The debate over markets and morality has a long pedigree.

Karl Marx thought, of course, that there was something intrinsically immoral about what he called capitalism based on his notion of “the labor theory of value” which contends that workers are alienated from what they produce by the private ownership of the means of production. A small ocean of ink has been spilt over that debate.

Many of those who see the importance of the free economy for the sustenance of society are quick to outline the defects in Marx’s argument, showing how the economic value of a commodity is not, as Marx contended, predicated on the amount of time, labor and effort a given worker puts into his production but rather, on the subjective use-value of the commodity to the consumer himself.

So far, so good.  But another conclusion is often embedded in this legitimate reply to Marx. His critics conclude that rather than the market being intrinsically evil, it is in fact, intrinsically good.  That it is intrinsically good, they argue,  can be seen by the astounding efficiency of a free economy, in its production of a greater amount of wealth and even a wider distribution of that wealth of the whole of society. Can anyone deny, this line of reasoning continues, that free exchange and the expansion of markets is primarily responsible for the rise in living standard throughout the world when measured in terms of access to things that make life better and easier and even happier? They will point to exhaustive studies that have been done empirically demonstrating the relationship between lower tax rates and less regulation to the general prosperity of nations.

“Isn’t all this a good thing?” they will conclude.  Doesn’t this constitute the intrinsic morality of the free market?

There is no doubt in my mind about the veracity of the empirical claims of these arguments. But the question before us is not the instrumental benefit that economic liberty can produce for people. It is, rather, whether the market is itself intrinsically moral. Many well-intentioned people do not, initially, make the distinction between an instrumental good and an intrinsic good.

The intrinsic quality of a thing is something related to the nature of the thing itself, something without which the thing would not be itself.  To be able to assess the intrinsic morality of the free market one needs to look deeper than to the merely positive (or even negative) utilitarian effects of what a free market can produce. One must look at its very nature.

When we look beneath the instrumental effects of the free economy, which is not, in the first place about money, its allocation or production and distribution, we discover that at its most fundamental level economics is about human action –the way people act to satisfy their needs.

A simply analogy might help to clarify this. Ask yourself this question: Is a hammer intrinsically moral?

Your reply would most immediately be: “It depends on what it was used for. If employed to bash in the heads of people you do not like, the answer is no.  If employed to help build a house for a homeless people, your answer might be yes. In either case, the precise answer is to say that the hammer is neither moral nor immoral; it is the person who chooses its use that can be evaluated morally.

Attending to these Big Questions will enable us to more deeply evaluate the economic organization of society. So the real issue here is not a financial one, but an anthropological one: What is man? Who am I? Why am I here? Where did I come from? Where am I going? What are my responsibilities to myself and others? How we answer these kinds of questions will have an enormous impact on every facet of our lives, including how we work and buy and sell, and how we believe such activities should be directed— in other words, on economics.

Only from this starting point can we look at the relationship between markets and intrinsic morality.

The most apparent thing about human beings is that we are physical. We live in a physical word which is a limited world. This existential reality is what gives rise to the economic question – what is the proper allocation of scarce resources?

Were physicality the only dimension of the human reality, we could be satisfied with the economist’s abstract construction of the homo economicus (man as solely an economic reality). It’s a metaphor which serves a purpose in the economic literature–in the same way that a cartoon, with its primary colors and exaggerated distinctions, can bring into high relief a crucial feature that might otherwise go unnoticed.

But this metaphor is not an accurate portrait of the rich, immense and subtle complexity that constitutes the human reality.  The bloodless and cold abstraction of the homo economicus who is only moved to act to “maximizing utility,” as the economist might say, is seeking to satisfy only material desires. The economic aspect of  man is true but it is not the whole truth about who human beings are.

Looked at more deeply, at an intrinsic level, it becomes clear that people are motivated by higher aims and goals, aims and goals not to easily reduced to an accountant’s ledger – as important as that ledger is for economic health of the family, the firm or society as a whole.

