Business ethics 88.
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Free markets are part of our freedom. The current economic crisis is causing a few people to have second thoughts about the free-market system. People blame the free market for the crisis; some point to the fact that Nazi Germany was one of the first countries in Europe to restore employment and industrial production when it moved to an authoritarian regime.
The criticism is almost totally unfounded. We can see that citizens in orderly market economies (that excludes Russia) even during a crisis are better off economically than those in command economies during boom times.
The problem characteristic of a free-market downturn is a glut: too much of everything and everything is too cheap. That's not the kind of problem they had in Soviet Russia or Communist China. Germany restored its industry, but the average German didn't benefit from the expansion at all, since it all went to military production.
But more fundamentally, the criticism misses an important point. The value of a free market economy is not solely or even primarily in the prosperity it has been proven to provide. As we approach the Holiday of Freedom, we should take account of the inherent importance of the freedom it provides.
This aspect of a free-market economy has been emphasized by many commentators, not necessarily libertarians. Economist and Nobel-prize recipient Amartya Sen writes in his 1999 book, Development as Freedom, "As Adam Smith noted, freedom of exchange and transaction is itself part and parcel of the basic liberties people have reason to value... The freedom to exchange words, or goods, or gifts does not need defensive justification in terms of their favorable but distant effects; they are part of the way human beings in society live and interact with each other."
And as Britain leaned leftward in the 1940s, economist Friedrich Hayek wrote the work The Road to Serfdom warning "Who can seriously doubt that the power which a millionaire, who may be my employer, has over me is very much less than that which the smallest bureaucrat possesses who wields the coercive power of the state and on whose discretion it depends how I am allowed to live and work?"
There is good reason to believe that people think this way. One example found in economics books is the blacks in the American South. There is convincing evidence that the material standard of living of the blacks was higher under slavery than after emancipation, and this is hardly surprising. The white masters had good reason to look after the physical condition of their slaves, just as farmers today take good care of their tractors. But I haven't heard that any emancipated blacks longed for the good old days of slavery.
In fact, we have evidence from our own history as well. There is plenty of evidence from the Torah that the children of Israel enjoyed a higher material standard of living in Egypt than they did in the desert. In Egypt they lived in houses, in the desert only tents. In the desert they repeatedly refer to the varied diet they enjoyed in Egypt, where they "sat on the meat pot and ate bread to satisfaction," not to mention the fish and the vegetables. By contrast, they refer to the manna as "insubstantial food." Even so, we never find that they contemplated returning to subjection in Egypt in order to restore their standard of living, only at times when they thought they were in mortal danger.
Even if you consider this bit of amateur Scriptural commentary rather speculative, it is certainly significant that we celebrate Pessah as "the festival of freedom," and not "the festival of prosperity."
Clearly, economic freedom is not the only or even necessarily the most important freedom, and that it needs to be limited in various ways in order to have an orderly and prosperous society. It is also true that in a democracy laws themselves are to some extent an expression of our national freedom. However, any time we consider limiting economic liberty in order to achieve some other worthy social aim, we must take into account not only any possible economic loss but also the loss of this important liberty per se.