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Wednesday / March 29.

The Morality of Markets Defended

By Andrew Humphries

Anil Padmanabhan advocates a mix of a market economy and one based on command and control in Mint. However, neither Anil nor Michael Sandel, whose Atlantic article Anil refers to, addresses the positive case, the moral foundations of free market capitalism.

The positive moral foundations moof free market capitalism is the principle of self-ownership, that no one is entitled to own another’s body and property, and that people should be free to associate and exchange on terms they mutually agree to. (To advocate otherwise is to support some form of compulsory servitude of one below another.)

The fall of the USSR did indeed create a period of apparent “market triumphalism.” But the new consensus was not based on the positive understanding of the capitalist alternative to command and control. Conservative forces have been itching for an opportunity to turn backward from the advance of a moral movement that resulted in capitalism. The taste of liberty people have experienced in recent years means that they cannot re-impose total command and control easily, but they want to persuade us that they should be able to have just “a little” for our own good.

As an expression of this conservatism, Anil and Sandel complain that “market values” have escaped their proper confines and need to be put back in a bottle. Not all goods, they say, should be up for sale for two reasons. First, they think, “market values” disadvantage those who have less than others, and second, buying and selling corrupts what they think is the “proper” valuation of things.

Regarding have-nots, Sandel says that, “In a society where everything is for sale,” where there is more capitalism and markets rather than more traditional ways of allocating resources, “life is harder for those of modest means.” This is just false. Not only do we see this in the incredible difference in the standard of living between pre-capitalist and capitalist times, but the per capita income of the poorest 10% in the most capitalist countries is ten times the income of the poorest 10% in the least capitalist countries today. As a rule, the less capitalist a country is, the harder is life for those of modest means. (See Economic Freedom of the World chart.) Anyone who has travelled to countries in these different quartiles has seen the evidence for him or herself.