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 / Summer 2006 / Issue 43(originally published by Booz & Company)


Deirdre McCloskey’s Market Path to Virtue

After Holland, Professor McCloskey returned to Iowa for another three years, in part to prove that she could be accepted as a woman in an institution that had gotten to know her as a man. But in 1999, Professor McCloskey was ready for a change when Stanley Fish recruited her to the University of Illinois in Chicago.

By most accounts, the gender change has not damaged Professor McCloskey’s professional reputation. “Deirdre hasn’t suffered at all,” says Stephen T. Ziliak, her collaborator in the critiques on significance testing. “Economists, in particular, are very libertarian. Even if not in their scholarship, they are in their personae.” Professor McCloskey herself notes wryly that when she told Gary Fethke, the dean of the University of Iowa business school, about her impending sex change, Dean Fethke responded: “Thank God…I thought for a moment you were going to confess to converting to socialism.”

In many ways, Professor McCloskey’s transformation from man to woman mirrors the dramatic transformations in her thinking that gelled as Donald became Deirdre: from Marxist into capitalist libertarian, from atheist into practicing Episcopalian, and from cliometrician, using mathematical models to understand economic history, into critic of significance testing in economics. Although Deirdre McCloskey’s work is a logical outgrowth of Donald McCloskey’s, it is also in some ways a rejection of it.

Professor McCloskey’s intellectual odyssey is not yet over. It took her six years to recognize that if economics is rhetorical, then it cannot be wholly rational. She acknowledges that she took a long time to move away intellectually and emotionally from her views as a “positivist, straight-line scientist” and assumes that her intellectual journey will cover still more ground. She has only just begun to define an economics that balances mathematics-based theory with a more qualitative approach. 

As Professor McCloskey continues to work on the future volumes of The Bourgeois Virtues, she remains optimistic about capitalism and her profession. “This long episode of [the] machine, of faith in mechanical views of what humans are like, may come to an end eventually,” she says. “I dream of an economics that will not throw away the insights that have been provided by people like Samuelson…but will redo them for human beings.” In achieving that dream, she can lead academic economists to a new perspective that will allow them to develop a more complete view — and greater appreciation — of human endeavor in a business setting.

Deirdre McCloskey’s Seven Bourgeois Virtues

  1. Prudence not just to buy low and sell high, but “to trade rather than to invade, to calculate the consequences, to pursue the good with competence.”
  2. Temperance “to save and accumulate, of course. But it is also the temperance to educate oneself in business and in life, to listen to the customer humbly, to resist the temptations to cheat, to ask quietly whether there might be a compromise here.”
  3. Justice “to insist on private property honestly acquired. But it is also the courage to pay willingly for good work, to honor labor, to break down privilege, to value people for what they can do rather than for who they are, to view success without envy.”
  4. Courage “to venture on new ways of business. But it is also the courage to overcome the fear of change, to bear defeat unto bankruptcy, to be courteous to new ideas, to wake up next morning and face work with cheer.”
  5. Love “to care for employees and partners and colleagues and customers and fellow citizens, to wish well of humankind, finding human and transcendent connection in the marketplace.”
  6. Faith “to honor one’s community of business. But it is also the faith to build monuments to the glorious past, to sustain traditions of commerce, of learning, of religion.”
  7. Hope “to imagine a better machine. But it is also the hope to see the future as something other than stagnation or eternal recurrence, to infuse the day’s work with purpose, seeing one’s labor as a glorious calling.”

Source: Deirdre N. McCloskey, The Bourgeois Virtues: Ethics for an Age of Commerce (University of Chicago Press, 2006)

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  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.
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