Friday Philosophy

Capitalism Facilitates Mutual Aid. It Can’t Be Dismissed as “Selfish Materialism”

Many people criticize the free market as “materialistic”; it reduces everything to monetary values. Murray Rothbard analyzes this charge against the free market, and in this week’s column, I’d like to consider his distinct perspective. He first sets the stage:

One of the most common charges levelled against the free market (even by many of its friends) is that it reflects and encourages unbridled “selfish materialism” Even if the free market—unhampered capitalism—best furthers man’s “material” ends, critics argue, it distracts man from higher ideals. It leads man away from spiritual or intellectual values and atrophies any spirit of altruism.

Rothbard answers this criticism in a striking way. He says that money is just a means, not an end. People seek money to get whatever they want, but the ends people have need not be “selfish” or “materialistic.” It’s up to each person to decide that for himself. He says,

In the first place, there is no such thing as an “economic end.” Economy is simply a process of applying means to whatever ends a person may adopt. An individual can aim at any ends he pleases, “selfish” or “altruistic.” Other psychic factors being equal, it is to everyone’s self-interest to maximize his monetary income on the market. But this maximum income can then be used for “selfish” or for “altruistic” ends. Which ends people pursue is of no concern to the praxeologist. A successful businessman can use his money to buy a yacht or to build a home for destitute orphans. The choice rests with him. But the point is that whichever goal he pursues, he must first earn the money before he can attain the goal.

An objection that might occur to you is that some people take it as their goal to make as much money as they can. They don’t want the money to buy other things: they just want more and more money. But Rothbard could answer this by saying that this is just another goal. The free market doesn’t tell people to pursue it.

Rothbard next turns to what I regard as his best point. Suppose you think that people ought to devote themselves totally to serving others: they ought to be complete altruists. Rothbard, I hasten to add, doesn’t hold this view. But, he says, even if you do hold this position, you should still support the market, People who make money in the free market are those who best satisfy consumers. If you want to help others, then, you should try to make as much money as you can. The contemporary “effective altruism” movement has accepted this argument, or a variant of it, although I doubt they got it from Rothbard. People in this movement think that you should try to get a high-paying job so that you can donate what you make to others.

Rothbard explains his argument in this way:

Whichever moral philosophy we adopt—whether altruism or egoism—we cannot criticize the pursuit of monetary income on the market. If we hold an egoistic social ethic, then obviously we can only applaud the maximization of monetary income, or of a mixture of monetary and other psychic income, on the market. There is no problem here. However, even if we adopt an altruistic ethic, we must applaud maximization of monetary income just as fervently. For market earnings are a social index of one’s services to others, at least in the sense that any services are exchangeable. The greater a man’s income, the greater has been his service to others. Indeed, it should be far easier for the altruist to applaud the maximization of a man’s monetary income than that of his psychic income when this is in conflict with the former goal. Thus, the consistent altruist must condemn the refusal of a man to work at a job paying high wages and his preference for a lower-paying job somewhere else. This man, whatever his reason, is defying the signaled wishes of the consumers, his fellows in society.

If, then, a coal miner shifts to a more pleasant, but lower-paying, job as a grocery clerk, the consistent altruist must castigate him for depriving his fellowman of needed benefits. For the consistent altruist must face the fact that monetary income on the market reflects services to others, whereas psychic income is a purely personal, or “selfish,” gain.

As I mentioned, Rothbard isn’t adopting altruistic ethics. To the contrary, he rejects them. He points out that a consistent altruist would have to reject the pursuit of leisure. If you rest from work, you are depriving others of time you could spend helping them. Rothbard uses this point to criticize W.H. Hutt’s version of consumer sovereignty, but the point applies also to contemporary altruists such as Peter Singer.

Rothbard says,

This analysis applies directly to the pursuit of leisure. Leisure, as we have seen, is a basic consumers’ good for mankind. Yet the consistent altruist would have to deny each worker any leisure at all—or, at least, deny every hour of leisure beyond what is strictly necessary to maintain his output. For every hour spent in leisure reduces the time a man can spend serving his fellows.

The consistent advocates of “consumers’ sovereignty” would have to favor enslaving the idler or the man who prefers following his own pursuits to serving the consumer. Rather than scorn pursuit of monetary gain, the consistent altruist should praise the pursuit of money on the market and condemn any conflicting nonmonetary goals a producer may have—whether it be dislike for certain work, enthusiasm for work that pays less, or a desire for leisure. Altruists who criticize monetary aims on the market, therefore, are wrong on their own terms.

Rothbard makes another brilliant point. He says that the free market deals with goods that are exchangeable but that these don’t have to be material goods. But if people keep trying to get exchangeable goods, the marginal utility of such goods falls. This means that the marginal utility of nonexchangeable goods increases. In other words, the development of the market economy makes the pursuit of these goods more valuable. The free market doesn’t deter people from pursuing nonexchangeable goods but, in time, makes it more likely that people will seek them.

He says,

The charge of “materialism” is also fallacious. The market deals, not necessarily in “material” goods, but in exchangeable goods. It is true that all “material” goods are exchangeable (except for human beings themselves), but there are also many nonmaterial goods exchanged on the market. A man may spend his money on attending a concert or hiring a lawyer, for example, as well as on food or automobiles. There is absolutely no ground for saying that the market economy fosters either material or immaterial goods; it simply leaves every man free to choose his own pattern of spending … an advancing market economy satisfies more and more of people’s desires for exchangeable goods. As a result, the marginal utility of exchangeable goods tends to decline over time, while the marginal utility of nonexchangeable goods increases. In short, the greater satisfaction of “exchangeable” values confers a much greater marginal significance on the “nonexchangeable” values. Rather than foster “material” values, then, advancing capitalism does just the opposite.

In his analysis, Rothbard applies a tactic he frequently uses, to devastating effect. He takes an argument he opposes and shows it leads to the opposite conclusion its proponents draw from it.

Note: The views expressed on are not necessarily those of the Mises Institute.
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