Free markets are neither inherently good, nor are they inherently evil. Entrepreneurial activity is not in and of itself a moral act. The ends that the entrepreneur pursues and how they pursue those ends defines the morality of their entrepreneurial efforts.
There are entrepreneurs who use their gifts and talents to build businesses that provide economic, social, and cultural benefits.
But there are also entrepreneurs who although they may build personal income and wealth, they do so in the pursuit of ends that can actually end up being destructive to society. In our soon to be released book, Mike Naughton and I describe this type of entrepreneur as follows:
But the most enduring counterfeit of prudence are those who confuse being prudent with being cunning. They can be highly efficient, technically competent and have a great sense of timing, but their purpose is only for themselves. To have technical skill without good ends can unleash a powerfully destructive force in society.
Sarah Brown sent along a story from Time that may fall into this category:
…40% to 50% of first marriages still break up. In the spirit of American ingenuity that can find a way to make a buck out of even the worst situations, a cottage industry has sprung up to help people cope with and often celebrate this passage from one part of their lives to the next. “Once divorce gets so common, the human approach is to treat it like another aspect of life,” says sociologist David Popenoe, co-director of the National Marriage Project at Rutgers.
Please know that I do not pretend to know what is in the hearts and minds of the entrepreneurs who have launched businesses in this newly discovered market niche. But, I think that most of us can agree that the break-down of families has been a less than positive force in our society over the past thirty years.
What do these entrepreneurs sell? Here are a few examples from the article in Time:
Business for products aimed at the newly divorced, from greeting cards and postbreakup getaway packages to custom-made cakes and joke gifts like wedding-ring coffins, is booming. New Orleans resident Renee Savant bought a hearse, thinking she would rent it out for over-the-hill-birthday celebrations. But since she began her service last October, the hottest demand has come from clients who want to ride around as they and friends celebrate the death of their marriages. “I would never in a million years have thought the fad would be divorce parties,” says Savant.
I agree divorce isn’t a positive thing. However it’s a traumatic event for someone to go through and if a party helps them cope then these services have their use.
While it may be true that free markets are neither inherently good or inherently evil, when the government proposes that a free market solution be tried on a social problem, there should be some sort of effort to make sure that there is no evil wrapped up in the execution of policy. Even policies that get the greatest good for the greatest number might contain property rights degradation that would be a good trade-off in the short term but a bad trade-off in the long run especially if the tradeoff set a precedent that was allowed to proliferate with little reflection.
It sounds like you are very close to saying that the ends could justify the means. The only problem is that we live in a world that is not good at looking at the long term ends to decide what is good.
When two people trade a dollar for a candy bar, we can say that both are better off or at least thinks they are better off after the trade for as long as the dollar and the candy bar lasts. But when the government builds an Interstate System or an airport, additional care must be taken to assure that the trade remains fair over the life of the facility. Simply imagining a long term good is nothing but good intentions and good intentions are not worth much in a real world with real consequences that happen regardless of your anticipation of the totality of the act.
Take, for instance, the legal prohibition of hospital or nursing home construction by the government to suppress proliferation of hospitals and a glut of (competition)hospital beds. This has really good intentions but some people find it easy to prove that this is bad. Florida is considering getting rid of their law and let the market decide. On the other hand, the state of Tennessee has promoted and caused the unwise proliferation of industrial parks with local tax revenue. LAst year there were at least 186 square miles in Tennessee. There is no proof that building these parks and providing infrastructure staunches the outflow of industrial jobs or even attracts industry.
When the government anesthetizes the free market system by giving unnatural privileges, subsidies, legal protection or favor, some kind of moral system needs to be in place to protect people
from good intentions.
I am not saying that the ends justify the means. I am saying that we need to pay attention to both good means and good ends. Both matter.
Government is also neither inherently good nor evil. And governments have never proven to be an effective moral compass. That is the role of culture — through our families, our faiths, and our communities. Sadly, we seem to have abdicated morality to the federal government in this country.
Don’t confuse the government favors to certain businesses and industries that you criticize as being an outcome of free market solutions. When government shapes economic activities it is socialism. The new flavor of this is socialized entrepreneurship, where government tries to shape entrepreneurs and investors to means and ends decided upon by bureaucrats and politicians.
You are correct — we need a “moral system”. I just hope you are not suggesting we look to Washington to define, build and run this system!
I don’t think we legislate morality, especially as it relates to business. I do think, however, that business is a reflection of the state of the society as a whole. I also believe that for those who want to really make a positive impact in the world, a fiscally healthy, morally responsible business is a good way to do it.
AJ