Free Markets Aren’t

The argument advanced by Brennan and Jaworski (B&J) belongs to an abstract genre associated with market fundamentalism. It affects to be quite specifically about how acting freely and entering into a market exchange around money are the same thing, but in fact it is about markets without limits. That argument relies on the usual liberal/libertarian background assumptions about “free” markets (immune to power, money and equality); about the “private” nature of good (individual goods and interests trump public goods – if there is such a thing! – and the commonwealth); about a reckoning of the costs of actions and commodities that ignores social costs (so-called externalities); and about money as an exchange medium that not only doesn’t demean “higher goods” such as dignity, but ennobles them. These unstated background assumptions are typically the provenance of laissez faire liberals, extreme libertarians and market fundamentalists such as Ayn Rand, Milton Friedman, and Robert Nozick. They also reflect the attitudes that anti-government Tea Party insurgents like Ted Cruz embrace in pandering to Americans who are frightened by politics, government, and democracy.

These arguments are deeply anti-political – contrary to the real challenge we face as citizens and politicians of creating common ground on which people holding conflicting interests, values, and perspectives can stand; stand and coexist civilly, without entering that Hobbesian state of nature where” the war of all against” makes life “nasty, brutish, and short.” Real politics, however, plays out in a dialectical space between the monolithic and apolitical extremes of totalitarianism (where there is no market, no civil society, only a totalizing state) and anarchism (where there is no state, no community, no public good, only the market – B&J’s seeming stance). Democracy is about degree, however: how much equality is compatible with how much liberty? How much justice is compatible with how much private interest? “None” is not an answer.

Like all such abstract closed systems, JB&J’s monolithic monism it is utterly without a feel for the dialectical essence of politics – balance, compromise, and the capacity to hold  rival values, such as liberty and equality, in tension, without insisting that one or the other is right or wrong. This dialectic is of course the indispensable condition of democratic politics.

Believing, however, that “there are no principled objections to markets” at all, B&J are seeking not a viable political balance between market and state (even if it skews to market), but seeking to delegitimize the public sector and the democratic state altogether. Not even among the most clownish cuckoo birds chirping away at one another in the recent Republican debates is there anyone who suggests “if you may do it for free, you may do it for money” let alone that there are “no limits on markets.” Certainly not the moralizing Ben Carson or Ted Cruz; not the narcissist Donald Trump (much as he loves money). Even the Ayn Rand apostle Paul Ryan has just stepped into one of the most political posts in America, where the mandate to abolish government must contend with the mandate to make it work.

            Let me take on two intimately related fundamental issues that emanate from the monolithic market perspective: first, the irreducible meaning of “public” and how a refusal to acknowledge it blinds B&J to res publica (public goods) and to the difference between common and private interests, as well as to the social costs of so-called “private” market choices, so-called  “externalities;”and second, the dependence of liberty, autonomy, and choice as they are exercised on equality, community, and power.

Many seeming private goods deliverable through market exchanges have a public dimension that requires public regulation to ensure their delivery. People buying tickets to movies or concerts in order to SHARE the experience with others, and concert artists like Patti Smith and filmmakers like Josh Fox selling tickets with the aim of providing reasonably priced tickets to a diverse audience  who share their egalitarianism will both be foiled if scalpers buy up tickets and resell them at prices only a few can afford; even worse if a single buyer (say a wealthy Patti Smith hater), buys the entire house in order to keep it empty. In such cases, anti-scalping regulations or a rule limiting the number of tickets that can be sold to one buyer manifest a public good – fairness – that the simple market exchange cannot itself provide.

Behind irrational outcomes of individual buying and selling or reselling stands the problem of monopoly. When contracts freely entered into among buyers and sellers create a monopoly in which the possibility of future contracts is compromised, the market has failed, and the need for a public guarantor for private goods is justified. The guarantee is itself a good the market cannot produce. The public sector (government) assures that the private sector works. Gilded Age markets produced more monopoly than competition, more privilege than choice. Teddy Roosevelt’s anti-trust legislation liberated markets and allowed them to deliver. The Roosevelts famously used aggressive state power to save capitalism from itself.

Markets also are incapable of addressing externalities. Few choices individuals make are truly individual and private; (let alone free – see below); most have social consequences. When a natural gas company fracks, it presumes to pay the “costs” of its enterprise by buying drilling rights, paying landholders, and so forth. But as it drills, it imposes costs in the form of harm to humanity and the planet it neither acknowledges nor compensates. It contaminates the water supply, releases methane into the atmosphere (20 times more potent than CO2 as a greenhouse gas), and it takes to market a product that when used and combusted, contributes to global warming and the potential destruction of life on earth. None of those costs – “byproducts” of but integral to fracking – are included in the market price of natural gas, which thus seems “cheaper” than alternative energy or even than oil. Enter government, which is the default funder of externalities understood as social costs. As with monopoly, government has the right to regulate the market to offset or impose taxes on frackers to pay the social costs they fail to recognize; or even to ban fracking altogether (as New York state or the city of Pittsburgh have done). So, yes, since private markets fail to pay the social costs of their enterprise, there are justifiable limits on them.

