Consistent free-market advocates — and not just professional economists — are not only enthusiastic about their preferred system of political economy; they are very enthusiastic. At least part of that enthusiasm is fueled by a well-grounded conviction that the general level of prosperity would be unprecedentedly high if people were free to engage in peaceful production and exchange without forcible interference by the state or freelance aggressors.
This enthusiasm is found in two broad categories of radical free-market advocates, or libertarians: those who regard themselves as consequentialists (or utilitarians), that is, those who think moral acts are acts that maximize some good like pleasure or happiness or well-being, and those who regard themselves as deontologists, or advocates of doing one's moral duty (say, respecting other people's rights) as good in itself, without reference to consequences.
In chapter one of Gary Chartier's Anarchy and Legal Order, he explains certain fundamental problems with consequentialism.
There is no underlying thing that well-being is. "Well being" or "welfare" or "flourishing" or "fulfillment" should simply be seen as a summary label for all the different aspects of a life that goes well. There is no quantity, no substance, that underlies all dimensions of well-being qua dimensions of well-being. And the absence of such a substratum, a definable common element, means that the various aspects of well-being are incommensurable — that there is no way of measuring them in relation to each other.… Similarly, particular instances of the various aspects of well-being are non-fungible: there is no objective basis for trading one off against another.
If this is true, utilitarianism, which implores us to maximize social well-being, must be a nonstarter.
I ignore for now a third category of libertarian, the eudaimonists, or virtue ethicists, with whom I identify. Eudaimonist libertarians are also enthusiastic about free markets in part because of the prospect for a high level of general prosperity. (See my "The Moral Case for Freedom Is the Practical Case for Freedom" and this video lecture by Roderick Long.)
It's no surprise that consequentialists would embrace free markets on grounds that they will produce general prosperity. In their view, they would be touting the (supposed) maximization of a good, which is what interests them. And we can understand a deontologist's joy at the prospect of high general prosperity. Why not rejoice that one's moral duties yield good consequences even if yielding good consequences is not their objective?
But this raises a question: what if we suspended disbelief and supposed that free markets could reasonably be expected to impoverish most people while benefiting only the few? What then?
I would still favor freedom, but I don't mind confessing I'd have decidedly less enthusiasm for it. Why wouldn't I be less than thrilled by the prospect of human suffering? On the other hand, prosperity is not the only important thing in life. The ability to be self-directed counts for a lot in my book. Money, to be sure, can enhance self-directedness by expanding options, but it's better to be poor and free than poor and unfree. Those who would suggest a third alternative — unfree and wealthy — have entirely too much faith in the state.
Some deontologist free-marketeers may insist that their enthusiasm for markets would go on even if most people faced poverty. I have trouble believing that. I would suspect secret disappointment. For one thing, I doubt that this type of libertarian is as pure a deontologist as claimed. Roderick Long has something to say on this matter:
In real life, one rarely finds members of either camp [deontologist and consequentialist] relying solely on a single set of considerations. It is a rare moral or political polemic indeed that does not include both consequentialist and deontological arguments.…
Whatever they may say officially, most consequentialists would be deeply disturbed to discover that their favoured policies slighted human dignity, and most deontologists would be deeply disturbed to discover that their favoured policies had disastrous consequences.
Fortunately, this discussion is purely hypothetical. We know that a radically freed market would create a high level of prosperity even for the "poorest." But before getting into the reasons for that, there is a point worth putting on the table. Sometimes the question posed to deontologists is different: What if free markets increased income inequality (not poverty)? The switch from poverty to income inequality is sometimes unnoticed, but it is significant. I noted recently that increasing "market inequality" (as opposed to what I call "political-economic inequality," which results from government privilege) is consistent with dramatically rising prosperity for all:
Let's remember that it is entirely possible for the poorest in a society to become richer even as the gap between the richest and poorest grows. Imagine an accordion-like elevator that is rising as a whole while being stretched out, putting the floor further from the ceiling.