Imagine for a moment what life in society would be like if people were motivated to act only by some kind of sensual satisfaction.  The streets would simply not be safe; indeed, to the extent that some people are motivated solely by their sensuality, many streets are not safe.

This anthropological perspective puts us in a better position to discern what is intrinsically good in relation to the human person: what helps man to flourish in his fullness is the standard by which we can determine what is moral.

Turning our attention now to an understanding of the market, we need to be clear as to what it really is in order to answer the question before us. The market is essentially the expression of human economic preference. Questions of the morality of the market often arise simply because the market is so closely connected to human decision making and betterment – on the material level. And here is where the confusion frequently arises as to its morality. Humans are more than their material reality, yet to the same time, their material reality is something without which a human being cannot well exist. Still, the abundant material benefit a person may enjoy is not a sufficient indication of his moral well-being. While these two dimensions of human existence are distinct they are not unrelated.

Another way of looking at this is to understand that freedom itself is not a virtue, but rather the context in which virtue (or vice, for that matter) becomes evident. If a free market is the expression of the liberty of economic actors to satisfy their needs, then the morality of the market will depend on whether or not those desires and their fulfillment was moral in the first instance.

Questions for discussion:

Do you believe the market has an intrinsic morality? Why or why not?

If‘ “what helps man flourish” is the question to determine what is moral, what is the role of the corporation?

If individual motivations make the market moral, how do we cultivate individual morality?

How might we foster the morality of the free market?

13 Responses

  1. Benson says:

    Empathy towards other humans, implying a certain degree of trust, makes possible an essential human trait; namely, division of labor, making possible the development of specialists who advance and become the repository of ever more complicated techniques. This separation of labor leads, among other things, to the development of a market economy wherein exchanges can take place between different kinds of specialists. Trade is facilitated by the further invention of money. Note however that the use of money removes personal interaction from the marketplace. You neither know nor care who the various people were that were involved in the manufacture and distribution of a shirt, for example. This tends to set up a serious conflict between urge for self preservation and the empathic relationship with others. 

    There is another social characteristic seen in mankind but rarely if ever seen elsewhere; namely, trust. The division of labor which is an essential to the development of a complex civilization depends on the citizenry largely subscribing to the implicit social contract. Thus when I enter a restaurant, servers trust me to pay for my meal. They accept a piece of plastic or a written check which is a promise for a third-party to settle my bill for me. The network of mutual trust spreads out in all directions and sustains the entire economic structure of society. The willingness to accept the goodwill of a total stranger is remarkable in the light of the dog-eat-dog style of so many interactions. This could perhaps be attributed to a thoughtful decision made upon examination of the requirements of a trade oriented society but it is more likely a reflection of a widely shared heritable predisposition which may be nearly unique to humanity.

  2. Peteface23 says:

    Personally, I’m not aware of any feature of the market that would count towards its being intrinsically good or bad. But I think that on the whole it is instrumentally bad because of the way in which it moulds human motives and relationships.

    I found it confusing to talk of the market having morality or immorality. I take ‘morality’ to mean a code of behaviour which can itself be a good or bad code. But I take it that what Robert means is the market being good or bad, not the code of behaviour it might extol. 

    Robert begins by saying that “of course” Marx thought that the market was immoral, but this is controversial. Marx’s earlier criticisms of ‘capitalism’ which focus on alienation appear to be inherently normative, that is, dependent on norms and values. But this isn’t clear because he didn’t explain himself well and didn’t revisit these concepts again. In his middle and later work he argued that morality was but an illusion sustained by the ruling class to help them control the working class. His criticisms of ‘capitalism’ became ‘scientific’ in nature, a multidisciplinary approach the most famous feature of which is the labour theory of value. This is an explanation on economic terms, not moral ones, of why he thought that particular economic system would fail.

  3. James Laird says:

    Is there morality associated with a free market? My opinion is yes; a free market supports the overall ascent of life – there’s goodness that comes from it.

