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The Free Market: Seeking Common Ground

Perhaps it's best to pursue an idea from this discussion in a new thread.

Why is a free market economy a good thing? I propose that it is a good thing because a free market allocates capital, labor, goods and services on the basis of legitimate human needs and desires. That is to say: the free market accurately reflects legitimate human needs and desires, and successfully allocates capital, labor, goods and services accordingly.

Conversely, then, to the extent that the free market does not reflect human needs accurately, or does not reflect legitimate human desires, or does not successfully allocate capital, labor, goods and services in accordance with legitimate human needs and desires, the intervention of public authority becomes necessary.

If you agree with the foregoing, then we have the basis for a conversation.

Comments (40)

From here, if we have agreement, the next step is determining things like "human needs" and "legitimate desires", which requires a common moral language and hierarchy of values. This is something Christians should be able to handle. Determining "successful allocation" is a matter of determining an acceptable tolerance for error.

Does Proverbs 30:8 & 9 qualify as an answer?

Remove far from me falsehood and lying;
give me neither poverty nor riches;
feed me with the food that is needful for me,
lest I be full and deny you
and say, "Who is the Lord?"
or lest I be poor and steal
and profane the name of my God.

Change the final 'necessary' in the second paragraph to 'defensible' and I would agree.

So the market for porn or contraceptives is not a 'free market' since porn or contraceptives fulfill no 'legitimate' desire?

What is wrong with the moral case for free market as the libertarians make it?

The market does not 'allocate' resources. The entrepreneur himself creates resources.

No, Jeff, I don't think the problem can be laid out like that. I really don't think that the expression "the free market allocates" the goods mentioned is a happy presentation.

In a free market, the people who have goods, services, and capital are free to suggest and offer them. Others who need goods, services, and capital are free to offer an exchange. The FREEDOM of the free market lies in the idea that neither party is required to enter into the exchange until they think the exchange is worthwhile, it is individual persons who exercise the freedom, not some impersonal "market".

The difference is important: if you allow "the market" to allocate, you accidentally (or intentionally?) allow for other impersonal forces to ALSO start allocating the goods: eventually, the government. Now, I am not a libertarian and certainly not an anarchist, I think that the government has a role, and this means that the government will be involved in some of the allocations (mainly by taxing wealth in order to run the otherwise needed government services), but this means allocating from those who have wealth to itself to spend directly, not allocating from A to B. Every time the government intrudes into the market to allocate for a reason other than to restore a level playing field, it reduces the real freedom of some marketer to exchange at a rational exchange rate. I don't know how it is possible to justify that kind of thing generically, an across the board sort of general "setting" of rates for the marketers, and still call it a free market.

I don't feel that this automatically means that the freedom of the free markets becomes the be-all and end-all of all players. There always have been people of wider motives (see, for example, those of philanthropic taste) whose interests in exchange take second place to
other interests. A healthy society need not treat the market as the entirety of the social field of play. There are employers who by themselves, and without being forced by the market, pay their employees better than the going wage, or offer better than normal benefits, because they WANT to. And there are many non-equal-exchange types of interactions that involve goods and services.

I also feel that you have mischaracterized the word "capitalism" at least to some extent. True, the word can be used to represent an ideology, one in which the import of capital is considered to exceed that of all the other elements of the marketplace. But there is a deeper-down root meaning that is being neglected under the ideological word "capitalism:" when surplus, or capital, owned by one who holds such surplus, is placed at the hands of others who do not own it for production of new wealth, a portion of the new wealth is owed to the capital owner. This concept is squarely supported in numerous encyclicals. Now, I would be happy to use some other word for this concept, but at the moment I am unaware of any word serving the purpose than "capitalism". It distinguishes from those all theories about surplus that say that the (owner of) capital thus employed is not in principle owed any return of the profit generated.