I don't think a growing income gap is likely in an increasingly prosperous freed market, but the scenario is not logically absurd. At any rate, I am not concerned about the prospect of growing market inequality the way I would be about mass poverty if I thought a freed market would produce it. My view accords with that of Benjamin Tucker: "Equality if we can get it, but Liberty at any rate!" (Hat tip: Roderick Long.)
As I say, this discussion is hypothetical. Freedom (or justice) can be counted on to produce good outcomes, in a eudaimonistic way, for everyone. But is this just a lucky break? Or is there a more solid explanation? It's long seemed obvious to me that good should be expected to come from abiding by natural law (including respect for natural rights). I recall that somewhere Murray Rothbard said the same thing. This is a fairly general statement, however, and it would be better to have a detailed explanation of why this is the case.
Fortunately, we have one — from Roderick Long in his paper "Why Does Justice Have Good Consequences?" I recommend reading this paper in its entirety. Here I will only hit the highlights. Long first shows "the concurrence of deontological and consequentialist criteria" by arguing that, as Socrates, Plato, Aristotle, and the Stoics taught, the contents of the individual virtues reciprocally determine one another. This is part of what is meant by the "unity of virtue." For example,
What courage requires of me [in a given instance] cannot be determined independently of what prudence [which is concerned with consequences] requires of me, and vice versa.… This does not make justice a consequentialist notion, since the direction of determination runs both ways; what counts as a beneficial consequence will be partly determined by the requirements of justice.… Aristotle defines virtue and human flourishing in terms of one another. " [Emphasis added.]
Because "justice and benefit are conceptually entangled," it's no mere "happy coincidence" that justice has good consequences.
This is Long's "unity-of-virtue solution" to the puzzle of why justice is beneficial. But he can't leave it at that because his "solution gives us no reason … to expect any concurrence between the prima facie contents of justice and benefit, before they have been mutually adjusted." After all, if the pre-adjusted prima facie contents can be mutually adjusted to each other, that cannot be explained via the unity of virtue.
Here I can only summarize Long's answer. He finds that the prima facie content of justice, "considered apart from consequentialist considerations," is represented by libertarianism, that is, the principle that each person is an end in himself and therefore is equal in authority to everyone else. On the other hand, "the prima facie subjectivist content of benefit, considered apart from justice," would entail the long-run satisfaction of people's preferences.
The social theorists of the Austrian School have shown, on praxeological grounds, how a libertarian social order constitutes an economic democracy, in which consumer preferences direct the productive resources of society through the imputation of value from consumer goods to goods of higher order. Hence justice, as it would be conceived prior to adjustment, does a reasonably good job of producing beneficial consequences, as those would be conceived prior to adjustment. Whether one thinks that the alterations to be produced in these two concepts after adjustment would be great or small, the fact remains that there is a rough concurrence prior to adjustment, and this rough concurrence seems to require explanation.
That explanation, Long says, is to be found in the work of the Austrian economists.
If the Austrians are right, and I think they are, then a solution to our problem may be in sight. The fact that a libertarian social order tends to satisfy consumer preferences is not a contingent empirical fact; the Austrians argue at length … that this concurrence can be established by conceptual analysis.
But if this is so, then the concurrence requires no explanation. It makes sense to ask why there are four shrimp on my plate instead of five, because the alternative is all too conceivable. But it doesn't make sense to ask why two plus two equals four instead of five, because the alternative is incoherent. Nothing could count as two plus two equaling five, so "Why don't two and two make five?" is no more coherent a question than "Why isn't MOO?" If the praxeological approach is sound, then demanding to know why the laws of social science are as they are is equally incoherent. That whose alternative is inconceivable requires no explanation.
It may be an interesting exercise to imagine how we'd feel about freed markets if the consequences were generally bad, but we need lose no sleep over the question. And now we know why.
This article originally appeared at the Future of Freedom Foundation.