    In other words, there are *many* different forces exerted within a free market, and the net sum of those forces results in a vector that supports the overall ascent of life. To me, that meets the definition of a “good thing”.

  4. Rev. Robert Sirico says:

    The points Benson makes about the way the market facilitates trust in people in the way we can walk into a restaurant and pay only after we have consumed the meal, responds in a real way the cautions Peterface offers in the observation that the market “moulds” human motives and relationship. It may be true to some extend, but not all the moulding is bad.  More significantly is that markets are merely the manifestation of choices that people make in their free interactions with one another – that is all that markets are. While it may be true that the early Marx did not express himself well, it is also true that the later collapsed morality into economics as he did everything, and thus, it could be said, as I did say capitalist activity was immoral. Of course, in my view, the whole of Marxist materialism is what is illusory – but that would be the stuff of another essay.  Thanks for joing the conversation.

  5. ianful says:

    No.  The market is a place for human enterprise. With free will, we disconnect from the will of God and without direct guidance have to derive values and standards of morality in order to live with other humans.  We can start with basic self-interest from materialism, evolve into a competitive mode like plant life, then adopt cooperative strategies like animals, further evolve into more charitable possibilities of humans, and last transcend the lot like Jesus did.  Where we operate depends upon the state of spiritual evolution of our soul, and whether we are willing to submit to the will of God.

    • ianful says:

      Continuing … Until we surrender to God, there a few things to do that will improve our existence in a free market in this material world.  I personally don’t like the term ‘free market’ as it has become tainted by political ideology and prefer the term open market.

      Capitalist ideology extolled the virtues of the ‘free market’ as opposed to the Marxist/Leninist/Communist ideology of the state regulated market.  The US market economy flourished in the1950s and 1960s and the state regulated market of the Soviet Union of the same period didn’t.  However, the reverse has occurred in the last few years with respect to the US and China – an economy under Marxist control is doing better.  However, the US always claims the higher moral position. 

      What has been going on? … is it not morality at work? … who knows?

      Examining what helps man flourish, and what doesn’t help man flourish, I can name a few things, and they generally describe a community’s culture – the rules by which members operate.
      Man flourishes where community is built: where all players have equal opportunity, where integrity is important, where there is a sense of fair play with no hidden agendas, and where there are agreed rules in operation in an open market.
      Man doesn’t flourish in a corrupt market system, as this produces a dysfunctional culture that destroys a community.  Corruption has destroyed the US economy and will ultimately destroy the Chinese economy.

      The intent of serving the fellow man will assist in making the market moral, and individual morality will be assisted if the need for individual integrity and service is upheld.  This pathway will lead the individual towards God.

      Whoops, I nearly forgot the role of the corporation: the corporation introduces the concept of an unfair advantage and generation of material wealth / power as the primary motive.

  6. ntadepalli says:

    1.      I believe free market has no moralising influence over its players.The players while in competing mode guide its operations serving society and while at it they usually find self-serving opportunities to derive benefits at the cost of society for short runs of time though in the long run business may become as usual.

    Thus there is a sort of self-regulation;but that is not enough.External regulation is necessary.It amounts to saying free markets fall short of any intrinsic morality.

    2.      During the short run of self-serving occasions,the individual shows his creativity,self-satisfaction etc.( making his life worthwhile ).Brains evolve during those times reaching out to new capacities. That is flourishing.

    3.      Some players may go for voluntary moral acts;but that will be usually outside their market domain.Obviously the motivation is associated name&fame.


  7. AthanasiusOfAlex says:

    I am in substantial agreement with Rev. Sirico’s article.

    Morality regards whether our actions are in accord with our human nature or not. Thus, morality most properly regards the interior decisions of a person, and not so much in their physical effects.

    Two examples make this idea clearer.

    If someone plans to commit a grave crime (such as murder), but the circumstances do not allow him to carry it out, he is still morally guilty of it (but not, of course, civilly guilty).

    As a different example, the Nazi propaganda experts were renowned for their film-making capabilities. They produced technically excellent progranda, but I think that everyone agrees that they were morally depraved for doing so.

