Does the free market encourage moral behavior? Virgil Henry Storr, Research Associate Professor in the Department of Economics at George Mason University, recently wrote a report called “The Impartial Spectator and The Moral Teachings of Markets.” He addresses critics’ concerns that the free market brings out and nurtures human vices.
Countless commentators have stated that “engaging in market activity can be corrupting.” Storr highlights two notable quotes. Aristotle “believed that there was something unnatural about the kind of wealth getting that occurred in the market.” Karl Marx “believed that the market could transform man into a ‘spiritual and physical monster.’”
Storr, who is also Director of Graduate Student Programs in the Mercatus Center, addresses these famous claims with quotes from those who have “made the point that markets are moral training grounds where virtues are rewarded and cultivated.” Michael Novak stated that engaging in trade “teaches care, discipline, frugality, clear accounting, providential forethought … fidelity to contracts, honesty in fair dealings, and concern for one’s moral reputation.” Deirdre McCloskey, Distinguished Professor of Economics at the University of Illinois at Chicago, says:
Capitalism has not corrupted the spirit. On the contrary, had capitalism not enriched the world by a cent nonetheless its bourgeois, antifuedal virtues would have made us better people than in the world we have lost. As a system it has been good for us.”
In ‘The Theory of Moral Sentiments,’ Smith said that:
Nature, when she formed man for society, endowed him with an original desire to please, and an original aversion to offend his brethren … But this desire of the approbation, and this aversion to the disapprobation of his brethren, would not alone have rendered him fit for that society for which he was made. Nature, accordingly, has endowed him, not only with a desire of being approved of, but with a desire of being what ought to be approved of; or of being what he himself approves of in other men.
Sturr summarizes this: “We do wish to receive praise but we also wish to be worthy of the praise that we receive.” He argues that “the market places us circumstances where we have to consistently concern ourselves with the desires and wellbeing of others” and if markets …
… are given a chance to flourish, we will grow wealthier, healthier, better connected with far flung relatives and friends, better educated, better behaved, more generous, more compassionate, more tolerant, more trusting, and more just. The market will deliver cures for cancer and new, post–crude oil, energy sources. If allowed to flourish, the market will also make us better connected and more virtuous.
If an individual wants to be successful in the marketplace, he or she must be concerned for others. You’re not going to get very far if you don’t think about other people when you engage in marketplace activity.
The farmer in Texas cannot be indifferent to the lot of the textile manufacturer in China. The typical merchant has frequent contact with dozens of customers if not hundreds daily and cannot really afford for any of them to think him vicious. The typical merchant also comes to genuinely care about the wellbeing of those dozens if not hundreds he encounters daily in the market.
Virgil Henry Storr concludes with this:
The critics of the market are correct. We cannot enter the market and emerge unscathed. We are changed and, arguably quite profoundly, by our dealings in the market. But, the critics are wrong that the market makes us ethically worse off. The reverse is actually true. The market is amoral space that (a) generates morally defensible and even preferable social outcomes, (b) thrives when peopled with moral actors and (c) pushes us to be morally better people.
You can read his entire report here. Storr has also written about this topic in the Journal of Markets & Morality: check out The Moral Meaning of Markets and Why the Market? Markets as Social and Moral Spaces.