Imagine a society where people interact with trust, solidarity, and fraternity. Where welfare is not measured by GDP, but lived as public happiness. Where the economy is virtuous and markets aim for shared prosperity through mutual exchange and generous reciprocity. Where organisations are, first and foremost, positive agents of societal change—creating communities, not merely commodities. And where work is centred on the integral development of each person, not solely on products…
"There is no such thing as society! There are individual men and women and there are families. […] And people look to themselves first." (Margaret Thatcher, 1987)
Indeed, when Antonio Genovesi in 1754 assumed the very first official chair of Economics at the University of Naples, his lectures focused on a so-called "Civil Economy." Like Adam Smith, Genovesi was both a moral philosopher and a political economist, deeply influenced by Aristotelian thought. He viewed economics not as a separate discipline, but as fundamentally embedded within ethics, politics, and theology—all interlinked in pursuit of "a good life" (in the Aristotelian sense of eudaimonia and shared wellbeing). Genovesi firmly rejected claims that human nature is fundamentally selfish, instead arguing that "the human capacity for virtue is a crucial ordering device" mediating between passion and reason, and helping individuals realize their distinct talents within society. Likewise, virtue and reciprocity were central to the division of labour and the right balance of economic activity—including the equilibrium between production and trade. Genovesi insisted it "is a universal law that we cannot make ourselves happy without making others happy." Thus, a virtuous "love for those with whom we live" is central to achieving common prosperity and the public good. Production and market trade are primarily means to efficiently take care of the whole of society, not simply ways to enrich any one party. This placed questions of societal virtue and vice at the heart of economic thought. In Genovesi's vision, without the shared responsibility of all citizens for the common good—and without public trust—a society could not cultivate the taste for civil life and flourish. Crucially, public trust was not just the sum of private trust, nor merely a characteristic of the State, but a form of social trust—a unifying "universal sympathy" binding citizens together in their quest for the good life. Only in such a trusted and well-governed Civil Economy, he concluded, would the mutual exchange of different natural faculties support and amplify our human desire for flourishing, and ultimately bring about common happiness.
So how did we lose this vital connection between economics and ethics, between society and economy?
Stefano suggests that people are quick to point the finger at Adam Smith, the supposed grandfather of neoliberal capitalism (whose Wealth of Nations, by the way, was published a decade after Genovesi's work on Civil Economy). Yet, any attentive reader will see that Smith's political philosophy bears little resemblance to contemporary libertarianism. Too often ignored, Smith's Theory of Moral Sentiments clearly articulates the need for civic and economic morality, far beyond mere self-interest. While Smith argued that freedom to produce could promote prosperity, he was far from advocating individual hedonism. Influenced by Aristotle, Smith believed that a decent human life requires virtue and depends on mutual respect and love. Human conduct must always balance self-interest with compassion and sympathy for others. Frustrated with ineffective bureaucracy under English mercantilism, Smith believed that social forces—not the State—could more effectively promote prosocial behaviour, and that legal sanctions were counterproductive to the cultivation of virtue. He may have reached some libertarian conclusions, but certainly not in the way most modern libertarians—or inattentive quote hunters—suggest.
But then, why did Capitalism prevail?
Here, Zamagni argues that economic science and practice gradually lost their soul. In their quest for scientific credibility and ever more sophisticated models, economists embraced an increasingly reductionist, distorted view of human beings. Describing 'homo economicus' as motivated solely by selfishness (and thus easier to model!), many abandoned ethical reflection and placed their faith in the "invisible hand" of the market. Rational self-interest, perfect competition, anonymous producers, full information, minimal State, and no transaction costs—these became the magic ingredients for maximizing collective utility. And since utility is hard to measure, profit and total production became the celebrated goals.
Yet, as Stefano highlights, neo-classical economics is in dire need of a profound axiological requalification, and enshrines numerous critical fallacies that must be addressed. The fictitious world of standard economics is built on unrealistic anthropological and methodological assumptions, generating massive negative side-effects—
Economic theory cannot be separated from societal theory. Our economy must attend to individual well-being and public happiness.
Profit alone cannot justify economic action. Capitalism is merely a "modern feudalism of investors," ruled by the patrons of capital. There is no moral principle beyond private property. Organisations must not be teleopathic in their pursuit of profit, but must consider their wider social impact; their true telos is to serve the common good.
Happiness is not individual self-interest or aggregate utility, but mutual flourishing seeking the common good. "Total good" as the sum of individual utilities is not the same as the "common good." If even one person’s well-being is neglected, the common good collapses.
