June 24, 2011

The Eminently Real Free Market (X): What Do We Mean?

It has been our practice to have the title of a series of posts reflect the character of the section of TCATL under review. The title for the current series thus directly comments on that of Chapter 2, “The Illusory ‘Free’ Market.”
Before continuing with the critique of that chapter, however, we must pause for a conceptual interlude. We need to explain just how “real” modifies “free market” in the title of the current series of posts. After all, we have claimed that “free market” refers to an abstraction, a non-actual theoretical construct, and that the hampered markets of economic history and political commentary are, to the degree they are hampered, not free. This philosophical excursus will not only explain how we relate the theoretical to the practical, but also inform our subsequent evaluation of the gallery of historical “sketches” on display in the rest of the chapter.
By “real” we mean the logical contrast of the illusory, the delusional, the fictional, the artificial, etc. When we know or suspect that we are in the presence of the latter, we appeal to some notion of the real to negotiate our encounter with it. A good analogy is found in the contrast between the true and the false: the notion of truth emerges only through the experience of falsehood. (If we could never experience being in error, or being deceived or lied to, we’d have no use for a notion of truth.)
Whatever is a function of real entities is also real. A market is a network of exchanges that persons, according to their human nature, spontaneously form. (That is, they do not engage in exchange because they read in some book that that's what they must do.) Markets are functions of persons, and persons are real. (Persons are entities with causal efficacy, however, markets are not.)
The market is an order—specifically, a network of exchanges—that persons naturally create in pursuit of their flourishing (which exceeds in value their mere biological sustenance and continuance). Since persons generate that order by acting in accordance with their nature, it is a natural order, one level, aspect, or dimension of several that make up the universal natural order. Violations of that order, which tend toward human self-destruction, is not to be put on the same ontological level as that which contributes to human flourishing.
Persons are the network’s “nodes” out of whom radiate catallactic “ties” (as distinct from, say, familial, ecclesiastical, or military ties). And so the reality of free markets is the reality of persons who, in order to achieve their goals freely make, accept, and decline offers of goods and services that are within their natural right to make, accept, or decline. (What A offers to B can only be title to scarce resource R that A has justly acquired.)
The reality of the free market is a function of the natural desire of real persons for a good life or happiness (in the sense of human flourishing) to which free markets are conducive. A person may, of course, have a desires that are not conducive to that end, which are therefore not even implicitly a desire for free markets. Further, the existence of free markets may be a necessary but is by no means a sufficient condition for human flourishing.
The desire for human flourishing—εύδαιμονία, eudaimonia, “living and doing well”—is real, and that reality extends to the network it generates, despite any failure to eliminate all forcible interference with voluntary exchanges. Eudaimonia is not, however, the concern of economics (catallactics) per se. The pursuit of economic knowledge—the logic of human action and interpersonal exchange—can only presuppose an interest in it on the part of those who pursue it. But there is no necessary connection between the two. Malevolent people can join their analytical knowledge of the laws of supply and demand, for example, to their empirical knowledge of the supply and demand for a particular commodity and act to effect human misery. This holds true for the knowledge of any other kind of causal laws. Economics, however, does not judge the malefactors. Only a eudaimonistic ethics, which affirms that the end of man is eudaimonia or happiness and that end ought to be pursued and misery and extinction avoided, can so judge them.
Catholic ethics shares its commitment to eudaimonistic ethics with many non-Catholic schools of thought, including some that self-identify as libertarian. It is a point of connection among them. They will differ, of course, over how they conceive of the cosmos within which the flourishing is pursued and the means by which it is attained.
The free market is a good of order, as distinct from goods of immediate satisfaction. The regular enjoyment of such goods requires that persons explicitly regard the good of order as worthy of attainment and protection. (Not just, for example, “This meal for me now,” but also “Good meals for me and my family several times a day, every day.”) Persons face a moral challenge when they realize that they can enjoy a good of immediate satisfaction only by rending the fabric of the good of order. In the name of eudaimonia, they must at times forfeit particular satisfactions.
Human beings enjoy essential freedom. They are free by nature. They can conceive of alternative futures, prefer one of them, understand the causal path to it, and act so as to set that causal chain in motion. But although it is natural for them to honor the good of order, they are perfectly capable of perversely, self-destructively, dishonoring and undermining it. That is, they can perceive a conflict between the good of order and a satisfaction attainable only at the cost of that order and still subordinate the order to the satisfaction.
That is, although they are naturally ordered to pursue a good life, which depends upon the good of order, human beings can, through their exercise of essential freedom, irrationally act to undermine that good. One consequence is the diminution and even loss of their effective freedom, a constriction of the range of choice. (The smoker, for example, has less effective freedom to quit smoking than he or she had to start, even if his or  her essential freedom to conceive of a smoke-free life has not diminished.) Human beings can, and do, inject the surd of sin into the historical equation, effectively “throwing a spanner in the works.” Sin is not just immoral, but also irrational, absurd. There may be non-rational causes, but never a reason for it. 

One way to describe history is as the story of pro-market and anti-market choices and their consequences. By counterfactual praxeological analysis, we can understand the logic of market exchange. By eudaimonistic criteria, we can morally approve of the pro-market side (peaceful offers of exchange of justly acquired property and responses thereto) because it favors human flourishing; anti-market choices (violent interference with peaceful offers and responses thereto) invite only deterioration, poverty, enslavement and other miseries, and which can logically terminate only in human extinction. And if that most unnatural telos is programmed, so to speak, into the anti-eudaimonistic ethic of anti-market ideologies, then they have no ethics worthy of the name.

Freedom and the attempt to suppress it are not ontologically on the same footing, any more than are natural living shoots and the artificial concrete slabs that, although temporarily stronger, will crack and crumble as the burgeoning tree slowly but surely pushes through. One is in accord with man’s nature, for it promotes his flourishing; the other, unnatural and potentially fatal to him. The free market that human beings generate, however imperfectly and inconsistently, is therefore as real as they are, and attempts to hamper it are only as real as sin, surds for which there are no reasons and which enjoy no permanent abode.