The Free Market 17, no. 7 (July 1999)
Free markets may be productive, a common complaint runs, but they lead to unjust results. For instance, writing in The New Republic (March 29, 1999) Cass R. Sunstein of the University of Chicago School of Law closes a book review this way:
A familiar problem with unrestricted free markets is that they can produce pervasive injustice. A less familiar problem is that free markets often trap people, including the well-off, into wasteful and continuing struggles for better position. It is in the very nature of the problem that even reasonable people may be unable to extricate themselves from those struggles without collective help. In the face of struggles of this kind, free markets should not be identified with freedom, properly understood.
This is indeed a pregnant remark. It is worth looking at closely because it is the basis for much antagonism toward not only the free market but America (which rhetorically, at least, stands for the free market).
First of all, the "pervasive injustice" of the free market has nothing at all to do with injustice as that is ordinarily understood. Injustice involves the violation of individual rights. Thus if you kill, assault, kidnap, rape, enslave, or steal from someone, burglarize someone's home or business and trespass onto someone's property (including plagiarizing someone's work), you are committing an injustice.
All of this is prohibited and severely punished in a free-market society. It is precisely to prevent pervasive injustice of this sort that the state is restricted from intervening in the workings of the society. Sunstein is not ignorant of this. So why is he saying that the free market can produce injustice? Because he uses the term idiosyncratically, in a way it is used in academic political theory since the publication of John Rawls's A Theory of Justice in 1971 where "injustice" became transformed into "unfairness."
Rawls's famous dictum — "justice is fairness" — guides the thinking of most academicians these days. And that means that the complaint is not that the free market does anything really unjust, only that it fails to provide everyone with what is fair — that is, what erudite academics believe would be fair, if only the world could be managed fairly. And what would that come to? According to Rawls a fair society is one in which no one has more than another, except where this would help produce more for everyone.
Even in line with Rawls's view, the free market is much more just than collectivist economic orders. This is because while not everyone has the same level of wealth, the discrepancies do tend to improve the lot of everyone. So by Rawls's own standards, the free market, though unfair, can make people much better off than alternative and fairer systems.
But fairness is not the right standard of justice. The world, after all, is inherently unfair — and, thus, unjust — in Rawls's and Sunstein's sense of that idea: Some are born more beautiful, talented, better located, in nicer times, etc., than are others. This is what is dead wrong with egalitarianism: nature itself is not fair in their sense of the term.
Arguably, of course, there is a kind of "equality" in nature, at least most of the time: we are all faced with our lives to run, however we begin it, and how we do this will leave its mark on us for better or for worse. The beauties of the world can make a great mess of their lives, as can the rich and talented, as well as be quite successful or just manage in a mediocre fashion.
But even more important is the fact that any collective help to eliminate unfairness introduces the most dangerous form of unfairness, namely, giving some people power over others. How do you equalize things but with equalizers? And they must be armed, otherwise some will not yield to the effort to equalize. That makes these equalizers most unequal--armed regimentors.
As to the point about how "free markets often trap people," here is what that means: We often allow ourselves to develop bad habits when we are free. We splurge when we go shopping; we do not save enough money for rainy days; we purchase goods that we do not really have much use for simply because this is what we did before, etc., etc. Indeed, free men and women often fall prey to temptations like this. (There are many more: chasing unworthy romantic ideals, seeking to own works of art that are really out of our reach; wanting to have cars we cannot afford; wishing to have our kids go to schools to which they can't get admitted, etc.)
Now all this is true but what of it? The most addictive habit of all is political power and so the collective help Sunstein recommends, as a remedy for such temptations, is precisely the worst temptation of them all. Instead, what we need is common sense and friendly reminders, maybe a blunt talking to once in a while from social and religious leaders. The free market itself tends to punish imprudent businessmen (by rewarding competitors who do not behave this way) and consumers (through a withdrawal of their credit privileges).
The last thing we need to combat bad habits is for a bunch of people to arm themselves and enforce their idea of prudent living on the rest of us. They will be exactly what a free society must most seriously resist.
Finally, does all of what Sunstein tells us prove that the free market isn't really free? Because we can be trapped in some bad habits? No. Being trapped in bad habits is just the sort of risk that free men and women face all the time. The price of liberty is, after all, eternal vigilance in more ways than one. We need to be vigilant both to keep our freedom and to deal with it responsibly. In the first instance it is against people like Rawls and Sunstein and all their eager-beaver government bureaucratic ("collective") helpers we need to be vigilant. In the second instance we need to be vigilant against our own weaknesses.
