The two most obvious ways in which free markets appear to be ethical are in the freedom they embody and the efficiency they provide. Freedom and efficiency are good things. Anyone who wanted to challenge the claim that free markets are ethical would have to argue (1) that these good aspects are outweighed by other bad ones, or (2) that freedom and/or efficiency are not really good in this particular case, or (3) that (a) freedom and (b) efficiency are not really features of free markets after all. These are ideas that anyone interested in the ethics of free markets ought to consider, even if we end up rejecting them ultimately. I’ll address them in turn, in reverse order.
3b. Are free markets efficient, or more efficient than the alternatives? Of course it depends what we mean by ‘efficient’. I’ll take the question to mean: do free markets get people what they want to a greater extent than alternative systems of distribution? If we assume that people know what they want better than anyone else then it does seem likely that allowing them freely to seek what they want and make whatever offer they like for it will maximize their getting what they want at a price that they are OK with. There are some assumptions here that could be questioned: Do people know what is out there? And can they get to it?, for instance. But history suggests that free market economies deliver more successfully than controlled ones.
3a. Are free markets really free? Well, it depends what you mean by ‘free’. Free markets are free in the sense that people’s behaviour in them is constrained only by the law, and I suppose we have to assume relatively liberal laws. One objection, though, might be that liberal laws allow advertising, and advertising makes us want things we wouldn’t want otherwise, or makes us want things more that we would want less otherwise. We are not free, the argument goes, to resist its allure. This is a real issue, it seems to me. Or rather two issues (if not more). One is an empirical question about the effects of advertising. I don’t have the answer to that, but I assume it is at least somewhat effective otherwise companies wouldn’t keep spending so much money on it. The other is an ethical question, which I will pose but not try to answer. Which is more important, the freedom to behave as we desire or freedom from having our desires manipulated by others? I think a case could be made that the way goods are marketed would be limited (no advertising aimed specifically at children, perhaps) in a maximally free market. But that isn’t an argument against free markets as such.
2. Are freedom and efficiency, while undeniably good in general, somehow not good in this particular case? This could be the case if the freedom of free markets had bad consequences, for instance if it was not efficient, but we’ve already addressed that concern. The real issue here, it seems to me, is whether the efficiency of free markets is a good thing. In other words, is it good that people tend to get what they want at prices they are willing to pay? That might sound like a ridiculous question (“Of course it’s good!”), but people don’t always want good things. If everyone simply got what they were given by the government, say, then they might complain about it but they might also get healthier food, more educational or morally improving forms of entertainment, and so on. They might not, of course, but they might. We currently restrict the buying and selling of various drugs, weapons, sexual goods (if ‘goods’ is the right word), etc. Would a completely free market be more ethical? It would be amoral. If we value freedom to buy and sell above all else then allowing anything and everything to be bought and sold would be a moral improvement, because it would maximize that kind of freedom. But arguably drug addicts are not fully free, and a free market for drugs might be expected to lead to an increase in the number of addicts. We could argue also that freedom might be reduced if just anyone were allowed to buy chemical or nuclear weapons, or tanks, for instance. We might also have doubts about the value of the freedom to be a prostitute. Not to mention questions about the ethics of the freedom to buy and sell people, body parts, embarrassing information, very large sodas, raw cheese, unsafe vehicles, and so on. The question seems to be not so much whether free markets are better than unfree ones but rather, given that there have to be restrictions on the market, what restrictions should we have? (There have to be some restrictions because otherwise we would have a market for slaves, and because the very idea of a market implies or presupposes the rule of law, which implies laws restricting what people can and cannot do.)
