isn't, certainly isn't narrowly self-interested."
    —John Kay ([21:59])

13. Where Economics and Morality Intermingle

• Blasland notes that people's moral rhetoric is often aligned with their preferred economic outcomes ([23:09]).
• Even cold calculations are often rationalizations for deeper moral instincts.

14. A Modern Moral Dilemma: Sen’s Job Allocation Problem

• A class of students debates who is most deserving of a job—based on need, happiness, or health ([24:07–25:44]).
  • The problem eludes easy solution, showing that "throw in moral values and there's no simple calculus" ([25:44]).

15. Return to Greece: Anger and Morality Amid Crisis

• Greek activist Nicky Rubani expresses deep anger with the system ([26:46]):

  • Quote:

    "I feel this kind of wrath now, this kind of anger because people have found themselves owing money that they don't actually owe to anybody. Somebody stole the money...it was the corrupt system."
    —Nicky Rubani ([01:21])

• Protest and disillusionment are forms of moral condemnation of perceived injustice.

16. Transition to 'Cogs': The Next Perspective

• Economics as pure mechanics (a "ruthless force") will be the next theme in the series ([27:32]).

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Memorable Quotes & Timestamps

• “Trade for trade's sake, to make big profits, was not what things were for. A shoe, above all, is for wearing.”
  —Professor Nikos Theocris ([03:20])
• “We're the primates...who have cornered the market in cooperative behavior.”
  —Paul Seabright ([06:21])
• "I’d rather keep my pride. I feel scammed."
  —Julie, after rejecting an unfair ultimatum game offer ([11:58])
• "Economics is amoral, it's not immoral. We gotta make sure we get our prefixes right here."
  —Charles Whelan ([15:13])
• “I don't want to lose sight of the fact that economics is something which is about human relations at the end of the day, and therefore about human choices.”
  —Rowan Williams ([19:07])
• "By designing institutions around the assumption of self interest, we actually encourage self interest behavior."
  —John Kay ([21:59])
• "We have given time to this government expecting things to change. And I think people are tired of waiting. People are already angry."
  —Nicky Rubani ([26:46])

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Notable Moments and Timestamps

• [03:43] Aristotle on proper vs. unnatural exchange
• [05:49] Comparing human and primate cooperation mechanisms
• [10:30] The Ultimatum Game in action reveals fairness trumps self-interest
• [15:13] The morality of buying a dog’s birthday cake
• [18:52] Archbishop Rowan Williams on the impossibility of separating economics from ethics
• [21:59] John Kay questions self-interest as a foundation for economic modeling
• [24:07] Students grapple with a real-life utilitarian moral dilemma

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Tone and Language

The episode moves conversationally between historical exposition, honest personal reflection, and lively debate. Michael Blasland’s narration is thoughtful and accessible, skeptical of pat answers but generous to all perspectives. The tone is earnest, occasionally wry, with a consistent effort to humanize and moralize what are often treated as dry, technical debates.

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Summary

This episode demonstrates that economics, at root, is always intertwined with questions of morality: trust, justice, and fairness. From the steps of Aristotle’s Lyceum to the angry streets of modern Athens, and via experiments and interviews with economists, philosophers, and religious leaders, the discussion reveals an enduring tension and interplay between self-interest and our moral instincts. As the series prepares to shift focus to economics-as-mechanism, the episode leaves listeners with the clear sense that economic life can never truly escape its ethical entanglements.

Transcript

[Michael Blasland]

Thanks for downloading this podcast from the BBC. Though it might not be what you expect, some of the people behind More Or Less have been busy making another series, the Story of Economics, presented by Michael Blasland and broadcast in three parts from Wednesday 16th March. Since more or Less is off air, we thought you might like this instead. You can find out more about this [e-mail].

It's a bright February morning in Athens and we're standing. This makes my heart beat a little faster. We're standing where Aristotle once taught, near the library of the Lyceum, recently rediscovered and soon to be excavated. Greece is arguably where economics as a discipline began. And it was an economics that was in many ways deeply moral, with the

[Narrator/Presenter]

gods much in mind.

[Michael Blasland]

And if morals no longer seem relevant to the dry economic calculus, well, that's not how it seems here, where people have died protesting about their economic fortunes.

[Roger Backhouse]

Three people have been killed in Athens

[Narrator/Presenter]

in a petrol bomb attack on a bank during violent protests.

[John Kay]

I'm so angry, I don't want to speak anymore.

