Tuesday, January 7, 2014

The ethics of free markets

I've been asked to be on a panel on the ethics of free markets next month, which involves speaking for about ten minutes and then joining in a discussion. It's for a non-philosophical and probably rather conservative audience. Below is what I've got so far. Are there any bloopers, omissions, or excesses I should correct?

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.


  1. My comments are again like buses. So here are six on this one:

    1) On the prospects for "socialism" in the US, there is a generation gap brewing that's quite remarkable in view of the slight attention it has received. See the figures and discussion here. To me it seems that the concept has been simply inflated into meaninglessness. When everything from seat belt legislation to the Gulag Archipelago has been tarred with exactly the same brush of "socialism", it can no longer mean anything very concrete. Whatever potency the word once had, originated in the Cold War, but nobody under thirty remembers the Cold War even vaguely, so they couldn't care less.

    2) Depending on what I want, a free-market process can lead to outcomes that limit my freedom as much as a process of state power (or "government", as it is quaintly called in American English). Imagine, for instance, that there is a slump in the sales of my favourite chocolate bar and that its production is therefore discontinued. The outcome is completely the same as if a law had been passed that bans the chocolate bar. Each of the two cases is about other people using their power to deny me my chocolate bar. Some free-marketeers like to speak emotively of the political process as "the tyranny of the majority", but every time a product disappears from the market, it's also a case of the tyranny of the majority – only of buyers, not of voters.

    3) Freedom and efficiency are themselves often in tension (as any traffic jam, for instance, will demonstrate). The question is not whether some system safeguards "freedom and efficiency", but whether the balance in which it puts the two is the right one.

    4) Much of advertising, perhaps a plurality, has to do with competition between different brands of the same product. Inasmuch as advertising creates a demand, it is thus often a demand for Hardtack A at the expense of Hardtack B – not a demand for hardtack-as-such at the expense of whipped cream or detergent or movie tickets. Also, there is solid empirical proof that advertising cannot create a demand for a genuinely bad product (e.g. Edsel, New Coke).

    5) The point about land, which is very good and which I would emphasise quite strongly, reminded me of a related point that I have already made before. There is no free market in national defense anywhere in the world. Even a volunteer army has to be paid for, and the money is collected through taxation by a coercive state. And thus the free market is, so to say, already conceived everywhere in the sin of taxation. For this reason, some wild-eyed free-marketeers, such as Ayn Rand, have implacably opposed even the existence of the volunteer US armed forces. But I suppose your audience does not oppose it. If so, why?

    1. Thanks, Tommi!

      Whatever potency the word once had, originated in the Cold War, but nobody under thirty remembers the Cold War even vaguely, so they couldn't care less.

      True, but the word still gets thrown around (along with 'communism') as a way of shouting down any idea that sounds insufficiently Ayn Rand-ish. Even by students. One fear I have is that people will simply stop hearing what I say unless I make it as clear as I can that I'm not proposing something radical. Of course simply saying "I'm not being radical" won't do the trick, but it might help.

      a free-market process can lead to outcomes that limit my freedom as much as a process of state power

      Agreed. I'll try to make and/or emphasize this point.

      Freedom and efficiency are themselves often in tension (as any traffic jam, for instance, will demonstrate).

      That's a nice example. This is another case of a free-market process limiting freedom, as well as efficiency.

      Inasmuch as advertising creates a demand, it is thus often a demand for Hardtack A at the expense of Hardtack B – not a demand for hardtack-as-such

      Yes, but is this always the case? I've heard that the notion of B.O. was invented in order to make people self-conscious of how they smelled so that they could be sold deodorant (for which there had previously been no demand). I should look into this--maybe it's a myth. But advertising campaigns do seem to be able to create demand for worthless (not necessarily bad) products, such as whatever toy every kid is asking for in any given Christmas season.

      There is no free market in national defense anywhere in the world.

      There are companies like Blackwater, though, and people who support that kind of thing. I have talked about "the socialized Marine Corps" before now, and might do so again, but it's probably risky. It's close to blasphemy for some people.

    2. Here's the kind of thing I was thinking of when I mentioned B.O. above. The idea of advertising as aiming at making people dissatisfied with their lives is interesting, too, but I have limited time.

    3. True, but the word still gets thrown around (along with 'communism') as a way of shouting down any idea that sounds insufficiently Ayn Rand-ish. Even by students.

      Sure, but that there is now even a slight sign of a backlash starting to develop is itself eyebrow-raising. There's assuredly a very long way to go, but that even a short one has already been gone is remarkable.

      Yes, but is this always the case?

      No, but measured as a percentage of the total, less of advertising is demand-creating than people think. You wrote "[...] otherwise companies wouldn’t keep spending so much money on it"; and my point was that they don't spend quite so much money on precisely that.

      I'm also not fully convinced of the uselessness of toys, even faddish ones. (But I don't have kids, so my experience of toys is one-sided in that sense!)

      I have talked about "the socialized Marine Corps" before now, and might do so again, but it's probably risky. It's close to blasphemy for some people.

      Oh well. I was hoping you'd mention the "socialised medicine" of the Department of Veterans Affairs as well. If anyone, shouldn't those heroic veterans be exempt from such socialist iniquities?

    4. measured as a percentage of the total, less of advertising is demand-creating than people think.

      I can believe that. Thanks.

      I'm also not fully convinced of the uselessness of toys

      Nor am I! But some of the faddish ones are seemingly desired only because of the hype on TV.

      shouldn't those heroic veterans be exempt from such socialist iniquities?

      I'm sure there are people who would say this in all seriousness. I don't want to encourage them.

