1. INTRODUCTION
In a recent paper (2008) Bruni and Sugden – unhappy about the usual identification of morality with self-sacrifice – proposed a way to reconcile what they call ‘fraternity’ with the intention to obtain legitimate benefits in market relationships. The key, they believe, is to view a market contract as a joint commitment to cooperate for mutual benefit, which activates ‘team reasoning’.
In this paper, after briefly summarizing their arguments (section 2), I maintain that their criticism of social preferences does not apply to guilt aversion, which in fact lends itself to the rephrasing of most of their claims in the language of individual reasoning (section 3). Then I argue that aiming for mutual benefit does not prevent individuals from facing trade-offs between their own and their partners’ surplus, so the notion of sacrifice cannot be entirely eschewed. Since in enduring relationships agents’ attitudes towards each other evolve as a function of past actions, reciprocal ‘sacrifices’ have a role to play: to enhance cooperative intentions and help create those ‘feelings of friendliness and goodwill’ that are associated with the idea of fraternity (section 4). Section 5 presents some concluding comments.
2. BRUNI AND SUGDEN'S FRATERNAL MORALITY OF MUTUAL BENEFIT
Does the market mechanism, with its efficiency benefits, prevent us from enjoying genuine social interactions in the economic sphere? Is authentic sociality then confined to non-economic milieus, such as families, churches, associations, or informal encounters?
Bruni and Sugden (Reference Bruni and Sugden2008) strongly reject such widespread convictions. To the contrary, they dare to claim that ‘. . . a fraternal orientation to market transactions is possible and compatible with market efficiency’ (36); and, furthermore, that ‘. . .properly understood, market relations are not different in kind from other relations of civil society’ (63).
Their approach is noticeably different from those recently put forward. In particular, they refuse to equate sociality with social preferences, especially altruism, inequity aversion, and reciprocity. This is quite remarkable, since in the last decades social preferences have offered economic science the most convenient way out of the traditional ‘dismal’ portrayal of economic agents. Moreover, social preferences have been widely invoked for explaining agents’ successes in overcoming social dilemmas, both in real life and in experiments (see among others Sobel Reference Sobel2005).
Bruni and Sugden refute the idea that ‘the social element of a person's preferences is revealed in her willingness to sacrifice her own interests in order to benefit or harm others’ (39). Indeed, they have in mind ordinary market participants, whose legitimate intention is to obtain some benefit for themselves. ‘[T]he conceptual framework of modern economics’ – they complain – ‘does not provide a way of conceiving of a relationship between individuals as both a mutually beneficial exchange, in which neither partner makes a sacrifice for the benefit of the other, and a genuinely social interaction, carrying moral value by virtue of this social content’ (41).
The moral understanding of market relationships that Bruni and Sugden recommend as a way out of this impasse has its remote roots in eighteenth century's Antonio Genovesi, in particular in his view that economic relationships are forms of ‘mutual assistance’ in which each party intends to benefit the other.
The authors express this intuition in modern terms through the correlated concepts of team agency (each party conceives of herself as a member of a ‘team’, performing her part of a profile of actions that promotes the common objective) and collective intentionality (the intention of each is to participate with others in bringing about a joint action). More precisely, they suggest that a market contract can be understood ‘as constituting the contracting parties as a collective agent with respect to whatever joint enterprise is the subject of the contract’ (51).
Their view of economic interactions allows agents to choose which counterparty to deal with according to ordinary economic incentives. However, once they have entered a contract (even an implicit one), it then calls them to pursue the joint benefit of the ‘team’. In this way, society would avail itself of the valuable allocative function of markets in the pre-contractual phase; at the same time, agents would be led to cooperate in realizing the potential gains from trade in the post-contractual phase.
In addition – the authors suggest – ‘[c]ollective agency . . . has implications for the affective tone of relationships . . . [M]arket relationships are more likely to be associated with feelings of friendliness and goodwill if they are perceived in terms of intentions for joint benefit rather than in terms of the separate and self-interested intentions of the individual participants’ (52).
In order to describe the ‘moral orientation’ of agents who are bound together by intentions for mutual benefit, Bruni and Sugden resort to using an expression that was common in the Enlightenment times: fraternity. ‘Fraternity’ – they explain – ‘is universalistic and open . . . [and] does not have the connotations of intimacy that Smith attributes to friendship’ (48).
3. COLLECTIVE INTENTIONALITY AS A SOURCE OF COMMITMENT FOR CONTRACT PARTNERS
Bruni and Sugden are right to observe that recourse to social preferences such as altruism, inequality aversion, and reciprocity leads us to explain socially desirable behaviour on the basis of sacrifice. Indeed, A's decision to refrain from opportunistic choices is explained by the fact that her utility also depends on B's material payoff, i.e. by A being willing to give up some surplus in favour of B. Indeed, an important paper on social preferences by Charness and Rabin (Reference Charness and Rabin2002) mentions sacrifice 80 times!Footnote 1
In Bruni and Sugden's view, instead, the very fact that two parties have agreed (even implicitly) a mutually beneficial combination of actions, prunes the decision tree of its opportunistic branches, or at least marks those branches as dissonant with the initial shared purpose. So the abandonment of opportunistic gains remains in the shadow and what actually catches the eye is the path to mutual benefit.
I largely agree with their perspective. However, it seems to me that their critique of the social preference literature is somewhat overdone in two respects.
