The best thing about the free market

The skeptic is intent on renouncing any means of persuasion that relies on tradition or social convention rather than science and logic. I’m very sympathetic to his cause. But when he wants coffee in the morning, how does he persuade the clerk at Starbucks to help him? For all his talk of scientific objectivity, he shows by his acts he’s perfectly comfortable with a means of persuasion that people believe only because other people believe, as long as it’s the one in his wallet.

To what projects shall I devote myself? Whom shall I help? The most fundamental moral questions in life are decided by slips of paper and plastic. Everyone around me is persuaded by the medium of exchange. So I allow myself to be persuaded by it too. I believe X should rule my behavior because others believe. These believe because yet others believe.

When I ask someone for help, do I try to persuade him I’m a kind man who would help others in similar circumstances? No. I get out my wallet. Do I try to appeal to his reason or his virtues? No. I offer a reward.

And when another man asks for my help, do I want to hear who he is or who he intends to be? Do I want to know his past actions or his present principles? Hardly. I want to see his wallet.

Now, if you suspect his wallet might be a reasonable proxy for the virtue of his actions or his principles, consider that Madison Avenue offers lush rewards to psychology PhDs for their services in manipulating the fragile and vulnerable minds of children. If wealth is distributed, not according to virtue, but according to chance and whim, how can I in good conscience allow it to determine whom I will help and whom I will ignore?

Suppose an island community uses copper as a medium of exchange. They work hard. They trade value for value. It’s a panacea right out of an economics textbook. But then something goes wrong. Copper is a rare commodity on their little island. But on the mainland it’s in plentiful supply. One day these two communities start trading. Before the islanders realize what’s happening, they have all become paupers and servants.

In essence, this is what happens in our world every day. The poor trade honestly with one another. But the hereditary owners of capital, like the mainlanders in our example, come along with abundant supplies of the same medium of exchange and snatch up whatever they want without having to work a day.

The injustice is terrible, and seems so easy to put to an end. The islanders just have to realize what’s going on, stop using the old currency, and switch to another. But there’s one problem. The new currency may undergo the same sort of debasement. In the end, the only way to guard against debasement of currency is to see who has it and decide if they deserve to have it.

But if I must assess whether a man is worthy of what he possesses, and decide whether to help him based on that, then I might ask, what’s the point of considering what he possesses at all? Why not just consider whether he’s worthy, and leave it at that? Then I will help those who persuade me by showing me the virtue of their actions and intentions. What they have in their pockets won’t concern me at all.

There will in essence be two entirely separate economies in the same territory. Exchanging one currency for the other will be impossible. The enlightened islanders know the copper (mammon) is debased. They’re unwilling to exchange it for their own currency (virtue). And the unenlightened islanders, who still believe the copper is more valuable than it really is, would never offer a reasonable exchange rate.

If I must choose, I will choose to help friends whose projects are most worthy of support, not ones with copper in their pockets. The cynics will say I have let myself be shortchanged. But the joke is on them. As they slave away on pointless projects, building bigger and bigger mansions for the mainlanders, I will be part of a new community working on worthy projects based on mutual support and love.

Luke reports that when Jesus sent his twelve disciples out into the world to preach, he explicitly admonished them to bring no money. The only currency they carried with them was the virtue of their intentions. And they had this in such abundance, the locals were often willing to house and feed them. If I devote myself to helping others, asking nothing in return, many will recognize my good intentions and help me.

The best thing about the free market isn’t its ability to equalize supply and demand, or any of the other virtues recounted in economics textbooks. The best thing about the free market is the freedom to ignore the market, and devote myself to the most worthy projects, helping others the best way I know how.

Les bêtes noires de laissez-faire

As the ideology of laissez-faire capitalism becomes ever more influential in our society, it becomes important to investigate the intellectual coherence of the theory that underlies it. In the capitalist utopia, the most abhorrent institution is the table of fixed prices. Prices must be set by free actions of individuals, not legislated by the force of a central authority. But when a crime is committed, how is the punishment determined? By a table of fixed prices for deviance legislated by the central authority—precisely the sort of table libertarians most abhor. The statute of limitations is another example of a fixed table set by the central authority. The tendency of capital to beget capital means the effects of arbitrary decisions are amplified with every passing year.

Although libertarians are wary of central authority, they concede that a central authority must exist to keep track of who owns what. When dissenters question the decisions of the central authority, libertarian theory never has had an intellectually coherent way of dealing with them. The examples by which the beneficence of free trade are demonstrated always assume we're unanimous in regard to who owns what to begin with. In reality there is no such unanimity. Our prices may one day be free from arbitrary authority. But what good is that if the distribution of property is rife with arbitrary authority to begin with?