[Narrator/Presenter]

I'm ready to kill people.

[Roger Backhouse]

It's time to rise up.

[Mary Morgan]

It's time for revolution.

[Nicky Rubani]

I feel very angry. It's the kind of anger that in ancient Greece they would say the wrath of gods. I feel this kind of wrath now, this kind of anger because people have found themselves owing money that they don't actually owe to anybody. Somebody stole the money, somebody misplaced the money and it was the corrupt system.

[Narrator/Presenter]

That's a Greek activist, Nicky Rubani. In good times, money felt no need of an excuse. Well, not now. Greed is evil again. Who thinks that? Not just bankers and regulators, but economists have some explaining to do. Me too.

[Michael Blasland]

So when Radio 4 asked me to

[Narrator/Presenter]

tell the story of economics and why it goes wrong, I said, ask an economist, then relented. Because it seemed to me that one way of thinking about economics and the crash was Nikki Robani's that we're living through a morality tale. So in these three programmes we'll explore that and two other perspectives. That economics is not really about morality, but science, describing a vast economic machine. And third, that it wrestles less with morality or mechanics than with a spirited animal made up from billions of capricious wills and impulses, including yours and mine. We've called these three gods cogs and monsters. So this is a story of economics told by a non economist. It says little about supply and demand curves, but travels instead through Aristotle's lyceum, the zoo, a bakery, an engineering lab, a cafe. And in this first Programme gods. We start with that morality tale, because the first economists weren't really economists, they were moral philosophers.

[Roger Backhouse]

We are here in the Ephevium.

[Professor Nikos Theocris]

Ephevium. It's the place where the adolescents were. I mean, the lecture room.

[Narrator/Presenter]

Amidst the foundations of the Lyceum, Professor Nikos Theocris describes Aristotle's economics. Some people think Aristotle was aristocratically sniffy about trade, but not quite, says the professor. But he did think that trade for trade's sake, to make big profits, was not what things were for. A shoe, above all, is for wearing.

[Professor Nikos Theocris]

He makes a very clear distinction between what we would call now value in use and value in exchange. If I have, say, excess grain and I exchange it for wine, which I lack, then this is a property exchange. If you make exchange in order to make money, and then another exchange in order to make more money, this, according to Aristotle, is unnatural.

[Narrator/Presenter]

Unnatural.

[Professor Nikos Theocris]

Unnatural against nature.

[Michael Blasland]

Arguments about morality feel immediate again here in Greece and in other countries too, since the crash. Many feel bitter and painful, pessimistic. Behind me you can hear a young guy playing blues harmonica on the steps of the Acropolis. Odd, but maybe apartment

[Narrator/Presenter]

Sobering, isn't it, this cry that there's something fishy about making money from money. A more than 2000 year suspicion. Even though few people now have a problem with the idea of lending at interest. My guess is that many still blame conjuring tricks in the world of finance for bringing the house down. From time to time. We're going to hear from an historian or two. Here's the first. Roger Backhouse. He wrote the definitive guide to the history of economics.

[Roger Backhouse]

Aristotle clearly was concerned with morality, partly because, I suppose when he was considering economic questions, he was considering the question of trade. And trade was typically done by merchants who were often outsiders to the communities that people were living in. And so people were rather suspicious of these merchants who seemed to get something from nothing.

[Narrator/Presenter]

So economics started moral. You could say that not just the study of economics, but economic life itself, that whole shebang of trading, buying and selling that began with the first tentative bartered exchange, was a giant moral leap forward. To find out what was moral about it, we need some animals.

[Michael Blasland]

We've come to London Zoo to talk about economics, and I'm watching a little squirrel monkey who's just climbed on the rope next to me and is chewing away at something and threatening to climb on me. The relationship between primates and humans is something that doesn't often strike us about the way that economies work. But I'm here to talk to Paul Seabright, who's an economist and has thought about exactly that. Paul, why are we talking about economics in the company of squirrel monkeys and other primates?

