Economy 26-06-2024 10:01 13 Views

Arguments Against Markets

President Barack Obama acknowledges the crowd at his farewell address in Chicago. 2017.

We should try hard to understand just why our intellectual opponents think differently than we do. Sincere effort to understand those with whom we disagree will sometimes change our minds. But even when it doesn’t, such effort will usually deepen our own understanding of reality.

As I understand reality — and, I’m sure, as most friends of AIER understand reality – the material and ethical benefits of free markets are so obvious and overwhelming that I can’t easily get my head around the enthusiasm that many people have for active government intervention into market processes. But I also understand this other piece of reality: my confidence in free markets, along with my leeriness of government intervention, puts me in a relatively tiny minority. Those of us who want to keep government small and strictly limited — and, hence, who want individuals to have very wide latitude to make whatever peaceful choices they wish in markets — are far outnumbered by individuals who distrust markets to deliver enough of the goods to enough of the people.

Why this distrust? What must sincere opponents of free markets have in mind to motivate their enthusiasm for replacing market processes with government commands? Here are my guesses as to some of what most sincere opponents of free markets have in mind.

The total amount of material wealth available to humanity is largely independent of human action and institutions.

Wealth just happens; it emerges automatically from nature or historical forces with little or no input from human beings. Human actions (and the institutions that govern it) determine only the distribution of this wealth, not its quantity or quality. It follows that if some individuals have more wealth than others, the reason can only be that wealthy individuals are simply lucky or, more likely, that they enjoy some unearned advantages over other individuals — advantages that allow them to grab unfairly large amounts of wealth.

Insofar as neither human action nor institutions have any notable effect on the total quantity of material wealth, tax rates and regulatory measures do nothing to diminish humanity’s stock of wealth. These measures affect only the distribution of nature’s bounty and not its amount.

Prices and wages are arbitrary, set by the powerful in opposition to the interests of the weak.

Because wealth is ‘produced’ independently of human action, prices and wages determine only how this wealth is shared among buyers and sellers and among employers and employees. High prices distribute more wealth to sellers and less to buyers, while low prices do the opposite. High wages distribute more wealth to workers and less to employers, while low wages do the opposite. Government control of prices and wages has almost no effect on wealth production; such control — or lack thereof — determines only the distribution of wealth among buyers and sellers. And so it follows that to oppose the likes of minimum-wage statutes is to support the interests of greedy employers at the expense of workers, while opposition to the use of price ceilings to prevent “price gouging” signals support of the interests of greedy merchants over those of consumers.

The profit motive is anti-social.

If the total amount of wealth is independent of human action, then the seeking of profit is the seeking of an unjustly large share of this wealth. To seek profit is to seek to rob one’s fellow human beings of their fair shares of wealth. Apologists for profit-seeking entrepreneurs and businesses are, thus, apologists for plunder. These apologists might be sincerely ignorant of the rapacious nature of profit-seeking, but this ignorance doesn’t excuse their carrying water for plunderers.

Commerce is anti-social because it is driven by the profit motive.

Because the profit motive is anti-social, anything that it motivates — such as commerce — is also anti-social. Commerce is a means by which the crafty, the devious, and the privileged gain at the expense of the credulous, the honest, and the oppressed.

Governments elected democratically express the will of The People, and this will is sacred – and genuinely good – as long as The People aren’t misled by false notions peddled by plutocrats and their mercenary apologists. Unfortunately, ordinary people are easily beguiled by ideas and ideologies that run counter to their true interests.

Sometimes, thankfully, The People understand their true interests and vote accordingly, as they did in the US, for example, when they elected Franklin Roosevelt, Lyndon Johnson, and Barack Obama. Yet too often The People, in their innocence, are hoodwinked — especially by greedy corporations and these corporations’ hired guns – into voting against their true interests, as The People obviously did when they voted for Ronald Reagan and Donald Trump. This woeful reality justifies many non-democratic means of collective action to further the true interest of The People. Such actions occur when well-meaning and smart government administrators and judges impose controls on markets that elected officials are too corrupt or cowardly to impose.

Working for a democratic government – as an elected official or civil servant – is noble; that’s why we call them “public servants.”

At the very least, working for the government, or for non-profit organizations dedicated to restraining commerce, is to avoid working in the profit-seeking commercial sector. Government officials motivated to pursue the public interest work selflessly to “pre-distribute” or “redistribute” the fruits of nature’s economic bounty away from the greedy and privileged, who grasp for more than their fair share, and toward the meek and oppressed whose only hope for a decent standard of living lies the successes of their champions in government.

All social order, including economic order, comes from the government.

There really is no such thing as “laissez faire” or anything remotely close. If the government protects property and contract rights along the lines advocated by free-market champions such as F.A. Hayek, Milton Friedman, and Deirdre McCloskey, it no less actively intervenes on behalf of particular groups (mostly, business interests) than when it redistributes property and reallocates resources using the likes of industrial policy and confiscatory taxation. Government, being the source of all social order, simply has no choice but to choose one particular kind of order over other possible ones. A humane government intervenes by using tools such as tariffs and redistributive taxation to ensure that the poor and oppressed have greater access to nature’s material bounty. A cruel government intervenes, by using tools such as “private property rights” protections and low tax rates, to ensure that the rich and powerful retain their unfairly large shares of nature’s bounty.

The above list is not exhaustive of the relevant beliefs held by opponents of the free-market order. Nor does every opponent of this order hold all of the above beliefs. And many of these beliefs, when held, differ in detail from how they are described here. Yet the beliefs described above – whether held consciously or just as unreflective presumptions – are commonplace among many opponents of the free-market order. These beliefs, almost needless to say, are ones that I am sure are deeply mistaken. But mistaken or not, such beliefs are widespread and go a long way toward explaining popular hostility to the free-market order. These beliefs must be challenged if the free-market order is to survive.

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