  2. 6) What Marx called "commodity fetishism" was not "fetishising commodities". This is a dishearteningly common misconception, from which you too seem to suffer. What Marx was speaking about was seeing human relations in terms of the model of relations between commodities. There is no criticism of any unhealthy psychological attachment by people to their commodities, or anything of the sort. Quite the contrary: Marx's criticism is that any particular commodity can no longer be either here or there, because it can now be seen only in terms of its potential exchange value. Totally unlike pre-capitalist societies, a capitalist society no longer has time to form any emotional attachment to commodities, because everyone is in such a hurry to buy them and sell them. Marx even writes in Capital, in a really embittered and disappointed tone, that when a commodity undergoes what he calls commodity fetishism, "all its sensuous characteristics are extinguished".

    If "fetishising commodities" is interpreted in the vulgar way in which it usually is, then Marx's own position is, paradoxically, not a demand that people should stop fetishising commodities, but a wistful wish that they would start fetishising each other in the way they already fetishise their commodities. (Thus heroically defying the demand of capitalism that they only fetishise the commodities' exchange value, not the commodities themselves.)

    Remember the passage in Wittgenstein's lectures on aesthetics about a hypothetical drug that would give the same aesthetic experience as a particular work of art? That's a perfect illustration of commodity fetishism in Marx's sense. Commodity fetishism is the inability to understand the irreplaceable, warm and cuddly, sui generis value – of commodities, not of people! – where it conflicts with exchange value.

    I can recommend, in the strongest possible terms, "Marx's Coat" by Peter Stallybrass. It explains Marx's concept of commodity fetishism much better than I can, is also exceedingly relevant for this blog post as a whole, and is also a truly beautiful piece of writing. I translated it back in 2007 for the same journal issue where I published the embryo of my first book, but looking at it now, it's even better than I remembered. I should have raved to you about it long ago.

    1. I was using the term in the vulgar sense rather than trying to be true to Marx, but you've taught me something all the same. Thanks for the link too.

    2. What I was trying to teach you, I guess, was that there cannot be (too much of) commodity fetishism in the vulgar sense, because if there were, it would not prop capitalism up. Quite the contrary: it would threaten capitalism, for the reason Marx describes. So, the fact that there is capitalism is itself indirect proof that there is no commodity fetishism in the vulgar sense (or not too much of it at any rate). Which in turn would seem to imply that there's little need to whip up worries about it.

      I'm looking forward to seeing your thoughts on Stallybrass sometime. Not in the framework of your ten-minute talk, but of your moral philosophy more generally. I would have recommended him together with those other things by Catherine Wilson, G. A. Cohen etc., had I only remembered.

    3. I'll try to say something about Stallybrass as soon as I can.

      You might be right about there being no need to whip up worries about commodity fetishism in the vulgar sense. I say very little about it, but perhaps I shouldn't even mention it at all.

  3. Very thoughtfully put! I would be careful about the slave market example though since things like slavery mean that a free market for some is not a free market for others and the point of radical free marketers is that the most free market is the one that is absolutely free.

    A market for slaves, however free for those engaged in the traffic, subtracts freedom for some from the balance. Once you get into balancing, you no longer have free markets in that radical sense though this sense is arguably too radical for those espousing a belief in radically free markets today, perhaps because of this very contradiction.

    It might be argued that our opposition to slavery today is a moral position which only recently came into vogue and that in an earlier period it would have been easier to reconcile the existence of slaves, and markets for them, with this philosophy. However, it's not clear that any actual proponent of free markets at a philosophical level in Western history ever recognized slavery as acceptable while also supporting the idea of free markets. There just seems to be something inherently contradictory in the notions of slavery AND free markets. One might make a similar case for the traffic in body parts since the very idea seems to undermine the notion of unique personal freedom of every individual even if such transactions were carried on in a free market way.

    The only society I know of that came close to the degree of individual freedom radical free marketers admire is medieval Iceland between its founding about 860 AD and collapse as an independent state in the 12th century. That society consisted of small groups of subsistence farmers severely constrained by the limited resources of the land on which they'd settled. They developed a unique system of governance without an executive and with a national assembly (and local ones) to legislate and provide a court system for adjudication of disputes.

    Absent an executive, though, each successful disputant had to enforce his or her own court judgments which led to dependence on those more powerful in order to secure/obtain redress. The electoral system this resulted in was rather odd in that one didn't vote for office holders. Those with official positions at the assemblies for each of their districts bought or sold those positions and the landholding populace "voted" by aligning themselves with one or another of them. A chieftain thus had to act in ways that maximized and retained his supporters while yet using his office to advance his own interests.

    But as William Ian Miller shows in his book, Bloodtaking and Peacemaking, this kind of maximally free society, where each person of property could do as he liked as long as he didn't trample another's rights (assuming the other was of his class -- though slaves and landless men and women were entitled to certain well defined legal protections, too), was not conducive to the operation of free markets.

    The populace, Miller shows, tended to look askance at the exchange of goods or services with others of their own class (though perfectly willing to trade with outsiders for goods or money). Among themselves, they treated the exchange of goods and services as matters of honor and insisted on the practice of gift giving and receiving -- or of arbitrary seizure (theft) -- as the only honorable forms of business dealings. In this extremely "free" society, where no government existed to constrain or tax, free markets just did not actually develop, or at least they did not grow into a substantial part of the society's economy. In a sense this has some bearing on your point about the need for some rules and restraints, centrally established and enforced, without which the free markets we admire and revere in the U.S. might not prosper.

