Q&A: Free-Market Economics and Morality
Free-Market Economics and Morality
Question
Hello Rabbi.
If I remember correctly, you once defined yourself as a libertarian, in the economic-social sense of the word. So I’m directing this question to you.
In your opinion, is there room to limit the freedom of corporations/individuals engaged in commerce when there is a high probability that doing so will lead to a positive outcome for most of the population?
Example: the law prohibits a “restrictive arrangement,” that is, price coordination between companies is forbidden. There is an infringement on freedom here, though it may be morally justified because it will increase competition in the market and thus bring greater benefit to the public. In other words, contrary to the trendy view these days, there is importance to a certain degree of government intervention in the market in order to preserve social welfare.
But here we are dealing with an empirical question—which system of government (a libertarian one in the style of a “night-watchman state,” or a free market with some government intervention) is better for a larger number of people. That is not what I wanted to ask you about. I’m interested in your opinion on the moral issue: assuming that a balanced economic system is more efficient, is it *proper* to reduce the freedom of corporations/individuals in order to promote the welfare of the many?
Thank you in advance
Answer
Hello Tair.
At the end of the previous column I wrote that even the categorical imperative is a rule, and as such one can deviate from it from time to time. I am against fanaticism and dogmatism even when one is using correct ideas. Therefore there is room to prohibit a restrictive arrangement when it prevents harm to the many.
Incidentally, one can offer a justification for this even on the level of pure capitalism. The rest of society also organizes itself into a restrictive arrangement, and within that arrangement it forbids restrictive arrangements by private individuals. From such a broad perspective, this is still a free market and voluntary organization based on power and coalitions. That only proves that one cannot be completely formalistic in libertarianism.
In socialist phrasing, this is said a bit differently: there is a “capitalist” justification for social distribution of profits, since society is the infrastructure that makes the earning of profits possible, and therefore it is justified in demanding its share.