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Are markets moral? This oft-asked question will be asked even oftener when Pope Francis visits the U.S. next week.
It’s one thing to conclude that markets are immoral after learning how markets work and what life would be like in their absence. Such a conclusion is intellectually defensible because it would reflect an informed – if, in my view, bizarre – value judgment. But the conclusion that markets are immoral typically reflects – as it surely does in the case of Pope Francis – utter ignorance of the logic and history of markets (and of the logic and history of governments).
Markets are deeply moral, for they, compared to all feasible alternatives, –
- are driven by voluntary choices rather than by diktats;
- concentrate the costs and the benefits of each choice as closely as possible on the individual who makes that choice;
- allow for great diversity of choices and life-styles;
- create mass flourishing; they raise the living standards of the poor far more than they raise the living standards of the rich;
- transform the manifestations of economic hardship from literal starvation to much-less severe financial distress; (losing a job or a home, however agonizing, is far better than losing your and your children’s lives);
- ‘churn’ over time the rich and poor; dynastic wealth, while not unknown in markets, is less common than unthinking and historically uninformed people suppose, and such wealth is always exposed to the forces of creative destruction;
- bring together literally hundreds of millions of strangers from around the globe and from many different cultures and religious faiths into a peaceful and cooperative productive effort.
This last point is illustrated most famously by Leonard Read’s justly celebrated 1958 essay “I, Pencil [2].” (See the video here [3].) It’s also illustrated by Thomas Thwaites’s effort to build a toaster [4]. (I calculated that the typical British worker can earn in a mere 21 minutes of work enough income to purchase a toaster that is vastly superior to the one that Mr. Thwaites spent nine months building [5].)
Another illustration of this profoundly important insight was shared with me this morning by Bruce Berlin. It involves one man’s effort to make a chicken sandwich from scratch [6]. To make this one sandwich took six months of this man’s work and additional expenses out-of-pocket of $1,500. (And, judging from the sandwich-maker’s reaction, the quality of the final product was mediocre.)
….
Far too many professors, pupils, politicians, pundits, preachers, priests, and popes screech and preach about matters on which they are ignorant. They should instead look with open minds on the great system of social cooperation that is the global market economy. They will see the marvelous cooperation of hundreds of millions of strangers working cooperatively and productively in ways that greatly enrich each other’s lives; they’ll see also the unleashing as never before of human creativity, dignity as never before for ordinary people and their peaceful pursuits, [7] and mass, live-giving and life-sustaining flourishing [8].