ȂȄǿ Partʺʺ: Politics and Philosophya functioning society, of people’s having some basis for predicting each
other’s actions; the inevitable imperfection, incompleteness, dispersion,
and costliness of knowledge; the costs of making transactions and of nego-
tiating, monitoring, and enforcing agreements, and the consequent use-
fulness of tacit agreements and informally enforced rules; applications of
methodological individualism and of property-rights theory to analysis
of nonmarket institutions and activities; concepts of externalities and col-
lective goods and the supposed free-rider problem; and the principle of
general interdependence.
Such concepts enter into explaining the usefulness of ethical rules and
even of concern with people’s characters.ȁStatutory law cannot prevent
all bad and enforce all good behavior. Laws attempting that would be
prohibitively costly to frame and enforce, as would the mobilization of
the necessary information. Ļey would have to be sweeping and vague,
would leave dangerous scope for administrative discretion, and would vio-
late the principle ofnulla poena sine lege. Ļe law could not enforce ordi-
nary decency, let alone actual benevolence. (“Ordinary decency” means
such things as honesty, respect for other people’s rights, and being consid-
erate, as in not throwing bottles into the street or making too much noise.)
Ļe very attempt at legal enforcement of decency, though doomed to fail-
ure, would spell totalitarian control over people’s lives. Ļis is not to deny
that properly enforceable ethical standards exist—far from it, and I shall
have more to say about enforcement later on—, but the case is overwhelm-
ing for keeping those standards and their enforcement outside the realm
of government and for keeping them informal, flexible, and subject to
piecemeal, gradual, decentralized reform (HazlittȀȈȅȃ, esp. pp.Ȁȇȃ–ȀȇȄ).Ȃ
ȁA social scientist may take interest in how ethical principles relate to the function-
ing of a social and economic system without imagining himself to possess superior moral
character. It is no coincidence that many eminent economists have pursued such an inter-
est—David Hume, Adam Smith, John Stuart Mill, Henry Sidgwick, J.M. Keynes, and
James Buchanan, to mention a few. Without implicating him in any mistakes of mine, I
should particularly like to mention my colleague Roland McKean, a former president of
our Association, with whose ideas on the economics of morality mine run largely in paral-
lel. See, for example, his two papers ofȀȈȆȃ. I should also like to acknowledge a significant
parallelism (despite some differences) with the thinking of another former president and
a former colleague, James Buchanan, whoseĻe Limits of Liberty(ȀȈȆȄ) I have read since
delivering this address.
ȂĻe most basic principles of morality, I would argue, are relatively unchanging, deriv-
ing as they do from human nature, including man’s nature as a social animal. But the
specific rules that are appropriate do change as factual circumstances and knowledge
change. Furthermore, as Hazlitt suggests, there may be such a thing as progress in moral