We need contributive justice as well as distributive justice. Contributive justice concerns the responsibility of each of us to help build a civil society, matching our obligations to our capabilities and roles.
Efficiency is not fairness. Markets may allocate resources, but cannot guarantee justice or happiness. Our current system tends toward centralisation, empowering the strong over the weak, and systematically underprovides public goods like infrastructure, education, research, and sustainability. As Amartya Sen notes, governments must focus on building capabilities, not merely providing access.
Markets are not synonymous with capitalism. The genus is markets; capitalism is only a species. Markets need not be focused solely on transactional exchange; generous reciprocity and relational goods matter. Market partners should not be anonymous, but real people—the quality of our interactions is fundamental.
Competition is not just "creative destruction." The root of "competition" is "cum petere"—to strive together, for a shared endeavour. True competition is about joint enterprise, not just rivalry.
Rationality is not only instrumental calculation, but expressive of values. There is utilitarian rationality, but also "expressive rationality," acting out our beliefs and values. Instrumentalism is not the most advanced form of reason.
Globalisation has widened the gap between winners and losers. Large corporations can pursue opportunities regardless of national accountability, often with little regard for the public good.
"Today, we have come to the point where even the most 'abstract' of economists cannot but admit that if we want to address the almost totally new problems of our society—such as endemic inequality, the scandal of hunger, new social pathologies, identity clashes, paradoxes of happiness, and unsustainable development—research simply can no longer confine itself to a sort of anthropological limbo." Unfortunately, "Many Business Schools are obsolete."
What Zamagni leaves unsaid is that such theories may well have served the interests of ruling elites—and still do. In a society urging everyone to become a mini-capitalist, always optimizing marketability rather than engaging in the system as a whole, fragmentation persists, the status quo is entrenched, and markets continue to favour existing holders of wealth and power…
Yet it must be obvious, even to capitalism’s staunchest defenders, that the system is failing.
We produce stagnant happiness, intolerable imbalances, and obscene inequality. As Oxfam notes, we are approaching a world where 1% possess 99% of the wealth. Most importantly, we are corrupting ourselves. In this "age of impunity," our social immune system is failing. Greed and dishonesty are now contagious, socially accepted diseases. We live in a dangerous society, seduced by the market and addicted to the State for care. The market is a hollow substitute for genuine human relationships, and the State dehumanizes its recipients. Our "corporate society" has lost the capacity to inspire faith in the future. Behind the compulsive pursuit of wealth and instant gratification lies a desperate attempt to fill a void that cannot be filled. It is no surprise that economic distress coincides with social breakdown and diminished civic participation. Poverty and poor mental health are not mere technical issues, but consequences of institutional failure and a lack of shared values.
So, is there hope? Yes, there is.
Stefano pleads: we must return to our roots and re-examine the ideas of the past, while asking the questions of future generations. It is a fallacy to believe that markets are "ethically neutral"—they are either ethical, or they are not. Markets that do not produce both value and values are, by definition, evil. Progress demands we refocus on the common good and morality, as embodied in the Civil Economy. We must reclaim the supreme value of every human being and shape the future of work to fit human dignity, not the reverse. Then, a welfare state becomes unnecessary. We must move from a society of individuals to a civil community of people—embracing virtuous interdependence and rejecting egotism and avarice. Above all, we must rediscover the spirit of reciprocity at the heart of social life and public happiness. More than private or public goods, we need “relational goods.” Only in relationship with others can we discover and develop ourselves—our relationships are fundamental to well-being, not mere market transactions.
If we want to change our fortunes, we cannot simply hunker down with Netflix or bowl alone in cyberspace. We must start to care for each other, for relationships are central to a society’s happiness—not something to be left to the State after the economy has had its say. The truth is simple: our caring relationships are the economy.
Stefano Zamagni is a renowned and highly awarded Italian Economist, prolific writer and teacher, Professor of Economics at the University of Bologna and Johns Hopkins University, and — amongst many other positions — President of the Pontifical Academy of Social Sciences.
References:
For our full Leaders for Humanity interview with Stefano Zamagni see:
https://www.youtube.com/watch?v=f8mHjq-gEK0&list=PLAPiHnsKsNHvIX9ScwluwGVsMH8DI5z-1&index=8
#UnitedForGood #GoodOrganisations #Leadership #Management #EthicsAndExcellence #Transformation #PersonalDevelopment #Work #LeadersForHumanity
(OTTI VOGT and Antoinette Weibel - Published originally: JAN 30 2022)