Free Market Fundamentalism: A Moral Objection, and What Should Take Its Place (Short Form)

Etching of the view on the marketplace in Duisburg by Theodor Weber, 1850‘Free market fundamentalism?!? What do you mean by that? Isn’t that a loaded term?’

Yes, it is a loaded term! I’m sure you’re aware that the phrase, as commonly used, implies a negative attitude towards the idea that strict adherence to free market principles is the best economic path for a society to follow. And it also implies that proponents of a strict laissez-faire economic approach possess a blind faith in the power of the market. According to this view, Adam Smith’s ‘invisible hand’, operating only in a free market, is the only force or principle in the universe that will assure the best overall outcome for both personal liberty and the fair distribution of goods. But if you detect a certain…. skepticism on my part towards belief in that hypothesis, well, you’re right.

Because all economic choices are based primarily on self-interest, so the free market fundamentalist argument goes, no one will purposefully decide to act against their own self-interests. Even if it’s true that one’s choices result in satisfying only short-term self interests but are harmful over the long term, over time and in the aggregate, these choices with balance each other out in the marketplace. The tendency to make harmful choices will wane and eventually cease when the harm becomes apparent and other choices are observed to be better options. Self-interest will, therefore, inevitably cause people to make better economic decisions over time.

One example of people making very harmful decisions on a large scale, based on short-sighted self interests put into practice in a free market, is the Dust Bowl disaster in 1930’s United States. Farmers, en masse, planted high-market-value crops that impoverished the soil and led to widespread erosion problems. These, combined with unusual weather conditions, caused a massive dust storm and drought that caused hundreds of thousands of farms to fail, thousands of people to die from dust pneumonia and other drought- and famine-related illnesses, and millions to become homeless. These people were hard-working and did not lack in that enterprising, pull-yourself-up-by-the-bootstraps work ethic lauded by the free market fundamentalist. They also made a rational choice: to make a success of the farm right away. So most farmers chose to forgo more prudent, sustainable methods of farming and chose instead to lift themselves out of their current state of debt and poverty by planting wheat. And in the end, this strategy soon proved disastrous to almost everyone’s long-term self-interest, including many prudent farmers who had made wiser choices.

So even though it’s true people sometimes and even often make self-destructive decisions due to short-sighted self-interest, the free market fundamentalist might point out that the ‘invisible hand’ force of the free market will correct this tendency overall. After all, we haven’t had another Dust Bowl (well, not exactly), and even if we’ve gotten ourselves into similar messes for similar reasons, each episode serves to correct our tendencies to make those particular unwise decisions. The individual might choose irrationally, but the system overall is rational.

But human beings are not just economic actors who allow our choices to be judged and corrected in the long run by the impartial and heartless forces of nature. We are moral agents: we judge each other’s actions, as well as our own, according to a(n) intuitive and/or written code of conduct, and hold each person accountable, in real time, for acting in accordance with that code. We also consider the potential consequences of our actions and choose to act according to how morally acceptable they are.

Here’s where our roles as ‘rational’, self-interested economic actors and as moral agents conflict. The corrective force of the free market, like biological natural selection, is an amoral force, which doesn’t ‘care’ who flourishes and who does not, who suffers and who does not, who lives or who dies. Human beings, as moral agents, do care about these things, both on a rational and on an emotional level. (I am convinced that the sharp distinction between emotion and reason is artificial and largely misleading, but that’s a topic for another essay. Here, I’ll use this distinction as it’s colloquially used, as two ways of looking at things, one that’s instinctive and one that’s more considered

So should humans, as moral beings, leave the weeding out of bad economic decisions mostly or entirely up to the amoral force of the free market? Is it morally right, or even acceptable, to allow the chips to fall as they may, so that bad effects (or the morally neutral term ‘inefficiencies’ of economics) end up correcting the whole system on its own? The corrective force of the free market, like natural selection, needs inefficiencies to correct against, in order to work its magic. But, the moral agent objects, these ‘inefficiencies’ that die out are, all too often, human lives! I argue that we, as moral, social beings, don’t consider the loss of human life an acceptable risk, and must hold ourselves and each other accountable if we don’t act to save lives if we can. And this commitment to moral excellence only begins at saving lives.

A general commitment to being a good citizen and a morally worthy human being should replace free market fundamentalism as the driving force behind one’s political and social views.  The facts of observation and of history reveal that the market is a force for ill as well as for good, and the morally committed, good citizen relies all of the evidence, to correct and sustain their beliefs and to inform their actions, and welcomes a system of checks and balances to keep them honest and on the right course between self-interest and concern for the common good.

The full text of my original essay can be found here:

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