Abstract
Traditional moral defenses of the market do not really address the central moral criticism leveled against markets by their critics. Rather than (theoretically or empirically) evaluating the claim that markets are morally corrupting, the traditional defenses either avoid or (implicitly or explicitly) endorse the view that markets are potentially corrupting. In this chapter, we review and discuss the way that the market is traditionally defended on moral grounds. Specifically, we argue that both claims that the market neither promotes nor suppresses morality and that the market transforms private vice into public virtue are inadequate responses to the central moral criticism of markets.
This chapter relies on Langrill and Storr (2012).
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- 1.
By south-sayer or soothsayer Mandeville likely meant a fortune teller or diviner.
- 2.
It is admittedly possible to cast the argument that we advance in subsequent chapters as a version in doux commerce thesis. Indeed, in Chap. 5, we agree with Montesquieu that wherever there is trade we are likely to find gentle mores. And, in Chap. 6, we fully agree with Montesquieu that markets reward virtue and punish vice. As we discuss below, however, Montesquieu maintained a worry that markets might be corrupting that we do not believe is supported by the evidence.
- 3.
For instance, Voltaire described commerce as a force that encourages people to become more tolerant toward others despite religious (and other) differences. In the Royal Exchange in London, “a place more venerable than many courts of justice, where the representatives of all nations meet for the benefit of mankind,” “the Jew, the Mahometan, and the Christian transact business together, as though they were all of the same religion” ([1733] 1901: 281). Likewise, Thomas Paine, in The Rights of Man ([1792] 1995: 265), depicted commerce as “a pacific system, operating to cordialize mankind, by rendering nations, as well as individuals, useful to each other.” “If commerce were permitted to act to the universal extent it is capable,” he (Ibid.: 266) continued, “it would extirpate the system of war … The invention of commerce … is the greatest approach towards universal civilization.” Adam Smith, in his Lectures on Jurisprudence ([1763] 1982: 538), spoke about the influence of commerce on manners; “[w]henever commerce is introduced into any country, probity and punctuality always accompany it. … Of all the nations in Europe, the Dutch, the most commercial, are the most faithfull to their word.” Finally, McCloskey (1998: 310) asserted that “who we are depends on what we do, our ethics depend on our business. Commerce is a teacher of ethics. The growth of markets promotes virtue, sometimes.”
- 4.
There appears to be evidence for this. For example, Friedman (1996) mentioned how no two countries in which a McDonald’s, the fast food chain, exists has ever fought a war against each other. This seems to have also been borne out by the scholarly literature that has examined it. See, for instance, Jervis (2002), Gleditsch (2008), Martin et al. (2008), Koerber (2009), and Strong (2009).
- 5.
Here, Montesquieu anticipated concerns advanced by Satz (2010) and Sandel (2012) about the expansion of markets into what should be nonmarket spaces. Satz (2010: 3) discussed how “as markets expanded their reach, new controversies have arisen concerning the morality of markets.” Markets, she described, can shape our politics, culture, and even our identities. Most troublingly, “[s]ome markets thwart desirable human capacities; some shape our preferences in problematic ways; and some support objectionably hierarchical relationships between people” (Ibid.: 4). These markets, such as the ones in human organ, blood diamonds, and sex, “strike many people as noxious, toxic to important human values” and “evoke widespread discomfort and, in the extreme, revulsion.” Similarly, Sandel (2012) anguished over the “the expansion of markets, and of market values, into spheres of life where they don’t belong” (Ibid.: 7) and over how “certain moral and civic goods are diminished or corrupted if bought or sold” (Ibid.: 111). Interestingly, Falk and Szech’s (2013) experiment revealed how market negotiation lowered subjects’ willingness to pay to save the lives of mice.
- 6.
According to Montesquieu ([1748] 1989: 339), “total absence of commerce produces the banditry that Aristotle puts among the ways of acquiring. Its spirit is not contrary to certain moral virtues; for example, hospitality, so rare among commercial countries, is notable among bandit peoples.” Others have written about the incompatibility of commerce with certain traditional values (MacIntyre 1981).
- 7.
Arguably, Smith did not object to that portion of Mandeville’s argument that assumed public virtue is rooted in private vice. As Smith ([1759] 1982: 309) acknowledged, “[w]hether the most generous and public-spirited actions may not, in some sense, be regarded as proceeding from self-love, I shall not at present examine.” Instead, Smith objected to Mandeville’s suggestion that all apparent virtues are in fact motivated by vice. “Dr. Mandeville,” Smith (Ibid.: 308) observed, “considers whatever is done from a sense of propriety, from a regard to what is commendable and praise-worthy, as being done from a love of praise and commendation, or as he calls it from vanity.” This blurring of the line between virtue and vice, and this insistence that even the motives which purport to be the purest are in fact fraudulent, Smith (Ibid.) explained, is incorrect and destructive. Although Smith continued to discuss Mandeville’s “favorite conclusion” in derisive tones, Smith’s objection to Mandeville’s view that public virtue depends on private vice is that Mandeville makes too much of the claim. Smith may have agreed with Mandeville that markets can channel private vice in such a way that it leads to public virtue, but Smith disagreed with Mandeville’s conclusion that this means that vice has become virtue.
