Virtuous Capitalism : Why there Is Less Corruption in Business than You Think

Executive summary :

On its surface, this paper is about rent-seeking—private parties’ use of government to secure special favors. In today’s political environment, the question to ask is not why there is so much rent-seeking, but why so little? The federal government spends about $100 billion per year on corporate welfare, yet lobbying is only a $3 billion per year industry. Given rent-seeking’s incredible returns on investment, why is the lobbying figure not higher?

Public choice theorists call this question the Tullock Paradox, in honor of the late economist Gordon Tullock, who is widely credited with developing the modern concept of rent-seeking. Tullock’s economic analysis offers several convincing answers for why there is so little rent- seeking. Those answers are valid as far as they go, but in explaining capitalist vice, they do not go far enough in accounting for another important factor in play: virtue. The purpose of this essay is to convince social scientists to consider ways to incorporate morality and virtue in their analysis of Homo economicus.

Homo economicus is only one part of human nature. We urge social scientists to study the whole human being as best they can. While we confine our analysis to rent-seeking, our larger point—that morality and virtue deserve a place in economic analysis—has much broader implications. Read more or don't ...

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