    The second example is especially a propos, since it shows that a thing’s technical perfection is not identical with its being morally acceptable.

    The free market is similar. It has proven itself to be the most efficient means for creating and distributing wealth. It can, however, be used for either good or sordid ends. A free market used to distribute drugs or pornography is undoubtedly the most efficient distributer of such products (they cannot be called “goods” in any meaningful sense), but such use of the market is clearly immoral.

    Excellent article. For Greek and Latin buffs, it is curious fact that “homo economicus” is misspelled, and seems to have been misspelled consistently by a lot of economists. The correct way to spell the adjective is “oeconomicus” (which comes from oeconomia, in turn from the Greek oikos–home–and nomos--law, hence “the law of the home”).

  8. Rev. Robert Sirico says:

    I am most grateful to Athanasius not only for amplifying my argument but for correcting my Latin as well.  Mea culpa!

    • While I agree with ianful that there is an evolutionary dimension to our moral development, I do not think it is determined solely by our biology. Were that the case, modern man living is a more evolutionary developed civilization would be more moral than our ancestors. This does not appear t o be the  case.
    • Unlike ntadepalli, I think trade relations can (note, not always), have moralizing effects on people in the same way that other freely engaged human realtionships can have moralizing effects – or not. That is why the market is not intrinsically moral (see my original  article for definition). Moreover, to my mind there must be something more to human flourishing than the physiological development of our brains.  Wouldn’t our will have something to do with it?
    • To ianful’s continued points, I agree that words we use to describe free human economic exchage becomes ideologically bogged down. Whether “capitalism”, “free market”, “business economy” “free trade”, “open economy” or, my personal preference, simply “the free economy” – the intellectual defenders of the state as the normal source of control in economic matters are successful in caricaturing this process with frequent unjustified approbrium. So, while all definitiions can be improved, I think we need to look at the opponenets of the free society to see why the system that has done more to liberate man from poverty always gets ideologically pigeonholed. And whatever one wants to call China’s economic system, “Marxist” is not quite it. 
    • ianful says:

      I agree that modern man is less moral than our ancestors.  Being hooked by materialism, mankind has reversed his spiritual evolution, and now most humans have material souls. These people are only concerned with thinking, monetary wealth and power.  However there is hope, since about 20 years ago an imperative for competition in business indicated that persons with plant souls were appearing.  Now cooperation in business is surfacing, and this indicates that people with animal souls are reappearing.  Maybe we will soon have more people with human souls (these are quite rare at present) and then we will have an economic system to benefit all and not just to satisfy greed.
      The disparity between human form and resident soul explains a lot of immoral behaviour by person of high standing in the community.  For example, child abuse by clergy, doctors that are killers etc.

      • Rev. Robert Sirico says:

        The language and argument employed in this post is may make sense to someone from within the  philosophical system represented here, but I have no clue what any of this means.

  9. FrMike says:

    The first problem is that “free market” is a non realizable utopian idea.  As long as one government or other force anywhere fiddles with subsidies or tariffs there can be no free market because every other body must adjust to those protections. 

    Unregulated markets seem always to tend towards monopolistic abuse. From Standard Oil to the present those who accumulate resources move to protect and expand by using non market means to skew the market in their favor. That is certainly immoral if you pretend to value free markets.

    Interestingly Steven Pinker’s “Better angels of Our Nature” demonstrates that commerce is an effective agency for reducing  violence.  Because it requires collaboration for profit it replaces conflict with cooperation and reduces violence.

    the market, free or not, is a neutral element, finally, because  people are either moral or not in its use

    • Rev. Robert Sirico says:

      I do not see the logic in the argument that because free exchange is inhibited they are therefore utopian. It is true enough that impediments to free markets exist due to restrictions like subsidies and tariffs, but why couldn’t markets, which work toward efficiency, out-compete less efficient alternatives? Technological advancements like the internet are increasingly showing how this is possible to accomplish.