The free market doesn't make people poor. People do.

Restricting free trade arrangements (beyond preventing the use of force and fraud on others) cannot solve the real problem, yet it hobbles the market’s ability to coordinate people’s cooperative and productive plans, causing harm in the misguided attempt to accomplish good.

By , Guest blogger

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    In this file photo, a man walks past a collage of copies of Chinese RMB, U.S. dollar and other foreign bills at a money exchange store in Hong Kong. Galles argues that the free market system is unfairly blamed for people behaving unethically.
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I am a believer in the power of liberty — voluntary relationships — to bring out the best in individuals and, therefore, society. But that well-founded belief makes it painful to see markets (willing exchange) blamed for virtually everything someone can think to object to, in favor of coercion of some by others via government, inspired by some utopian vision that cannot actually be achieved by that coercion.

The question then becomes why unattainable utopian visions seem to be so much more attractive and inspirational to so many people than liberty, which can achieve the best society actually attainable, and how the spell that leads to ever-increasing statism can be broken.

Leonard Read, one of America’s most prolific defenders of liberty in the 20th century, considered that question. And in his 1969 Let Freedom Reign, he offered a useful two-part answer in his chapters, “Free Market Disciplines” and “The Bloom Pre-Exists in the Seed.”

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In “Free Market Disciplines”, Read showed that liberty’s failure to gain more adherents than utopian statism can be, in part, traced to the fact that it is the ends envisioned, rather than the means involved, that often motivate people. And since unlike utopian visions, freedom, including free markets — an “amoral servant” — cannot be proven to have no objectionable results to anyone, liberty can be saddled with an inspirational deficit. However, attributing disliked results to markets misplaces the blame. Therefore, restricting voluntary arrangements (beyond preventing the use of force and fraud on others) cannot solve the real problem, yet it hobbles the market’s ability to coordinate people’s cooperative and productive plans, causing harm in the misguided attempt to accomplish good:

[T]he free market is the only mechanism that can sensibly, logically, intelligently discipline production and consumption. For it is only when the market is free that economic calculation is possible. Free pricing is the key.

[But] it is necessary to recognize the limitations of the free market. The market is a mechanism, and thus it is wholly lacking in moral and spiritual suasion…it embodies no coercive force whatsoever.

[Quoting W.H. Pitt]: “[T]he market, with its function for the economizing of time and effort, is servant alike to the good, the compassionate, and the perceptive as well as to the evil, the inconsiderate, and the oblivious.”

Given a society of freely choosing individuals, the market is that which exists as a consequence — it is a mechanism that is otherwise non-definitive. It is the procession of economic events that occur when authoritarianism…is absent.

In a word, the free market is individual desire speaking in exchange terms … When the desires of people are depraved, a free market will accommodate the depravity. And it will accommodate excellence with equal alacrity. It is "servant alike to good … and evil.”

It is because the free market serves evil as well as good that many people think they can rid society of evil by slaying this faithful, amoral servant. This is comparable to… breaking the mirror so that we won’t have to see the reflection of what we really are.

The market is but a response to — a mirror of — our desires.

Instead of cursing evil, stay out of the market for it; the evil will cease to the extent we cease patronizing it. Trying to rid ourselves of trash by running to government for morality laws is like trying to minimize the effects of inflation by wage, price, and other controls. Both destroy the market, that is, the reflection of ourselves…attempts not to see ourselves as we are…

To slay this faithful, amoral servant is to blindfold, deceive, and hoodwink ourselves…denying the market is to erase the best point of reference man can have.

The market is a mechanism and is neither wise nor moral…The market is an obstacle course; before I can pursue my bent or aptitude or obsession, I must gain an adequate, voluntary approval or assent…My own aspirations, regardless of how determined, or lofty, or depraved, do not control the verdict. What these others…will put up in willing exchange for my offering spells my success or failure, allows me to pursue my bent or not.

Eventually, in a free society, the junk goes to the junk heap and achievements are rewarded.

I believe that anyone should follow his star; but let him do so with his own resources or with such resources as others will voluntarily supply. This is to say that I believe in the market, a tough, disciplinary mechanism.

[An] individual, in the free market, considers how much of his own property he is willing to put on the line…the free market gives short shrift to projects that are at or near the bottom of individual preferences.

Read saw that defenders of liberty must face the fact that markets enable people to do whatever they want better — i.e., that it is an amoral servant. It cannot be relied upon with certainty to only do good and inspirational things. But whenever they enable doing ill, they only reflect what some desire. If we reformed ourselves, markets could do no harm. And Read had great faith such improvements were possible, that “Eventually, in a free society, the junk goes to the junk heap and achievements are rewarded.” In contrast, coercively “reforming” ourselves by law does not eliminate the cause of such harm and so does little to actually stop it, but the restrictions on markets adopted in the process throw out the amoral servant to doing greater good than can be accomplished via any other mechanism.

Read proceeded to address the crucial distinction between the “inspirational” utopian ends and the means that such ends necessarily entail in “The Bloom Pre-Exists in the Seed.”

