This address actually was delivered. Not quite as colorful, but pretty good.
May 25, 2012
"Markets and Morality"
Dr. Walter E. Williams
Benjamin Franklin said “A frequent reference to fundamental principles is absolutely necessary to preserve the blessings of Liberty, and keep a Government free." That is what I would like to do today – talk about fundamental principles.
How often do we hear the suggestion that free markets or capitalism is immoral? Some of the alleged injustices of capitalism include that it is a system where there is unfair distribution of income, there is greed and materialism where the rich get richer whilst the poor get poorer, and there’s systematic bias in favor of big business and bias against the little guy.
The attempt to find a definitive definition of morality has occu¬pied the attention of philosophers for centuries and has remained elusive. What we can say is morali¬ty is only applicable to human purposive behavior. Morali¬ty is a concept applicable to people acting, singly or in a group, with a purpose. The concept of morali¬ty can be applied to the actions of a corporation, a state, a family, a mob, an individual or any other agent capable of purposive behavior.
Morality becomes a fuzzy concept when applied to society since like any other system it is an organized, integrated whole composed of diverse people who have interdependent relationships. As such society cannot behave in a purposive fashion as does an individu¬al, or a group of individuals such as a corporation, a family or a state. For example, if a mob lynches an individual, we can all agree that the mob has committed an immoral act. We can also agree that non part¬icipants, the lynch mob and its victim are all members of soci¬ety. While we can indict the lynch mob for immoral behavior, we can be less certain about a similar indict¬ment against non pa¬rtici¬pants and the victim. The most defini¬tive observation we can make about social morality is to ask whether the society's laws appropriately punish such conduct or not.
Just as in the case of society, markets are incapable of purposive behavior; therefore, markets cannot be evaluat¬ed as moral or immoral. Howev¬er, we can ask whether a market system's institutions and set of relationships is more or less compatible with moral behavior of the individuals and groups of individuals who comprise and act within it.
The first principle of a free society is that each person owns himself. You are your private property and I am mine. Most Americans probably accept that first principle. Those who disagree are obliged to inform the rest of us just who owns us, at least here on earth. This vision of self-ownership is one of those "self-evident" truths to which the Founders referred in the Declaration of Independence that "All Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness." Like John Locke and other philosophers who influenced them, the Founders saw these rights as preceding government and they said, "That to secure these Rights, Governments are instituted." Thus, the major job of government is to prevent the initiation of force, fraud and intimidation and we're all duty-bound to cough up our share of the cost. Most other matters in our lives should be left to civil society and its institutions.
The direct implication of self-ownership is people must own those things they produce. If a person cannot own what he produces, self-ownership is meaningless. One way to describe slavery is that it is a condition where a person produces goods and services but he has no ownership rights to them. Those ownership rights are held by someone else. The idea of self-ownership is what makes slavery, murder, rape, assault, extortion, theft, and the like immoral acts. They violate a person’s human rights to his property.
In order to promote and protect human rights it would appear that we would want to have a system that maximizes the probability that human transactions are voluntary. Of all economic systems, free market capitalism maximizes that probability best.
When there is free market allocation of resources, transac¬tions occur because individuals perceive themselves being better off than their next best alterna¬tive. In other words, when a person purchases a pair of shoes, he gives up title to his $100 because he perceives himself as being better off as a result of acquiring the shoes rather than further retention of the $100. The owner of the shoes gives up title to the shoes because he perceives himself as being better off by acquiring the $100 rather than further retention of his title to the shoes. When there is voluntary exchange, both parties to the exchange are better off in their own estimation. In other words, voluntary exchange is a positive sum game.
When there are coercive exchanges, regardless of the justifi¬cation, we have a zero sum game where in order for one person to be better off necessarily requires another to be worse off. In my example, this would be where the person steals the shoes. Clearly, he would be better off but only at the expense of the shoe owner who would be worse off. It is immoral for one person to be forcibly used to serve the purposes of an¬other. I might add that it makes little difference in terms of morality whether the person is being used privately or collectively through Congress to serve the purposes of another.
Rise of the Market
Throughout most of mankind’s history, the route to great wealth accumula¬tion was through enslavement, pillage, plunder and conquest. In pre capitalist societ¬ies, a few people had enormous riches while the many were very poor and subject to arbitrary control and abuse by others.¬ Indeed it was the rise of free markets, that made the accumulation of wealth possible through serving one's fellow man, namely finding out what one’s fellow man wants and providing it in a least cost manner. This vision does not apply to crony capitalism where people seek governmental special favors and privileges as a means to greater wealth.
