A Moral Case for Markets?

Posted on August 20, 2013 by



Some of you who read this blog and some who have read the recent works by Robert Sirico and Arthur Brooks know that the need of the hour seems to be to make a moral case for markets.  Nearly everyone admits their efficiency and ability to create massive wealth.  But the criticism on ethical grounds has been with us for over one hundred years—or more—beginning at least with individuals such as Walter Rauschenbusch (it is difficult to say that Karl Marx argued against markets on ethical grounds unless we attribute to him an ethical theory as markedly different from other traditional theories).  On the religious side, both Catholics and Protestants have busily attacked capitalism as essentially un-Christian.  In recent years Roman Catholic theologians and laymen have continued the attack, based on their reading of older papal encyclicals.  Protestants such as Ronald Sider and Jim Wallis, among others, have contributed their share also.  With all this criticism, is it even possible to make a morally sustainable argument for markets as not only the most efficient institution for creating wealth but also at least equal with any other institutional arrangement in terms of justice and its cognates?  And can this be done from a Christian perspective?  At the risk of a certain fatigue that comes with addressing a topic perhaps too much I will make a tentative attempt, imperfect as it might be.

Out of the gate, let us agree that no institutional arrangement is perfect, for two reasons: (1) innate institutional flaws and (2) the sinfulness of humans.  Perfection then is for those who are only “heavenly-minded” in whatever sense they think of heaven on earth.  My argument is that morally markets are at least as good as any other arrangement precisely because they account better for sinfulness as a datum, a fact, and because they have fewer innate flaws, in relation to what they purport to do, than other arrangements attempting the same goal.

So how do we make the argument?  We can begin with what we mean by moral or ethical.  For Christians the terms obviously have theological foundations.  But this presupposes that a Christian ethical system is a divine command theory, that is, rooted in special revelation, the Bible, properly interpreted.  If we accept that as a basis, then we must specify what it is that the Bible teaches/commands that a market institution would satisfy in terms of ethical revelation.  For good to be done to people then, we must deal with theft of all kinds, fraud, duress, and we must allow for property rights (or else we could never have theft).  We find that Scripture does address all of these ethical questions.  Then we must ask whether Scripture addresses more controversial issues such as distribution of goods and services (the “social justice” question).  Once again we are concerned with doing good or avoiding bad for humans, and we are therefore asking whether the Bible, properly interpreted has anything to say about the goodness or badness or particular distributions of goods or services.  We know it does speak to the distributive question in terms of its prohibition on distributional outcomes produced by theft, fraud, and duress.  Does it specify anything further, such as some inherently “accidental” of “incidental” distributions that are not deliberate but arise from the functioning of some kind of institutional arrangement?  It does condemn outcomes produced by corrupt governmental authorities.  But it does not seem to go further to condemn an institutional arrangement or an outcome just because it results in distributions that are not equal.  And this is where things get interesting.  Some Christian writers have condemned institutions like markets just because they may produce differential outcomes “incidental” to their operation.  These writers believe Scripture is on their side.  Is it?

Of the roughly 150 texts in all of Scripture that use the term “justice” or that are translated “justice,”  I have been unable to find one that, taken in its appropriate context and using normal interpretational methods, yields agreement with those who would argue that the Bible teaches an outcome-based and egalitarian theory of distributional justice.  As I said, it does condemn outcomes deliberately produced by the actions of corrupt governmental officials.  This condemnation is of injustice in a procedural sense which deviates from a rule of law.  I am led to conclude that distributional theories of the modern social justice type are not addressed in Scripture.  Now this does not at all mean that God cares nothing for the less fortunate.  But it does allow us to get on with the real task: to find the best (though) not perfect institutional arrangement for both producing goods and services that sustain human flourishing and for distributing those same goods and services to maximize flourishing.

Another point to be made however concerns charges of materialism by market critics.  They say that capitalism makes people materialists.  They say that everything is “commodified.”  And they attribute the cause to markets as institutions.  It may be true that we are more materialistic than we were say 100 years ago, though I have my doubts.  But I assert this is not the fault of markets themselves, but with humans themselves.  Is greed a problem?  It has always been a problem.  Is capitalism uniquely responsible for greed.  I argue no.  In fact, one can find abundant examples of greed in any institutional type, including pure socialism or communism.  The question instead is whether we can find an institution that incentivizes other-centeredness, even when greed is present, in a way other institutions cannot.  Markets seem to fit that bill.  They are not predicated on greed, but self-interest (different from greed) but if greed is present its deleterious effects are limited by the market itself and its legal constraints which prevent the abuses of greed.  In contrast what can prevent the worst aspects of greed from manifesting themselves in a system that is centrally planned and controlled?  Nothing it would seem, except the “good will” of fallible authorities.