[Paul Seabright]

Well, we're primates ourselves. I'm not sure if you realise this, but there's a bunch of other small primates on an outing from school just past us, and if you'd been concentrating on them rather than on the squirrel monkeys, you'd have picked up some very interesting noises from them. Because we're the primates, I suppose, who have cornered the market in cooperative behavior. If we were chimpanzees, we would be fighting each other much more than talking. If we were bonobos, we would be largely having sex rather than talking. I should specify for your listeners that we're not actually having sex. That's one of the things about radio, you never are quite sure. But bonobos build trust by sexual encounters between the members of the group, which essentially defuse aggressive instincts. Chimps do it more by building coalitions which are of sufficient size to deter potentially violent assaults by others. We do it by a much more complex system of interactions, which are both psychological interactions. I mean, the way we look at each other, the way we signal to each other, but we also do them by formal institutions. We do things like we establish financial systems that allow me to go and get some food from a restaurant and pay for it with a scribble on a credit card slip, which is, if you think about it, a fantastically elaborate and abstract way of doing what chimps have to do by coalition management. Bonobos have to do by having sex. And we do in this huge array of different ways. Most people think, they see cnn, they see the World News, they think, my God, we live in a dreadfully violent world. And we do in terms of the total numbers of people who die, which is why we, you know, BBC News always finds plenty to report. But in terms of the relative risk of dying violently as opposed to dying some other way, we're in the most peaceful century the world has ever known.

[Michael Blasland]

Because of economics.

[Paul Seabright]

Yes, because the things that have tempted us to deal with each other instead of fighting each other have been the promise of a more prosperous life.

[Michael Blasland]

We'll just keep our distance, actually, while the. About to pull apart your

[Julie (participant in game)]

luggage.

[Michael Blasland]

There we go. Sorry.

[Paul Seabright]

There's a wonderful description of the Libyans and the Carthaginians trading. And the way they would trade is that they would meet each other at a distance in the desert and one group would go forward very cautiously to the others, always watching to make sure that they had an escape route and they would lay some goods on the ground and then they would scurry away and the other group would come forward and inspect the goods. And if they were tempted by the goods, they would put down some goods of their own which they thought were of an approximate equal value, and then they would scurry away and this thing would go on until both sides indicated they thought it was a fair deal, in which case they would take the other's goods and go away. Now, you can see all sorts of risks in this. Even if you keep your distance enough to avoid being killed by the others, the risk you face is that when both sets of goods are down there, the other party takes both of them and disappears. What happened gradually, as history developed, was that people started to trust each other enough to forego the temptation of taking all the goods and running away and just taking the ones offered by the others, so that the game would be played again another day.

[Narrator/Presenter]

Please enter your pen. When banks were frightened to lend to each other and others and the economy

[Michael Blasland]

trembled, it was partly because they didn't

[Narrator/Presenter]

trust other people's balance sheets. Account balance?

[Michael Blasland]

Yes, please. But the odd thing is that usually

[Narrator/Presenter]

they do looks about right. More's the pity.

[Michael Blasland]

We let strangers into our homes just because they wear the gas company's badge. Will the taxi driver at a foreign airport fleece me? Maybe, but probably not much, even though

[Narrator/Presenter]

I'll never see him again. The idea here is that trade somehow helps us behave, usually.

[Michael Blasland]

And if you don't, you won't be long in business or out of jail.

[Narrator/Presenter]

But surely people have moral notions of their own, not forced on them by economics like fairness.

[Michael Blasland]

To find out about those, we're going

[Narrator/Presenter]

to play a game.

[Michael Blasland]

It's a game for two people.

[Narrator/Presenter]

We're playing at Warwick University. So let's hear it for our host from the business school, Professor Nick Chaytor.

[Professor Nick Chaytor]

Great.

[Game host]

Well, thank you very much, Debbie and Julian, thanks very much for taking the time to play this game. This is game with real money. It's a very simple game called the ultimatum game. And the way it works is I'm going to give some money in a second to Debbie. And this is money you may or may not be able to hang on to. So I'm going to give you the money and then you have to decide how to split that money between yourself and Julie. And then Julie will say whether she accepts your quotes ultimatum. And if she accepts it, then the split goes through. But if she rejects your ultimatum, the game's off and we Take the money back. Okay, so here is your money.

[Julie (participant in game)]

That's six pounds offering Julie three pounds.

[Nicky Rubani]

I accept.

[Game host]

Well now that actually turns out to be a very, very happy coincidence that you've chosen the standard response. Some people choose other responses, but that's a very normal one. Okay, Michael, you have a go. So now you're going to play Debbie and you've got the money, you've got to decide what, what you're going to allow her to have.

[Michael Blasland]

I have my £6. £6 in ready money and I'm going to offer you, I'm not offer you 50p actually, because I, you know, I could use the money myself.

[Julie (participant in game)]

I don't accept.