- 8.
According to Smith ([1759] 1982: 183), in times of ease, we are apt to view the pleasures of wealth as being “something grand and beautiful and noble,” something necessarily connected to the even grander “order, the regular harmonious movement of the system, the machine or the oeconomy” which the quest for wealth makes possible. But, viewed apart from the part that it plays in this grand system, the pleasures of wealth “will always appear in the highest degree contemptible and trifling” (Ibid.). In times of ease, then, we are likely to engage in a kind of self-deception, to imagine the trinkets that we are striving for as more than mere trinkets. It is an open question whether or not this is the same self-deceit that the poor man’s son engaged in or an altogether different brand of self-deception. But it appears to be the case that the quest for wealth, at least in these passages in Smith ([1759] 1982), is motivated by some kind of self-deception.
- 9.
Smith , Hanley (2009: 106) argued, believed that vanity could be checked and channeled toward “the pursuit of other goods more conducive to both virtue and happiness.” And, Smith ([1759] 1982: 149), worried that “[t]he person under the influence of any of those extravagant passions [i.e. avarice, ambition and vain glory], is not only miserable in his actual situation, but is often disposed to disturb the peace of society, in order to arrive at that which he so foolishly admires.” Smith believed that we not only could but should escape the moral pitfalls that ensnared the poor man’s son. Additionally, it is not only personally problematic but also socially problematic if we do not escape these extravagant passions.
- 10.
Interestingly, Weber ([1905] 2002) seemed to offer a different basis for people’s work ethic than the one that Smith and Mandeville are advancing. Weber rooted his work ethic in worldly asceticism and not greed or self-deceit.
- 11.
“Masters,” Smith ([1776] 1981: 84) stated,
are always and every where in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate. To violate this combination is every where a most unpopular action, and a sort of reproach to a master among his neighbours and equals. We seldom, indeed, hear of this combination, because it is the usual, and one may say, the natural state of things which nobody ever hears of. Masters too sometimes enter into particular combinations to sink the wages of labour even below this rate. These are always conducted with the utmost silence and secrecy, till the moment of execution, and when the workmen yield, as they sometimes do, without resistance, though severely felt by them, they are never heard of by other people.
- 12.
According to Wicksteed ([1910] 2002: 165), “[e]very man has certain purposes, impulses, and desires. They may be of a merely instinctive and elementary nature, or they may be deliberate and far-reaching; they may be self-regarding or social; they may be spiritual or material.” Also, “the economic relation, then, or business nexus, is necessary alike for carrying on the life of the peasant and the prince, of the saint and the sinner, of the apostle and the shepherd, of the most altruistic and the most egoistic of men” (Ibid.: 171).
- 13.
Wicksteed ([1910] 2003: 180) continued that,
All manner of considerations of loyalty, of humanity, of reputation, and so forth, are no doubt present to his mind … but in making his bargain the business man is not usually thinking of these things … Neither is he thinking of the ultimate purposes to which he will apply the resources he gains. He is not thinking either of missions to the heathen or of famine funds, or of his pew rent, or of his political association. But neither is he thinking of his wife and family, nor yet of himself and the champagne suppers he may enjoy with his bachelor friends, nor of a season ticket for concerts, nor of opportunities for increasing his knowledge of Chinese or mathematics, nor of free expenditure during his next holiday on the Continent, nor of a week at Monte Carlo, nor of anything else whatever except his bargain.
- 14.
Wicksteed discussed how the moral accounting regarding markets is more complicated than many pretend. According to Wicksteed ([1910] 2003: 183–184),
That London is fed day by day, although no one sees to it, is itself a fact so stupendous as to excuse, if it does not justify, the most exultant paeans that were ever sung in honour of the laissez-faire laissez-passer theory of social organization. What a testimony to the efficiency of the economic nexus is borne by the very fact that we regard it as abnormal that any man should perish for want of any one of a thousand things, no one of which he can either make or do for himself.
But, Wicksteed (Ibid.) continued,
we must look at the picture more closely. The very process of intelligently seeking my own ends makes me further those of others? Quite so. But what are my purposes, immediate and ultimate? And what are the purposes of others which I serve, as a means of accomplishing my own? And what views have I and they as to the suitable means of accomplishing those ends? These are the questions on which the health and vigour of a community depend, and the economic forces, as such, take no count of them.
