Libertarians are sometimes accused of being “market fundamentalists,” and there’s a sense in which I will plead guilty to the charge (though I have multiple criticisms to offer of the Longview Institute’s “vulgar liberal” take on the subject). Libertarians certainly have great esteem for “the market” — but our esteem is rooted in reason and history, not faith.
This esteem, however, is often misunderstood. As I see things, it need have nothing to do with hyper-consumerism, shallow materialism, or single-minded acquisitiveness. (This is not to condemn the desire for material comforts, of course.) Nor does it indicate a wish to see everything located within the cash nexus or the for-profit world. “The market” is better understood as much more than those things, though the boundary between it and the nonmarket parts of civil society (which include families and noncommercial associations of various kinds) may be hard to locate. Let’s just leave it at this: The market takes in a good portion, though not all, of the voluntary relationships in civil society; it’s an important part of the voluntary sector, and so it’s decisively different from the state, or coercive, sector.
If the market isn’t worth esteeming solely for material reasons, what is its big attraction for libertarians? Many volumes could be (and have been) written on that subject, so I will have to keep my ambitions realistic here.
Facilitator of Cooperation
A fundamental attraction lies in the market’s role as a facilitator of social cooperation, permitting a degree of peace, harmony, and interpersonal coordination that could not be achieved by other means. To be sure, such cooperation is partly instrumental; it is a key means to material well-being. But it is more than that: As social beings we value cooperative interaction as an end as well as a means.
The market (though not literally a physical place) is where people meet in peace to engage in mutually beneficial exchanges of all kinds, material and nonmaterial. As such, it makes possible a host of wider values that we take for granted. For example, free exchange generates prices that are indispensable for economic calculation and coordination among producers and consumers, as Ludwig von Mises famously taught. Without true market prices, we wouldn’t know what to produce, how much to produce, and by what methods. This is no trivial thing. In a world of scarce means and abundant ends, the need to make trade-offs is pervasive. We can’t have everything we want, and we don’t want the (subjectively) less important at the expense of the (subjectively) more important. It is good that there’s a way for us to minimize waste and maximize efficiency in achieving our ends. Only the market can achieve that.
Markets and market prices permit extensive specialization and division of labor, which have value far beyond the satisfaction of material needs. Without a division of labor or with only a primitive one, people would have to spend time inefficiently producing many things for personal consumption, time that could be spent enjoying leisure and social activities. With a division of labor, one has a better chance to develop one’s unique talents and skills.
Moreover, to the extent the market is free and competitive, the division of labor and economies of scale push prices down, making a unit of labor more valuable and further freeing individuals for noncommercial activity or for the production of art and literature. As Mises wrote,
Because many people or even all people want bread, clothes, shoes, and cars, large-scale production of these goods becomes feasible and reduces the costs of production to such an extent that they are accessible at low prices. The fact that my fellow man wants to acquire shoes as I do, does not make it harder for me to get shoes, but easier.
The Gift of Economy
This is part of the answer to those who long for a “gift economy,” in which people produce for the community without expectation of direct reciprocity. While such an arrangement can work within the family or other small groups, or in circumstances where the range of choice is strictly limited, it is difficult to imagine how a large and prosperous society could arise or endure without free exchange and money prices. Even if one thinks it would be nicer for people to give their products as gifts, expecting that they will be able to take what they “need” from the common store, I see no getting around the fact that this arrangement would lack information (provided by prices, albeit imperfectly) indispensable to the kind of decision-making on which everyone’s material and nonmaterial well-being depend.
Another benefit, which grows out of the first, is that the market facilitates constructive interaction with strangers and hence promotes peace across broad geographical areas, even globally. What deeper compliment could one pay a social system? A money-based division of labor brings people together for mutual advantage, expanding the array of goods and fostering goodwill among individuals who might otherwise view one another with fear and suspicion. Instead of fighting or hiding from one another, they are producing valuable things for exchange and relating to one another as equals, and the resulting cultural cross-fertilization has untold beneficent consequences.
Some will say that the market is a cold and calculating place, where people do good only in order to do well. Remember Adam Smith’s observation that we rely on the self-interest, not the benevolence, of the butcher, baker, and brewer for our dinner. But (as Smith well understood) this leaves a good deal out of the picture. While it is true that people enter the market to acquire goods and services, and their providers seek their own (and their families’) well-being in serving others, that does not prevent the emergence of benevolence and even friendship in the course of market transactions. At a personal level, people understand that other individuals are ends in themselves, not only means, and that realization colors market relationships. Have you never asked a store clerk with whom you’ve had repeated commercial encounters how she is feeling or how her kids are doing? (See Neera K. Badhwar’s “Friendship and Commercial Societies.”) Moreover, we are capable of realizing and taking satisfaction in the general good produced by the market order.
If there is deep value in the market as an institution, then logically there is value in those things without which the market could not exist, such as private property. Those who harbor a moral or aesthetic aversion to the market typically dislike private property too — or at least they think they do. Actually, their anti-property attitude is often belied by other stated positions. For example, if one believes — and finds offensive — that labor is deprived of its just product in some social systems, isn’t that a pro-property concern?
Property makes autonomy possible by creating a zone of freedom around each of us, leaving us at liberty to pursue the plans by which we define ourselves. And being free in one’s justly acquired possessions averts violent conflict. Far from insulating individuals from one another, property fosters peaceful cooperation through free association and exchange. (On the conception of property as a means of conflict avoidance, see John Hasnas’s “Toward a Theory of Empirical Natural Rights.” Also see Less Antman’s provocative “Is Property Theft?”)
No doubt property has gotten a bad name over the centuries due to its unfortunate association with slavery and the expropriation of peasants by idle ruling classes. These will be understood as perversions of the concept when one realizes that property logically proceeds from self-ownership. (The American abolitionist movement perceptively labeled slavery “man-stealing.”)
In defending private property, I do not mean to imply that nonstate public property or voluntary community management of common pool resources (à la Elinor Ostrom) are anti-market. On the contrary, those exist within, not in conflict with the larger market economy.
Freed Market Versus State Capitalism
Finally, it should be noted that much opposition to the free market (and that on which it is founded) stems from its misidentification with the current corporatist economy and its many attendant evils. (Roderick Long calls this “left-conflationism.”) Richard Cobden, the towering advocate of peace and free trade in 19th-century England, once said,
They who propose to influence by force the traffic of the world, forget that affairs of trade, like matters of conscience, change their very nature if touched by the hand of violence; for as faith, if forced, would no longer be religion, but hypocrisy, so commerce becomes robbery if coerced by warlike armaments.
Likewise, when the market and the institution of property are touched by the hand of violence — that is, the state — their very essences change. It makes no sense to judge the freed market by the nature and record of state capitalism.
(Thanks to Gary Chartier for helpful comments.)