First of all, their claim that in social preferences theories ‘individuals’ concern or unconcern about one another’ is ‘a property of their preferences’, rather than ‘a way of perceiving a relationship’ (37–8), does not apply to guilt aversion.Footnote 2 In my reading, guilt aversion is a manifestation of commitment, intended as a moral obligation to behave as agreed. As pointed out by Sen (Reference Sen1987), altruism expresses an agent's concern for another's payoff, in terms of the former's utility: altruism is literally a question of preferences. Commitment, instead, requires the abandonment of the traditional assumption of preference maximization. Indeed, in the presence of guilt-aversion, fulfilling the moral obligation towards the counterparties is a goal quite distinct from preference maximization.Footnote 3 If this is true, the argument that in the presence of social preferences morality boils down to self-sacrifice does not hold here.
As Sugden (Reference Sugden2009) points out, the notion of guilt aversion has a weakness: in order to distinguish situations in which guilt is activated from those where it is not, we need a theory of guilt formation. In fact, Bruni and Sugden's paper offers something valuable in this regard: that the collective logic of mutual benefit is a valid source of normative guidelines – and of guilt when these guidelines are violated – for contract partners in a market society.
However, once the ‘we-frame’ has pointed out mutually beneficial profiles of actions to contracting parties, we need to move back to the familiar ‘I-frame’. Indeed, it is hard to imagine that agents do not also evaluate those actions according to their own individual logic.Footnote 4 Well, it seems to me that guilt aversion is a reasonable, albeit imperfect, translation of the prescriptive value of Bruni and Sugden's ‘collective intentions for mutual benefit’ into the language of individual reasoning.
All this can be illustrated with the help of an example proposed by Bruni and Sugden. Annie (a builder) is asked by Bob (a landlord) to make a costless change in an agreed construction plan with no extra charge. The contract has already been signed, so she could exploit her monopoly power and obtain an additional payment of, say, X. The authors argue ‘. . . if the original contract is construed in terms of a collective intention to achieve joint benefit, it seems natural to say that Annie's opportunism is inconsistent with that intention’ (55).
My suggestion is to contrast the above situation with one in which the two are the beneficiaries of a bequest and Bob proposes to Annie, instead of an equal split, one biased in his favour by an amount X, with no justification. The two situations can be made perfectly identical, in terms of the material payoffs for the two parties that ensue from Annie's acceptance or refusal. Of course, Bruni and Sugden's logic does not recommend that in the latter case Annie accept Bob's proposal. Indeed, in their view it is the engagement in a mutually beneficial interaction that ‘commits each party to play her part in bringing about a collective goal’ (51). Were we to reason, instead, in terms of Annie's willingness to give up X to the benefit of Bob – out of altruism, inequality aversion, or even reciprocity – it would be hard to account for different decisions made by Annie in the two situations, without making some ad hoc assumptions However, consideration of guilt, an inner cost triggered by deviations from the dictates of Bruni and Sugden's ‘fraternal morality’, can do the job, thanks to a justifiable ‘context-dependence’.Footnote 5
4. TRADE-OFFS BETWEEN ONE'S OWN AND OTHERS’ SURPLUS CANNOT BE AVOIDED
My second point is that Bruni and Sugden only consider situations in which the agents’ choice is between one blameless and one opportunistic action. Their agents never face situations in which two or more options are consistent with collective intentions for mutual benefit, but where one is more favourable to the decision-maker and another to the opponent. Let us refer again to the house repair example and imagine that complying with Bob's request is costly, as it involves supplementary equipment. Annie resists opportunistic temptations and agrees to only charge Bob the additional cost, plus a fair mark-up. However, she has to choose between two equally effective pieces of equipment, the more expensive of which saves her some effort. As both options are Pareto-improving, neither prompts guilt. We are then forced to reason in terms of Annie's willingness to give up some surplus in favour of Bob: despite attempts at avoiding it, the notion of sacrifice has returned!
This remark is not intended to discredit mutual benefit as a prescriptive criterion in economic interactions, but rather to underline that trade-offs between our own and our partners’ payoff cannot be completely left out of the picture. Their existence, and how they are handled, has a bearing on real life economic relationships. These often comprise an indefinite sequence of moves that are made at unpredictable times by one or other player. As the experimental literature has clearly shown, each action impacts on opponents’ perceptions of the movers’ attitudes, or intentions (see among others, McCabe et al. Reference McCabe, Rigdon and Smith2003). These perceptions, in turn, affect the attitudes and intentions of the next mover; and so on. If the signing of a contract creates the conditions for the emergence of shared intentions for joint benefit, as is emphasized by Bruni and Sugden, we must be aware that those intentions do not stay the same for ever. To the contrary, they may be strengthened or weakened by the process of interpretation of reciprocal attitudes that takes place throughout the various phases of the relationship.Footnote 6 Then the readiness to sacrifice an immediate benefit in favour of an opponent is a powerful message. Interchange of such messages may be decisive for the actual achievement of mutual material benefits, and also for generating those ‘feelings of friendliness and goodwill’ that represent an extra dividend from a successful relationship.
From this perspective, the intentions required of the parties are not those of a benefactor, who starts a relationship with the intention of giving up some wealth. Rather, they remind us of Taylor (Reference Taylor1987) and Bordignon's (Reference Bordignon1994) starters of cooperation. These are agents who have no desire to forfeit wealth, but who are willing to risk some losses (should their partners not reciprocate), in order to move the game towards more cooperative paths.
5. CONCLUDING COMMENTS
Bruni and Sugden's contribution is lucid and well written. Their notion of fraternity is certainly original in modern economics.Footnote 7 Their resistance to reducing concern for others to a mere question of preferences, or to equating sociality with forms of behaviour that are contrary to self-interest, has merit. Even more importantly, the morality of mutual benefit advocated by them removes some of the ideological obstacles to a friendly and cooperative economic life that are often created by one-sided individualism. What they do not say is that the road to mutual benefit and friendliness is smoother for those teams of travellers who are ready to engage in the ‘exchanges of gifts’ that circumstances could demand along the way.