Finally, 1, what bad aspects might free markets have that could outweigh the goodness of freedom and efficiency? One is that with freedom there are no guarantees. If people are free to hire other people or not then there is no guarantee of a job for everyone. Nor is there any guarantee that what jobs are available will pay a decent wage. Similarly there are no guarantees regarding healthcare, education, housing, and food. It might be better to sacrifice some freedom and efficiency in order to ensure that everyone has what they need to stay alive. It might be better to sacrifice some freedom and efficiency to make sure that everyone has more than this: a realistic chance to live a decent life. Again, I won’t try to say whether it is worth it or not, but we can ask the question, as well as questions about what a decent life is.
Those are concerns about the outcomes of free markets: will everyone end up with what they need, and if they don’t then what should we do? Another kind of question concerns justice or rights. I need a job because I need to eat, roughly speaking (I also need shelter, etc.), and there isn’t any free food. That is, if I want to grow crops to eat then I can’t because the land on which I might grow them has all been taken by other people. The same goes for fruit I might want to pick, deer I might hunt, etc. There isn’t any free land, and we need land to live. Of course people do hunt deer, but only with the permission of the landowners or else on land that the hunters already own. If I want (or need) to hunt and own no land then I am at the mercy of people who already own land. By what right has the land all been taken? It’s very hard to answer that question, unless we simply say that the answer is none. It is debatable whether rights exist as anything but a potentially useful fiction. John Locke argued for strong property rights on the basis of mixing one’s labour with the land one works, but only on condition that one leaves as much and as good for others. And people have not left as much and as good for others. They haven’t left any. I can’t go into much careful argument about property rights here, but claims that property rights are absolute exist on very shaky ground. The most plausible defence of property rights is (in my opinion) on the basis of utility, and utilitarian considerations certainly suggest that some of some people’s property should be taken to help those who need it. To the extent that we redistribute wealth or income our economy is less free. At least in one sense of ‘free’. The recipients of redistributed goods might be much freer than they would otherwise have been. People who can eat are freer, can do more, than those who starve to death. People who go to college have more options than those who cannot afford to do so. A well fed, educated society might be much more productive than the alternative, leading to greater wealth in general, and hence an overall increase in opportunity and, in another sense of the word, freedom. And to the extent that redistribution is good, a less free economy (in the sense of freedom for those with goods to do with them as they please) is better than a freer one. To repeat and, hopefully, clarify: freedom from taxes is an instance of one kind of freedom (often called negative) and freedom to do things is another kind (generally called positive). Both are undoubtedly good, but it’s possible that less of the former might lead to more of the latter. If that’s true then negatively free markets (which are usually what people have in mind when they talk about free markets, I think) might not be as ethical as other kinds.
Another objection to free markets is to their market aspect. What’s so great about shopping? Do we fetishize commodities? This brings us back to advertising, but I won’t discuss that again. It also raises questions about culture. Free markets by themselves do not cause commercialism. But excessive banging of the drum for free markets might do so. I have argued that free markets are at least to some extent a good thing. Very roughly speaking, socialism doesn’t work and freedom is intrinsically good. So free markets are good. But markets need restrictions, they need laws. And a society needs taxes. So we cannot have complete freedom. Indeed, as many people have pointed out before, complete freedom means anarchy, and anarchy leads to tyranny by local bullies or foreign powers. The most we can have is the maximum possible freedom, not total freedom. How much that is depends, in part, on what kind of freedom we want. Perhaps the real question then is not whether free markets are ethical but which markets are the most free.
I have a fear that I might sound like a socialist and be ignored for this reason, so let me conclude by addressing that idea head on. I am not advocating socialism. I’m not really advocating anything here so much as I am raising questions. But the suggestion behind these questions is that the kind of system we have now is on roughly the right lines. It is good that we don’t allow the buying and selling of slaves. It is at least reasonable that we don’t allow the unrestricted buying and selling of all drugs, weapons, secrets, and uses of human bodies. It is reasonable that we don’t allow unrestricted advertising. And it is good that we have measures in place to ensure that people aren’t left to die if they slip between the fingers of the invisible hand. Freedom is a great thing. My interest is in how we can have as much of it as possible.