When I assume without question that I should buy the biggest house I can afford, take the most lavish vacations I can afford, I show a deference to the central authority it doesn't deserve. The central authority doesn’t know if I really deserve these privileges. And I don’t know if I really deserve them. Because of my skepticism, the idea of pampering myself while other human beings suffer is abhorrent to me, whether the central authority tells me it's acceptable or not.

Healing the divided mind

In our age we witness the near universal acceptance of the principle that a mind must adopt two distinct roles: a “professional” role devoted to disciplined intellectual work, and a “personal” role devoted to pleasure. The mind is divided into a producing part and consuming part. We strive to perfect each part in isolation, becoming ever more efficient in making money in the first part, and ever more efficient in procuring pleasure in the second. Such a divided mind, far from eliminating pleasure from its intellectual ecology, has made pleasure its defining principle.

The marketplace offers us tasks that seem serious and dignified, until we consider more carefully what their purpose is. Often these tasks demand intellectual rigor, and in this respect they might be helpful to a mind that seeks to perfect itself. But eventually we're bound to ask, if the desired end result is determined by whim rather than intellectual rigor, what’s the point of exerting intellectual rigor in fulfilling it?

Indulging my body’s desire for pleasure is sinful not only because it distracts me from the task of perfecting my mind, but also because it condemns those who produce the tools of pleasure to tasks that don’t help them perfect their minds either. Ten dollars I spend on pleasure, if they were instead used to fund a scholarship, would allow a Third World student to spend one day less in the factory and one day more in the library.

From a falsehood anything follows

The mathematician G. H. Hardy once casually remarked over dinner that a falsehood implies anything. Another guest asked him if he could prove that 2 + 2 = 5 implies that he is the Pope. Hardy replied, "We also know that 2 + 2 = 4, so that 5 = 4. Subtracting 3 we get 2 = 1. The Pope and I are two, hence the Pope and I are one."

When an architect makes her decisions based on spreadsheets in which a dollar offered by a billionaire building yet another ten million dollar mansion is equal to a dollar offered by a charity building a homeless shelter, from this false equation she draws ethical conclusions no less absurd than the factual inferences Hardy draws from his.

Rarely do we find anyone seriously claiming that the present pattern of ownership of material resources is the true and just distribution. The tendency of capital to beget capital means unremedied past injustices never disappear. When someone offers me a dollar for my services, do I ask if the claim this particular dollar makes on me is justified? Even if I wanted to ask, how could I? The precise equality of one dollar with every other dollar conceals the vastly disparate history of each.

A mathematician who begins by grouping unlike things together and then making elaborate calculations based on the aggregate, no matter how competent her mathematical reasoning, is not a competent mathematician. This is the position of bankers who make sums of just and unjust wealth. This is the position of producers who tabulate consumer demand for food, shelter and education alongside consumer demand for mansions and caviar. This is the position of economists who include both production of penicillin and production of psychologically manipulative advertising for children in their gross national products.

We call money a “medium of exchange.” Perhaps it would be more accurate to call it a “medium of persuasion.” By offering money, others persuade me to help them. The mind that seeks to perfect itself demands rigorous arguments, not only about facts, but also about who is genuinely in need of help—and who is behaving like a spoiled child.

The mistake of engineers

When a patient demands medicine, the physician doesn't immediately assume the demand must be fulfilled. She first decides if the medicine will be beneficial. A medical science that took as its premise that patients know what is healthy and unhealthy would reach incorrect conclusions. It wouldn’t really be a science at all.

If a man asks me to go a mile with him, I go two miles with him. But if he's going toward self-destruction, I don’t remain silent on the way. I try to persuade him to alter his course. Commercial enterprises, on the other hand, hasten him on the path to self-destruction and collect profits on the way.

When a spoiled boy demands more and more toys, we ignore his incessant demands and teach him the virtues of self-denial and self-restraint. But when a billionaire demands a three hundred million dollar mansion, the architect is all too eager to comply.

With exception of a few noble professions such as medicine, commercial enterprises are ruled by a morality deliberately stripped of all difficult demands and reduced, in effect, to amorality. Commercial enterprises never take an oath to do no harm. Those who work for them are complicit in the harm they do.

Many of the demands of consumers are the demands of undisciplined minds driven by ignoble passions. The premise of commercial enterprises is that all consumer demand constitutes an opportunity for profit and none should be passed up. The inevitable consequence is that when we allow ourselves to be ruled by commercial enterprises we allow ourselves to be ruled by the ignoble passions of undisciplined minds. Under such conditions it is impossible to maintain intellectual discipline. Under such conditions it is impossible to remain noble.