Intended ends may be the vision that inspires people, so much so that they ignore whether the means are morally defensible. That is, the utopian ends envisioned can be chimeras of self-delusion that can be used to justify immoral means. And if the collectivism to be imposed requires immoral means, one cannot assert the result is a moral system:

[Many] people expect to achieve lofty goals without any thought of the means they use to attain them…[but] a hard look at means and ends is appropriate.

Ends, goals, aims are but the hope for things to come, in a word, aspirations. They are not a part of the reality…from which may safely be taken the standards for right conduct. They are no more to be trusted as benchmarks than are day dreams or flights of fancy. Many of the most monstrous deeds in human history have been perpetrated in the name of doing good — in pursuit of some “noble” goal. They illustrate the fallacy that the end justifies the means.

Examine carefully the means employed, judging them in terms of right and wrong, and the end will take care of itself.

 

An individualist…looks upon society as the upshot, outcome, effect, recapitulation incidental to what is valued above all else, namely, each distinctive individual human being.

[Quoting Hayek]: “[W]e differ not so much on ultimate values, but on the effective means of achieving them.” Thus, if we would find the distinction between collectivism and individualism…examine the actions — means — that are implicit in achieving the goals.

[There are] opposed means implicit in the pursuit of collectivism or of individualism…So, for us to understand…we must discover what is implicit in the collectivistic as well as in the individualistic approach.

Implicit in the collectivistic approach…is the masterminding of the people who make up society…The control of the individual’s life is from without…

The collectivistic view holds that society is the prime concern…The individual does not fit himself into place but, instead…is assigned that niche or role which the political priests believe will best serve whatever societal pattern they have formulated…These coercive actions…are implicit in and must logically follow from the beehive way of looking at humanity.

Implicit in this beehive view is that men exist who are competent to form the ways and shape the lives of human beings by the millions…that there are those who not only can rightly decide what is best for all of us but who can prescribe the details as to how the best that is in us can be realized.

Any conscientious collectivist, if he could see beyond his utopian goals and thus properly evaluate the authoritarian means his system of thought demands, would likely defect…

However lofty the goals, if the means be depraved, the result must reflect that depravity. Therefore, the eventual outcome of the collectivistic way of life may be accurately predicted by anyone who understands the means which must be employed.

People who call themselves individualists rarely reflect on the means implicit in their philosophy. Individualists thus overlook the merits of their means to the good life just as the collectivists overlook the shortcomings of their way. When only ends are envisioned and means ignored, there can be no reliable estimate as to whether the consequences will be good or bad.

When the individual replaces the beehive as the ultimate goal…the means implicit in achieving such a goal must be radically different.

Either I will concentrate on me and my welfare or on others and their welfare…mind my own business or mind other peoples’ business.

In view of the obstacles to the relatively simple task of self-realization, reflect on the utter absurdity of my…undertaking to manage the lives of millions.

Attention to self is not a disregard for others. On the contrary, each individual best promotes his own self-interest by peaceful, social cooperation as in the free market. Indeed, the more I make of myself the more are others served by my existence…The way to assume “social responsibility” is for the individual to rise…as far as possible.

If we concede…that man has a right to his life, it follows that he has a right to sustain life, the sustenance being the fruits of one’s own labor. Private ownership is as sacred as life itself.

Private ownership lies at the very root of individual liberty. Without it there can be no freedom; with it freedom is secure…It is senseless to talk about freedom if the right of private ownership be denied.

Can we pronounce a moral judgment on these means implicit in the individualistic goal…to the pursuit of self-perfection and the right of owning what one produces? … These means serve as a powerful thrust toward the individual’s material, intellectual, moral, and spiritual emergence — and that is right! Others — those who comprise society — are the secondary beneficiaries of individual growth. If we would help others, let us first help ourselves by those means which qualify as righteous.

Visionary or utopian ends may inspire people to pursue what turn out to be statist failures, sacrificing liberty for innumerable “good causes.” Read argued powerfully that we should instead focus on the means (voluntary versus coercive) rather than stated goals or ends that can often be achieved only in someone’s imagination. And since the means utilized by statist “solutions” are immoral, such systems are morally inferior to voluntary arrangements, not morally superior.

Leonard Read recognized that liberty — voluntary arrangements that spring up, once one’s rights to oneself and one’s production are protected — provides the means of achieving what is actually achievable in advancing society. As we develop ourselves, we each have more to offer others, accomplishing the goals of statist utopias, without immoral acts, that they themselves cannot, despite their immoral acts. And what freedom has historically accomplished, beyond anyone’s ability to envision, extended to further as-yet-unknowable possibilities (beyond the fact that it will benefit those who voluntarily participate) was at the heart of his inspirational vision.

To follow in Leonard Read’s path toward increasing liberty, we too also develop our ability to “see” the unseen (and often unimagined) good that can only be accomplished by freeing people’s ability to peacefully create and innovate. To complement that skill, we must also be able to “see” and articulate the inherent failings of the coercive and immoral means employed toward utopian goals, which are unachievable despite such means. With such binocular vision, liberty can be recognized as far more inspirational than any statist alternative. If that is the vision we hope others to catch, that is the vision we need to better articulate, as Read argued over and over again.

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