A series of exchanges on facebook about this comic with people trained in economics who seemed to me to miss the point of it entirely made me remember running across the abstract for this article, which I then dug back out and read and appreciated, and which I now recommend.
Lisa Herzog, "Higher and lower virtues in commercial society: Adam Smith and motivation crowding out," forthcoming, Politics, Philosophy, and Economics.
Motivation crowding out can lead to a reduction of ‘higher’ virtues, such as altruism or public spirit, in market contexts. This article discusses the role of virtue in the moral and economic theory of Adam Smith. It argues that because Smith’s account of commercial society is based on ‘lower’ virtue, ‘higher’ virtue has a precarious place in it; this phenomenon is structurally similar to motivation crowding out. The article analyzes and systematizes the ways in which Smith builds on ‘contrivances of nature’ in order to solve the problems of limited self-command and limited knowledge. As recent research has shown, a clear separation of different social spheres can help to reduce the risk of motivation crowding out and preserve a place for ‘higher virtue’ in commercial society. The conclusion reflects on the performative power of economics, arguing that the one-sided focus on models of ‘economic man’ should be embedded in a larger context.
My view about the cartoon itself, since Mike Munger misunderstood the punch line completely (hi, Mike!): The philosopher already knows the economist's arguments, having encountered them in week 2 of freshman intro moral philosophy under the names "Bentham" and "Sidgwick." That the economist is falsely assuming his ideas are new to the philosopher is made clear with the "fractions" joke.
The economist is violating lots of the official methodological pronouncements of economics, which is supposed to take preferences as exogenous and is not supposed to be a normative injunction to individual persons to maximize market value in all of their choices. It's supposed to be a way to model the decisions that are made among commensurable ends, whatever the decision process that goes into deciding what to value. So a good economist would have said, "ah, this is a question that comes before the questions I know how to answer; I need to put my toolkit away and see whether there's something interesting to learn here about how individuals do, or should, form priorities." And of course the economist is also violating the rule against engaging in interpersonal comparisons of utility; there's not even a pretense of showing Kaldor-Hicks efficiency (which itself is mighty dubious from the perspective of no-interpersonal-comparisons).
But the economist is talking like lots of people with some econ training talk, despite those methodological pronouncements. He's seeking aggregate welfare maximization, using only the welfare measures that are revealed in market prices. That this is a tail-swallowing rule for individuals to follow in making ethical choices was shown long ago by Bernard Williams. But it's also worth noting that it's Benthamite utilitarianism of just the sort that modern economics purports to have outgrown.