Free Markets, Dismissive and Control

November 11th, 2008

I received this gem in my feed reader today from Tim Bray’s Ongoing, as the opening of his description of what regulations he thinks should be implemented in wake of the financial crisis:

Oh, and if any right-wing fundamentalists or Randroids want to explain how if government just gets out of the way the market will protect us, please first read this and then go away. Thank you.

Rather than go away, however, I have decided to respond to his linked piece.1

Business is a magnificent paradox. The Free Market, with its parade of cheerleading ideologues from Adam Smith right down to today’s Economist pundits has, more or less, worked. It succeeds in creating immense quantities of (unevenly distributed) wealth, lifting people out of rural poverty and urban slums, in arranging that most people have jobs, that most things that are built are needed, and that most things that are needed are built. These are not small accomplishments.

Bray’s short piece starts off well enough. These are indeed not small accomplishments.

And yet, and yet, and yet; business is often a filthy practice. It encourages both vile venial and monstrous mortal sin. Most people who are successful CEOs are just not people you’d want to spend time with. Business, left to itself, would rape the earth we live on, fill food with poisons, theatres with stupidity, streets with gas-guzzlers, and legislatures with puppets. All as an organic consequence of the competitive marketplace.

Let’s make sure Bray’s claim and evidence are clear here.

His claim is the last sentence, that the evil he highlights above is a “consequence” of the competitive market, that is, the free (competitive) market causes those evils.

That is his claim. For any claim to be valid, it requires evidence. Bray’s evidence is the bolded sentence, where he states that “most” people who are CEOs are not people you’d like to be around, e.g., in this context, they’re bad people who do evil things.

This “evidence,” however, is nothing of the sort. First, it is but a claim itself — his claim is that most successful CEOs are people you would not want to be around, but he has no evidence of this claim, either. Thus, logically, his evidence can be rejected on face, because it isn’t evidence.

Second, to illustrate my point, let’s grant for a second that many CEOs are evil.2 There are factory workers, teachers, scientists, and social workers which I would much rather not spend time with. They have done things I find morally reprehensible — lie, commit adultery, et cetera. They are on the whole terrible people.

Yet these professions are not derided as evil. I haven’t heard the argument that lying, cheating, and generally being a poor human being is an “organic consequence” of teaching, and I wouldn’t make this argument because it is without value. Bad teachers certainly do not invalidate teaching as a profession, and nor do company executives who conduct themselves poorly.

Third, and most damaging to Bray’s argument, is his own opening statement. Bray begins his article by pointing out that the free market has “mostly worked,” by increasing the standard of living for most of the world (and an increasing number of those who did not benefit in the last two hundred or so years). The free market has coincided with, and promoted, the greatest economic and technological expansion in the history of humanity.

Let’s put Bray’s two comments together. Bray claims that the free market causes the evils he lists, but acknowledges the free market has led to the incredible advancement we have seen. Those two statements are fundamentally incompatible, because it was that same system which created the good we enjoy. Perhaps CEOs are evil — but it is the free market system which turns their “evil” into a social good, and thus to impede it only encourages evils.

A prime example is one of Bray’s evils — that businesses fill “legislatures with puppets.” Bray’s solution to this problem is to give government more control, because they don’t yet have enough to stop the evil businesses from corrupting the legislature. But remember that the only reason it is beneficial for businesses to lobby government is because government has the ability to “regulate” — control — large areas of the economy. If the government had no right, lobbying would decrease by an incredible amount, because it would be a waste of money.

It is certainly correct that harms have arisen out of the free market, but that logically does not mean they resulted from the free market system. People have plotted to harm others since recorded history, in the state of nature and in the totalitarian state. Government control — or government control beyond its proper role, the protection of individual rights — has not stopped this, and in reality, has magnified its effects.3

The takeaway is this: evils seen in a free market (or in our case, quasi-free market, as the U.S. does not have a free market by any stretch) cannot by default be placed on the system. To do so requires evidence to corroborate the claim, and sound logic justifying why the system was to blame. But what we can clearly see is the free market has used sometimes (or even oftentimes) unsavory motivations on the part of individuals to, in the aggregate, advance humanity to incredible heights that only years ago seemed impossible. And that should never be forgotten.

  1. It should be noted that I have been influenced by Objectivism in individual ethics, and in political philosophy, primarily by Locke and Nozick. []
  2. Note that for Bray’s argument to have any validity we would first have to develop a standard for what is “bad,” and this standard would necessarily stop short of violating someone’s rights, because in a free market, the government stops any rights violations or punishes the aggressors. []
  3. See the Soviet Union’s environmental destruction, Mao’s government-induced famines which killed tens of millions of people, and on a lesser scale, the U.S. federal government’s magnification of the financial crisis through Fannie Mae and Freddie Mac, and the federal reserve’s low interest rates. []