Free Market Philosophy as Process

What these philosophies have in common is not a belief in a set of goals or ideals but a belief in a preferred process. These Utopians are like the tenders of a giant machine whose role, they believe, is to keep it well oiled and running smoothly. What the machine makes is not of interest to them.

I'm going to call those who focus on goals "liberals" while those who focus on process are "conservatives". You can take exception to this somewhat arbitrary terminology, but it will make a useful shorthand in what follows.

I see two problems with the conservative type of philosophy. First, there are questions about the underlying assumptions. In the real world an unfettered market is the exception, not the rule, so a philosophy which depends upon an ideal situation isn't very useful in solving real-world problems.

Second, is the question of what goals are appropriate. If a society does not have a clear set of goals than how can we be sure that the market is going to lead to them?

There is also the question of the sincerity of those holding these philosophical views. Once again there seem to be two groups. The more damaging group are the hypocrites. We have been hearing a lot about them lately. Many long-time "conservatives" have been claiming that their ideals have been subverted by opportunists who use the conservative vocabulary, but are really interested in self aggrandizement. Some of these people are power hungry, while others are interested in wealth. Hence the criticism by people like John Dean and Bruce Bartlett that the ideals of "conservatism" (as exemplified in their minds by people like Barry Goldwater and Ronald Reagan) have been debased. What these ideals are depends upon the spokesman, but they all seem to share a few core ideas. These include a belief in minimal government and a maximization of personal liberty. Both stem from the free market model. Without government intervention things will just run better.

The hypocrites use this framing, but they really do have goals. The goals are the preservation of their privileged position in society. They advocate a "free market", but work to shift the rules so that they tilt in their favor. This is why the critics of capitalism always point to the tendency toward monopoly or oligopoly control of markets. Even Adam Smith warned against this. As we have seen in the past there are always some in a market that are stronger than others and they can use this to their advantage so that the market is not really free. An unwillingness to acknowledge this is a strong indicator that the person making the claims about openness is gaming the system.

The second group are the ideologues or true believers. In general they don't examine the underlying foundations of the free market or libertarian philosophy, but just go along with the slogans. Thus you end up with some yahoo living off the grid in Idaho who values his "freedom" from government intervention in his life more than the fact that he is living a near subsistence lifestyle while his "allies" in the movement (the hypocrites) are living high on the hog. Unthinking ideologues who are easily misled by cynical leaders form the backbone of every Utopian mass movement.

How has the "free market" done so far? The optimists point to all the benefits of the industrial revolution. Most of this wouldn't have happened if the capitalist/competitive system hadn't existed. The promise of wealth and power, if you are the big winner in a market, seems to be an inducement for innovation. Of course along the way there have been the losers as well. This includes not only all the firms which fell by the wayside, but all those workers who were mistreated in the rush to wealth. When conditions got bad enough there was a reaction, philosophical as with Marx or political as with the battles for unionization. Is it worthwhile if things come out better at the end, but there is much suffering along the way? Does "the market will solve things eventually" offer any solace to those suffering now?

The social critics not only point to the losers among the workers and failed entrepreneurs but to the negative effects on the environment and the impact on generations to come. This has been called "ecological economics" by some, but the factoring in of "externalities" by more and more political philosophers has led to more consideration of goals in general. So what are the goals that I claim underlie the liberal philosophy? Foremost are the belief that all people have equal rights and should have equal access to the benefits that society offers. In addition allowing people a voice in setting the way the goal of equality and fairness is to be carried out is important. In practical terms this has meant a democratic form of government in most cases.

As the world becomes more crowded and population puts pressure on natural resources a consideration of the goals becomes more important. People can't just pickup and move to a fresh location when they have depleted their local environment. Consuming for today without consideration for tomorrow is also unpalatable. Most people hope to see their descendants prosper and, perhaps, even do better than they did. Overconsumption now will prevent this from happening. Few parents are willing to adopt this hedonistic lifestyle at their children's expense. Perhaps the degree that such hedonism exists can be correlated with the increasing number of adults without children of their own. If you have no descendants why no live for the present?

What must be done is to reframe the discussion away from process and back to goals. When someone says "let the markets decide" the proper response must be, "decide what?".

Moral: Goals Matter.

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Copyright © 2007 Robert D Feinman
Feel free to use the ideas, but the words are mine.