I have trouble seeing how a government that is engineered to respect subsidiarity can choose to take away some of my "surplus" (it gets to decide what is surplus) to mend someone else's situation that is an obligation of charity (not of justice), before I get a chance to make the very same choice or one better still with that surplus of mine. And like Jeff S, I think that when society establishes mechanisms to relieve the poverty of the deserving and undeserving poor alike, and in the process relieves me of my surplus which I was going to make available to some of the deserving poor as capital to earn a productive living, this cannot be said to be a free market arrangement. The intelligent exchange rates that drive a free market include the negative incentives of being cold and hungry and ignorant. When society unravels the negative incentives for those capable of freely entering the market of labor, it automatically unravels the intelligible exchange rates that drive the market. This is not leveling the playing field, but tilting it.

It is with no small amount of trepidation that I enter again into a discussion of economics at WWwtW. Is Zippy out there? Zippy, dude: be gentle, OK?

Jeff C, the problem I see with your definition of the free market is that it boils everything down to an accurate and successful allocation of goods *according to human needs and desires.* Presumably because those are depraved, you add in the modifier “legitimate.” This allows us to enter the condition that a legitimate desire is a desire for a good that is actually ontologically and morally *deserved* – that has been *earned,* or is otherwise simply due. But say that all the illegitimate desires had been purged from society by some great calcining fire. Say further that the free market in question were perfect, as to its accuracy and success. What would happen if the sum of morally legitimate goods desired happened to exceed the sum of goods available? There would have to be some rationing, some triage. Someone would have to get less than he rightly, legitimately desired.

Among other things, the market is a way of making that decision, which incorporates all the available information about how society can optimize its resources so as to minimize such disappointments.

But because the good is without limit, the amount of legitimate good desires is without limit, and so therefore some such disappointments there must certainly be, even in a population of saints, and no matter how well society has arranged itself to produce and distribute goods. So, the poor are always with us. This bit of economics is actually metaphysical (which is, no doubt, why it is also Dominical). It would be a misprision for the poor to blame their relative deprivation on the free market system, when in fact some such deprivation would occur under any conceivable sublunary social arrangement. That a deprivation has occurred does not therefore indicate that the social arrangement in question is unjust.

Even perfect justice will produce suffering. Indeed, in a situation of perfect justice, there could be *everlasting* suffering, right? It’s a mistake, therefore, to focus on suffering, on deprivation. We must focus on justice.

As to the social dividend, there are ways to establish it that, I think, would indeed not interfere with a free market, but rather promote it (and that quite ruthlessly, too – so as to maximize the dividend, don’t you know). But this could happen only after a profound revision of our notions of taxation, citizenship, etc. I won’t go into it here. So deep are these revisions, that I doubt the moniker “social dividend” would really accurately apply anymore. Lydia, you be gentle, too, OK? Cause I’m 10 times the market libertarian you are; heck, compared to me you’re a commie. ;-)

Tony, you and your confreres really need to figure out what terminology the rest of us are allowed to use. Maybe get together with Lydia, Jeff S., and a few others, make a decision, and send me an e-mail with the rules. I promise to stick by them if the rest of you do the same. Constantly getting bogged down in definitions is tiresome.

Besides, I think you have misunderstood the point of my post. The question behind the question is this: what is a free market for? Why arrange things this way? A free market economy is not the default, state-of-nature condition of the human race; it requires a moral justification. So here are some possible answers:

1. The free market, like any other economic system, is justified by providing for the legitimate needs and aspirations of human society.

2. The free market is justified because it rewards the strong, intelligent and industrious with great material prosperity.

3. The free market needs no justification because economic freedom is its own justification.

I'm sure there are many other possible answers. But the conversation will not go anywhere without some consensus on this point.

Change the final 'necessary' in the second paragraph to 'defensible' and I would agree.

That's fine with me, Matt. Some imperfections are tolerable and some interventions could do more harm than good.

So the market for porn or contraceptives is not a 'free market' since porn or contraceptives fulfill no 'legitimate' desire?

That's right. Examples can be multiplied. If most people desire six-figure incomes, that doesn't mean there's something wrong with an economic system that doesn't provide it for everyone. It's not a legitimate desire in this context. But the desire for clean drinking water, or a safe and stable home, etc. - these are legitimate desires and our economic system should provide for them effectively.

I have trouble seeing how a government that is engineered to respect subsidiarity can choose to take away some of my "surplus" (it gets to decide what is surplus) to mend someone else's situation that is an obligation of charity (not of justice), before I get a chance to make the very same choice or one better still with that surplus of mine.