    1. However, it's not clear that any actual proponent of free markets at a philosophical level in Western history ever recognized slavery as acceptable while also supporting the idea of free markets.

      One of the classics of historical sociology is Thomas Haskell's somewhat controversial "Capitalism and the Origins of the Humanitarian Sensibility" (Part 1, Part 2). According to Haskell (very roughly speaking), the increasing marketisation of society made people aware in a qualitatively new way of their personal participation in the causal chains that ended up in slavery. (And also of the tension between the official self-image of capitalism and the status of the slaves: if man is a calculating, interest-maximising, truck-and-bartering animal to his very core, then why aren't slaves allowed to calculate and maximise the way we non-slaves are?)

      Much of this new awareness was morally neutral in itself, but Haskell suggests tha it meshed with independently held moral convictions in such a way as to gave rise to the antislavery movement. It was not so much a new sense of an obligation to help, but a new sense of an ability concretely to act on the sense of obligation. Haskell views the antislavery activists, in a sense, as the Peter Singers of their time; with only the difference that they managed to achieve critical mass, while Singer hasn't.

      The Icelandic example is very good. I have emphasised this before in some of my comments, but I will again emphasise it now. When the capitalist ethos arose in the eighteenth century, it was consciously offered and promoted as a morally superior replacement for a premodern, warlord-centric, blood-and-honour ethos. Which is just as alien and repellent to today's critics of the capitalist ethos as it was to the initial eighteenth-century promoters of same. Whatever one makes of further developments since, it's important to remember that the choice at the time was largely between these two alternatives and only these two. Later on we had such wondrous new improvements on the initial raw capitalism as the social democratic welfare state, but at the time it wasn't yet as much as a twinkle in anyone's eye.

    2. Thanks, Stuart. I'm not sure that I understand your point about slavery and free markets.

      things like slavery mean that a free market for some is not a free market for others

      Right, this is one of the points I want to make.

      the point of radical free marketers is that the most free market is the one that is absolutely free

      But what does it mean for a market to be absolutely free? If I am free to buy or sell slaves then the market is not absolutely free (the slaves are not free), but if I am not free to buy and sell slaves then I am not absolutely free. So "absolute freedom" doesn't seem possible/meaningful.

      A market for slaves, however free for those engaged in the traffic, subtracts freedom for some from the balance. Once you get into balancing, you no longer have free markets in that radical sense

      Right, but can such balancing be avoided? The radical sense of free markets seems to be no sense at all.

      I feel as though we agree, but sense that you meant to express some disagreement. Have I missed something?

    3. I think we agree on the big issues, Duncan. The point I was trying to make, perhaps clumsily, is that, if you offer the idea that slavery and slave markets could occur in a free market (and so introduce a contradiction within such a market), believers in free markets would likely demur because they would hold that if the former existed, the latter would not.

      So it can't be that allowing slavery could ever be countenanced in a free market system, as "free markets" are understood today -- in which case you can't really present this as a challenge to free markets. Radical free market exponents would likely say the existence of slavery and slave markets is simply incompatible with free markets, not a problem for them. If you have one, you can't have the other.

      It would not be a problem of simply balancing competing freedoms but of trying to have your cake and eat it, too (i.e., have free and unfree markets in the same system). It would be like saying 'well if you have a non-free market as a component of your free market the free market wouldn't work.' Well, of course it wouldn't because the very idea of a free market is then undermined. That is, you don't have a free market to protect any longer and I think your point was to present examples which show how unfettered freedom, as envisioned by supporters of radically free markets, leads to less freedom.

      Your other examples for the most part struck me as much better and more problematic challenges to the idea of free markets because others' freedoms aren't inherently undermined by their occurrence (even if, in practice, they may be). Thus one could have free markets producing contradictions like those you cite. But if you have slavery, you don't have a free market at all. The contradiction is not in the market, thus undermining the concept, but in the concept itself.

      Perhaps another way of saying this is that the freedom to advertise for your product, if you have the money to pay for it in the market place, does conflict in the way you cited with the freedom to be free of coercion (in this case of the subliminal sort) and so two freedoms seem to cancel each other out and undermine the idea of absolute freedom in the market place for everyone, which radical free marketeers purport to espouse. But if you have slavery and slave markets in the mix, you don't have a market place in which absolute freedom is realized or sought and so it's not an inherent contradiction of free markets.

  4. Put more simply:

    In the case of freedom to advertise vs. freedom from coercion, we have two freedoms which cancel one another out, thus introducing inherent contradictions to the attempt to realize a free market (which maximizes freedom of transactions throughout). Attempting to maintain such freedoms side by side creates a contradiction that seems to require rules of the road, introducing limitations that reduce the totality of freedom available in that marketplace. Hence an inherent contradiction in the implementation of freedom in the marketplace must be managed in some way.

    But in the case of freedom to buy and sell slaves vs. freedom to operate unfettered in the marketplace, the first freedom already limits the total amount of freedom in the market place, thereby fatally undermining the claim of that market to be free. The problem is different than in the first case where two freedoms cancel each other out because they work against one another (conflicting interests).

    In the case of slavery, freedom is already sacrificed at the get-go so the result cannot be a genuinely free market of the sort many free market partisans think is the only type worthy of the name.

    Does that seem clearer?

  5. Yes, this helps a lot. Thanks.

    What I think I don't get is not anything you're saying but the very idea of a free market, at least as you (I think accurately) portray it.

    It seems to me that if I am not free to enslave others then this is a limit on my freedom. It's a good limit, of course, but still a limit. And so a market that allows me to buy and sell what I like as long as it's not slaves is not an absolutely free market. But it is, according to certain advocates of free markets, because they understand "free market" to presuppose certain conditions or values which do not allow slavery.