The mistake of engineers is that we place the intellect in service to the body, the pure forms of mathematics in service to the impure forms of the marketplace, the higher in service to the lower. The barbaric idea that the development of the intellect must invariably lead to a means of temporal livelihood leads us to think that we must either become professional mathematicians or else find some other professional use for our mathematical talents. But mathematics, like philosophy, is on a higher plane than bodily needs which give rise to the existence of professions. In the same way that the sublimity and beauty of love is corrupted when it is offered for sale, the sublimity and beauty of mathematical talent is corrupted by debasing it into just another ware in the marketplace.

We teach virtue by leading virtuous lives, setting an example of humility for others to follow. If our leaders refuse to learn the lessons of virtue we teach, we must certainly not serve them and thereby make ourselves accessories to their vices.

You’re too smart to be an engineer

Intellectuals in the Middle Ages distinguished between liberal arts, pursued by free men out of sincere intellectual interest, and servile arts, pursued by slaves in service to their masters. Engineering is deceptive. It lures you with interesting mathematical problems, making you think it’s a liberal art. But in fact engineering is a servile art. Every activity must ultimately justify itself by showing it’s useful to the market or the majority.

Mathematics and other liberal arts are ruled by an intellectual aristocracy. You need only submit to those you recognize as intellectual superiors. Servile arts are ruled by majorities and markets. You must submit to the brute force of votes and dollars, even when those who wield them are your intellectual inferiors. Even if you're fortunate enough to work for a manager who is your intellectual superior, he is still ultimately accountable to the market. If you have your own business, you must hold yourself accountable to the market directly.

The practitioner of a liberal art is free. He may choose a master when he needs a master to help him advance intellectually. He may be independent when independence suits him. The practitioner of a servile art doesn't get to choose his master, and is certainly never independent.

Liberal arts are open to two sorts of people: those who are already wealthy, and those who despise wealth and live simply and rudely. If you’re determined to earn a living from work, this determination imposes a constraint. If you imagine the constraint is temporary, think again. Thoreau aptly ridicules the foolishness of spending the best part of life earning money in order to enjoy a questionable liberty during the least valuable part. He cites the case of an Englishman who went to India to make his fortune so he could return to England and live as a poet. Why didn’t he just move into a garret and begin writing?

It’s impossible to serve a master without being influenced by him. As soon as you consent to be ruled by markets and majorities, the excellences that once placed you above them will begin to fade. What’s worse, you will begin to question whether they were ever really excellences at all.

The invisible hand and the helping hand

The proud landlord, says Adam Smith, gives no thought to the needs of his brethren, and would keep all his income for himself if he could. But in order to keep in working order all the “baubles and trinkets” he uses to impress himself and his guests, he must pay a portion of his income to workers. The workers thus get from his capricious desire for luxury what they never would have gotten from his meager kindness and charity. This arrangement, says Smith, ends up producing a distribution of the necessaries of life that differs little from what we might have found “had the earth been divided into equal portions among all its inhabitants.”

The problem with this arrangement is that those who are employed in providing the landlord’s baubles and trinkets might have other talents. They might be painting canvases and writing poetry if they weren’t obliged to clean mansions and cook meals. Of course some people have to do gruntwork some of the time. But the vanity of the owners of capital makes this far more than necessary. A truly great aristocrat would allow his subjects to pursue intellectual pursuits of their own choosing. He would encourage and assist those pursuits as far as his resources permitted. By insisting that his subjects produce the baubles and trinkets he desires, rather than trying to discover where their true talents lie, he leaves these talents idle and undeveloped.

The idea that each of us can pursue our own capricious desire for luxury, and, as if guided by an invisible hand, inevitably advance the interest of society, is perhaps the most fundamental axiom of today’s economy. It is also transparently false. For every dollar I spend entertaining and pampering myself, I have one less dollar to spend educating and improving myself. For every dollar I spend trying to impress others, I have one less dollar to help others.

Spoiled children

Parents accept a life of strife and servitude out in the world in order to create an oasis of peace and tranquility in the home. They take it for granted that their children are destined for the same dichotomous life. But there is an alternative. If we teach our children to shun all comforts and luxuries as effeminate and evil, we open up to them the possibility of a life in which they no longer need the things that can be won only by strife and servitude. Then theirs can be a life of freedom and harmony, and the cycle of innocent and blissful childhood followed by rapacious and conniving adulthood can finally be replaced by something better.

We call expectations of free and blissful life "idealistic," by which we mean "unrealistic," and for most who hold these expectations, they are indeed unrealistic, because most of us are unwilling to forego the comforts and luxuries that can be won only by strife and servitude. It is indeed unrealistic to expect both luxury and peace. We must choose one or the other. It is indeed unrealistic to expect both convenience and freedom. We must choose one or the other. The ascetic training that allows our children to make the correct choice must begin as early as possible. The term "spoiled child" is quite an accurate description. The pampered child is destined to a life of servitude and strife because parents failed to provide training in asceticism. Pampering has corrupted the child and spoiled the prospects for a free and harmonious life.