Tony, as I hoped my general set-up would make clear, a free market system that provides adequately for the poor by permitting individuals like you to help the poor with your own surplus has no need for the intervention of public authority toward the same end.

Does a free market actually do this well? In my lifetime, it hasn't had the chance to try. But it seems that historically, in the United States anyway, the free market (through individual persons exercising their freedom) has not been up to the task.

Jeff Culbreath is very much correct to insist that the conversation include a moral dimension, one particularly interesting in the context of questions concerning distribution. Economics is not a purely empirical study; its subject-matter is the needs and desires of mankind; which qualities cannot be understand absent a moral component of judgment.

So much of economics has been characterized by that pretense to hard science which is the peculiar imposture of modern doctrine.

In light of recent events in the practical world of business, my long-running criticism is that the financialization of markets, the brittle crystallization of a welter of human interactions into a vast infrastructure of actuarial modeling, has been a detriment to free markets. It has misallocated capital and simultaneously abetted the intervention of government in to every market.

I notice that discussions about the 'free market' often seem to take off on the dogmatic assumption that instead of being a question of degree, an absolute condition is being defended or attacked. Such discussions usually arrive at an impasse because the conflict of values inherent in them can't be settled.

According to President Roosevelt - who I guess might be persona non grata at WWWW - the values for which a US government stands can be enunciated in 'four freedoms'. Notwithstanding the rhetoric, these four freedoms would probably be endorsed by most Americans. The 'third freedom', which is freedom from want, appears to be impossible in a society where unconditional esteem for free enterprise prevents the economy from being organized from the centre so that the mass of people are liberated from want.

Accepting the first paragraph for the sake of argument, I don't see that the second paragraph follows. Or, to narrow it down further, the last word?:

Conversely, then, to the extent that the free market does not reflect human needs accurately, or does not reflect legitimate human desires, or does not successfully allocate capital, labor, goods and services in accordance with legitimate human needs and desires, the intervention of public authority becomes necessary.

Necessary? I certainly will not accept as a default assumption that the intervention of public authority will do a better job than the free market. Given the nature of contemporary public authority, indeed, there is a rather high burden of proof that government intervention will do a better job of allocating capital, labor, goods and services in accordance with legitimate human need and desires.

I have no problem with including a moral dimension in our discussion of what the market should and shouldn't allow. That's why I'm in favor of draconian pornography laws. But I wouldn't engage in the term-juggling of saying that the sale and purchase of pornography doesn't actually involve a free market. I'd just outright say people shouldn't be free to buy and sell pornography. Simple.

Most, unfortunately, of what my co-bloggers here mean by a "moral dimension to the market" goes far beyond that sort of obviously social conservative position into other realms where I do not follow them.

I do not agree with the main post. I do not agree that the government should intervene wherever the market doesn't reflect "real" and "legitimate" human needs and desires, as though laws against people's wasting their time and money (on Farmville, say, or buying cars of a size they don't "legitimately need") were legitimate for approximately the same reason, or at least a reason in the same family, as laws against pornography! No, no, and no.

Sorry, no common ground here. Here is my comment to that effect in the previous thread:

http://www.whatswrongwiththeworld.net/2011/12/a_highly_regrettable_blog_post.html#comment-168851

For that very reason, I'm going to _try_ not to comment any further in this thread. So, Kristor, you need have no worries about my being unkind in this thread. I have no idea where you're coming from on the "social dividend" post. I don't recall seeing you in the comments thread there, so I don't know if you and I would even be talking about the same thing if we discussed your views on it. That thread is here, simply for reference purposes for others who might find it useful. I think the main post on that subject speaks for itself:

http://www.whatswrongwiththeworld.net/2011/11/the_social_credit_movement.html

Kristor, if you ever want to explain to me why you're more of a libertarian than I am and how this intersects with your views on these other things, feel free to get in touch. As you know, I'm always happy to hear from you. :-)

Craig: "I certainly will not accept as a default assumption that the intervention of public authority will do a better job than the free market."

Lydia: "I do not agree that the government should intervene wherever the market doesn't reflect 'real' and 'legitimate' human needs and desires ..."

