February 15, 2016 • No 339 | Archives | Search QL | Subscribe



Why Free-Market Advocates Are Not Obligated to Defend the Economic Status Quo
by Gennady Stolyarov II

Many on the political left today equate advocacy of free-market capitalism with an “anything goes” support for the economic status quo. Many on the political right give credence to this perception by, indeed, seeking to defend the status quo just because it happens to be so. Yet this is neither an obligatory nor an advisable approach for characterizing a genuinely well-considered free-market outlook.

Suppose that you are a free-market advocate and also an engineer, well-versed in the principles and methods for constructing durable, safe structures. You hold that individuals and businesses should have the freedom to be able to build structures which would improve human well-being, in exchange for the opportunity to earn a profit (or not, if they wish to build structures for a charitable purpose). Now suppose that you are tasked with evaluating the integrity of a particular structure constructed by a private business – perhaps a bridge. This particular bridge happens to be fully privately funded – no subsidies, no exclusive rights, no barriers to competitors’ entry. The business undertaking the construction intends for the bridge to be used as part of a major new toll road that is intended to carry massive amounts of traffic.

Unfortunately, upon deploying your technical skillset and studying the bridge design carefully, you find that the bridge, while it is represented as being able to withstand one thousand cars at a time, would in fact collapse under the weight of only five hundred cars. You also find that, in your basic repertoire of engineering techniques, you have knowledge of construction techniques and superior materials which would rectify these design flaws and enable the bridge to be as safe and as durable as originally represented. The trouble is that the business owners want to hear none of it. They are attached to their original design partly out of cost considerations, but mostly because they simply cannot understand your findings or appreciate their significance, no matter how many different ways you have attempted to communicate them. The business owners have almost no engineering knowledge themselves and are generally contemptuous of overtly mathematical, “nerdy” types (like you). They are skilled salespeople who have capital from a previous venture and are eager to make additional money on a high-profile project such as this bridge. Suppose that you know that you have all of the technical knowledge of your discipline firmly on your side, but it is the owners’ money on the line, so, unconvinced by your arguments, they build the bridge according to their original specifications. They still advertise it as highly durable, but in a sufficiently nebulous way that the advertisements do not truly make any specific promises or technical claims. (This business is short on technically knowledgeable professionals, but spares no expense in hiring attorneys to litigation-proof its marketing materials.) The driving public’s impression from the marketing campaign is expected to be, “It is an incredibly sturdy, state-of-the-art, daring new bridge that you will enjoy driving on in safety and style.” The business owners contend that there is no problem. After all, were this a truly free market, the public could choose to pay to use their bridge or to find some alternative in getting from point A to point B. And competitors could build their own bridges, too, if they could buy the land, purchase the tools and materials, and hire the labor to do it.

Of course, on most days, this bridge would not collapse, since it is rare for five hundred cars to be on it simultaneously. The owners could well be reaping profits from their bridge for years and convince the lay public to drive on it with no visible ill consequences during that time. The bridge is, however, vulnerable to high winds, earthquakes, freezing damage, and gradual deterioration over time (exacerbated by substandard construction). As time passes, the risks of collapse increase. No bridge is invulnerable, but this particular bridge is about 30 years farther along the path to decay than other bridges that you know could easily have been built in its place, had the owners only listened to you. As a free-market advocate, you have some sympathies with the owners’ view that the construction of the bridge should not be forcibly prevented, as they are using their own property for their own chosen purposes, and they are not forcing anyone to use it. However, as an engineer who knows better when it comes to quality of bridge design and construction, what do you do?