    My questions then are: what other conditions might there be?, and what is the basis of these conditions? If the basis is something like morality then free markets will be good by definition, which then makes them seem not worth discussing. If the basis is the idea that everyone owns their own person, as as often said, then I would reject this as nonsense. The concept of ownership implies disposability. E.g., I own my van, therefore I may maintain it or not maintain it, sell it or trash it as I like. But to talk that way about a person, including myself, would be absurd. There are important analogies between property rights and autonomy (it's up to me whether I smoke or not, whether I get a tattoo or a piercing, whether I exercise, etc.) and we might say that this is because it's my body, but it's not my body in the way that my van is mine. My (living) body does not belong to me. It is me.

    Another possibility is that people are taken to have not ownership (which is alienable) but an inalienable right to their own persons. I don't know how this belief would be justified, though, and I don't know how far it extends. May I sell my hair without violating this inalienable right? Sell my organs? Prostitute myself? Where do we draw the line between slavery and non-slavery? If I get a five minute break from slavery every day am I then free? An hour's break? Eight hours? Or if there are rules about what can be done to slaves (no torture, perhaps) are they then no longer slaves?

    There seems to be a mysterious kind of ungrounded absolutism in the very idea of a free market, like an article of faith from a fictional religion. But I admit I'm confused and I might be overlooking something simple.

  6. I think you've put your finger on an important point. Many free market advocates are, essentially, "hard" libertarians. They see freedom as an absolute which may never be abridged no matter the implications in particular cases. This kind of absolutism spawns a certain kind of partisanship which carries a moral veneer and is very hard to argue against. But there's another kind of libertarianism and free market advocacy. One may favor maximum human liberty and freedom in market transactions to the extent it's achievable without conflicting with other important human needs, rights, etc. I think most free marketers are of this sort (or we would not have the kind of modified markets we actually do have) but, of course, the problem as you clearly show in your piece, is where to draw the lines. For the hard libertarian/free marketers, there really is no way of drawing them (though I think such people are more often "hard" in rhetoric than in the breach). For "soft" or "weak" libertarians/free marketers, on the other hand, there is plenty of room for negotiation so long as a common basis is maintained, i.e., that, all other things being equal, individual liberty and its consequent, free markets, are good things to be striven for.

    It's possible that the panel you'll be participating on will draw an inordinate share of "hard" believers (at least that's what I get from your initial description) in which case the nuances you want to highlight may fail to resonate with many. You'll be dealing with dogmatists, true believers, more than with those who are interested merely in maximizing what they take, on balance, to be a good thing. That's why I wanted to call your attention to the slave market-free market dichotomy. It's the kind of example that can muddy the waters, I think.

    Of course you're right that not being free to enslave others is a restriction on your freedom. But that's a different kind of challenge to the notion of a free market, I think, than the idea that two distinct cases of freedom can cancel each other out if not properly mediated by law/regulation. Once we include in the free market an unfree one, it seems to me that the idea of a free market is sullied, not by the opposition of conflicting freedoms but by the addition of non-freedom. Can a free market be partly unfree and yet still count as a free market? Yes, if all we mean by that is the kind of mediation you speak of. But maybe not if we mean including elements of slavery in it. The first hinges on the role of regulation as a limited restrictor of freedoms while the other on the explicit denial of freedom to some, thus excluding them from market participation.

    Do we "own" ourselves? As you rightly note, not in the same sense as we "own" vans, houses, businesses, commodities, etc. But I think the term is understandable in context and so not merely nonsense. After all, theoretically we could be owned by others or our body parts could! I once had a dog which I had a great affinity for and made the mistake of referring to him as "my" dog in front of my sister who is way more politically correct than I can ever hope (or want) to be. She castigated me for treating the dog as mere property by my choice of words since I claimed to have a great affection for him. I asked her if calling her "my" sister similarly reduced her to mere property and she agreed it didn't. I think we have a similar case with "owned" in the sense of who has the right to make our choices for us. To "own" ourselves is merely to claim that that right, and related rights, belong to (lies with?) us.

    I think the important point you've made in that piece is that there's no such thing as a perfectly free market in the radical sense espoused by many free market partisans ("hard" libertarians). There are always balances and for that we need rules of the road.

    1. I don't know who will be on the panel, but I believe they are economists. I don't know who will be in the audience either, but our student body is something like 85% Republican, and I expect students to make up the majority of the audience. Hard liners will probably in a minority though.

      After all, theoretically we could be owned by others or our body parts could!

      I'm not sure what to say about this. It's interesting. There could be laws allowing slavery, of course, or giving someone else legal control over parts of my body. But it seems to me that there would be something not just monstrous but also absurd about this. Laws like this would seem to require a kind of pretense in which we all acted as if someone else 'owned' people or parts of people, even though the grammar (forms of thought and behaviour, including attitude) of ownership and of people runs so deeply contrary to this idea that it is impossible really to believe that anyone can own a human being. My attitude toward another human being is not an attitude toward a commodity. This goes for everyone, not just me. And it applies even to people who treat others as commodities while they are doing so. Or so it seems to me. (This is a point about bad faith rather than natural law.)

      There are always balances and for that we need rules of the road.


  7. I find your remarks on the grammar of slavery and ownership of persons and body parts interesting. I have a different intuition though. It seems to me that ownership of persons is not just an odd construct but a genuine possibility given different contexts and assumptions. Going back to Iceland for a moment, the Icelanders carried with them the Norse concept of thralls, humans one could buy, sell or barter. It certainly was a form of slavery though the Norse culture imputed rights and responsibilities to thralls and even the right to own things themselves. What was owned about the thrall was the right to their labor and the right to dispose of it.