I don't see a problem here, folks, and in fact I accept the correction. So let's tweak it just a little. Replace "the intervention of public authority becomes necessary" with "the intervention of public authority may become necessary".

Or better yet, how about "the intervention of non-market institutions may become necessary", which leaves room for large-scale works of the Church, private charities, cooperatives, and so forth.

The point is to arrive at some consensus about what the free market is for and about the (possible) need for non-market approaches when it fails. I don't understand why you two would object to this. If you are among those who don't believe that economics should have anything to do with meeting human needs and aspirations, or if you don't believe that human needs and aspirations have a moral component and should be evaluated objectively, then not only is conversation impossible on this topic, but it is impossible on every topic.

"no common ground here"

Do you believe that government should provide some sort of safety net for those who've been adversely affected by the market's vicissitudes? If so, there is at least a small patch of common ground.

But say that all the illegitimate desires had been purged from society by some great calcining fire. Say further that the free market in question were perfect, as to its accuracy and success. What would happen if the sum of morally legitimate goods desired happened to exceed the sum of goods available? There would have to be some rationing, some triage. Someone would have to get less than he rightly, legitimately desired.

Yes, Kristor, in that case the free market would be all-sufficient and we would have to accept it's rationing mechanisms. It's an interesting thought experiment.

This allows us to enter the condition that a legitimate desire is a desire for a good that is actually ontologically and morally *deserved* – that has been *earned,* or is otherwise simply due.

That is precisely the conversation that needs to happen. Is it legitimate for a man to desire work that is intrinsically good and pays a family wage? If the answer is yes, and if a free market cannot provide at least a realistic opportunity for this to a sufficient number of workers, then might effective non-market interventions be justified? Free-marketeers need to face these sorts of questions. Maybe they have the answers, maybe they don't, but simply blowing the questions off doesn't cut it.

Lydia,

I'm surprised to read your quick rejection of Jeff's attempt to find common ground (look at how quickly he is willing to correct himself!) I tend to think what he is trying to do is not very different from what the folks at the Acton Institute are trying to do -- define ways in which a free market economy can meet the needs of human flourishing. Of course, our freinds at the Acton Institute will point out the many ways in which right now if the government would simply get out of the way of individuals who simply want to "truck and barter" with one another, the common good would be served in a manner that it is not currently served today. But conversely, I'm sure folks over at Acton would also be comfortable with limits on what we can do with our capital or interventions by the government to help those who might not have the skills or abilities valued by others at a wage that supports a growing family (e.g. so a policy like the Earned Income Tax Credit might be necessary). Again, we can argue about the particulars, but I think this is an important discussion and kind of pushed Jeff C. to set down some sort of positive principle because as Paul points out, "economics is not a purely empirical study; its subject-matter is the needs and desires of mankind; which qualities cannot be understand absent a moral component of judgment" and as Christians I thought we should say something positively about what this moral component might look like (in broad outlines).

The point is to arrive at some consensus about what the free market is for and about the (possible) need for non-market approaches when it fails.

Jeff: You seem to be edging close to endorsing the social and economic policies that Harold Macmillan advocated in his long forgotten book, The Middle Way. The sham sequel to which might be the Tony Blair/President Clinton 'synthesis' described as 'The Third Way'.

Macmillan was a Christian gentleman with High Anglican principles: not so the Blair-Clinton counterfeit.

Jeff C,

Following the correction, we are in agreement. This is a fairly extraordinary thing to happen on the internet, so let me just bask in it for a moment.

@ Lydia: I was just joshin'. I much doubt that I am more of a market libertarian than you.

Jeff C., I agree with part of your point, mainly the end goal, and I disagree with part of the way you think to direct us there. Well, I think I disagree, still working it out.

A free market economy is not the default, state-of-nature condition of the human race;

This may be the deepest area of disagreement. If I am a Daniel Boone and walk miles past the previous boundary of settlement into untamed, unclaimed wilderness, and cut down a sapling to make a bow then YES, by default the bow is mine. It is mine because I took a resource previously unclaimed and by my action invested it with my energy and turned it into something useful. By default, natural law says that is my property. The state (once it grows again and encompasses the land that had been wilderness) can perhaps tax me out of that bow, but it has to have a higher reason that overcomes the default condition that the bow is mine.

