This blog has had a bit to say about the natural
rights view of governance and politics. In
summary the main points have been that that view has become prominent among
Americans; that it promotes the belief that individuals have the right to
determine their values; and the right to pursue those values with only one restraint,
i.e., that no one be allowed to interfere with others having the same rights.
This, in turn, has
implications on one’s morality. The last
posting hinted at a connection between this political/moral perspective and economic
concerns and activities. There is a good
reason for this connection. The moral
element of the natural rights construct is the moral foundation of a capitalist
or free market economy. What does that
mean? This posting attempts to answer
that at a basic level.
One can readily find
critiques of free markets, especially among leftist political writers. This writer has deeply felt concerns over unregulated
markets or over how libertarians and other strongly conservative advocates support
free markets. This blog has expressed
those concerns, but here this writer wants to sing about its qualified
merits.
This is done here because
nothing illustrates the meaning of the moral positioning of the natural rights
construct – which is the main topic of concern being addressed here – more than
when one considers free markets. No economic arrangement as capitalist/free
markets has led to such levels of enormous wealth. So much so that the political writer Jonah
Goldberg calls it “the Miracle”[1] with
good reason. And that reasoning needs to
be reviewed to garner the positive moral aspects of capitalist thinking.
This is so because by its nature,
free markets provide the means by which to overcome the obstacles that keep
people economically constrained. Wealth
is created and accumulated by the acts of many.
Free markets situate people in this endeavor by them seeking individual
goals. Initially, as societies moved to
this mode of production and distribution, many were coerced into their roles
(here one can cite the exploitive conditions that early factory workers or
miners sustained), but over the longer term more people than in any other means
of production benefitted.
Hence, each actor, under current
forms of capitalism, takes care of his or her own interests by his or her own
means. A person so engaged has a
targeted motivation to fulfill his or her role that both advances the person's
interests and those of society – at least most of the time. Rest easy; this review will forego the
economics of it all, but it points out that history has not known a more
impressive success story.
The
question is not whether free markets work, but whether free markets, in the
long run, work best under certain restraints placed upon them. In this posting, the argument is made for
restraints on free markets as necessary components of a well-functioning
capitalist economy and how restraints (usually through some form of
regulations) affect natural rights’ morality.
According to those who advocate for restraints on free markets, their
arguments have to do with the social conditions that unfettered markets help
create as was the case during the early development of free markets.
These
advocates would argue: Without any
restraints, free markets create dysfunctional levels of skewed income and
wealth distributions.[2] They also set up very dubious practices such
as the selling of products that most feel are, for moral reasons, beyond
limits. This might include the selling
of babies, the selling of military service, or other civic oriented duties such
as a person's vote. One is apt not to
think of these examples or see them as beyond the pale, but one should remember
that America has not had a totally unregulated economy.
In terms
of this, Jean-Jacques Rousseau wrote:
“As soon as public service ceases to be the chief business of the
citizens, and they would rather serve with their money than with their persons,
the state is not far from its fall.”[3] Unfettered markets enable and encourage
citizens to view their civic life in monetary terms and this can cause
expensive outcomes to a government and its people. And with enough of that, one starts
encroaching on moral concerns.
But
nothing essentially says that a free market cannot have restraints. Supporters of restraints would point out that
the US economy from 1945 until the end of the century functioned with
meaningful restraints and experienced vast growth. Yes, given the advantages World War II
provided the US in relation to other industrial nations, one can argue that
those times were not common.
But as the
Noble Prize-winning economists, Abhijit V. Banerjee and Esther Duflo, argue, reasonable
restraints, such as those imposed by governments with mixed economies, do not
impose debilitating consequences regardless of global conditions.[4] In their book, Good
Economics for Hard Times, ample evidence supporting this
claim is cited.
[Note: The next posting
will pick up on this topic.]
[1] Jonah
Goldberg, Suicide of the West: How the Rebirth of Tribalism, Populism, Nationalism,
and Identity Politics Is Destroying American Democracy (New York, NY: Crown Forum, 2018). Yes, Goldberg is a leading conservative national
writer and former editor of the National Review.
[2] For a
historical account of this claim the reader is referred to New York, a documentary series produced by Public Broadcasting
Service. This series, directed by Ric Burns, depicts the New York economy run
by an exceptionally free market system resulting in segments of the city's
population being extremely rich and “half,” as Jacob Riis designated it, living
in abject poverty. See Ric Burns and James Sanders, New York: An Illustrated History (New York, NY: Alfred A. Knopf, 1999).
This was particularly the case in the
nineteenth century. The nation is again
experiencing large income and wealth disparities among its population. This has spawned a literature currently
available; for example, the following book:
Capital in the Twenty-First
Century by Thomas Piketty. This has
taken place as the restraints instituted by FDR’s New Deal policies have been
weakened or, in some cases, eliminated.
This more recent trend began under the
administration of Ronald Reagan and has been accelerated under the Trump
administration. Another history that
focuses on the rise of industrial cotton production and lends insight to the
trend highlighted here is Sven Beckert’s Empire
of Cotton: A Global History. Sven Beckert, Empire of Cotton: A Global
History (New York, NY: Alfred A.
Knopf, 2014).
[3] Jean-Jacques
Rousseau, The Social Contract, Book
III, chapter 15, translation by G. D. H. Cole (London, England: J. M. Dent and
Sons, 1762/1973), n. p.
[4] Abhijit V.
Banerjee and Esther Duflo, Good Economics for Hard Times (New York,
NY: Public Affairs, 2019). Capitalism, with structural restraints, has
also lifted the fates of millions of people in the developing world.
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