    In early Norse society there was also the idea that a thrall's life could be taken with impunity but, over time in Iceland, that became less and less relevant. Thralls, too, commanded weir guild (a blood price for their killing) albeit at a less substantial rate than for free persons including yeomen (the farmer class or bondi) and the more substantial farmers and chieftains.

    Obviously this was very different than the later European and American treatment of Africans (and American Indians) captured and sold into slavery where these people were treated like animals with no rights and entirely subject to the will of their owners. This sort of slavery was common in the "Old World" among different peoples and didn't even originate with the Europeans.

    Interestingly in Florida in the early 19th century escaped African slaves from the southern plantations to the north found sanctuary among the Seminole Indians (an offshoot of the Creek nation) but not necessarily freedom. Most continued to be considered the owned property of the Indians who harbored them, representing a status marker for their owners, but their condition was not as abject as on the white (and some Indian operated) plantations.

    The Seminole did not restrict their slaves' movements nor use them for hard labor. Slavery to the Seminole meant owing a kind of fealty to the tribe or tribal leaders which included having obligations to remit a portion of their crops each year, to join in the hunt or on the warpath when called on to do so (rather like our modern day conscription!) and to live in areas designated by the Seminole leaders. Otherwise they could come and go as they pleased, carry weapons, hunt and farm for their own board, marry as they pleased, appeal to tribal laws to secure their rights, etc. But they could also be bought, sold or traded by the tribe.

    The Seminole, having a communal agrarian culture based on subsistence did not have large fields or commercial crops to put their slaves to work on. Lacking a genuine commercial economy, they didn't have a need for the kind of labor the enslaved Africans typically performed on the plantations.

    My point is that slavery is not just one thing and it was not always as total and personally demeaning as we tend to think of it today. As such I don't see how the grammar of ownership fails to apply once "ownership" itself is understood in various ways.

    1. slavery is not just one thing

      That's a good point. Perhaps what I mean is that people are not things, so that if one owns a person this will not be the same as owning a thing. One way to try to make that point is to say that one cannot own a person. Another way is to say that ownership in the case of persons is not the same as ownership in the case of things. I think I'm OK with either version of the idea.

  8. http://video.pbs.org/video/2365150175/

  9. is there really such a thing as a "free" market or is this like "free" speech and are we going to have the questions of who/what gets regulated and how as part of our democratic processes or will we leave them to the market participants and is there a meaningful distinction to be drawn any more between private and public interests around markets? also what about "externalities" from air toxins to rising prices of corn in rural Mexico, your freedoms to buy and sell other peoples' rights to say breath and eat...pardon any repetition of earlier ideas didn't try to follow the whole thread.

    1. I see two issues with free speech: one is that people should not be free to say or print whatever they like (lies, secrets, harmful things (shouting "Fire!" ...), etc.) and the other is that some people have far more of a voice than others, which seems unjust (at least to some people). The same goes for free markets. People should not be able to buy and sell just anything, and the market is not equal in terms of either the starting point or the end product. The only way to level the playing field or to ensure that losers in the market do not die is to interfere with the market. And in order to be a market rather than a war zone there have to be regulations. So free markets are a bit of a myth.

      Perhaps we can still ask whether relatively free markets are a good thing, but that's too vague a question to be very worthwhile. I prefer to ask about what kinds of freedom we want, and the freedom to pollute, etc. would not be high on the list of desirable kinds of freedom.

    2. I think the really important point you're making is that freedom, including the freedom of markets, always requires rules and guidelines which inherently involve some curtailment of freedoms. So absolute free markets are a myth. Being that, there's no real point in arguing for them as if we could have such things for what is mythical is non-existent. The only real free markets are those which balance competing freedoms in ways that maximize freedoms in the marketplace while minimizing disenfranchisements which occur because of a diminishment of freedom. Achieving freedom in markets (and in society in general) is always going to be a balancing act of these kinds of concerns.

      Those who want to make the case for free markets in some absolute sense are simply confused because there's no such thing, they are just not realizable. Free market proponents must finally content themselves with arguing for maximally free markets which is always going to be an area in which disputes will arise and require resolution.

    3. swm, yeah it seems to be a sort of honorific that certain tribes run up the flagpole to rally around while shutting down any actual investigation/negotiation/conversation.
      d.r., that pbs show is tough medicine to swallow, not the reporting but the ugliness of the truths it shows, meanwhile the press will be full of leonardo dicaprio and the ills of hollywood...

    4. That said, I count myself a proponent of free markets. But I don't think one should make a fetish of them, or make it a matter of ideological allegiance. Nothing is perfectly free or perfectly anything, really. The best you can get is whatever maximizes that which we count as good and minimizes what isn't. Thus arguments for individual liberty and free markets must, finally, be about effects (which I think are better on balance than the absence of liberty in life and in markets). I think that's where Duncan is headed with this and it should resonate quite well with his audience once he makes this important distinction, i.e., that absolute freedom of the markets is as much a chimera as absolute anything else in the real world!

    5. Thanks. That all sounds right.

      Wall Street seems like a nest of snakes. It isn't somewhere you go to work because you want to do good in the world (unless you're one of the very few people who deliberately make as much money as they can in order to give as much as possible to charity). I'm sure some people there are more honest than others, but as an institution it seems like a bad thing, even if it's a necessary (or partly good) bad thing. Not surprising that some people there are completely dishonest.

