Will Wilkinson argues that ethics are an important part of economic infrastructure.
At bottom of both well-functioning markets and states are norms of behavior that dispose people to cooperate, to keep agreements, and to recognize and respect claims to property and a certain degree of personal autonomy. These norms are the ultimate public goods, and constitute the moral infrastructure of society. The moral infrastructure, and the system of norms it comprises, is largely a consequence of systems of widely shared belief. To this extent, ideology is infrastructure. A community that shares the belief that property is morally illegitimate, that profit is odious, that the state is primarily a mechanism for conferring special benefits on whatever tribe can dominate it, or that some groups but not others have legitimate claims to peace and prosperity cannot sustain a moral infrastructure -- in which case other questions about public goods are moot.
A moral infrastructure is something neither Bechtel nor the CPA has the power to provide. Canals and constitutions are all for naught if Iraqis don't develop norms that enable the emergence of a complex market and the benign administration of the state. If -- whether because of religious conviction, political ideology, tribal affiliation or whatever -- they don't believe these are norms worth having, then they won't have them. And despite our best intentions, our efforts there will fail.
I agree with this view--see What Causes Prosperity? A concern I have about Iraq and other failed states is that they lack a work ethic. If people see earning a living through work as inferior to kleptocracy or feudal mastery, then it is hard to see a vibrant market economy developing.
For Discussion. Raghuram Rajan, now chief economist at the International Monetary Fund, has written that government must achieve a happy medium between being too strong to allow the private sector to operate and too weak to protect property rights. Can government solve the problems that Wilkinson describes?