Public goods and public harm are then ineluctable features of economic, social, and civic life, and the argument that markets are or can be autonomous, and that limits on them are never justified, is not just fictive but fraudulent. Public goods cannot be reduced or disintegrated into private goods. Air, water, the human genome, climate change, biodiversity, and carbon change (among others) are ineluctably public, and common will (democracy) rather than private choice is the only way they can be reasonably, fairly, and legitimately negotiated.

Finally, B&J are unconscionably reductive. They demean goods such as human dignity by defending their sale, and then insist buying and selling cannot really demean those goods but rather ennobles the money with which they are purchased!  “Hey babe, sell me your body! No, I’m not commodifying your body, I’m de-commodifying money! Money’s cool, and when I put a price on your ass I am paying it an enormous compliment!”

The second crucial issue market fundamentalists overlooks is the intimate relationship between liberty and equality – the way in which liberty of choice depends on laws and rules that preserve it from the skewing impact of power and money. Freedom of speech is about equal voice in public affairs; when money is treated as its surrogate (as happed in the profoundly wrongheaded Supreme Court decision Buckley v. Valeo), the object of free speech – equal influence in the political sphere – is fatally undermined. By confounding speech and money, the Court destroyed real political choice and made a mockery of American democracy.

It’s not just that you can’t always do for money what you do for free, it’s that what you do for free isn’t always freely done. Homelessness is not a free choice; neither is alcoholism. Although you may buy liquor “freely.” B&J offer multiple examples that work against their own argument. They condemn slavery but fail to recognize “wage slavery” of the kind Marx associated with starving paupers “voluntarily” selling their labor power to wealthy capital owners. Those who sell labor cheaply are constrained by abject need – survival – to do so. Same with another B&J example, prostitution. Non-desperate women, they say, can sell their bodies freely. But persons selling their bodies are by definition “desperate,” in moral and existential extremis, if not always financially strapped. Same with the “exploitative markets in surrogacy” that B&J are willing to prohibit. Yet “non-exploitative” markets are no different, since the very idea of surrogacy, selling the fruit of a human womb, is always exploitative. Desperation and exploitation are not just a matter of whether or not you have money in the bank.

The missing construct is power. Like all market zealots, B&J assume that power is top down, the exclusive property of the state. The truth is power is everywhere, and can operate bottom up, emerging quietly from the media, culture, and society as well as noisily from above. Bottom up power is the more compromising to freedom because it is hard to see and allows us to think we act freely because we are unconstrained from above. The reality of a power-pervaded market means that the market can no more secure equality than it can the competition on which its free choices depend.  Maybe you can do for money what you do for free, but it turns out that little that people do for free is done freely, and even less of what they do for money is unconstrained. Free markets just aren’t.  Which means the notion of markets without limits is simply oxymoronic.

Markets are only free when choice is made meaningful by equality, when competition is unhindered by monopoly, and when the interdependence of private and public goods along with the priority of the public over the private are guaranteed by democratic government. And it is precisely the limits which democracy and the law (the community) impose on markets that allow them to be free. Limits and markets are dialectically interwoven, and the point is not to eliminate politics but to legitimize democracy so that politics can adjudicate market relations. That is the task of the public sphere, whose objects are res publica and whose participants are not consumers but citizens.

B&J truly chase their own tails in trying to liberate markets from the very constraints that make markets free. They do the same when they tell us their aim is to “put philosophers out of the business of talking about the moral limits of markets.”  Because what they don’t get is that philosophers are not in business, but in search of knowledge and truth that are not for sale.

In his remarkable forthcoming film How To Let Go of the World, Josh Fox (who made Gasland) reads a poignant sentence from a Zambian schoolgirl’s notebook: “Freedom is meaningless if there is poverty.” That is the simple point that eludes Brennan and Jaworski.

Also from this issue

Lead Essay

  • Jason Brennan and Peter Jaworski take on the critics of commodification. They first offer a typology of arguments against buying and selling otherwise licit items and actions. These critical arguments include claims of exploitation, misallocation, corruption, harm, and - likely the most controversial case - a class of objections that they term semiotic. Semiotic objections to market behavior claim that buying and selling can in some circumstances express wrongful attitudes. Brennan and Jaworski review examples of these arguments and show why in their view they are mistaken. They then offer a means by which they might be proven wrong; but so far, they say, no one has done it.

Response Essays

  • Benjamin Barber argues that free markets are a fiction. Democratic controls are everywhere, and these controls must also make markets just. That’s because markets can’t exist in a vacuum; they are constituted by laws, and these laws need to be instituted democratically. Many of the good things that we hope to achieve in market exchange cannot be had in any other way; this is particularly true of fairness. Individuals are poorly situated to make judgments about fairness or non-exploitation themselves, because their lives are suffused with power relations that predetermine what they will say and do. The democratic process has the potential to liberate them from these power relations.

  • Ilya Somin broadly agrees with Jason Brennan and Peter Jaworski that commodification is not a bad thing in itself. Yet he proposes to draw one very small area of exception: Citizens must not sell their votes, whether in elections or as members of a jury. The dangers of political corruption are simply too high, in that potential vote buyers are unlikely to pay people for good motives. Rather, they will act out of narrow self-interest and subvert representative government. This must not be allowed. In other cases, however, markets should be allowed to operate in one form or another.