  10. I'm not as down on Wall Street as you. It's a place where people do business like anywhere else and people who are doing business are generally looking to profit. There are honest and dishonest ways to do that, and more and less honest ways Sometimes the border lines are very vague and difficult to delineate.

    I don't expect those looking to make money to be purely altruistic. As it happens my interests don't push me to pursue money but other things (ideas usually which don't have the same payoff most of the time) but others have different interests and that's okay. For many it's the fun of the game, i.e., using their smarts to outwit the marketplace (which means to outwit other players). Unlike business transacted on Main Street or in Boardrooms, the capital markets are rather impersonal. One generally doesn't see the other player(s) one is competing against so it's kind of easy to think of them abstractly and so forget there are other people at the other end of one's transactions. Rules of the road often seem abstract to many of the players, too, because of this, and part of the fun of playing the game and beating the markets is beating such rules, too.

    Many years ago (when I was a callow youth!) I used to think Wall Street and the business of investing in capital markets were all about being parasites, that those in that sort of field don't produce anything, just move money around, trying to take more off the table than the next guy and so they lived off the sweat of the workers. But I have come to see that that was a superficial picture.

    The function of capital markets is to provide liquidity (facilitate the flow of capital, i.e., funds used for building businesses) and this enables the entire economy to operate more efficiently and grow, which is good for everyone in the sense that it fosters wealth and job creation. Wealth creation leads to more business activity which leads to more jobs and more jobs leads to better pay and better living standards and thus more wealth for everyone.

    Capital markets attract a certain type of person to them, of course, and some of us are uneasy with that sort of person, the ones who seem only interested in the game of making money. But all of life is about different kinds of games. Why should we think that the money-making sort is any less worthy than others?

    Some very smart, philosophically sophisticated people have gravitated to the markets and done quite well. I'm thinking of both Carl Icahn and George Soros, whose successes demonstrate that philosophy may not be a bad field for educating and sharpening minds! Only Soros seems to have pretensions of contributing to the field of philosophy though (a student of Carl Popper, he has authored several books, some of them dealing with the philosophy of markets) but both Soros and Icahn are icons(!) in the world of high finance. Hey, it's a game and they have used their mental acuity to learn to play it well.

    Many other very smart people have been in the investing game including the famous Columbia professor (and father of financial analysis) Benjamin Graham, not to mention Warren Buffett who is probably Graham's most famous and most successful pupil. Indeed, Buffett has long since supplanted the master!

    So markets should not be unfairly downgraded. They are a part of the economy, of our form of life, no less than educational institutions, government, businesses on Main Street, or religions and churches are. They play a critical role in the economy as well as providing a highly rewarding field of endeavor (and I don't mean this in merely monetary terms) for some of us.

  11. Yes, we probably need them. It seems a shame that so many of our brightest young people go into this line of work, though, and when I think back to when I was getting ready to leave college I don't remember the most altruistic or creative people wanting to work in the City of London. That's not to say that everyone who did was evil. "Nest of snakes" was probably too strong, but my impression is that among the reasonable people working on Wall Street there are a lot of bad ones too, There's so much money to be made there that it's bound to attract bad people, however many good ones it might also attract. And it does seem to have become dangerously unregulated. (Not that I know enough to be able to specify what regulations ought to be in place, of course.)

  12. But if you don't believe you know enough to say what regulations are missing or need to be added, how can you be sure regulations we don't already have are the answer? Isn't it more like a particular bias you have that's speaking here? What are the actual problems you think obtain within our current iteration of free markets that you'd like to see corrected? Is it just that some greedy, shallow and perhaps unscrupulous people gravitate to markets where cleverly playing the game can lead to big financial scores? If so, how would more regulations change that without reducing market efficiency and, thus, effectiveness in lubricating capital flows? And what sort of regulatory regime that we don't already have would do the trick?

  13. Isn't it more like a particular bias you have that's speaking here?

    Yes and No. It's a political issue, and I think everyone has biases when it comes to politics. Nor can anyone be an expert on everything. But I'm not sure how anyone could claim that there are no problems on Wall Street. The people I find most plausible when they offer responses to these problems are people like Elizabeth Warren.

  14. The urge to do something is always strong. But not everything is fixable by regulation. Human nature plays a big part and the acquisitive instinct is as powerful on the government side as in the private sphere. We can no more regulate greed or unscrupulousness out of markets than we can out of government and I think this is an empirical fact we learn through history. Besides, things tend to move in cycles, the pendulum swinging back and forth. We're now in a time where people think government can do more for them, should do more. And so government is empowered and bureaucracy waxes. It will wane, too. I think Warren's approach a marked overreach. But only time will tell if it takes hold before the pendulum swings back!

  15. We can't get rid of greed and unscrupulousness through regulation, but we can make at least some unscrupulous behavior illegal. It seems to me that history has shown that deregulation has gone too far, but of course if there is to be more regulation it needs to be of the right kind, and I'm not qualified to say exactly what is needed or likely to work.

  16. I don't agree that deregulation has gone too far. The problem we had in 2008-2009 was a long time coming and but wasn't due to deregulation. It was due, in large part, to government intervention in the markets (the push to reduce the barriers to home ownership which led to lessening of lending standards on a massive scale with many institutions under political pressure to lessen the standards, being exhibit A).

    At the same time computer technology advanced to such a degree that financial institutions gained the ability to carve up aftermarket mortgages into multiple tranches reflecting higher and lower yields and spread these around so broadly that the players, reaching for yield in a low yield environment due to a loose Federal reserve, took inordinate risk by buying the high yielding paper that resulted from the development of investment instruments populated by high yield (because of high risk) elements from the mortgage aftermarket.

