One of our noted friends at bluenc cited a critique
of free-market ideology this morning while redirecting the arguments of
this critique towards “the free-market fanatics here in North
Carolina.” However, the critique that he cites, which was written
by Fred Block of the Longview Institute, grossly misconstrues the
intentions of free-market advocates. Block makes the typical
argument for a “moral economy,” but in so doing insinuates that
free-market advocates would prefer an anarchic state in which no legal
rules existed. He states:
“The reality is that market exchange can serve the common good, but only
when individuals obey moral injunctions and legal rules. When people
cheat their customers, sabotage their competitors, avoid paying taxes,
and ignore environmental rules, there is no Invisible Hand that blesses
these transactions. Market Fundamentalism hides the fundamental reality
that actual markets work because of a structure of legal and moral
constraints that people have constructed over the decades to avert the
disasters produced by excessive greed. Market Fundamentalism is so
dangerous because it strips away all of the mechanisms and moral
understandings that protect us from runaway and unregulated markets.”
I don’t know many free-market advocates that would
disagree that a sound legal structure is essential to the functioning of
markets. Indeed, markets cannot exist in absence of legal rules
that enforce contracts, sustain property rights, and ensure fair
competition by making industrial espionage, insider trading, and other
subversive practices illegal. Moreover, markets have benefited
from the creation of certain new legal constructs in recent years
such as the cap-and-trade program for emmissions and strengthening
protection of intellectual property rights which are designed to
commodify the nature of knowledge into a proprietary good. Legal
constructs such as these have created markets in areas where markets
previously did not exist. Indeed, there are legal rules that are
market-enabling as well as those that are restrictive. Critics of
markets should at least take note that free-market advocates are not
opposed to legal rules – we, in fact, see them as essential.
Arguments for a “moral economy” such as the one made by Block would be
largely unnecessary if there existed a clear understanding of what it
is free-market advocates are advocating. Fortunately for us,
Block’s demonstrated lack of understanding on this topic justifies our
continued employment.