Is it legitimate for a man to desire work that is intrinsically good and pays a family wage?

I agree that it is a legitimate desire - in the abstract. But the question is phrased with hidden problems, which I suspect you are glossing over. If the desire can be met readily when you have the knowledge of a high school graduate, and you decline to get a high school education (when you could do so), then your desire is legitimate abstractly but not legitimate concretely: you are not using your natural intelligence, energy, and social resources to position yourself for the jobs available, so you ought not desire the jobs.

and if a free market cannot provide at least a realistic opportunity for this to a sufficient number of workers, then might effective non-market interventions be justified?

I for one am happy to consider this, and I think it is an important question. It is not among the first questions to ask, but you cannot settle the issues without addressing it.

One of the failings of capitalism as an ideology is the ho-hum approach to people whose jobs are lost because "progress" did away with them, or moved them somewhere else. Unemployment insurance is an effort to deal with it, but it is showing itself to be less than satisfactory. Before 2008, the ordinary unemployment pay typically ran out at 6 months, and that is rarely enough time for a person whose job no longer exists because of progress to re-train for a new job and then get one.

The trouble with non-market interventions here _in general_ is their tendency to reward thoughlessness and laziness. If a job category is going the way of the buggy-whip, more often than not you can foresee its demise beforehand to some extent, and you can therefore plan for it to some extent. When the buggy-whip factory hands were laid off, didn't they have newspaper articles about the drop in buggy sales for 10 years and more? The trick to a well-designed social adjustment mechanism is to craft it so that it does not reward indolence and lack of ordinary forethought equally with industry and forethought.

One common modern approach is to make higher education, skilled labor vocational training and college education, available to almost anyone, with huge grants and huge loans (a lot of which default). There is a funny thing going on here: because the market is tilted by these enormous subsidies, the education system doesn't provide what the market otherwise needs for a strong base of workers. (In addition, there are millions of people who are being graduated from college who don't even realize that they have been sold a lemon - an education that neither makes them fit for human freedom, nor gives them skills for industry.) The tilting skews the perception of what they should be educating for. Take away excess subsidies, and it is possible that people will be more discriminating on what they will pay for.

I don't have a solution per se. If I did, I would be sitting in a very different office. But I have a principle to recommend we try: subsidiarity tells us to leave the decision-making at the lowest level suitable to the subject matter. If it is support of my family, then I should be making the main decisions normally.

The second part of the principle of subsidiarity is what to do when the decision-making is defective and failing. If and when society finds that a lower level entity (family, business, industry, state) is failing, the correct primary response is NOT to take over and solve it at a higher level. That's the easy but wrong way. The correct primary response is to aid, support, and build up the lower level to fix his / their defect so that they can once again make their own successful decisions. Thus in a proper sort of "fix", the higher level comes in and bolsters the lower level in that exact area in which they are deficient, and enables them to become efficient instead of deficient: to help change them instead of changing their circumstances only.

The clearest example I know of to illustrate this is sex education. Since parents were failing in their grave duty, the schools and the state took over the job. WRONG APPROACH! They should have been teaching (and giving incentives for) the parents to fulfill the task well as they should have all along, both for the parents' sake and for the kids, and for all of society (in order to not intrude extra-family power into delicate family matters).

As a consequence of this principle, the idea of treating the deserving poor and the undeserving poor to the exact same assistance is just plain wrong. Humanly wrong, morally lacking, and it doesn't work in the long run either. If A is destitute because of some hard life accidents, that is completely different from B being destitute because he is lazy and won't try to work, and buys drugs when he gets money. The higher level should look at them and say: in the case of B, his deficiency is not in the amount of money he has, but in the way he uses his time, energy, and creativity - or doesn't. Therefore, the correct response is to respond to THOSE deficiencies. In A's case, the deficiency might be simply enough money to tide him over until his next pay check. If you decide that government must turn a blind eye to the _different_ reasons for A and B's lackings, then you are saying that government should not be in the business of fixing them up (because it is not treating them as human agents), it should be left to other social agencies who are allowed to discern and discriminate between them, to treat them humanly.