    The low yield general market, reflecting loose Fed policy which prompted the real estate sector to be bid up, produced an historically large component of bad risk mortgages (traceable to the political policy to reduce restrictions to encourage home ownership), further fueled the frenzy as people pushed the price of real estate too high thanks to easy interest terms (cheap money) and an advent of buyers who, under more restrictive regimes in the past, would not have qualified for mortgages or for homes larger than they could actually afford.

    The bad paper got spread around thanks to new computer capabilities. All the experts thought there was so much diversification of the shaky loans that it wouldn't matter if a few defaulted. But the whole thing went sour when people discovered the bad loans were: 1) had become a much more significant part of the total mortgage loan portfolio than anyone had dreamed; and 2) computers had done such a thorough job of breaking up the loan tranches that no one knew were the bad debt was!

    With lots of high yield paper on their books (their job's to invest to maximize returns), major institutions no longer knew what they had and everyone began to be afraid of everyone else's paper. That meant they couldn't turn their assets into cash as needed and the system caught fire. When everyone's asset portfolio is suspect no one's willing to trade with anyone and the system seizes up.

    Because the system works on debt and credit you must have the ability to transact. When you don't, those companies with shakier asset portfolio (even if only perceived) who were most leveraged (obligated over and above what the perceived worth of their assets) faced bankruptcy. A string of bankruptcies in the institutions which undergird the economy as a whole meant everything stopped and valuations wilt. Those companies with the largest debt relative to the perceived bad quality of their assets failed, jeopardizing the entire system.

    Government interference in the real estate markets combined with new computer technology and the fundamental forces which drive markets combined to undermine what had, until then, functioned as a powerful engine of global economic growth. Soros argued that this was all made worse by the fact that the aftermarket for mortgages, enabled by government entities like Freddie and Fannie, put too great a divide between the mortgage originator and the mortgage holder who eventually ended up holding the mortgage. If the originator only cares about the fees from writing the mortgage and the return for selling it, the eventual holder, is too cut off from the origination and so lending to less than creditworthy prospects increases. But regulation to prevent that runs up against regulatory demands for increased housing lending to enlarge the ownership base!

    1. Continuing the foregoing, I guess the point of my lengthy comment was to try to begin answering your statement that:

      "We can't get rid of greed and unscrupulousness through regulation, but we can make at least some unscrupulous behavior illegal."

      Given the picture of a complex financial system knocked out of balance by policy initiatives qua regulatory regimens and the decision by the Greenspan and, later, Bernanke Fed to maintain what were then historically low interest rates for an historically unheard of amount of time, what would we regulate away? And how could we do it?

      Would we want to regulate the Fed? But the Fed IS a regulator whose job is to implement regulations indirectly via altering the balance of money in the system. Regulate Congress which pressed for policies and regulations to expand credit availability to people who, previously, would not have had it on the grounds that it would boost home ownership as a good thing in itself?

      The overly easy credit of the Fed combined with Congressionally driven polices of Fannie Mae and Freddie Mac to loosen the credit markets for home buyers produced a classic real estate bubble (like the historic Tulip mania in Holland or the South Sea Company bonds in England) which drew in increasingly greedy (sometimes just anxious) participants searching for homes in an an ever rising market or capital return in a low interest rate environment in the financial markets.

      People bidded up home prices, producing too many unsound mortgages, while Wall Street's technical impressarios dreamed up increasingly innovative ways, using computers, to build new kinds of financial instruments which could be traded and thus command high prices (because of the high yield from junk debt that had been liberally salted into the paper in question), thereby earning the innovative financial engineers and companies which traded them large profits to make up for the lack of yield available from more familiar debt instruments.

      Because computer technology did its job so well, the "junk" debt was so thoroughly homogenized into the mix that the experts presumed the risk was diversified away. But, in fact, the reverse happened since the risk was everywhere but not easily locatable, and so isolatable, thereby poisoning the overall quality of the portfolios in which it was buried.

      Should we regulate against such computer programming innovations? How would we differentiate between those which would have good effects and those which wouldn't? The experts supposed that the homogenization effect would be a good thing on balance, not the bad thing it turned out to be!

      There are always those on both sides of an issue as there were in this case, experts decrying the widespread reduction in mortgage quality taking place (many were denounced as racists or short sighted bankers) as well as denouncing the slicing and dicing of debt paper which modern computer programming made possible (which the proponents thought a great boon to the efficiency of markets at the time).

      After the fact, the critics looked prescient. But beforehand there were just as many smart folks saying the opposite. And for years the economy and markets continued to do well, making the pollyanna analysts appear right. If you can't know in advance who's right (there are no simple IQ tests to determine which "smart" guy is really smarter in cases like this), then how can you successfully legislate or regulate against the adverse consequences of one of the sides being wrong?

      In the 2008-2009 case most of the officially "smart" folks (like Greenspan who had gotten it right for years) got it wrong! As they say on Wall Street, "past performance is no guarantee of future returns." The point is that we can't predict results in such complex systems (even if, after the fact, we can analyze what went wrong). If we can't, then isn't it hubris to think we can regulate our way to safety?

    2. Thanks very much! Such a long comment deserves a long response, but the reason you've provided the comment is because of my confessions of ignorance, so I can only thank you for the information. A government policy of increased home ownership sounds like the policy of increased college attendance, or increased numbers of STEM majors. These things don't seem to work, at least not when done in the US.