[Narrator/Presenter]

I think this is fair. Yeah, no, look, I'm offering you 50p of free money. That's so irrational.

[Michael Blasland]

Explain yourself.

[Julie (participant in game)]

I'd rather keep my pride. I feel scammed.

[Narrator/Presenter]

Game theory, as this branch of economics is known, suggests that fairness can trump even what looks like self interest. That at our simplest level of economic motivation, morality must count. And for a long time the idea that economics and morality were chicken and egg seems to have stuck. Time then to meet Adam Smith, the great 19th century economist. He of the invisible hand of the market. With help from another historian, Mary Morgan.

[Mary Morgan]

Adam Smith's account of how his economy works is a portrait of the individual in which the most important thing is what makes us different from dogs. The single most important thing, almost the starting point for Adam Smith is that we have, all of us, an inbuilt instinct, a propensity calls it to truck, barter and exchange.

[Roger Backhouse]

Right?

[Mary Morgan]

Well, you know, you look at two dogs fighting over a bone, they don't exchange, they fight. And the point about being human is that you exchange. So it's a fundamental internal propensity instinct and that's what in a sense generates a large bit of Adam Smith's system. You have interests, but interests aren't narrow self interest, they are the ability to reason, to think through what will happen to you. If you save today you can invest in stock tomorrow.

[Roger Backhouse]

Adam Smith was first and foremost a moral philosopher. His main book was the Theory of Moral Sentiments and he carried on revising that book right up until his death. I mean, he refers to the luxuries consumed by the rich as baubles and trinkets, which is hardly disdainful. Yes, completely disdainful.

[Narrator/Presenter]

Roger Backhouse. So Adam Smith, pin up of the free market, a moraliser. Seems so, but now I'm puzzled. Economic life was a civilizing force for trust, a moral virtue. Economic theory also started and continued Moral and people have deep moral instincts that they bring to economic life. Morality all over the place. So since we didn't discover greed this century or any other what happened in

[Roger Backhouse]

the 19th and 20th centuries, economists have been far more concerned to separate what they call positive economics and normative economics. Positive economics is about how does the world work and normative economics is about how it should work. The argument is that economists aren't qualified as economists in their role as economists to make political judgments or judgments about values or the ends of economic activity.

[Narrator/Presenter]

Is that it? The parting of the ways? Generations of economic students grown up, intellectually divorced. Though I guess the rationale sounds logical enough. First find out what the economy and economic behaviour is. Then presumably add your moral objective. How does that work? Well, not without a few moral headaches, as I found out when I met Charles Whelan from Chicago. Charlie is the author of Naked Economics, a popular introduction to the subject, and he tells a great story of perplexing modern economic morality. Buying a birthday cake for his dog.

[Charles Whelan]

Economics is amoral, it's not immoral. We gotta make sure we get our prefixes right here.

[Michael Blasland]

Did you really buy a birthday cake for your dog?

[Charles Whelan]

I did actually. And the store, one of the stores went out of business. So we're here on Lincoln Avenue, which is intersects with Halstead and there used to be several. Now I believe there's only one. Stores that sell products exclusively for dogs. It is a dog bakery.

[Michael Blasland]

And you raise the question yourself in your book, how is it morally defensible to buy a birthday cake for your dog when you know, maybe you could pay for life saving vaccinations for a dozen people Elsewhere I believe I went

[Charles Whelan]

even further and said it is not morally defensible. We know that there are resources that could be better put to some other use in some other part of the world. There is not necessarily a mechanism for getting that to someone who's starving in Africa because they have nothing to offer in exchange.

[Michael Blasland]

Some people might say that, well, we should set up a mechanism where we have governments. That's what governments are for. They should direct the money in that kind of fashion to the ends which we think are good, not just instantly gratifying.

[Charles Whelan]

I always ask my students, I say, look, there are roughly a million people a year who die of malaria. A good portion of them are children. And it is a disease that people feel that if we actually threw more resources at, we could create a vaccine. So why don't we do it? They kind of scratch their heads and I say, well, let's go a step further. Let's suppose that you run a pharmaceutical company and your scientists say, look, we can't do everything. We have promising research on a drug that will cure male pattern baldness and we have some research that's promising to cure malaria. Which avenue should we put pursue? And you look at the potential market for your malaria drug and you realize that just about all of these million people who are dying are utterly poor. So this may be a promising breakthrough on your behalf, but you're not going to make a whole lot of money. Then you go over to your male pattern baldness drug and you realize that the market here is huge and it's going to be a complete blockbuster. So the rational business economic decision for your firm is to create the male pattern baldness drug to send all your scientific resources in that direction. We go further and say your shareholders would probably fire you and arguably should fire you if you spend a lot of resources on the malaria drug. So your question was, can government do things to fix that? And that answer is yes. The Gates foundation and Gordon Brown's government went to great lengths to mimic the market's incentives and they set up a program that did for the market what the market would not do for itself. In the case of malaria, you can think of it as almost as a contest where they offered a very large prize to whatever firm designs an effective malaria vaccine first.