This dilemma illustrates a question at the core of how free-market advocates approach the world in which they find themselves – a world, of course, which is far from free in an economic sense, but many people still use their own property for their own purposes. There are some who will assert that the very fact of private, voluntary use of property renders such use inherently above criticism, provided it is a manifestation of free choice. (We can overlook, for the sake of this argument, the fact that, in the real world, many incentives and constraints upon human action are routinely distorted by the effects of political influences in favor of one group or set of outcomes and/or in opposition to others.) In this argument’s more typical instantiation in today’s world, some would assert that any outcome of “private enterprise” in today’s world must be acceptable for free-market advocates, since it was (ostensibly) somebody’s use of private property for a private purpose. For example, mass corporate layoffs (virtually unheard of until the 1970s), raising the price of a life-saving, long-generic drug by 5,556 percent (as pharmaceutical executive Martin Shkreli did with Daraprim in 2015), listening to or creating brutal “gangsta rap” (virtually unheard of until the 1990s), teaching of creationism in private schools (common throughout history, but increasingly untenable in the face of over 150 years of mounting evidence), and many other behaviors of questionable rationality and/or taste are defended as being the decisions of private entities – so what could be wrong about them?


“A free-market perspective is a political and economic position which is compatible with completely rigorous, objective views of matters of science, technology, mathematics, history, metaphysics, epistemology, ethics, psychology, and any other conceivable discipline.”


The problem with reflexively defending any and every behavior, just because a private entity undertakes it, even in the absence of market distortions, is that it misses an essential point. The market is nothing more than the sum of the choices and actions of its participants. A market outcome is not a Panglossian “best of all possible worlds” scenario. Even in the absence of compulsion or restraint, some people will be mistaken, irrational, overconfident, immoral, confused, or all of the above. Ex ante, they may expect that the transactions and behaviors they engage in will benefit them – much like a tribal shaman might believe that his rain dance would bring forth water for the tribe’s crops – but, ex post, they may well find themselves regretting their behavior, or even if not, they may have still become materially, intellectually, or emotionally worse off from it compared to the alternatives. In addition to choice, there is also truth – which comes in the form of scientific, mathematical, historical, and philosophical principles and facts. Truth is an outcome of combining induction from the empirical facts of reality with deduction from the application of logical reasoning to known facts and incontrovertible first principles. It is entirely possible for a person – including a wealthy, powerful, influential person whose decisions affect thousands or millions of others – to completely miss what the truth is, or even to be ignorant of the correct methods of arriving at the truth. In other words, if the external reality is objective and governed by comprehensible natural laws – and if morality is also objective in the sense that some outcomes are incontrovertibly more beneficial to human well-being than others – then it must be the case that somebody who is thinking in a rational, well-informed manner can truly “know better” than a particular decision-maker who is not.

Does that mean that the market could be replaced by some “superior” system of decision-making? Ultimately, no. We have no guarantee that any substitution of decision-making for that of private actors could lead to a necessarily preferably result from those decision makers’ free choices. If Person A is irrational and mistaken, we have no guarantee that leaving Person B in charge of A’s life would not lead to even more irrational and mistaken choices, compounded by the knowledge problem that B will necessarily have in relation to A’s situation. The possibility that B could be not simply misguided but nefarious, and seek to sacrifice A’s genuine interests in favor of B’s own, is a further argument against this kind of command-and-control approach. More devastating, however, would be an outcome in which a different person, C, really is doing his best to act in a truthful, rational, and just manner, but the controller B does not see it. Or perhaps B does see it and thinks it is all well and good, but B needs to set uniform standards that would keep the lowest common denominator in check, and C’s scrupulous, innovative, and principled way of living could never be generalized to a society-wide system of controls.