    3. It occurred to me after I wrote it that there is at least one area where deregulation, a concern of yours, played a part in the 2008-2009 financial crash. Some decades earlier Congress eliminated Glass-Steagal which had put up a firewall between bankers (responsible for holding and managing savings and lending money) and investment firms (responsible for managing investments and making them, a higher risk activity). After the Great Depression the government decided these two activities should be kept separate and so instituted regulations preventing the same entities from engaging in both types of activities or one such entity owning another of the other type. In the 1990's Congress did away with Glass-Steagal which allowed a mixing of banked and invested funds. Since the former are inherently more conservative and risk averse while the latter are not, the dropping of that regulatory restriction allowed the dangerous mixing of funds of these two types. The bank/investment houses, seeking higher returns in a low interest environment were enabled by the end of this restriction to shift from traditional but now exceedingly low-return, safe securities to the more adventurous new-fangled stuff produced by the financial impressarios via computational technology. When these new kind of financial instruments foundered because of the contamination by so-called "toxic debt" they were caught holding the bag. Certainly one can argue that the deregulation that did away with Glass-Steagal was, if not the cause of the disaster (for years it actually helped build wealth), a significant contributant to the excessive vulnerability of many of the linchpin institutions whose failures produced the general collapse.

      I know this is probably way more than you need or are interested in but I want to be clear here that I am not against any and all regulation, only excessive reliance on it to solve all problems, particularly in the financial world and the economy at large which is the focus of your upcoming presentation. Who knows what your fellow panelists or your audience may throw at you. It can't hurt to have at least a passing familiarity with some of the history.

      Anyway, in general I would say that the world in general and economies, in particular, are too complex for us to hope to manage them perfectly. While there is obviously a need to understand the problems that face us and to address them where we can, I think we humans tend to be way too confident in our ability to manipulate events through intensive intervention. Predicting the future is hard enough. It's better not to assume that any of us can prescribe all the necessary rules that will make it turn out as we want it to.

  17. Thanks again.

    Yes, it was largely getting rid of Glass-Steagal that I had in mind when I said there seems to have been too much deregulation. I don't think we should have lots of regulation in markets generally, but in this case it looks like we don't have enough.

    Believe it or nor I have read books and articles about this, and watched movies (documentary and otherwise), but the details rarely stick with me. Your explanations have been admirably lucid and helpful.

    1. The problem I see is that people like Elizabeth Warren want to go much farther. They seem to have an innate bias against free markets.

      The cancellation of Glass-Steagal, which I think we can agree was a dumb idea since that particular restriction tends to make economies, and therefore markets, safer, is not to strike a blow for permitting "unscrupulous and illegal behavior" which was your concern. What Glass-Steagal did was put obstacles in place to bar the introduction of higher risk to entities operating in areas that are critical to a stable and strong economy where only a lower level of risk makes sense.

      Like you, and like most folks, I want to curtail "illegal and unscrupulous" behavior (say like Madoff's pyramid investment scheme which took millions from investors and used their money to pay new investors, as if it were a return on their investments, instead of investing their money as advertised and in accord with the purpose for which Madoff was entrusted with it). Surely no one would argue that such fraudulent schemes should be permitted as part of a free market! It would be somewhat (though not exactly) like saying slave markets could be part of free markets.

      Would a perfectly free market be one that is so unregulated as to permit anyone to bilk anyone else if he or she could get away with it? That is less a "market" than a transactional warzone.

      I think we'd both want to say that that wouldn't be a free market in any legitimate sense at all even if, in another more radical sense, it's free because it represents an entirely anarchic market on a par with the natural world where the strong or the shrewd can succeed by preying on the weak or the dumb (or at least the less sophisticated).

      That was also the failure of medieval Iceland, I think, because the absence of an enforcement mechanism in the "state," undermined efforts to mediate disputes by reliance on laws. While the Icelandic Republic had laws, they only really worked for the powerful, people rich enough or strong enough to be their own enforcers (with the assent of the larger community).

  18. Yes, a transactional warzone is what we want to avoid. Getting and enforcing the right regulations to allow a functioning market would be nice.

  19. Actually I should have written that Madoff's scheme took millions from new investors to pay OLD investors as if it was a return on their investment. My mistake! Yes, I think we are on very similar pages here except for your apparent inclination toward an Elizabeth Warren approach to ensuring "a functioning market". I think her approach impedes freedom in markets too much because she is less interested in free markets than in controlling some players (i.e., the big ones for the benefit of the small ones, that is, consumers). We can support reasonable consumer protections, I think, without supporting those that restrict markets in ways that curtail freedom (which necessarily should be available to large players as well as small ones). Once again the problem, as it usually is, is to strike a good balance. I think Warren's approach goes too far but obviously some restrictions ARE necessary for markets to be anything more than a dog eat dog free-for-all which is ultimately self-defeating (and self-destructive).

  20. I assumed that was what you meant. I'll try approaching Warren's ideas with more skepticism in future and see whether they still sound right.

  21. Duncan,

    You talk of negative freedom and connect it with freedom from taxes, and you point out that when people talk of free market, this is usually what they mean. This is really important. And i really like that you remind people that there are other kinds and meanings of freedom. You make people think about what THEY say.

    Sometimes I get the impression that what the people “really” mean by free market is ‘free from morality’—as if they want to say: “Don’t interrupt us with all those issues, don’t force us to think about the implications of what we are doing, and the value of what we are doing. Let us focus on the bottom profit line.” To the extent that this is true, this is obviously—by definition—a bad thing.

    Good luck tomorrow. I hope I will be able to make it to the discussion.