[Narrator/Presenter]

I have to say after that that I'm feeling implicated in a lifetime of morally dodgy economic behaviour. I've never bought a cake for the dog, but I've spent almost as much on one sandwich. And I can't blame economics for that. Charlie says I'm free to bring to the market or to the politicians who intervene. Just about any values are like. Most economists don't mind if we're public spirited, generous, religious or green. What they want to understand is how our preferences pan out. So after making the money, can intervention make it moral as Charlie Suggests? The top 1% of earners in the UK pay about a quarter of all the income tax. A huge part of what we consume is shared, not leased, through the health service. This is people giving one to another. There's moral meddling for you. The problem is that not everyone thinks it's meddling for the good. I think we need the view of a modern moral authority. Lambeth Palace. It is home of the Archbishop of Canterbury, Rowan Williams.

[Rowan Williams]

The suggestion that there is some area of choice and policy and imagination and so forth which is right outside the scope of ethics has to be very unreal.

[Narrator/Presenter]

But you couldn't say that there's a

[Michael Blasland]

descriptive category of life and onto which

[Narrator/Presenter]

we can graft moral or ethical values.

[Rowan Williams]

Certainly there are, there are transactions we can just describe. But my worry sometimes in some kinds of economic rhetoric is that these transactions are described as if they were not actually performed by persons, as if they just happened somewhere out there in this mysterious virtual world called the market. And I don't want to lose sight of the fact that economics is something which is about human relations at the end of the day, and therefore about human choices. You've had the extraordinary explosion of what you might call speculative finance, the shift of profit making from the actual to the virtual economy, from actually making and trading things to shifting currency patterns around and handling loans and all the rest of it. And that I think has intensified the feeling that economics is or can be again a rather impersonal thing. It happens in this virtual world. You feed the information in, mysterious things happen and out comes a lot of money at the end. Rather like a slot machine. I think what's worrying about this, what's morally worrying about it, is the sense of detachment, the sense that once the button's pressed, I don't really have responsibility for what then goes on.

[Narrator/Presenter]

Rowan Williams argues that economics and morality can't be separated after all and that something in the language maybe made the divorce bad for us. Or is that just what a moralist would say? Let's try it on an economist. John Kay is one of Britain's finest. How does he see one of the great questions of the moment? Bankers pay the. And bonuses.

[John Kay]

I don't think even if these arrangements are functionally efficient, that actually that enables one to say there are no moral aspects to it. You know, one might be repelled by the fact that bankers earn bonuses of tens of millions of dollars. Even if one thought it was efficient, that that was the outcome of a market process, Whether it is an efficient outcome of a market process is another and secondary question. But both issues are there and you're

[Michael Blasland]

comfortable with an expression of revulsion about that. You say that's a legitimate part of an argument, an economic argument about bankers.

[John Kay]

Perfectly legitimate, right. And it seems to me one of the big questions as a nation we have to answer is that there are corrupting effects on society of this kind of activity and these kind of earnings which might lead us perfectly reasonably to conclude that even if there were some other benefits derived from them, we didn't want them to take place.

[Michael Blasland]

There's sometimes a view that economics is about self interested calculus does that make any sort of sense as a description of the way that we conduct our economic lives?

[John Kay]

It's true that an awful lot of economic models are predicated on the assumption of self interest. And actually for a lot of behavior that's not a bad description. But it's perfectly obvious that actually economies function only by virtue of a lot of behavior that isn't, certainly isn't narrowly self interested. More than that, I think by designing institutions around the assumption of self interest, we actually encourage self interest behavior. Before 20, 30 years ago, people used to talk about selfishness in business and finance and they felt rather ashamed of it. In the last 20 or 30 years people have been quite proud of it to believe almost that the moral virtue of an activity is measured by how much money you make out of it. I think all this is a terrible misunderstanding of how economies, you know, actually work.

