Montreal, May 15, 2008 • No 256


Bradley Doucet is QL's English Editor. A writer living in Montreal, he has studied philosophy and economics, and is currently completing a novel on the pursuit of happiness.






by Bradley Doucet


          Liberty is won and preserved not primarily with guns, but with ideas. Spreading freedom requires that we spread an understanding of the benefits freedom brings, that we explain to whoever will listen how freedom is really in everyone's best interest. In making the case for a truly free society, however, we will inevitably come up against a wide array of illiberal beliefs that keep others from embracing our vision of a better world. The more we seek to understand those beliefs, the better we will be able to counter them and address the concerns that underlie them. In this ongoing series, I address some of the issues we can expect to face, along with brief outlines of the kinds of responses I think can be helpful.


BELIEF # 14: Free markets are utopian

May 15, 2008

          In defending the ideal of a free society with a minimal state, free market enthusiasts are sometimes accused of being utopian, of presenting an impossibly perfect vision of what such a society would be like. We are accused of having blind faith that the market will somehow magically solve all of our problems. In fact, while economic and personal liberty is an ideal—and one that deserves to be depicted in all its glory—a free market society is emphatically not utopian for two important reasons. First, free markets are not perfect; they are merely better than any of the alternatives. Second, free markets do not need to wish away all human weaknesses in order to function.

          The 16th century book by Sir Thomas More whose title gave us the word "Utopia" is actually two very different books. In the first book, we are treated to a lively dialogue brilliantly ridiculing all the power-grubbing machinations of government officials and arguing about the best way to effect positive change. It wisely warns that societies will never be perfect because human beings are not perfect, but recommends that we should still try our best to resist negative changes and promote positive ones. In the second book, however, we are shown a vision of a radical, socialist society. On the island of Utopia, money does not exist, and a whole slew of positive effects (and no negative ones) is simply assumed to follow from this: everyone happily works for the good of all, there is plenty to go around, and government officials perform their duties with integrity and intelligence.

          One is left to wonder what happened to the wise counsel of the first book, which cautioned that human beings would not work without the incentive of personal gain. One also wonders how this Utopia would deal with coordination problems in the absence of market prices, and what happened to government corruption, which is not primarily about money but about power. In stark contrast to the warning of the first book, human beings in the state of Utopia are angelic: they are willing to work hard without proper incentives; they are able to produce everything that is needed without proper information; and they are able to resist the lure of power far better than the members of any society in the real world ever has. There is no plausible explanation of how human beings are supposed to act in ways so contrary to their nature, or of how, in the absence of price signals, producers are to know what and how much to produce given unavoidably limited inputs.

          As was made devastatingly clear from the tragic socialist experiments of the 20th century, socialists were wrong to assume that money and property are the sources of conflict, and that by doing away with these, conflict would disappear. They were wrong to assume that it is possible for humans to strive without the incentive of personal reward. They were wrong to imagine that production could be efficiently organized from the top down without market price information. And they were wrong to think that government corruption would disappear with the removal of money from the equation. In practice, societies that have tried to impose egalitarian visions have displayed more, not less, corruption, as power was the only thing left to compete for; they have had insurmountable knowledge problems in the absence of market prices; and, having ruled out the use of "carrots" to motivate people, they have had to resort to the most brutal of "sticks," imprisoning, enslaving, and murdering millions of their own citizens. The solution to the problems that beset humanity is clearly not just to share everything—especially when that sharing takes place at the point of a bayonet.

          Societies cannot be perfect because human beings are not perfect. Far from denying this, free market enthusiasts accept this and argue that the best kind of society for us imperfect humans is a free one, precisely because it allows for the easiest and least painful course corrections. Competition allows for and in fact encourages the discovery of better ways of doing things. Free societies harness the personal reward incentive and channel it toward the good of all. The only way to get ahead in a free market is to serve others, to provide them with goods and services they actually want to buy.

          Free markets are not perfect, but no one is claiming that they are. We enthusiasts simply believe that the so-called "failures" of markets are in fact just the shortcomings of imperfect human action itself, and hence are not unique to free markets at all, but something that all systems must deal with. The difference is in how well free markets deal with problems compared to all other systems. The closest approximations of egalitarian, socialist societies have brought increased misery through the use of brutal "sticks" and inefficient production. The closest approximations of free market societies have brought decreases in suffering through the use of "carrots" and ever greater, smarter productivity.

          A free market society supported by a minimal government that only uses force in retaliation against thieves and thugs is not a utopian fantasy; it is the best realistic way to organize a society for the good of all. But is it perhaps unrealistic to hope that bloated, corrupt governments can be pared down to more reasonable proportions? How do we rein in the undue influence of certain unscrupulous large corporations that extract special privileges for themselves at the expense of their competitors, thereby undermining the benefits of true competition? The solution is simple to state, though admittedly more difficult to implement: if governments have fewer goodies to dispense, large corporations will have less reason to corrupt the political process. What is needed for this to happen is a sea change in the way people perceive governments, and the abandonment of the notion that we should try to address our problems with coercive, top-down, one-size-fits-all solutions that solve nothing. Changing people's ideas is not easy, but it is possible, whereas trying to eliminate the competitive, self-improving nature of human beings as egalitarians would have us do—if such a thing were even desirable—really is utopian.



Current Illiberal Belief >>>


13. Change is bad
12. You're either with us or against us
11. The environment is steadily deteriorating
10. Resources are limited
09. It's a small world

08. Morality must be enforced
07. The truth is obvious
06. Good intentions are enough
05. Charity must be enforced
04. We are our brothers' keepers

03. Theft can be justified
02. Order comes from above
01. Government is good