I hate to perpetuate the trend of criticizing Millennials, but our sentiments regarding markets are quite disappointing. A Harvard University survey, which polled young adults between the ages of 18 and 29, revealed that 51% of respondents did not support capitalism, while only 42% said they did. I believe that the rejection of free markets is a product of its conflation with “crony capitalism,” where the state operates to protect the interests of corporations and the rich. I also believe it is a product of general ignorance regarding the benefits of markets and trade. Many Left-leaning people value individualizing moral foundations like fairness and kindness. They are likely to adopt more market-positive opinions if they recognize what a great tool the market can be for reaching individual actualization and inclusivity. Markets promote the formation of noble moral values like humility, cooperation, tolerance, and self-actualization and facilitate their realization through direct and spontaneous ways.
A definition of markets is necessary before moving forward. Markets are a regular gathering of people for the trade of capital, goods, services, and ideas. My definition of a market system, comparatively, is a system characterized by economic freedom that facilitates (formally) and encourages (informally) market-centered interactions. In The Wealth of Nations, Adam Smith discusses humanity’s natural “propensity to truck, barter, and exchange.” He argues that our natural tendency to trade gave us the division of labor, which is the hallmark of the development of all advanced economies. A distinctive characteristic of voluntary trade is that it is always mutually beneficial. The only reason I would trade good X, which I own, for good Y, which you own, is because I value good Y more than good X, and vice versa. After the trade, we are both better off, forming a spontaneous order: a self-reinforcing system that is a product of human action and not human design. The most important lesson that demands attention is that in a market system, people can only prosper insofar as they offer goods that others desire. Your success and mine are contingent upon our capability of serving each other in ways we mutually appreciate.
Another set of values that the market system teaches us is tolerance and inclusivity. Interactions with others in markets allow us to tolerate people we disagree with initially for the sake of fulfilling our wants. Austrian Economists have researched the role of markets in creating meaningful relationships and have found that they are social spaces where bonds develop. For example, in The Economics of Discrimination, Gary Becker explains why there tends to be less discrimination in market settings. Becker showed that in market systems, racial discrimination has had negative economic ramifications for those who engaged in discrimination. If both white and black employees create the same output, yet the black employee accepts a discriminatory lower wage, then greedy employers will find it more profitable to hire as many as blacks as possible, and will undercut the racist employers and capture more profits. Incidentally, if the employer indulges in his racist inclinations, a substantial cost is imposed on him (the cost of stubbornly hiring white laborers who demand higher wages for ostensibly the same work). Interestingly enough, a bigoted, yet greedy employer’s actions would also serve to bring the wages of Whites and Blacks into parity. As the employer hires more blacks for labor, black people’s wages will rise accordingly because they will have the numerical strength to demand higher pay.
Interestingly, the relationship between tolerance and economic freedom has been empirically observed. In comparing U.S. states, we find that increases in economic freedom are correlated with the willingness to allow minorities to participate more actively in society. Research shows that human interactions open the door for mutual sympathy, understanding, and tolerance. These moral values are fundamental for national stability and have been achieved through the healing power of the market system. Comparatively, we find that many racist and bigoted people condemn globalized capitalist markets. In the case of the New Zealand Mosque shooter, the Islamophobic terrorist perceived Western capitalists as “traitors” to the white race, because they gladly receive and employ Muslim immigrants. It is clear that the terrorist recognizes that free markets value one’s contribution regardless of religion or race.
As the world becomes more dependent on technology and automation, Progressive academics have become skeptical about the market’s long-term capability of facilitating human interaction and developing mutual sympathies. Nonetheless, markets inherently induce trading parties to depend on each other. In other words, markets naturally push for the division of labor and specialization. When individuals or nations specialize, they become better at what they’re good at and delegate to others where they have a comparative disadvantage. The market system, if left unhindered, almost inevitably creates interdependence between parties engaging within it. Advocates of national self-sufficiency, known as autarkists, strongly dislike dependence on others, but they depend on others all the time. They’re wealthier because they delegate to others what they could not have done as well themselves. An international market system does the same amongst nations, which forces cooperation and peace between them since they do not want to lose the goods and services they are provided by their trade partners. I am not suggesting that international power imbalances would not play a role in making some countries more dependent on others. However, I am saying that interdependence between America, China, Russia, and others would pressure these governments to cooperate with each other and create a more peaceful world.
Finally, I feel the need to discuss the market system and its reinforcement of self-actualization. In the famous essay, The Meaning of Competition, F. A. Hayek asserts that the revelation of information in a market system allows producers to produce more efficiently, and consumers to learn more about their preferences. Consumers understand themselves better in a free market economy, as they are permitted to explore and discover what goods, services, and even ideas help them live more fulfilled and meaningful lives. Some critics of the market may claim that economic institutions are amoral, and I think that is a valid point on a surface-level analysis. However, what I would call moral economic institutions are institutions that facilitate moral discovery, compared to others that obstruct it. The freedom to explore one’s preferences, including spiritual preferences, opens the door to search for self-actualization, which is crucial to living a moral life.
I find it very disappointing that these unique characteristics of the market are frequently overlooked by both its advocates and its detractors. Free market advocates highlight the economic benefits of markets and free trade, usually in too technical a lexicon that is lacking in the human element. On the other side, its detractors use the advocate’s apathetic support to suggest that the market system is morally vacuous. Economists have been explaining the economic benefits of the market system for decades with no avail. Perhaps this is because only academics share economic research and facts. It’s time for free-market advocates to speak the language of the public and present the moral value of free markets. It is time to adopt a new vision for market advocacy that the average American can appreciate and understand, both scientifically and morally.