… is from page 189 of my late Nobel-laureate colleague Jim Buchanan‘s 1981 Abbott Memorial Lecture, titled “Moral Community, Moral Order, or Moral Anarchy,” as this lecture is reprinted in Moral Science and Moral Order (2001), Vol. 17 of The Collected Works of James M. Buchanan; in this lecture, Jim distinguishes between a moral community (such as a family) and a moral order (original emphasis; footnote deleted):
A moral order exists when participants in social interaction treat each other as moral reciprocals, but do so without any sense of shared loyalties to a group or community. Each person treats other persons with moral indifference, but at the same time respects their equal freedoms with his own. Mutual respect, which is an alternative way of stating the relationship here, does not require moral community in any sense of personal identification with a collectivity or community. Each person thinks about and acts toward other persons as if they are autonomous individuals, independent of who they might be in terms of some group or community classification scheme. In a moral order, it is possible for a person to deal with other persons who are not members of his own community if both persons have agreed, explicitly or implicitly, to abide by the behavioral precepts required for reciprocal trust and confidence.
The emergence of the abstract rules of behavior describing moral order had the effect of expanding dramatically the range of possible interpersonal dealings. Once rules embodying reciprocal trust came to be established, it was no longer necessary that both parties to a contract identify themselves with the same moral community of shared values and loyalties. There was no longer any requirement that trading partners claim membership in the same kinship group.
DBx: As long as, and to the extent that, the behavior of people acting in commercial society is judged by the same ethical criteria used to judge the behavior of people acting as family members, as neighbors, as friends on a camping trip, or, more generally, as members of moral communities, markets will be mistakenly judged to be ethically deficient. Yet if we tolerate only those interactions that are guided by the same ethical principles that guide the actions of individuals as members of moral communities – that is, if we reject all market arrangements not guided by the likes of love or caring of the sort that unites members of the same family or small tribe – then we will all be miserably materially impoverished. Without arms-length market arrangements – arrangements among people who are part of the same moral order but not the same moral community – the division of labor and division of knowledge will be much less extensive than it is today.