Jeff:

Here's a quote from commentary entitled In Defense of Distributism that might interest you:

"Distributism is nothing other than free enterprise conducted according to the Gospel as summed up in Our Lord’s two great commandments: love of God and love of neighbor. Subtract “the sordid love of wealth” and boundless ambition from free enterprise, add love of God and love of neighbor, and you will see emerging naturally the very economic order many of us are old enough to remember: the economy of the local grocer, hardware store, and savings and loan; an economy in which one could provision a household entirely on the basis of exchanges with one’s own neighbors in one’s own neighborhood; an economy conducted on a human scale by human beings rather than fictitious corporate “persons” created by government fiat that display all the personality traits of a psychopath."

The entire article, which I read this morning, is here.

"One of the failings of capitalism as an ideology is the ho-hum approach to people whose jobs are lost because 'progress' did away with them, or moved them somewhere else."

This failing is a subspecies of a larger one: the belief that markets will always correct their own negative effects. At times they do, but many times they don't, and even when they do it may take longer than desirable. In such instances recourse to non-market forces is virtually inevitable.

Nice M, I agree with that. The difficult question is, what kind of non-market forces ought to deal with it? Governmental, or non-governmental? Local or national? And so on.

For instance, it seems somewhat reasonable to say that the real cost (economic and human cost) of moving a clothing production operation to the Honduras ought to include and recognize the cost of re-settling the home-grown workers who are left into new jobs. If the company making the decision to relocate were to take that additional element of the real costs into account, and decide that the relocation still made sense and they were willing to pay that cost, that would be a reasonable market result. The question is, by what mechanism do we make effective imposing those additional costs as part of the relocation? If companies automatically did this without any external mechanism, that would be better still, but they don't, and there is no prospect that this will change without a major revision of the market.

So, what kind of revision of the market could even remotely lead to that? I don't know for sure, it is just a theory, but one component of change could be a lot better sharing of information about how a company operates and spends its revenue. If a standard part of the market for most companies (including clothing sellers) was to publicize what they pay their employees, and how they treat employees who were let go when they relocate operations, buyers would be freer (because better informed) to give their custom to sellers that operate in wholesome ways. A buyer could look at Land's End practices versus Walmart practices and make an intelligent choice.

My point is that we can try to be creative about forming a market that caters to better practices more readily, rather than a market that promotes selfishness and short-sightedness. It is not automatically true that the government is the sole bulwark against poor market practices.

More information won't work, because most buyers are concerned with a single, readily available piece of information--the price. If they can save a dollar by buying from Honduras Inc., then who cares about all those laid-off workers they don't even know? We can't say this behavior is irrational either, because no one on Earth really consumes themselves daily with the weighing of abstract moral concerns in order to make simple decisions like buying clothes.

What really needs to be understood is human nature. That will show us why neither the free-market solution nor the government solution will work in this case. Which brings up another question: How much imperfection can we tolerate?

More information won't work, because most buyers are concerned with a single, readily available piece of information--the price.
Matt, I agree that under current conditions too many buyers are too concerned with a single piece of information, the price. But I would point out 2 additional thoughts. (1) Even today, there are plenty of people who intentionally pass up the lowest-price item on the shelf, because they see the brand, they know the brand is reputed to be cheap and break easily, and they go for a more reputable brand. Honda vs GM can attest to this. People are not so TOTALLY consumed by price that they ignore the long-term costs of the product.

(2) We didn't get this way overnight, and we won't fix everything overnight. If we had a long-term standard in society of sellers and manufacturers (and employers generally) posting information on the way they treat employees (and suppliers, and the local community), this would result in different habits and inclinations in the buyers. Even now, there are plenty of people who pass up cheap coffee and buy "fair trade" coffee that costs more, because they think that is a better way of doing business. This mind-set would be much easier to accomplish if every merchant openly posted the needed information. There would grow to be certifiers - like with the fair trade certification - who examine the information for an employer and attest that this employer uses "fair treatment" standards for its employees.

I doubt that a market that supports virtue can be conceived readily by a people who are far away from the public virtues needed to sustain such a market. Same way with our government: the more vice increases, the more you need coercive practices, but the more such a tendency pushes us away from virtues.

