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Does Money Taint Everything?

May 8, 2008

Tags Free MarketsEntrepreneurshipPhilosophy and Methodology

Let's pull this sentence out of the civic pieties of our time and see what's wrong with it: "We should all volunteer our time in charitable causes and give back to the community in a labor of love."

We can't argue with the instruction here, or the sentiment behind it. There is nothing wrong with giving and sacrifice. My argument is with the choice of language. It contains a word and three phrases the common usage of which can be highly misleading.

Voluntary

This word "volunteer" is used to describe a person who does things in service of others, and we all know the intent of the term. We speak of volunteering all the time. The United States has what is called the voluntary sector, which is supposed to refer mostly to nonprofit organizations that elicit nonremunerative employment. But think of the literal meaning of voluntary or volition: the act of making a conscious and noncoerced choice to do something. The opposite is to be forced to do something. So prisoners are forced to sleep on mats; people in the army are forced to march here and there. Or you and I can volunteer to sleep on a mat or to march here and there.

It's true that people serving soup to the poor are not forced to be there. But in what sense does introducing wages or profit or money generally change the nature of choice? Are the paid administrators of homeless shelters any less volunteers? Not at all. They are making a conscious choice to serve the poor, just as the unpaid "volunteers" are making a conscious choice to be there. They are all free to do something else.

Let's expand this to the for-profit sector. No one who works in retail or software or any other industry in a free economy is being forced to do anything. They are all there by choice, a result of having evaluated a variety of options and choosing one option over every other possible option (the opportunity foregone here is what might be called the "cost" of that choice).

The doctor who administers medicine, the lawyer who writes a legal brief, the salesman who sells you a suit, the clerk who rings up the total — these are all volunteers. The investment banker is a volunteer. The introduction of money into exchanges (and all actions, charitable or profitable, are exchanges) doesn't change anything about the nature of the action. It doesn't switch it from voluntary to forced.

This is not merely a terminological dispute. There is an ideological import to the use of the term "voluntary" to describe nonremunerative activities. It evidences a bias against the cash economy, as if monetary exchange and profit is a tainted motive, whereas the removal of money makes an action pure and beyond reproach. This is completely wrong.

It's time we demystify the role of money in society. It serves a useful purpose. Under barter, goods and services are exchanged directly for each other. That works for primitive economies, but once complexity appears, barter has its limits. You can't exchange a cow for an egg or an auto plant for a hat, because these goods aren't divisible. You need money to serve as a proxy for goods and services to exchange later.

Money also serves the vital function of permitting economic calculation, so you can know if exchanges are profitable (nonwasteful and productive) or yield losses (wasteful and nonproductive). Thus is the institution of money not inherently corrupt or tainted; it is highly useful and necessary, and arises merely in response to the desire of people to cooperate.

Give Back to the Community

"Give back to the community" is a phrase used to implore people who have been successful in business to donate their time, talent, and treasure to some cause besides their business. There is no arguing with the injunction to serve others, but there is a problem with the phrase "give back." It implies that people with money have taken something from others. But presuming that the businessperson has been successful through enterprise, their wealth comes not from taking but from cooperating with willing buyers.

Let's see how this works: When you need milk in a hurry, you dash to the convenience store and pick up a carton. You put it on the counter and the clerk says what you owe. At that moment, there is a calculation made. The clerk determines that he (or the person who employs him) values $2.50 more than the milk. You, on the other hand, determined that you value the milk more than the $2.50 you have been asked to pay for it. You exchange, and voila — you are both better off as a result.

You have done a service to the convenience store, and the convenience store has done a service for you. The store is richer in money, and you are richer in goods. What do the two parties to the exchange owe each other afterwards? Nothing. What does justice demand? That they keep the bargain, and nothing else. The milk can't sour. The check can't bounce. Nothing else is required or asked. Now, if the store clerk is sick and needs help, or the customer is poor and needs shelter, that's another matter. But what is asked in this case is completely unconnected from the results of the economic exchange.

Expand this logic more broadly, and we can see that it applies to all people who make money, even vast amounts. Even the richest person, provided the riches comes from mutually beneficial exchange, does not need to give anything "back" to the community, because this person took nothing out of the community. Indeed, the reverse is true: Enterprises give to the community. Their owners take huge risks, and front the money for investment, precisely with the goal of serving others. Their riches are signs that they have achieved their aims.

Labor of Love

The phrase "labor of love" is used as a kind of euphemism for doing work without pay. It is an apt phrase if it means only that the person is so wild for his work that he is willing to do it even when there is no remuneration. But the phrase is also laden with the implication that if you are getting paid, it is not a labor of love.

Surely the most successful employees are those who love their work. That they receive salaries or wages in return for services offered only serves as a sign and a symbol of the value that the business owner attaches to that work. They are cooperating to their mutual satisfaction, which one might say is a form of showing love. In that way, all labor in a free market is a labor of love. Both parties are giving and receiving.

Another unfortunate way to use this phrase is to imply that if you refuse to work without wages, you are not showing love. It is an undeniable fact that the use of time means the use of the most valuable resource we own. If a worker gives up a day that he could otherwise use earning wages, he might be forgoing a few hundred dollars of income. This lost income is the cost; it is what he pays in order to pursue a "labor of love." So he is not merely foregoing income: there is a sense in which he is contributing what otherwise would have been his income to the cause he is serving instead. What if that money was meant to buy groceries or medicine for his children? In this case, doing a "labor of love" instead would be a cruel act.

It is even true of the wealthy businessperson. What if staying at work — even earning money — is the best way to serve the community? What if that person is a pharmacist or a doctor or a website worker who is helping to provide people vital information about religion or health or some other vital issue? Labor for wages is just as much a contribution to society as working somewhere else for free. What if a person is responsible for the wellbeing of thousands of employees? Is it not an act of love to stay on the job?

There is no point in claiming that love is involved only when donating your time at no pay. You can pay or be paid and still show love.

Again, this is not just about terminology. It is about the assumptions many people bring to the subject of economics as it affects ethics. People often take it for granted that the "cash nexus" is incompatible with clean living. We gain a clearer understanding of this issue by seeing that money and finance are merely instrumental institutions that serve the cause of human cooperation and human betterment.

Yes, we should volunteer in charitable causes, and give to the community, in labors of love. That may not mean serving soup in a homeless shelter. Indeed, it might mean pulling down a large salary as an investment banker for commercial real estate ventures. Once we understand that the market economy is not incompatible with social justice, but is rather a form in which authentic social justice is realized in the real world, we will be more careful with the language we use.


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