Moral Economy in Business History: The Question of Value and the Evolution of Firms and Markets
R. Daniel Wadhwani

Post-Chandlerian business history has added a set of new lenses through which scholars now examine the historical evolution of firms and markets. These new perspectives include political economy (John 2006), culture (Hansen 2012), and class and gender relations (Yeager 1999), among other approaches. Recent work has also begun to consider questions of moral economy in business history, sometimes by tracing the antecedents of the contemporary construct of corporate social responsibility(Carroll, Lipartito et al. 2012). In this paper, I seek to contribute to the interest in moral economy within business history by examining how questions of justice and justification might be incorporated in ways that address central research concerns in business history, such as the evolution and growth of firms, the character of competition, and the evolution of industries and sectors.

In particular, I explore the prospect of incorporating moral economy into business history by revisiting an old question examined in historical views on markets and capitalism: what is value and where does it come from? Drawing on both American and European pragmatism (Dewey 1939, Boltanski and Thévenot 2006),  I suggest that the problem of value raises fundamentally moral questions of what ought to be valued and how it ought to be evaluted. Processes of agreement and disagreement among actors over these questions of value, I argue, form a discourse of moral economy within markets that shape coordination, dissent and innovation in economic activities, and contribute to the legitimization of certain new goods, organizational forms and competitive dynamics over others. I develop these ideas in three main body sections.

Section 1 examines the intellectual history of value theory, particularly in the context of historicist perspectives on the evolution of markets and capitalism. Classical political economy, held firmly to an intrinsic labor theory of value; the evolution of capitalism in Marixan (2008 (1865)) historicism hinged in large part on how conflicts over the appropriation of labor value shaped processes of change in capitalism. The neo-classical turn in economics removed questions of value from economics by positing that value was determined by individual “preferences” and hence was autonomous from the market process (Beckert and Aspers 2011). Early twentieth century historical institutionalists, both in the Europe and the United States, critiqued both intrinsic theories of value and neo-classical economics’ supposition that value was autonomously determined by arguing that shared notions of value changed over time and were hence shaped by institutionalized norms and practices(Cooley 1913). But by the mid-twentieth century, as the old institutionalism faded, both economic and business historians focused increasingly on questions of the efficient allocation and combination of resources in markets rather than the antecedent question of value; to the extent that the moral economy of value remained a topic of historical interest it was a subject of labor history and envisioned as a pre-capitalist or anti-capitalist mode of thinking about transactions that modern markets and exchange economy replaced(Thompson 1971). Recent work in business history has highlighted the relevance of moral economy in modern capitalist societies and in shaping competition and firms in markets. But it has not considered how to incorporate moral economy into systematic explanations of the dynamics explaining the evolution of firms and markets – that is, the topics of concern in business history.

Section 2 (re)introduces the question of value as a way to understand how moral economy shapes the historical evolution of firms and markets. Drawing particularly on Dewey (1939) and Boltanski and Thevenot (2006), I suggest that rationales or justifications of value form a kind of moral discourse in markets by articulating the ends a good is designed to serve and how a good should be evaluated in relationship to those ends.  The discourse surrounding a Prius, for instance, justifies valuing a car based on civic and environmental ends in addition to valuing it as a mode of transportation, quite in contrast to say, an SUV. Agreement over what ought to be valued and how to value it in turn helps coordinate activities toward what is understood to be valuable. Dissent and conflict, in contrast, open up the possibility for change and innovation by raising the possibility of alternative ways of valuing a good. I argue that by examining these processes of agreement and disagreement over value in markets, business historians can consider how economic actors view the purposeful ends of activities, and how this works to justify particular organizational forms and modes of competition over time.

In section 3, I seek to apply the line of reasoning developed in Section 2 in explaining processes of change in firms and industries. Specifically, I explore how processes of justification of value within markets shape entrepreneurship and innovation, variations in organizational form and size over time and place, and the nature of the relationships between organizations in industries. These applications, I argue, are suggestive of the ways in which moral justification may be understood as an inherent part of market processes. Specifically, I suggest that by examining processes of agreement and disagreement over worth would allow busienss historians to examine processes of coordination and change in industries.