"My point is that we can try to be creative about forming a market that caters to better practices more readily, rather than a market that promotes selfishness and short-sightedness. It is not automatically true that the government is the sole bulwark against poor market practices."

Agreed. With modern corporate capitalism, however, sometimes the government is, unfortunately, the only effective bulwark, at least in the short term. The size, wealth, and power of many giant modern corporations makes it difficult for smaller non-market forces to resist corporate strength. Of course the problem that arises is the fact that when corporate power and state power grow, they tend to grow together. This would lead one to believe that size or scale itself is a problem, that large impersonal entities, whether corporations or states, tend to grow away from the fostering of public virtues.

Therefore, one of the ways "we can try to be creative about forming a market that caters to better practices more readily" is to support the small and local over the large and distant when the opportunity is available.

"I doubt that a market that supports virtue can be conceived readily by a people who are far away from the public virtues needed to sustain such a market."

Yes, and add to this the fact that many prominent "conservatives," who ought to know better, A) do not make any connection whatsoever between the virtues and the market or B) when they do, believe that market forces themselves will create and foster the necessary virtues.

Conservatives have fallen too much under the spell of those who would reduce economics from a humane science to a business of mere numbers.

B) when they do, believe that market forces themselves will create and foster the necessary virtues.

NM, I think you are right. There are "process" conservatives, as I think of them, who say that the well-working market will generate a well-ordered society of well-acting agents. That's impossible, the market can never be more than a portion of social interaction, and that market must be sustained by a whole host of good customs, morals, and laws. But it is true that a good market will help foster virtues, when it operates in tandem with that whole plethora of other good customs and laws that support the market.

The size, wealth, and power of many giant modern corporations makes it difficult for smaller non-market forces to resist corporate strength. Of course the problem that arises is the fact that when corporate power and state power grow, they tend to grow together. This would lead one to believe that size or scale itself is a problem, that large impersonal entities, whether corporations or states, tend to grow away from the fostering of public virtues.

Subsidiarity, I say, go subsidiarity. I don't think that a sound market in a healthy society would readily tolerate any of the multi-nationals the way we do now. I suspect that the largest directly integrated business entity we really should have is less than 2000 people, (usually less than 500) and certainly not the 150 business lines, with 600 facilities, that something like GE is. In my opinion, when a manager is more than 4 levels away from the floor worker, there are problems. Normally, even top managers should have some knowledge of the floor workers - at least enough to have heard most of their names. This would mean that very large undertakings would require a kind of federation of multiple businesses for a _limited_ purpose. Such federations would not normally last more than a few years, which is fine. Most businesses would perforce be locally run, or sometimes regional, and thus would have a hell of a lot more reason to pay attention to the long-term welfare of the local community.

At the same time, I think the reason for this is mostly not something that the market itself could discover on its own - not without lots of failures along the way, certainly. And, therefore, it would have to be imposed from other sources in society, using reasons that stem from other sorts of human goods than those of the market. Government is the obvious one, but that doesn't make it the best one. The government is ham-fisted, and is sometimes unable to distinguish between things that are legitimately treated differently for other than legally definable reasons.

I dunno Tony. There are Fair Traders around, but Wal-mart is the biggest retailer in the land and I'm pretty sure the words 'Fair Trade' don't appear anywhere on the premises (but I could be wrong, as I avoid WM like the plague). I guess I'm more pessimistic about human nature than you are. I agree entirely on the current state of Americans though. I doubt it will get any better while I'm alive.

One problem with having the government intervene in the market is that it can't be nice and abstract like that, you actually have to have your particular government do it. And I don't know about you all, but I don't have the slightest bit of trust that the US government could even comprehend doing something that was genuinely in the public interest. The thing is just a giant parasite now, and the sooner it is cut down by, oh, let's say 80%, the better.

In older times, the free markets were interfered with in ways people might hesitate now.

E.g. In British Punjab, the Govt passed a law restricting the money-lending community from buying farm land. As in Indian castes, the money-lending community comprised a single caste group i.e. it was an ethny.

Are the distributionists comfortable with such laws?

