Moral fiber is no doubt important. So, too, is culture. But it is a mistake to understand culture without also understanding incentives. The culture that Smith

Moral fiber is no doubt important. So, too, is culture. But it is a mistake to understand culture without also understanding incentives. The culture that Smith praises was the product of a firm with a particular legal form, in a particular financial environment. At just about the same time, both particularities changed. And given these changes, it is no wonder that the culture Mr. Smith celebrates soon disappeared.