Propaganda and stubborn ignorance has it that the advances of capitalism benefit only the rich. The evidence refutes that. The rich have always been able to afford entertainment, but it was the development and marketing of radio and television that made enter¬tainment accessible to the common man. The rich have never had the drudgery of washing and ironing clothing, beating out carpets or waxing floors. It was the development and mass production of washing machines, wash and wear clothing, vacuum cleaners and no-wax floors that spared the common man of this drudgery. At one time, only the rich could afford automobiles, telephones and computers. Now all but a tiny percentage of Americans enjoy these goods.
The output and wealth generated through free markets contrib¬utes to a more civilized society. For most of mankind’s existence, he has had to spend most of his time simply eking out a living. In pre-industrial society and in many places in the world still today, the most optimistic scenario for the ordinary citizen was to be able to eke out enough to meet his physical needs for another day. But with the rise of capitalism and the concomitant rise in human productivity that yielded seemingly ceaseless economic progress, it was no longer necessary for mankind to spend his entire day simply providing for minimum physical needs. People were able to satisfy their physical needs with less and less time. This made it possible for them to have the time and resources to develop spiritually and culturally.
In other words, the rise of capitalism enabled the gradual extension of civilization to greater and greater numbers of people. More people have time available to read, become educated in the liberal arts and gain more knowledge about the world around them. Greater wealth permits them to attend the arts, afford recreation, contemplate more fulfilling and interesting life activities and enjoy other culturally enriching activities that were formerly within the purview of only the rich.
Income Distribution
The most frequent justification for the interventionist state is to create greater fairness and justice in the distribution of income. Considerable confusion, obfuscation, demagoguery and ignorance about the sources of income provide the interventionist with a plenty of ammunition to justify their agenda. Some people see income as being distributed as if out there is a dealer of dollars. That vision quite naturally leads to the conclusion that if some people have fewer dollars than others the dollar dealer is a racist, sexist or a multi-nationalist. Thus, justice and fairness requires a re-dealing of dollars, or income redistribution, where the “ill-gotten” gains of the few are returned to their rightful owners.
In a free society, income is not distributed. Income is earned. People serving one another through the provision of goods and services earn income. That income provides the earner with claims on goods and services produced by his fellow man. The quantity of income, and hence one’s claim on goods and services produced by his fellow man, is determined by the value his fellow places on what he produces.
Let's look at it. Say I mow your lawn. When I'm finished, you pay me $20. I go to my grocer and demand, "Give me two pounds of steak and a six-pack of beer that my fellow man produced." In effect, the grocer asks, "Williams, what did you do to deserve a claim on what your fellow man produced? I say, "I served him." The grocer says, "Prove it." That's when I pull out the $20 I earned. We might think of those twenty dollars as "certificates of performance", evidence of service. This process promotes a moral discipline that says: Unless we are able and willing to serve our fellow man, we shall have no claim on what he produces. Contrast that moral discipline to government handouts where a person is told, "You don't have to serve your fellow man. We'll take what he produces and give it to you."
None of what I’ve said today is an argument against helping one’s fellow man in need. I believe that charity is noble. Reaching into one’s own pockets to help one’s fellow man is praiseworthy and laudable. Reaching into someone else’s pockets to do so is despicable and worth of condemnation. The latter is nothing less than legalized theft. In the recognition of this, James Madison said, "Charity is no part of the legislative duty of the government." Moreover, I’m sure that when God gave Moses the commandment “Thou Shalt not Steal”, I’m sure He didn’t mean thou shalt not steal unless you got a majority vote in Congress.
The great problems that confront our nation have their roots in morality where we’ve asked government to commit immoral and unconstitutional acts. We don’t have many years to turn it around so that today’s young people can live in and bequeath to their children the robust nation that was bequeathed to us by our grandparents. But if there’s an optimistic note for us is that we Americans have not done the wrong thing for a long time. However, we’d better get about the task of straightening out our nation while we have the liberty to do so.
The biggest part that you individually can play is to be moral yourself and try to sell our fellow man on the moral superiority of personal liberty and its main ingredient limited government. Good luck and congratulations to parents, graduating students and Grove City’s dedicated faculty.
Grove City College Trustee, Guest Lecturer in Economics and distinguished author Dr. Walter E. Williams delivered the keynote address at the 2012 Grove City College Commencement ceremony on Saturday, May 19, at 10 a.m., on the Quad between Harbison Chapel and Crawford Hall of the Grove City College campus.
http://www.gcc.edu/2012_Commencement_Address.php |