Also, Wicksteed (Ibid.) wrote,
When we draw the seductive picture of ‘economic harmony’ … we insensibly allow the idea of ‘help’ to smuggle in with it ethical or sentimental associations that are strictly contraband. We forget that the ‘help’ may be impartially extended to destructive and pernicious or to constructive and beneficent ends, and moreover that it may employ all sorts of means. We have only to think of the huge industries of war, of the floating of bubble companies, of the efforts of one business or firm to choke others in the birth, of the poppy culture in China and India, of the gin-palaces and distilleries at home, in order to realize how often the immediate purpose of one man or of one community is to thwart or hold in check the purpose of another, or to delude men, or to corrupt their tastes and to minister to them when corrupted.
- 15.
One interesting account of the relationship between markets and morality that we do not engage is Hodgson (2013). Although principally concerned with how moral considerations should affect economic analysis, Hodgson does arrive at several conclusions about the morality of markets. According to Hodgson (Ibid.: 130),
I do not claim that capitalism is a noble example of ethical achievement. On the contrary, we have abundant evidence of corruption and injustice under capitalism. Capitalism has exploited the weak and driven many into a life of mind-numbing labor. … It is predominantly a system of getting and spending, driven by greed. … But whatever their failings, humans are not entirely motivated by self-interest, even under a social order that encourages and depends on private acquisition and consumption. … Business strategies are touched by ethical impulses of some kind, … Competition does not extinguish moral sentiment. Capitalism depends on significant residues of morality for its very existence.
On Hodgson’s account, markets are very bad morally but are not wholly immoral spaces. Some “residue” of morality remains in markets. See also Smith and Wilson (2019) that advances an integrated approach to understanding human life that combines Adam Smith’s both economic and moral insights.
- 16.
- 17.
As we will discuss in Chap. 7, our conclusion that markets do not corrupt our morals, like the case Friedman articulated here, opens the door for the possibility of noxious markets or of banning certain practices like insider trading or price gouging.
- 18.
“The wealth of the rich,” Hazlitt ([1964] 1994: 317) explained,
makes the poor less poor, not more. The rich are those who have something to offer in return for the services of the poor. And only the rich can provide the poor with the capital, with the tools of production, to increase the output and hence the marginal value of the labor of the poor. When the rich grow richer, the poor grow, not poorer, but richer. This, in fact, is the history of economic progress.
- 19.
“It is true,” Hazlitt ([1964] 1994: 321–322) wrote,
that capitalism, as it functioned in [Wicksteed’s] time and today, is not yet a heaven filled with cooperating saints. But this does not prove that the system is responsible for our individual shortcomings and sins, or even that it is ethically ‘indifferent’ or neutral. Wicksteed took for granted not only the economic but the ethical merits of the capitalism of his day because that was the system he saw all around him, and therefore he did not visualize the alternative. What he forgot … is that modern capitalism is not an inevitable or inescapable system but one that has been chosen by men and women who live under it. … True, this system of freedom, … presupposes an appropriate legal system and an appropriate morality. It could not exist and function without them. But once this system exists and functions it raises the morality of the community still further.
Unfortunately for our purposes here, Hazlitt asserted but did not show how markets raise the morality of the community or of community members.
- 20.
Contrary to Hayek, Israel Kirzner, who also viewed the market as a discovery process like Hayek, argued that that the returns that profit seekers receive are deserved. As such, profits are just. Although the profits that entrepreneurs obtain in the market are not like the returns from production (which no one would begrudge the producer), Kirzner ([1989] 2016) explained that they are very different from the fruits of luck (which many might begrudge the recipient). Instead, acts of discovering pure profit opportunities are in a different category, a category between production and luck. “An act of discovery, even though it is not an act of deliberate production,” Kirzner (2004: 165) explained, “is the expression of human motivation and human alertness. That which has been discovered might never have been discovered but for this motivation and alertness; it is quite wrong to see the discovery as merely the product of blind chance.” In other words, it is possible to hold that the discoverer “deserves” the fruits of his discovery when the market process is viewed as a discovery process and discovery is viewed as a creative act (i.e. the thing that was discovered did not exist in an economically meaningful sense prior to its being discovered).
- 21.
“When markets are embedded in a private property order governed by the rule of law,” Boettke (2004: 49) wrote, “then they can be reasonably relied on to allocate resources effectively and to channel behavior in a manner consistent with the values of individual liberty, personal responsibility, honesty in dealing, respect for the property of others, etc.”
- 22.
Minimalist moral defenses of the market “[rest] not on the individual’s ability to intentionally improve the lives of others and the community in general, but rather on the idea of unintended consequences ” (Lavoie and Chamlee-Wright 2000: 105). It makes no explicit assumption regarding the morality of economic agents; they need only obey the rules. As long as they obey the law, the greedy businessmen acting in their self-interests unintentionally satisfy the needs and desires of others and are even pushed to better serve others. Here, the market is a moral order not because market participants deliberately pursue moral purposes (although they are capable of doing so) but because the market inadvertently achieves social cooperation or distributive justice.
- 23.
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Storr, V.H., Choi, G.S. (2019). Markets as Unintentionally Moral Wealth Creators. In: Do Markets Corrupt Our Morals?. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-18416-2_3
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