strategy+business is published by PwC Strategy& LLC.
or, sign in with:
strategy and business
 / Summer 2006 / Issue 43(originally published by Booz & Company)


Deirdre McCloskey’s Market Path to Virtue

Professor McCloskey is one of “the broadest-gauged intellectuals I know,” says Robert Fogel, a Nobel laureate who was Professor McCloskey’s mentor at the University of Chicago. “There are one or two in my generation that are her match,” he adds. Indeed, her intellectual journey has taken her through rhetoric, philosophy, the classics, and literature. By bringing a multidisciplinary approach to the study of economics, Professor McCloskey is hoping to inspire a change in the profession at large so that it better reflects society and can be more useful in solving complex human problems. Professor Fogel notes, “Everything that Deirdre has touched is interesting. It’s insightful. It’s provocative. Even if I don’t agree with it, I have to worry about it.”

Professor McCloskey’s reputation is built on disputing the status quo. In the 1960s and 1970s, Donald McCloskey helped pioneer the field of cliometrics, an approach applying quantitative analysis to the study of economic history. In the 1985 book The Rhetoric of Economics, he issued a challenge to the economic formalists, the “Samuelsonians” whose mathematical models and abstract theory dominated the discipline’s mainstream. Persuasion, he said, is as influential as so-called scientific analysis in shaping economic discourse. Though it remains outside the prevailing current of economic thought, Rhetoric is now considered a classic text in the field. Stanley Fish, the eminent social and literary theorist who brought Professor McCloskey to the University of Illinois in 1999, calls her an “intellectually curious and capacious” thinker along the lines of Thomas Kuhn in science or Richard Rorty in philosophy; she has raised fundamental questions about the underlying protocols, assumptions, and hard-science credentials of economics.

Through the breadth and depth of Professor McCloskey’s work and prodigious writings runs a commitment to pragmatism and empirical research. She insists on embracing the messy complexities of human behavior, rather than relying on what she sees as the simplistic theoretical lens of modern economics. In her broadest critiques, she rails against the caricature of “economic man” — a self-interested hunter-gatherer whose only motivation is accumulation — that has been the mainstay of capitalist economics since Hobbes and Bentham. “Surely there is an opportunity to get rid of that great stick of a character, Homo economicus, and to replace him with somebody real, like Madame Bovary,” wrote Professor McCloskey in The Rhetoric of Economics.

In The Rhetoric of Economics, Professor McCloskey also suggested that modern economics is based on a fundamental misunderstanding of the role that “rationalism” plays in the intellectual roots of capitalism. This misunderstanding has led both capitalism’s critics and its defenders to the reductive misunderstanding of capitalism as a purely utilitarian, amoral system that glorifies personal gain at the expense of societal cooperation. Such a view, Professor McCloskey says, is dangerously wrong because it prevents capitalism from achieving its potential to foster virtue and economic growth.

Today, as scandals play out across the business pages, the view of capitalism as an engine of virtue feels counterintuitive to many. Such writers as Jack Bogle, founder of the Vanguard group of funds, pollster Daniel Yankelovich, and ethicist Lynn Sharp Paine have recently taken up the subject of corporate behavior. The premise of most of their work is that the greed inherent in the market must be tamed by outside forces (either laws or norms). In contrast, Professor McCloskey notes in The Bourgeois Virtues that classical capitalism, as envisioned by Adam Smith, has the seeds of morality already embedded in it and that no economic system is inherently good or evil. “The Capitalist Man in his worst moment is greedy,” writes Professor McCloskey. “And so are you and I. And so, I note, is Socialist Man, in more than his worst moments.”

Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store



  1. John C. Bogle, The Battle for the Soul of Capitalism (Yale University Press, 2005): Vanguard Fund founder’s acerbic and non-McCloskeyan view of managerial immortality.
  2. Ann Graham, “Lynn Sharpe Paine: The Thought Leader Interview,” s+b, Summer 2003: Research on ethical ambiguity anticipates some of Professor McCloskey’s ideas. Click here.
  3. Arjo Klamer and David Colander, The Making of an Economist (Westview Press, 1990): Provides hard evidence, based on a survey of graduate students, that economists have veered too far into mathematical models and away from real-world problems.
  4. Art Kleiner, “Daniel Yankelovich: The Thought Leader Interview,” s+b, Fall 2005: A different kind of management morality optimist. Click here.
  5. Deirdre N. McCloskey, The Bourgeois Virtues: Ethics for an Age of Commerce (University of Chicago Press, 2006): Tour-de-force defense of capitalism as ethical source.
  6. Deirdre N. McCloskey, If You’re So Smart: The Narrative of Economic Expertise (University of Chicago Press, 1990): Argues that the power of economists rests more on their abilities to persuade than their abilities to predict the future.
  7. Deirdre N. McCloskey, The Rhetoric of Economics (1985; University of Wisconsin Press, 2nd ed., 1998): How economic formalists have taken their reliance on econometrics and mathematical models “absurdly too far.”
  8. Rob Norton, “Derivative Wisdom,” s+b, Spring 2006: Survey of sources of financial wizards who influenced Professor McCloskey. Click here.
  9. Michael Schrage, “Daniel Kahneman: The Thought Leader Interview,” s+b, Winter 2003: The Nobel Prize–winning economist parses the roles of emotion, cognition, and perception in the understanding of business risk. Click here.
  10. Adam Smith, The Theory of Moral Sentiments (1759; Prometheus Books, 2000): Deirdre McCloskey credits the father of modern economics with much of her thinking on the virtues of capitalism.
  11. For more business thought leadership, sign up for s+b’s RSS feeds. Click here.
Sign up to receive s+b newsletters and get a FREE Strategy eBook

You will initially receive up to two newsletters/week. You can unsubscribe from any newsletter by using the link found in each newsletter.