By JOHN YOUNG
I believe in complete economic freedom. An extreme position, it will be said, and one not only against Catholic social teaching, but also against common sense. It implies, surely, that I have a heartless disregard for the vulnerable, or at least a naive trust in capitalism — the unrestrained capitalism that Pope Francis, in harmony with his Predecessors, has condemned.
Let us approach the question by asking why it is said that freedom of market forces has to be restrained. The fundamental argument is that without such restraint the weak will suffer while the powerful will become ever more powerful. Ruthless monopolies will dominate the market, forcing smaller firms out of business, and will then raise their prices.
Wages, especially those of the less skilled workers, will be forced down, for the workers will lack the muscle to oppose the big firms. Powerful interests will use their clout against governments that oppose them.
But what are these objections implying? They are implying that lack of economic freedom is a bad thing. The small firms, the poorer workers, the consumers are being denied freedom, in this scenario.
So in saying that complete economic freedom is the ideal to be aimed at is to imply that the abuses noted above are a denial of freedom. The abuses arise from a lack of freedom for some, together with full freedom for others. But that is not a free economy: It is a lopsided economy, oppressing some of the participants.
To illustrate the confusion of terms, take this statement of that extreme crusader for alleged freedom, Ayn Rand: “During the nineteenth century the world came close to economic freedom, for the first and only time in history” (Rand: For the New Intellectual, New York, Signet Books, 1963, p. 25).
In the 19th century that she praises for its freedom the worker had little power, especially in the earlier part of the century, being often poorly educated, not allowed to vote (which allowed the rich to dominate in political decision-making), there were laws against trade unions, poverty prevented the worker from striking for better conditions while the employers could starve him into submission.
In his great encyclical Rerum Novarum Pope Leo XIII deplored the poverty into which the workers had been forced. “Working men have been surrendered, isolated and helpless, to the hard-heartedness of employers and the greed of unchecked competition. The mischief has been increased by rapacious usury” (n. 3).
While not going as far as Ayn Rand, many advocates of economic freedom fail to fully appreciate the strength of vested interests and the extent to which the powerful can exploit the vulnerable. These advocates of freedom tend to think that if only the government would stop interfering with the market things would run smoothly and all sections of society would benefit.
But that is unrealistic. One vital requirement is a strong moral framework, with an appreciation of the natural moral law and of the dignity of each person. We are a long way from there. But that doesn’t affect my contention that full freedom is the thing to aim for.
What of the objection that the freedom I am advocating would mean, if we are to be consistent, that people must be left free to promote pornography or to sell drugs?
That is in no way implied, anymore than it would mean allowing people to commit robberies. I am not suggesting that anything and everything should be allowed: I am saying that legitimate economic activities should be free (in the sense outlined above).
The price system would then coordinate economic activities, distributing benefits equitably. Even in our present imperfectly functioning economies chaos is avoided through the price system. Prices transmit information, provide incentives and distribute incomes.
Prices transmit information. When more of a certain commodity is wanted, the price tends to increase; when less is wanted, it tends to decrease. The price is a signal to producers.
Prices provide incentives. Producers need not only information but incentives. Higher prices are an incentive to produce more; lower prices lessen the incentive to produce.
Prices distribute incomes. The price one receives is one’s income, whether as a wage or a return on investment. In a truly free market people whose return is too low will look elsewhere — whether for another job or another investment; while consumers will shop elsewhere when a firm charges too much.
But to the extent that the market is interfered with, as by government regulation of prices or by powerful pressure groups, this marvelous price system is distorted, resulting in scarcities or overproduction, and an unjust distribution of rewards.
I maintain that the free price system is the natural way for the economy to function, and therefore that interference with it by special interests or by government intervention is a kind of violence (taking violence in the sense of something against nature). However, that doesn’t mean there should never be government intervention or pressure from special interests, such as trade unions defending the rights of workers.
Now it may seem I have just contradicted myself. Having argued for complete freedom I have just said that intervention may sometimes be justified. How can that be?
I have just defined violence as being something against nature. To illustrate: In the physical order, if a surgeon cuts me open and removes my appendix, that is a violent act. But if the appendix is about to burst, with the probable result that I will die, the operation should be done. The point is that I am faced with violence in either case, with no escape. So I should choose the lesser violence of the surgery so as to avoid the greater violence that would result from a burst appendix.
Let us apply this to the economic order. We are living in an imperfect world where the perfect freedom which I defend can’t be achieved without a great deal of restructuring. So relative violence against the natural order is sometimes necessary to avoid greater violence against that natural order.
But to take the illustration further: Just as the aim should be to have a healthy body, so that the violence of surgery won’t be needed, so in the social order the aim should be to achieve a healthy society, including the economic order. That in turn means understanding the God-given laws that should guide economic life.
Central to that understanding, I argue, is to see the place a truly free market has in achieving a healthy economy. A free market, in the sense explained, is the ideal to be aimed for.
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