[Narrator/Presenter]

Said the economist to the archbishop from the same hymn sheet. They're both arguing against what they tell us is the rival gospel of the spreadsheet.

[Michael Blasland]

It's a plausible story of economics.

[Narrator/Presenter]

But how many of us, like John Kay, are prepared to say that morality might cost us? Because here's what nags at me. I've seldom met anyone who thinks that the state should help people more for moral reasons, of course, who didn't also argue that the economy would be better if it did. And I don't think I've ever met a believer in the morality of self reliance keeping the state out of our lives, who didn't argue with uncanny conformity that economic prosperity compels us to cut government. Our morality always seems efficient. Funny that. My hunch is that this alignment explains a lot inside economics, even when it pleads dry utility, is often a moral instinct trying to get out.

[Michael Blasland]

I've come to my old school, Tring in Hertfordshire. A few ghosts here. It's been about, oh, I don't know, too many decades to mention. And I'm going to ask them a question about morality and economics.

[Narrator/Presenter]

Of course, here's the question devised by Amartya Sen, an economist, and set to Wendy Davis, year 13 economics class. Three people equally qualified for a job. For Alice, the poorest work provides the biggest increase in welfare. Jane, the unhappiest, would have the biggest increase in happiness. Emily, the most unhealthy, could pay for treatment and most improve her health. So who gets the job? Do we prefer Emily's health, Alice's wealth or Jane's happiness?

[Professor Nick Chaytor]

I give the job to Jane because I believe that unhappiness can be cured by Having a job and having something to live for as well. She's got a family. It's very important to support your family. Even though Alice is poor, she's not necessarily unhappy. So give it to Jane.

[Michael Blasland]

Anyone else want to have a go?

[Julie (participant in game)]

I'd go for Emily because most damage is from loss of production anyway resulting.

[Michael Blasland]

This is very utilitarian view.

[Julie (participant in game)]

I've just been doing it, so I think there's probably more wider effects. If you boost the health of everyone,

[Michael Blasland]

do you not care about Alice's poverty?

[Julie (participant in game)]

Well, I do, but as a whole, if there's a healthier population, it's going to support a whole lot more people. Unhealthy people are often the people who are most likely to suffer from lower incomes anyway.

[Michael Blasland]

Will anyone speak up for Alice?

[Professor Nick Chaytor]

She's on desperate need for the money. She hasn't had a job for quite a while, so therefore she's making a government deficit due to the increased benefit. And then Emily, she might not be fit to have the job. She's unhealthy and she can get healthcare through the nhs.

[Narrator/Presenter]

Throw in moral values and there's no simple calculus. But notice how these young economists do like trying. Some say economics is the devil, even putting a price on life to others. That's cheap. Economics, they say, is more moral than its critics, exactly because it has learnt to face honest choices such as who whose health and life to save and who's not where. Some see selfishness, others see self reliance, a virtue or freedom. Some want higher tax for the common good. Others see tax as theft or waste and the common good weasel words for dependency. This is economics with almost no economics, it's moral philosophy. Isn't that where we began? Will economics ever be less than up to its neck in moral argument? Some thought they'd escaped all that, but who really can be surprised at the strength of feeling in Greece?

[Michael Blasland]

Here, everywhere, among economists, as everyone else,

[Nicky Rubani]

we have given time to this government expecting things to change. And I think people are tired of waiting. People are already angry. They're just waiting, waiting to see if there is any change.

[Michael Blasland]

We've seen some strikes and riots.

[Nicky Rubani]

Well, you've seen nothing yet. I think now it's starting.

[Narrator/Presenter]

To my right is the Parthenon, the

[Michael Blasland]

temple of the goddess Athena.

[Narrator/Presenter]

To the left is the ancient Agora, the marketplace.

[Michael Blasland]

We're about to move from gods to the cogs of economic supply and demand. Economics is a way of telling us how to live a moral life, dealing with justice or fairness, who's really worth

[Narrator/Presenter]

it and what we mean by worth.

[Michael Blasland]

None of this has gone away. But what comes next in our history of economics sometimes appears at least to forget all that. For there's another version of the Greek crisis that it had little to do with failure of the economic model and everything to do with failure to heed economics, whose ruthless necessity is a matter not of morals, but the cog like operation of an economic machine of ruthless force, the market. That's our next programme, which takes us to Chicago.

The story of economics was presented by Michael Blasland and produced by Richard Knight. More or Less is back on air from the 1st of April.