In this period of economic stress, a big-picture examination of Western economic thoughts and practices can provide insights for the present. Some 2,500 years ago, Aristotle began the quest for a moral economy with a call for the government to establish “just” prices and wages. The Christian church adopted the concept of a “just society” based on the belief that individuals should subordinate their selfish interests for the common good.

The Puritans who came to America in the 1630s attempted to control prices and wages, and even prosecuted a merchant for allegedly making too high a profit. Events, however, trumped the government’s efforts. During the 1630s, a heavy influx of people drove up demand for goods and services, creating a high rate of inflation. In the 1640s, the beginning of the English civil war brought the population influx to a sudden end. The price of land, cattle and other products dropped like a rock. The price of cows, for example, fell on average 75 to 80 percent.

The government in Massachusetts had very little influence over the economy because it had no control over population movements and was a very small cog in the Atlantic trade network. The people in Massachusetts, however, clung to the idea of a moral economy up until the American Revolution and beyond. Extreme inflation in the 1770s led to protests in the streets and attempts of crowds to humiliate merchants for supposedly charging too high prices.

Adam Smith in his 1776 Wealth of Nations stood the concept of a moral economy on its head. Smith argued that selfishness, rather than being the threat to a moral economy, was the key to economic growth. Individuals seeking their own interests would generate more wealth and benefit all according to their role in the economy.

In the nineteenth century, Karl Marx saw the market system as inherently flawed and exploitative. Marx argued that the market system would gyrate from extreme inflation to extreme deflation. In both extremes, the monopolists would become fewer and fewer since the market would eat up all but the strongest. At the same time, workers would become more and more miserable and would eventually rise up and throw the monopolists out and then create a moral economy since everyone would have an equal share of the wealth. Thus, society would become harmonious rather than an all-out struggle to survive.

In the 1930s, many people feared that Marx’s prophesy was on the verge of becoming true and in the process would destroy individual enterprise. To counter Marx, John M. Keynes proposed that the government, through a minimum of interference in the economy, would ensure that the inevitable fluctuations of the market economy would be smoothed out to an acceptable degree. To combat inflation the government would follow deflationary policies with cuts in spending and possible tax increases. To ward off possible depressions, government would spend more and cut taxes if necessary. This would create a moral economy that would provide a just share of the increasing wealth in a stable economy.

The current public frustrations over the perceived injustices in the market system demonstrate that the American people still believe in a moral economy. To reverse the trend toward greater inequality since the 1970s, the government needs to devise policies that approximate the ancient quest for a moral economy.