Are markets really morally free zones?

25 Oct, 2013 at 10:40 | Posted in Economics, Politics & Society | 2 Comments

negotiation1When reading walked-out Harvard economist and George Bush advisor  Greg Mankiw’s articles on the “just desert” of the one percent, one gets a strong feeling that Mankiw is really trying to argue that a market economy is some kind of morally free zone where, if left undisturbed, people get what they “deserve.”

Where does this view come from? Many neoclassical economists have a more or less Panglossian view on unfettered markets, but maybe Mankiw has also read neoliberal philosophers like Robert Nozick or David Gauthier. The latter writes in his Morals by Agreement:

The rich man may feast on caviar and champagne, while the poor woman starves at his gate. And she may not even take the crumbs from his table, if that would deprive him of his pleasure in feeding them to his birds.

Mankiw has stubbornly refused to nudge on his neoliberal stance on this issue, but let’s see what a true liberal – John Maynard Keynes – has to say on the issue in his General Theory (1936):

The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes … I believe that there is social and psychological justification for significant inequalities of income and wealth, but not for such large disparities as exist to-day.

A society where we allow the inequality of incomes and wealth to increase without bounds, sooner or later implodes. The cement that keeps us together erodes and in the end we are only left with people dipped in the ice cold water of egoism and greed.

2 Comments

  1. Not to talk about the grandfather himself, Adam Smith, who defended a liberal economy on the ground that it would lead to morally just outcomes. If it didn’t – to the hell with liberalism, apparently.

  2. PS. In any case, the theorists mentioned above seem to think that their models are more important than real people. It doesn’t matter if the world goes to pieces, provided that their sacred models survive. Religion, anybody?


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