Much of social science has been devoted to the analysis of different mechanisms for social steering. The most well-known are the “invisible hand” market and the “iron hand” state. In many studies, these systems of coordination have been put forward as the only two that are available, and we have seen endless amounts of energy going into the pros and cons for each in different areas. In this book, two renowned scholars, one an economist (Geoffrey Brennan) and the other a political philosopher (Philip Pettit), put forward a third mechanism that they argue has largely been neglected, namely, esteem. The central idea is that while people are motivated by material benefits and by the incentives given by laws and regulations, they are also motivated by the opinions other people hold of them. In addition to material rewards, we also want other people we care about to think well of us. The authors argue that this esteem mechanism has largely been overlooked in modern neoclassical economics but that it was a major part of earlier economics, not least in Adam Smith's “A Theory of Moral Sentiments,” which was published in 1759, 13 years before “The Wealth of Nations.”

This book is original in that it contains both positive and normative arguments for the importance of esteem and also because it blends economic analyses about the different equilibria with philosophical reasoning and, to some extent, policy prescriptions. The latter seems motivated, at least in some part, by the authors' experience of a recent trend in many governments to submit public universities to “a pattern of relentless scrutiny and continuous accounting that consumes an extraordinary amount of time, demoralises and destabilises those in the business of education, and makes the education profession less and less attractive to young talent” (p. 6). The esteem mechanism is presented as an alternative to the “pseudo-market” type of steering that, according the authors, has seriously damaged academia.

The book has many original and surprising analyses of how esteem works and what makes esteem different from material rewards. While the market is driven by “the invisible hand” and laws by the “iron hand” of the state, the force behind esteem is defined as the “intangible hand,” which is grounded in civil society. The central arrangements for esteem to work are that general norms can be established so that there is a common understanding of what constitutes good and bad behavior; secondly, that the relevant actions become known to the civil society/general public; and thirdly, that people find it worthwhile to react (give esteem or disesteem) in the appropriate way. In all three cases there are problems (the proper general norms may not be established, the associations in civil society may be driven by vengeance or in-group loyalities, and people may fail to react due to the problem of collective action), and the authors discuss them all in a thorough manner. These are very difficult questions that pervade much of social science and discussion about public policy.

While this is a very creative piece of analysis, there are a few points where I find the discussion less convincing. The authors argue that esteem is different because it cannot be bought, sold, or exchanged. This is a strange argument since we live in a political world that, to a large extent, is dominated by organizations that make a living out of doing precisely this. The political sphere, at least in the countries I know, is today filled with political lobbyists and public relations consultants who trade in esteem. Also in academia, I have seen people trade esteem (“you cite/invite me, I cite/invite you …”). Secondly, there is at least one part of economic analysis in which esteem has not been as neglected as the authors argue. This is theories about the firm and organizational theory more generally in which conceptions focusing on the importance of “commitment,” “trust,” leadership,” and “organizational culture” have taken central stage (e.g., Gary Miller, Managerial Dilemmas, 1992). The reason is a result from noncooperative game theory showing that firms and organizations cannot be steered only by incentive schemes because in order to make such schemes work, those who are going to construct them need “correct” information about the nature of the tasks from those who are going to work under the schemes (otherwise the incentives will be dysfunctional). But if those in the latter group know that this information will be used against them (e.g., to speed up their work), they are not going to provide such “correct” information. This problem is the reason why real existing organizations rely not only on material rewards to steer their employees but also on different types of “esteem” (employee of the month, training to induce organizational commitment, promoting the esteem of leaders, etc.).

The authors end the book with a policy-oriented chapter about the ways in which the esteem mechanism could be used. Since giving esteem (or disesteem) often seems to be a more efficient steering mechanism than giving material rewards or incentives by law, this appears to be very promising. Unfortunately, the chapter is more about what to avoid than what to do, and the reason given for this is the lack of empirical information about the type of institutional arrangement that can influence esteem. This is a little surprising since one of the most discussed developments in public policy and public administration is the rise of “the audit society.” Governments have become more interested in establishing institutions that evaluate the performance of public authorities than in steering them by strict regulations. This is very much geared toward the issuing of publicly available reports that contain evaluations of performance and thus present esteem or disesteem in the way that is discussed here. A connection to this literature would have been a valuable addition to The Economy of Esteem.