The market economy is, on its surface, a chaotic system of self-interested people each trying to profit off of one another. Both the left and right will complain of the greed brought about by capitalism. But as Friedman argued, all societies run on self-interest. Whether centrally planned or decentralized, communist or capitalist, all economic systems function by individuals seeking personal gain. It is the incentive structure of capitalism that directs the drive for gain in a beneficial manner.
But for those especially concerned with morality and justice, this answer doesn’t work too well. Their moral concerns cannot simply be assuaged by arguments that amount to “all other systems are just as bad” and “well, greed brings material profit.”
What is needed are moral arguments for free markets and capitalism.
Thankfully, people have been making the moral case for free markets for many centuries, from the Scholastics to Russell Kirk, to Jacob Rees-Mogg (and many, many others). The moral case is not simply that moral ends justify questionable means. The means themselves must be moral.
Since the primary goal of the Scholastics was determining right from wrong, their economic theories led to certain moral conclusions. They spent centuries discussing the criteria for a Just Price. With some exceptions (that dwindled over time), the Just Price was the price determined by the common estimation of people within the market.
There were two important requirements for the Just Price to be legitimate. For one, it must be agreed upon voluntarily, free of coercion. If a buyer did not purchase something of his own free will, the price was not legitimate. The second criterion for the Just Price is that a transaction must be free of fraud. If the seller lies about what is being sold or cheats, the price is no longer valid.
This is similar to the basic ethics of free-market capitalism. Capitalism is not simply “it is valid if it is profitable.” There is an etiquette of mutual respect required for trade to exist. People want to further their own interests, and they must do so in a world with other people that are doing the same. Due to the scarcity of resources, individual interests conflict. These conflicts can either be resolved peacefully or with violence.
Trade is a form of peaceful conflict resolution. People want what others have, and are willing to come to an agreement rather than trying to profit at the expense of others. Both parties generally assume that the other is not trying to cheat them with counterfeit goods or money. There is an ethics of mutually respect present in trade.
Of course, the real world isn’t perfect. Plenty of people are perfectly willing to lie, cheat, and steal within a capitalist system. Some media organizations and journalists make it a goal to present the truth, while others are willing to present lies and slander as the truth. Some companies will compete with others to offer the best product for the best price, while others are fine with begging the government for special favors that give them an unfair and unearned advantage.
The difference between the flaws of the free market and the flaws of other systems is that individuals can try to eliminate fraud and corruption within the free market, while the flaws of socialist systems are catastrophic.
Though, there is one criticism of libertarian defenses of the market that has some merit. Some libertarians argue that, whatever the issue, “the market will sort itself out.” This explanation doesn’t work for people that see clear issues that the market hasn’t sorted out and takes a far too distant approach to market forces.
In fact, we must all remember that the market is not a spiritual entity, but a society of individuals that includes each of us. “The market” does not automatically weed out fraud and corruption. It is up to the people within the market to disincentive lying and corrupt practices, and to reward trust and virtue. When good people are not encouraging just market practices, people will lose confidence in the free market and turn to more easily corruptible systems.
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