The Instrinsic Morality of the Free Economy

by David Clayton on December 14, 2012

Defending the Free Market: the Moral Case for a Free Economy, by Fr Robert Sirico

Is commerce and trade instrinsically moral?

Critics of capitalism would say no. Some, who acknowledge that the free market works to a degree when considered in cold economic terms only, argue that it is impersonal and encourages a selfish, individualistic outlook that is contrary to the principle of love that governs properly ordered personal interraction. Therefore, they say, it undermines faith and contains the seeds of its ultimate demise. This view can be reinforced, strangely, by some advocates of capitalism who say that in consideration of the economy, the generation of wealth is the only thing that matters and provided no laws are broken, then all moral considerations are private and for each person to sort out for themselves in isolation. Some Catholics who believe in the free market struggle to reconcile this with some papal encyclicals on Catholic social teaching that are critical of some aspects of capitalism. They do so by saying that in some matters the popes go beyond their authority. They might correctly highlight social injustice, they say, but when they start to analyse the economic causes and recommend economic policies to help, they are misguided and what they say is wrong and will not work.

Fr Sirico in his book does not take the position of any of these camps. He argues for the good of the free market, and does so on two counts. First he emphasises the good of what the market produces, quite fairly in my opinion: the importance of wealth generation, especially for relieving poverty and how it is he most effective way of achieving this aim. Second, he goes further and argues that the basis of trade, the interaction of human persons freely entering into an agreement, is intrinsically moral. In doing so he never neglects the dignity of the human person in his thinking. He establishes his argument for the value of the free market from the basis of a human anthropology that is personal (that is one in which personal relationships are critical) and cites Catholic social teaching as the basis for it. He does not  say that selfishness is a virtue, or greed is good (as some who would expect to disagree with him might expect). Neither does he argue that consideration of what is most profitable entitles anyone to disregard any other aspects of morality. On the contrary he makes that case that consideration of the common good and of others in any transaction is essential if the free markets are to work. And furthermore where this love is greatest, business flourishes the more.  Of course naked selfishness does exist as it does in all spheres of human life, but he makes the point that point that the free market is remarkably efficient in channeling even actions motivated selfishly towards the common good. This is good to know, for which of us is totally absent of selfishness in dealing with others?

In reading this, it struck me that personal freedom, properly understood, is a crucial and vital component to this for it preserves the dignity of the human person in all these interactions. It is this personal freedom that fosters the genuine love for the other in all our interactions and economic interactions are no different. It is this participation in love, properly ordered to an economic interaction, that fosters the creativity which is so much part of an economy flourishing for the common good. The place of the law and regulation in this is robustly to preserve personal freedom. The natural tendency for many in a particular market can be to try to preserve or enhance market share by restricting the access to others. Those with the power to do so will influence government to introduce laws and regulations that stifle competition and so personal freedom. Fr Sirico does not support this form of capitalism and in this regard is in the same camp as some who I have met who consider capitalism wholly bad, because it is the only form of capitalism they know of.

In 1991, John Paul II wrote: ‘Can it perhaps be said that, after the failure of Communism, capitalism is the victorious social system, and that capitalism should be the goal of the countries now making efforts to rebuild their economy and society? Is this the model which ought to be proposed to the countries of the Third World which are searching for the path to true economic and civil progress? The answer is obviously complex. If by “capitalism” is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a “business economy”, “market economy” or simply “free economy”. But if by “capitalism” is meant a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality, and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the reply is certainly negative.’ (Centesimus Annus, 34, 42)

I do not know if JPII created the phrase ‘free economy’, but Fr Sirico’s use of this phrase in the title of the book suggests to me, that he is deliberately making a connection with the encyclical here.

What has this got to do with the Way of Beauty some might ask? If artists are to flourish, they not only have to paint well, but also must be able to sell it. It seems to me that whatever system maximises ‘free human creativity in the economic sector’, to quote from the paragraph above, is going to be the best to support cultural renewal.

Fr Sirico’s book is available from Amazon here. He is the founder of the Acton Institute, www.acton.org, the mission of which is to promote a free and virtuous society characterized by individual liberty and sustained by religious principles. This organisation, among other things, publishes books and organises lectures and educational programs. Every year has is four-day residential even which offers many lectures by an excellent faculty called ‘Acton University’. residential

 

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sancrucensis December 14, 2012 at 3:44 pm

The problem with the so-called free market is that it’s not actually free, as W. T. Cavanaugh shows in this brilliant talk: http://youtu.be/2yiu2-kUNGI

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David Clayton December 17, 2012 at 1:24 pm

Thank you for this. In this talk Cavanaugh contrasts Milton Friedman’s concept of freedom with the traditional view of freedom. There are two questions here: first is this criticism of the definition of freedom, a real critique of how free markets actually work, or just a critique of Friedman’s theory about why they work that way – as it stands, in this talk it is simply the latter and so to my mind it doesn’t really undermine the free market.
Second, can this criticism be applied to Fr Sirico or John Paul II’s understanding of the free market too? Both Fr Sirico and John Paul II describe a free market – characterised by both as the ‘free economy’ as I mentioned in my review – that is consistent with the traditional idea of freedom and therefore not subject to the criticisms of Cavanaugh in his talk. This talk by Cavanaugh is a criticism of the worst excesses of form of capitalism that exists today. Even if this is an accurate characterisation and the criticism are accepted (and that is disputable in my opinion), it is another matter to say that this characterises the whole of the economy as it really operates; or that the economy that he attacks is the one that people such as John Paul II or Fr Sirico are referring to when they talk of a free economy. At no point did Fr Sirico try to justify selfishness, greed or the excesses caused by them or any of the practices critised by Mr Cavanaugh.

You may not agree with what Fr Sirico says but in order to undermine Fr Sirico’s arguments, a fresh set of criticisms will have to be produced, which probably means you have to read the book (available from all good bookstores!).

I would add also, that I think Mr Cavanaugh exaggerates the power of the corporation to dictate demand through advertising. I am more inclined to believe that in the long run substance overrides publicity in the choice of what people buy. Genuinely good and beautiful artefacts and gracious service will be more compelling and more attractive and dominate the market to the degree that they are offered, and because the demand will be greater, will command a higher price. The fact that we don’t see more grace and beauty is a reflection, I would say, of something completely different, and that comes down to a discussion of what it is that forms the culture…which is a whole different discussion.

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