But getting back to you, the engineer: How to address the dilemma that you are in? Has the “market” not “decided” that the bridge of substandard technical quality is just fine? Not so fast. We must never forget that we are the market, and that the market does not only consist of the first decisions and inclinations of some small group of wealthy, powerful, or connected individuals. Quite the contrary: We are what a truly free market consists of. A truly free market consists not only of our affirmative choices, but also of our negations and criticisms of certain other choices. It consists of our knowledge, including those situations where we truly “know better” than certain others. You, the free-market engineer, could not force the bridge owners to change their design. However, you could fully publicize its flaws in a fully free society, one characterized by robust protections of free speech and lack of a climate of frivolous litigation with regard to libel laws. If today such professional criticism is difficult, it is because many larger, politically connected enterprises will hire legions of attorneys to squelch sufficiently specific assertions in meritless litigation that is too costly for ordinary people to counter. But a truly free society would lack this obstacle and would include a legal system that is designed with speed, simplicity, affordability, and protections for peaceful natural persons in mind. A corporation would not be able to sue you for publicizing detailed criticisms of its products; the judge would be empowered to simply throw out such a lawsuit at first glance. A truly free market of goods and ideas is not an indiscriminate stew of anyone’s and everyone’s plans. Any such plans also would get tested, scrutinized, refined, and ultimately accepted or rejected by the other market participants. To the extent that one owns property that could sustain the perpetuation of a plan, one might counter even strongly held prevailing opinions – but only temporarily and only if one has other means of replenishing that property if the plan causes it to be depleted.

Moreover, in a truly free market, barriers to entry exist only on the basis of the constraints of the physical world, not on politics and special behind-the-scenes influence. Thus, competitors can always arise with a superior business model. Perhaps if you, the engineer, criticize the existing bridge sufficiently, another business enterprise will learn of its defects, purchase another piece of land, and construct a parallel, sturdier bridge that takes your suggestions into account. The misguided owners of the first bridge might eventually find themselves out of business because travelers will discover that safer, more convenient routes are available. And if the bridge ever does fail, a free-market system of civil liability will penalize those businesses who, through negligence, failed to take reasonable precautions to protect the health and safety of their customers. If the bridge ever becomes an imminent danger to travelers, it would be proper for public warnings to be issued and for the law-enforcement entity (be it a minarchist government or a private dispute-resolution agency) to order that traffic to the bridge be discontinued until the immediate danger is averted (perhaps through structural improvements at that time). A free market does not permit the reckless endangerment of unwitting, non-consenting others.

But always, in a hypothetical free-market society or in our own, a free-market-oriented engineer – or any professional, really – should have no compunction about expressing the truth about the soundness and validity of any party’s decisions or proposals, be they private or governmental. Just as a private party may well propose building a substandard bridge, so might a government today actually develop a decent bridge, especially if the incentives of a given political system are conducive to that particular outcome. The free-market engineer should not hesitate to praise the technical design of a good bridge, no matter what its source – because truth is true, and a bridge that could support two thousand cars at a time would, indeed, support those cars no matter who constructed it (provided the methods and materials used are identical in each case). A free-market perspective is a political and economic position which is compatible with completely rigorous, objective views of matters of science, technology, mathematics, history, metaphysics, epistemology, ethics, psychology, and any other conceivable discipline. Free-market advocates should respect people’s right to make choices, even when those choices are mistaken, but can maintain their own right to criticize those mistakes using as high a set of standards as they consider justified. If your values include striving for truth and justice, then those values are a part of the market as well, and you can improve market outcomes by working to instantiate those values in reality.


Gennady Stolyarov II is a science fiction novelist and philosophical essayist, and is Editor-in-Chief of The Rational Argumentator. He lives in Carson City, Nevada.


From the same author

Refuting Ayn Rand's 'Immortal Robot' Argument
(no 337 – December 15, 2015)

The Imperative of Technological Progress: Why Stagnation Will Necessarily Lead to Disaster and How Techno-Optimism Can Overcome It
(no 334 – Sept. 15, 2015)

Fast-Track Atheist Security Lanes and More: Time to Jettison Perverse Egalitarianism
(no 333 – June 15, 2015)

Universal Physical and Moral Laws, With No Lawgiver
(no 332 – May 15, 2015)

The Ukrainian Regime's Censorship Spreads West to Canada, and Political Correctness is to Blame
(no 331 – April 15, 2015)



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