Is the free market moral?

Over at the Acton Blog, I watched the video over there about the morality of the free market. There are some interesting problems with the video, such as the narrative of the exchange. A seller does not in fact ask the buyer “What have you done for your fellow man?” The seller does not in general care whether the buyer has money from mowing lawns or that he found on the street. However, beyond all of this, I am left to wonder what is the fundamental justification of the free market.

The presupposition of the video is that the market is justified because the exchanges are voluntary. It then goes on to describe how this is a benefit and how certain government policies are damaging.

In the first, it is insufficient that the market be justified solely on the grounds that exchanges are free, especially free from governmental intrusion. This is the case because there are exchanges freely entered into that undermine the existence of the market. Usurious loans are of this sort. Usury is not only intrinsically evil but intrinsically uneconomical and therefore destructive to the market. Certainly, free exchange is a necessary condition for the market and even for a good market, but it is not sufficient.

In the second, it is also insufficient to acknowledge the many benefits of the free market. These are very powerful arguments and good reasons to support the free market. However, they are insufficient to give a principled foundation to the market. From a principled foundation we can understand the benefits as a true good of the market (more people fed, clothed, lifted from poverty, etc.) or as a mere temporary and apparent good of the market, such as growth and real good as a result of usury.

The freedom of the market must then be understood principle not as license but as liberty. As St. Pope John Paul II said, freedom does not consist in doing whatever we please, but in having the right to do what we ought. The freedom of the market needs to be understood in this context. The market must be open in freedom to the labor and creativity of people, but it need not be open to any exchanges or production whatsoever. At the end of the day, the market needs to be a real good for human beings and it is human nature which is the measure of the goodness of the market.

There then is some moral and political circumscription of the market. It must be sufficiently free of political intrusion to allow for the real and organic growth and development of the market in human ingenuity and industry. However, as the market must be protected from theft and fraud, it must also be protected from more subtle forms of undermining of the market and the human good, such as usury.

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[I have taken the example of usury as a prime example for a few reasons. First, it rests now at the core of present market capitalism throughout the West. Second, it moves away from the destructive examples of drugs and prostitution to an example that strikes at the heart of the market, the exchange of money. It is not just a moral failing, but an economic one. Third, because it is intrinsically evil.]

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