Recently a lecture by economist Walter Williams came to my attention. I have known of Williams’ work for a couple of years now and I regularly read his op-ed pieces and watch his videos on YouTube. Hillsdale College held a Free Market Forum seminar in 2007 where Williams spoke on the issue of markets, governments, and the common good. You can access the page here. If you click on the first link (same title) it will download the paper that I will be referring to in this post. Or you can view it here.
In this short speech Williams not only accurately defines the market (he is an economist after all), but he also talks about the inherent morality that the market encourages and promotes. Many people today (politicians and the common person) demonize the market as being inherently immoral, corrupt, and bad for society. Such sentiment gains the airways and makes for rousing dithyramb, but it is based on misconceptions and distortions. There is a lot of crony-capitalism afloat in the world, and true free-market enterprise often takes the blame for those who abuse the system. But of course the value and virtue of the free market should not be determined by the actions of those who abuse and distort it.
We all benefit everyday from capitalism. In fact, much of the comforts and goods in our lives are due to the wonders of the free-market. Most of world history has witnessed the common man (say, 98% of the population of any given demographic) living at a subsistence level, eking out food and shelter on a day-by-day basis. Yet for the vast majority of people in the West, this is no longer so. We can afford the luxuries of an eight-hour work day, Starbucks lattes and fruit for breakfast, personal transportation, entertainment, and vacations. How is this possible? The wealth and cost-efficiency created by the free-market.
Williams also talks about the market and “rights.” He rightly defines a negative right as “something that exists simultaneously for all people,” and which “confers no obligation on another.” This is the negative duty of non-interference that I talk about in my post Does the Bill of Rights Grant us Rights? Williams draws a contrast between this negative right (civil liberties such as speech, press, religion, etc), and positive rights that force obligations upon certain members of society to provide goods and services regardless of whether the beneficiaries can afford it or not. Many times these benefits come via the federal government, such as the current programs of Medicare, Medicaid, food stamps, and the like (for a survey of the current 126 government poverty programs, see this study). Many people view the government as being financially omnipotent, but where does the government get the resources to provide these goods and services to people who can’t pay for them? This is where a robust understanding of government financing comes into play. Williams accurately explains that governments finance such welfare via the paychecks of ordinary Americans (think taxation in its myriad forms), which is forcing an obligation upon one American to pay for the benefits of another without their consent and often against their will. This is why such programs are inherently immoral and hurt the common good.
Finally, Williams also makes the important point that the government of the United States owes its existence to the Constitution, a social contract between the citizens of this country, and the few people (politicians) elected to represent them. Where does the government gain the right to do whatever it wants to do, such as tax whomever it desires in order to provide welfare services? Since the US government has only enumerated powers that come from the people, the people can only delegate a right that they first possess. For example, Williams says, “we all have a right to defend ourselves against predators. Since we possess that right, we can delegate it to government. In other words, we can say to government, ‘We have the right to defend ourselves but for a more orderly society, we delegate to you the authority to defend us.’ By contrast, I do not possess the right to take the property of one person to give to another. Since I do not possess such a right, I cannot delegate it to government.” Such a distinction is lost on most people who have been brainwashed by big government welfarism over the last century to believe that the government somehow inherently has the right to redistribution of wealth and property, which is theft.
I would disagree with Williams’ definition of self-interest as greed. He rightly draws a distinction between greed that is harmful and illegal, and actions that are self-beneficial (but neither illegal nor detrimental to others). However, from a biblical perspective, greed is a moral vice not to be emulated or extolled. Certainly many individual consumers and businesses operate out of the motive of greed, but to say that the entire free-market enterprise is based on greed is false. Instead, it is better to recognize the genuine difference between greed and self-interest. If I am unfit and decide to take 45 min each day to exercise or lift weights, such self focus is not greed, but self-interest. I am properly looking after myself, and in doing so I benefit others (my wife, children, employer, etc). The same is true in the market. Businesses that properly look after themselves by making a profit, paying employees, creating goods and services, reducing costs, and increasing efficiency are not only better off themselves, but they serve the public good. If you want to read more about the difference between greed and self-interest, check out this article, “Goldman Sachs, Self-Interest, and Greed.” If you want to read even more, there is also a longer article, “C.S. Lewis, Greed, and Self-Interest.”
For another article on the morality of markets, see “The Virtue of Business: How Markets Encourage Ethical Behavior.”