Critics often employ moral arguments in attacking free-market policies. They say people who advocate market-based solutions to life’s problems support greedy, profit-hungry businessmen instead of the public interest. Dwight Lee, William J. O’Neil professor of global markets and freedom at Southern Methodist University, says there’s a moral case to be made for markets. Lee addressed the importance and difficulty of making that case during a presentation to the John Locke Foundation’s Shaftesbury Society. He also spoke with Mitch Kokai for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)
Kokai: Let’s get into the difficulty first: the moral case for markets. A lot of people think markets are for greedy business people. They have no public benefit. How difficult is it to make this case that markets are beneficial?
Lee: Well, I think it is difficult for the simple reason that people have kind of an instinctive morality about what good behavior is. You know, it’s helping other people, but not just helping other people, but you have to do it intentionally, you have to make a sacrifice to do it. You can’t profit from helping because that kind of taints the help, if you benefit from it. And also, it helps if you help specific people, identifiable people.
And the wonder of the market is that you can help far more people by not intending to, by not sacrificing — actually you can benefit from it — and you can help not particular people, but you don’t have to discriminate. You can help everybody by following simple moral rules, but they’re not very emotionally appealing moral rules. Just by following your interest, obeying the rules of the market, keeping your promises, being just a decent person but nothing heroic, you can do far more to help others than if you actually intended to. But people kind of dismiss the market and let the process of what they see as greed and self-interest kind of contaminate in their minds the benefits that the market provides. They often don’t even see those benefits.
Kokai: That’s a difficulty, but why is it then also important that we do make this moral case for markets?
Lee: That’s a good question. Because I think this urge we have to have this, what I call “magnanimous morality”— the intention, the sacrifice for others, and specific people — that people want to have the benefits of the market, to the extent that they even notice those benefits, but they want it to be done for these magnanimously moral reasons. … Magnanimous morality is extremely important, you know, for people you know, for small settings, for your family, your friends, your associates. You want to be magnanimously moral, but people want to kind of extend that to the global economy, to the general economy. And the general economy can accomplish things through this mundane morality, the marketplace, that could never be accomplished by actually caring for other people, by intentionally wanting to help specific other people. You could never, for example, feed New York City that way. There’re all kinds of examples you could give.
I often ask my students, “What is better than caring and sharing?” That sounds really good, and it is good in certain settings — caring and sharing. But my answer is: What’s better than caring and sharing is not caring, but sharing with far more people and far more effectively, through the market process. And we do that every day — every time someone wants more of a good. Let’s assume that Canadians want more bananas. The most effective way they can get us to share with them, by consuming fewer bananas in the United States, is to send us a price signal, higher prices. And we will all — we do it every day in response to higher prices. We share with others by cutting back on our consumption of what other people are now telling us they value more at the margin than we do.
Kokai: Is part of the problem with this issue the fact that people have so ingrained in their impressions of the market that someone wins and someone loses? If the businessperson makes a sale, makes a profit, it’s the consumer who loses, and that’s the completely wrong way to look at it?
Lee: That’s a very good point. It’s not a point I made in my talk, by the way. But it is a very good point. People tend to have this zero-sum view of the market. And it’s instinctive, I think. I think we kind of evolved in a hunter-gatherer society, small groups, and I think that’s where this magnanimous morality comes from, too, and it was very productive in these small groups. But in those small groups, it really was kind of a zero-sum society. If somebody was kind of getting rich or maybe gaining weight, which was unusual in those small tribes, they were probably not playing the game quite right, not sharing with others, and people got suspicious of them.
But now we’re in a very different setting, and it’s very much a positive-sum situation. All you have to do is look at how 1 billion people were living 200 years ago, and now see how much better 6 billion people in the globe are living. We’ve added tremendously to the amount of wealth available. But I think you’re absolutely right. When people see somebody get rich, they get suspicious, and they get the impression, “Ah, this guy is getting rich at my expense,” when the reality is, when you get rich in the marketplace, you do it by serving the interests of others.
Kokai: Moving forward, is there any good way you see that we could help change this mentality to allow people to see that, hey, markets are good and, in most cases, work better than the government at addressing these problems?
Lee: Well, I don’t think there is any way of getting rid of this kind of emotional attachment to the magnanimous morality — helping others intentionally and sacrificing to do so. But I think what you can do is point out that one of the big advantages of the market is that we can economize on that morality. That’s a very important morality, and there is nothing that I would ever say or write that would criticize it. But it’s best confined to situations where we really do treasure each other, know each other, kind of know what each does, what they need and want. And we can economize on it, use it in those settings where it’s appropriate, and then be able to do more for those people we care about, by having the productivity that is only possible when you have this mundane morality of the marketplace allowing us to cooperate and communicate and interact productively with billions of people around the globe in ways you could never do if you tried to expand or extend your magnanimous morality beyond your family and friends. That would only make things worse.
What often happens is the political process takes advantage of our desire for magnanimous morality by putting on a rhetoric of concern when in fact all they’re doing is trying to capture power for themselves, and actually making things worse instead of better.