Accepting the Invisible Hand - Preface
October 11, 2010
Mark D. White
To lead up to the release of Accepting the Invisible Hand: Market-Based Approaches to Social-Economic Problems early next month, I will be posting features on each of the chapters, starting with the complete preface today (with hyperlinks) - as always, comments are most welcome.
Markets are hard to appreciate.
In an interview in The Wall Street Journal in early 2010, Gary Becker, professor at the University of Chicago, fellow at the Hoover Institution, and Nobel laureate in economics, explained how people tend to have distrust of markets, despite the tremendous increases in standards of living enabled by them:
People tend to impute good motives to government. And if you assume that government officials are well meaning, then you also tend to assume that government officials always act on behalf of the greater good. People understand that entrepreneurs and investors by contrast just try to make money, not act on behalf of the greater good. And they have trouble seeing how this pursuit of profits can lift the general standard of living. The idea is too counterintuitive. So we’re always up against a kind of in-built suspicion of markets. There’s always a temptation to believe that markets succeed by looting the unfortunate.
It is the purpose of this book to help show that markets indeed do not succeed at the expense of others—that commerce is rarely a zero-sum game—and that markets not only serve to increase wealth and standards of living, but can also be effective means of helping alleviate social problems, as well as enhancing human life in ways deeper and more meaningful than material satisfaction (important though that is, especially in developing countries).
The contributors to this book are drawn from a wide variety of fields and specializations, and each provides a unique perspective on the social benefits of the market. All of the chapters in this book focus on positive arguments for markets, eschewing well-known criticisms of the efficiency, efficacy, or ethics of state intervention in the economy. Readers who are looking for those arguments can easily find them elsewhere—possibly even written by some of the present contributors—but the chapters in this book argue the case for markets, not the case against government.
In my chapter, for instance, I argue that the most essential feature of markets is not their capacity for wealth creation or efficiency, but rather that they embody respect of the dignity of persons as described by the philosopher Immanuel Kant. I then apply this analysis to the case of health care, arguing that rather than representing an inappropriate use of the market, the intimately personal choices that are made in the realm of health care necessitate a market setting in which they can be made by patients themselves. Along similar lines, John Meadowcroft argues that market-based solutions to social problems are preferable to political ones because they are more responsive to the diversity of individual preferences, and he uses the examples of smoking regulations and education to illustrate his point.
James Gwartney and Joseph Connors provide theoretical arguments and evidence, based on World Bank poverty rates and the Economic Freedom of the World index, that economic freedom, including a strong reliance of markets, not only increases wealth in countries around the globe but also lowers their poverty rates, countering the frequent charge that the spread of free markets benefits the wealthy at the expense of the poor. Jennifer Baker provides a philosophical complement to Gwartney and Connors’ chapter, suggesting that Stoic ethics, with its bilevel account of value, can recognize the good that the market does in generating widespread affluence, while at the same time calling attention to its possible faults in terms of issues such as unequal distribution and access. She argues that the Stoic account can also help us ethically consolidate our market-oriented behavior (which usually makes up much of our day-to-day lives) with our moral responsibilities and duties to others. Citing the economic and moral insights of Adam Smith (who was influenced by Stoic thought), Benjamin Blevins, Guadalupe Ramirez, and Jonathan B. Wight examine the ethics surrounding market behavior in Mayan culture, arguing that without understanding the history and culture of different regions of the world, the impact of aid from abroad will be radically diminished, if not self-defeating. They also describe the Highland Support Project, which has provided much-needed assistance to the Mayan areas in Guatemala by respecting and building on existing cultural practices to help enhance markets on the Mayans’ terms, not according to standard Western conceptions.
Robert Garnett brings the thought of Friedrich von Hayek and Kenneth Boulding together with that of Adam Smith to explain why charity and commerce have been separated for so long in economic discussion, and why they must be brought together to grasp the full scale and scope of meaningful economic activity. Deirdre McCloskey, one of the most prominent exponents of Adam Smith’s moral philosophy and the virtues of commerce, explains in her unique way that market activity is not only honorable and virtuous work, but is often also affirming and satisfying—if you do it right. And finally, in the spirit of McCloskey’s book The Bourgeois Virtues, Steven Horwitz provides real-world examples of private firms acting charitably toward both their communities and their employees, focusing on the efforts of firms such as Wal-Mart during the tragic events and aftermath of Hurricane Katrina. Cynics may argue that these companies engaged in charitable works simply for the publicity, but Horwitz effectively answers this charge, providing ample evidence from numerous interviews and other sources to support his argument.
Together, I feel the chapters in this book make a strong case for the use of markets to enhance the material and ethical aspects of society: helping deal with problems such as poverty and natural disasters, contributing to the provision of services such as health care and education, and enhancing standards of living and inner fulfillment. Following Becker’s lament, I hope that this book will make markets a bit easier to appreciate (and perhaps a bit harder to denigrate).
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