To further Mr. Culbreath’s teleological analysis of the market, I would add that the market is essentially a social organization. The term Free Market, as it is usually used, is only an abstraction. In reality, there are only particular markets that exist within particular social contexts and arrangements. We should therefore see the market as the servant of the community in which it exists. This makes it necessary to analyze the market as primarily a function of communal relations that enables a type of political flourishing, political, in this context, meaning the group qua group.

For modern Americans, this may seem inimical to what their conception of the free market entails. To speak of the needs of the community might appear to be merely a socialist mimicry. I would ascribe this line of thought to two sources. The first is actual socialism. Socialism has done much to destroy the notion of the common good. Whereas the common good might have once enjoyed a prominent position in discussions of political economy, it is now seen, at least by many modern conservatives, as antithetical to private property and personal liberty. The second is liberalism, broadly speaking. This would include many strains of what we would call conservative thought. Perhaps because of the prevalence of socialism, or perhaps for independent reasons, Americans subscribe to an ideology of individualism wherein the individual must assert his rights against any and all who are perceived to make a claim on him. When this is coupled with the efforts of the modern state to eliminate any form of social organization that might provide a bulwark between it and individual people, the idea of the common good becomes either misused or too thin to have any real content.

When the state enacts policies of multiculturalism, seeks to actively alter the demographics of its own country, enforces, through popular culture, a materialism that encourages mobility for the sake of success as the pinnacle of virtue, and when it eliminates any federative principle by which its authority might be removed to more local governing bodies, the need to assert the rights of the individual might seem of paramount importance. In reality, however, it only reinforces the idea that the modern state and the individual are the only viable political actors. Since any form of local government, that is, government which is actually a part of the people it represents, has been rendered impotent in this country for some time now, the only organizations left with power are the national state and any corporate entity wealthy enough to manipulate the state. Neither body is loyal to any person or place, so we are left with a thoroughly devastated notion of the market existing for the sake of the community. This does not mean, though, that we should adjust our conception of the free market and how it relates to human justice, it means that all of the aforementioned impediments and ideologies must be removed before any sane discussion can begin.

There are no real free markets. The concept is an ideal, like the Ideal Gas Law. Like the Ideal Gas Law, a free market is neither a good thing nor a bad thing but a model for how markets behave. I think it's a good model in the sense that it can be used to make predictions.

Economists need to understand and take into account the laws of supply and demand, just as all chemists and engineers need to understand the ideal gas law. But like the ideal gas law, those laws will not tell leaders and lawmakers what they ought to do. Economics is a branch of ethics, not a "social science." We have to take the model of a free market into account but ultimately we are talking about an "ought to" not an "is."

Paradoxically, a market for contraband and vice can be closer to a "free" market than a market for legal things (particularly legal but regulated things).

"Neither body is loyal to any person or place, so we are left with a thoroughly devastated notion of the market existing for the sake of the community. This does not mean, though, that we should adjust our conception of the free market and how it relates to human justice, it means that all of the aforementioned impediments and ideologies must be removed before any sane discussion can begin."

True enough, yet this is difficult to achieve when any critique of "capitalism" or "the market," even one originating on the right, is viewed as traitorous or heretical. The ideology will not allow self-examination.


Jeff: You seem to be edging close to endorsing the social and economic policies that Harold Macmillan advocated in his long forgotten book, The Middle Way.

Alex, I've never heard of Macmillan or his book, but I appreciate the reference and will look him up!

I wonder if that's the same Harold Macmillan who was P.M. of England...

Slightly off-subject, but speaking of critiques of capitalism: on a thread not too long ago I mentioned Wendell Berry in passing, and a couple negative comments were made. Well, guess who turns out to my surprise to be a Berry admirer? The eminent conservative historian John Lukacs. He has this to say in his blurb on the 2007 book Wendell Berry: Life and Work, edited by Jason Peters:

"What emerges from these various writings...is the greatness of the man, good and wise at the same time. His talents as a writer and poet include those of a historian and a prophet. More and more Americans -- entire generations -- ought to hear his voice and read him."

So there ya go. Not an unknown English prof from some far-flung minor liberal arts college, nor a Catholic seamless-garmenter involved with the Workers, but John Lukacs. Think about that for awhile, Berry-bashers.

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