Are Free Markets Moral?

, Steven Koskulitz, Leave a comment

The economic system of capitalism has become widely criticized in recent years. Paul Winfree, Director of the Roe Institute for Economic Policy Studies at The Heritage Foundation, presented capitalism in a positive light by speaking about Adam Smith’s economic views. The left has criticized Smith for his support of the free market, claiming that his philosophy promotes envy and self-interest. Winfree disputed these claims and explained Smith’s true belief; that is, the free market must be accompanied by a virtuous society.

Smith was both an economist and an ethicist, and believed that “Benevolence, or love, is the top virtue—everything else is secondary.” He also did not believe that selfishness was a virtue: “Even self-interest in Smith, or what he would call prudence or self-love, is not selfishness or greed; rather, it’s synonymous with self-interest governed by sympathy or something akin to what we could call empathy.” Morality plays an important role in a capitalistic society, because treating others fairly results in economic success. Smith supported this idea by pointing out that “…in order for trade to exist it has to be reciprocal, and in order to have reciprocal trade it needs to take place among equals…and where they’re treating each other’s preferences as if they are one’s own.”

When people are not treated as equals, they get taken advantage of and robbed. In order to promote fair treatment of others, Smith thought that society should have social rules. “…Smith would say that the Ten Commandments (or something like the Ten Commandments) is a social rule-it makes sense because what’s on the tablets is not the default…” Following a set of guidelines such as the Ten Commandments restrains people from only treating themselves well and promotes treating others well too.

Finally, the use of governmental involvement would not be effective in making society more virtuous, because this requires force. Smith’s view was that “…if you hold a gun to somebody’s head and say, ‘go take the hill,’ they’re not displaying courage—they’re acting on the gun being held to their head.”  Instead of relying on the government to improve society, we should “…hold people up in our society who display these types of virtues…”People who are courageous, temperate, or loving should be celebrated in hopes that others would follow suit.