During my 1984-85 sabbatical years at BYU, I decided to write a book about the relationships between modern economics and my religious beliefs. The intent was to find scriptural examples to illustrate important economic principles including the importance of specialization and trade, externalities, and motives. However, the more I tried to illustrate principles of economics using examples from the scriptures, the more I came to recognize there was a major conflict between neoclassical economics and economic outcomes described in the scriptures. The conflict centered on motives. Being motivated by “selfishness of preferences” emphasized in neoclassical economics appeared quite incompatible with being motivated by “love” described in the first and second great commandments to love God and others.
As a result of this conflict between selfishness and love, and being unsuccessful at making the gospel examples illustrate economic theory as I understood it, I decided to focus on what the gospel could teach me about economics. The result was that my study of the Book of Mormon turned on a light through which I could see more clearly concepts in economics that before I couldn’t explain.
One early insight came to me after reading about the relative prosperity of those who cared for each other versus those driven by greed: “And thus they [those who cared for each other] did prosper and become far more wealthy than those who did not belong to their church” (Alma 1:31). Nothing I had read before in my profession had made such an unambiguous declaration about the conditions leading to economic prosperity. But how could ‘caring’ or sympathy lead to economic prosperity, I wondered?
One obvious answer was that caring, in which we internalized the well-being of others, would increase our interest in and willingness to trade with those we cared about. And trade was required if a society was able to specialize—which Adam Smith described as the key to productivity. In addition, honesty and covenant keeping, also hallmarks of a righteous people, reduced transaction costs, which also facilitated trade. Furthermore, caring led the community of saints to conserve shared resources and reduce harmful externalities—which is so much a focus of modern economics. And finally, caring as a motive resolved the long held conflict between efficiency (which, it was assumed, required selfishness) and equity (which, it was assumed, required public redistribution of resources). The conflict is resolved, the scriptures reported, because a people with one heart who cared about each other would work just as hard for those they cared about as for themselves (resolving the efficiency problem) and share with those in need without an external threat of force to effect redistributions (resolving the equity problem). As a result, among such a people, called Zion, there was both prosperity and equity.
So the next step in my career was to ask the question: is there any evidence that relationships alter the terms and level of trade and with whom we trade? Does caring, or the internalization of another’s well-being which we called sympathy, have a place in modern economics?
So a colleague and I set out to examine if relationships influenced trade. Our first study asked: how do relationships influence the minimum sell price of a used car. After we completed the study we sent it off to the program committee for our profession’s annual meeting. The reviewer’s response was not encouraging: “I don’t know what you are doing, but it’s not economics.” We later published the article in another venue, but the reviewer’s response was a foreshadowing of the difficulty in convincing colleagues that relationships matter.1
One day I was visiting with a colleague about my interests and the importance of caring relationships, which seemed to be an essential resource required for economic prosperity. He suggested that I call this resource of caring or sympathy social capital. “What a great idea,” I thought. And so, social capital was born—for me. Only later did I learn that the same concept was present and growing in importance across the social sciences. Each discipline defined and applied social capital slightly differently but, in each case, they recognized the importance of this resource embedded in relationships. Some observed how positive relationships could improve the formation of human capital.2 Others noted that communities worked better when neighbors were connected.3 And still others noted that development outcomes could be improved with social capital.4 And finally, the most recent Nobel Prize in economics was awarded to a political scientist who demonstrated the importance of relationships of trust in the allocation and use of shared resources.5
Since that early effort to appeal to the scriptures to teach me about economics and the importance of caring, I have enjoyed a profound peace as I have studied and written about “the dismal science” and caring.6, 7, 8 I have also learned that one not need compromise one’s gospel convictions to accommodate modern philosophies of science and man. Finally, the experience of using the gospel to illuminate my professional inquiries has made me even more grateful for the truths of the restored gospel and strengthened my faith in divine revelation through ancient and modern prophets.
1 Robison, L.J. and A.A. Schmid (1989). “Interpersonal Relationships and Preferences: Evidences and Implications.” In R. Frantz and H. Singh (Eds), Handbook of Behavioral Economics. Vol. 2, Greenwich, CT: JAI Press, pp. 347-358.
2 Coleman, J. (1990). “Social Capital in the Creation of Human Capital.” American Journal of Sociology 94:S95-S120.
3 Putnam, R.D., R. Leonardi, and R. Nanetti (1993). Making Democracy Work: Civic Traditions in Modern Italy. Princeton, NJ: Princeton University Press.
4 Woolcock, M. (1998). “Social Capital and Economic Development: Towards a Theoretical Synthesis and Policy Framework.” Theory and Society 27:151-208.
5 Ostrom, E. (2009). “A General Framework for Analyzing the Sustainability of Social-Ecological Systems,” Science, 325(5939), 419–422.
6 Robison, L.J. (1992). “Economic Insights from the Book of Mormon” Journal of Book of Mormon Studies 1:35-53.
7 Robison, L.J. and B.K. Ritchie. (2010). Relationship Economics: The Social Capital Paradigm and its Application to Business, Politics and Other Transactions. Surrey England: Gower Publishers.
8 Robison, L.J., A.A. Schmid, and M.E. Siles (2002). “Is Social Capital Really Capital?” Review of Social Economy 60:1-21.
Lindon J. Robison is a professor in the Department of Agricultural, Food, and Resource Economics at Michigan State University. After receiving a B.S. from Utah State University and an M.S. from the University of Illinois, he earned his Ph.D. at Texas A & M University in 1975.
Dr. Robison’s professional interests focus on such areas as social capital and the influence of attachment values and socio-emotional goods on farmland values, environmental practices, surveys and framing responses, and transaction costs. Among his publications are Present Value Models and Investment Analysis (1996, with Peter J. Barry); “Social Capital and Household Income Distributions in the United States: 1980, 1990,” Journal of Socio-Economics 28 (1999): 43-93 (with Marcelo E. Siles); and “Is Social Capital Really Capital?” Review of Social Economy 60 (2002): 1-21 (with A. Allan Schmid and Marcelo E. Siles).
Posted December 2010