Moreover, markets can also be praised for their positive incentives in regard to work and vocation.  But it is not only positive effects but actual biblical support that we can point to.  In Genesis 1 for example we read that man was created to have dominion over the earth, to subdue it.  Later Adam is placed in the garden to work—and this work, being pre-Fall, is good.  Thus work in general is good.  Work then has real value far beyond its ability to produce money (though that too is certainly not seen as evil in itself—see 1 Timothy 6: 10).  Work is good for the worker and for those whom he serves in working, directly and indirectly in his productive efforts.  Which institutional arrangement functions best to produce the desired results in work?  Centrally planned and controlled economies do not seem to accomplish this, as they give incentives not to work, as ones own productive efforts are “taxed” or confiscated away or as individuals simply cannot flourish in doing what they do.  Since the good result produced by work is a good in itself, it must be ethical.  And since markets produce this outcome best—or even exclusively—they are moral in this respect.

There is something more to consider.  It is assumed by most economists that in the absence of the unethical conduct listed above—theft, fraud, duress—any transaction between two individuals must by definition by mutually beneficial or they would not have engaged in it in the first place.  This statement is also predicated on an assumption of accurate information (besides and beyond the fraud question), which markets have been shown to be very good at providing.  Why would an individual trade an opportunity for something (in terms of how he might otherwise use his money or resources) for one particular good or service if he did not expect to gain from the transaction?  That would be irrational in most instances, accounting for those situations of altruism.  And if any single transaction must be mutually beneficial, when we add all transactions together, how could we expect anything other than that the aggregate would be mutually beneficial?  If that is true, then markets must in every given instance (except of course illegal and unethical conduct) be ethical.  They do not produce bad but good for each participant, again assuming absence of illegal and unethical conduct.  It might be theoretically possible for a planned and controlled system also to make all transactions mutually beneficial, if those whose resources were taken were happy with that in order to redistribute to those less wealthy.  We could hardly expect such a result in the aggregate, even if we could find isolated instances.  It might also be possible to argue that individuals do not really know what is best for them, so we cannot say that markets actually do produce mutually beneficial outcomes from an objective standpoint.  That argument first must assume that subjective value of individuals is invalid and second that there is an objective observer in a position to state infallibly what is best and then produce that outcome.  But there is no such human being or group of humans.  Moreover God has not said that He judges economic transactions in any way as bad in themselves.  Again then market institutions are morally superior, if not perfect.

There is much more to say on this subject.  I fear I have already worn the reader out and perhaps not convinced either.  But at least I have started the discussion.  Markets, though imperfect institutions, do what they are designed to do—and no more—more efficiently and, most importantly for this argument, more ethically than any other institutional arrangement conceivable for the production and distribution of private goods and services and in a way that produces real benefit to all engaged.  In addition, markets cannot be blamed for actual harm to others if they are properly kept within their boundaries, that is, constrained by appropriate legal rules.  In that case, all participants enter the market on legal equal status.  Whether they can or cannot do as well as others in the market then is a product of situations for which markets cannot legitimately be blamed.  In fact, it is government itself that is frequently the problem that keeps markets from working as they should, not markets themselves.

Christians will continue to debate the subject.  But the moral case is here to stay for the foreseeable future.  Below I have listed a selection of works that have contributed to this piece.  Some are for a more general audience and some are more specialized.  Not all agree with what I have argued, but they are useful in orienting oneself to the debate.

Robert Sirico, Defending the Free Market: The Moral Case for a Free Economy.  Regnery, 2012.

Arthur Brooks, The Road to Freedom:  How to Win the Fight for Free Enterprise.  Basic Books, 2012.

Ronald Nash, Poverty and Wealth: The Christian Debate over Capitalism.  Crossway, 1986.

Walter Rauschenbusch, many works, including Christianity and the Social Order (1912).

Roman Catholic Papal Encyclicals, at PapalEncyclicalsOnline, especially those between about 1848 and 1931.  The issue today is how to interpret those edicts, whether pro-market or anti-market or something else altogether.

Acton Institute, several small works approaching the issue of markets from the standpoint of Christian revelation and the philosophy of Personalism.  See also The Journal of Markets and Morality for many helpful articles of a scholarly nature.

Craig M. Gay, With Liberty and Justice for Whom?  The Recent Evangelical Debate over Capitalism.  Eerdmans, 1991.

Ronald Nash, Freedom, Justice and the State.  University Press of America, 1980.

Paul Heyne, “Are Economists Basically Immoral?” And Other Essays on Economics, Ethics and Religion.  Liberty Fund, 2008.

Ronald Sider, Rich Christians in an Age of Hunger.  InterVarsity, 1977.

Jim Wallis, editor, Sojourners (an anti-capitalist journal/magazine that began under the name Post American in the late 1960s and is still published).

E. Calvin Beisner, Prosperity and Poverty:  The Compassionate Use of Resources in a World of Scarcity.  Crossway, 1988.

The Holy Bible (NAS, ESV and Authorized Versions).  This is self-evident but overlooked.  It requires also some sophistication in interpretation at points, when dealing with economic issues.

Grant Osborne, The Hermeneutical Spiral, Revised and expanded.  InterVarsity, 2006, one of many helpful works on interpretation theory and practice.