Capitalism’s cure for economic sins

Reprinted from Law and Liberty

Philosopher and work ethicist James Outson of the University of Notre Dame wants to save you from the errors of your ways, and in doing so, improve your life. his latest book, Seven deadly economic sins, debunks a standing list of economic fallacies about capital, government intervention, and prosperity, and makes a strong argument in favor of a market economy and the classical liberal political institutions that underpin it. As the book’s title (and the author’s professional background) suggest, Ottison’s argument is ultimately based on a set of moral assumptions rather than any equilibrium model or regression analysis.

As a philosopher best known nonetheless for his writings on economics, Utson is very much walking in the path of the man he spent most of his life researching and writing about, Adam Smith. While Smith is considered a legend in the history of economic ideas for writing 1776 AD wealth of nationsOttison Reminds Us of the Significance of Smith’s Place as a Professor of Moral Philosophy and His Earlier Artwork, 1759 The theory of moral sentiments. While many economic commentators over the years have suggested that the content of Smith’s two great works represents a conflict or some kind of intellectual “problem,” Ottison shows that many of the basic economic concepts we take for granted are, in fact, based on ethical assumptions. basic rather than mathematical combinations.

When it comes to the biggest economic policy debate—whether governments should exercise more or less control over economic life—Ottison’s key assumption is simple: As human beings, we all have the same value and equal moral agency. Thus, interventions in a market economy, whether large or small, are supposed to be illegitimate because they nullify the rule of the contracting parties peacefully. This is true even when the goal is economic equality itself. Market participants have different talents, training, and goals, so implementing a government policy that would force them into the same situation would mean disrespecting their freely chosen life paths.

The Seven Deadly Sins is based on principles familiar to most people who exist somewhere in the overlapping worlds of libertarian, conservative, free-market, Austrian, and Chicago economic thinking. Wealth creation is a positive sum, progress is not deterministic, and no “great mind” has enough knowledge to plan an entire economy. Market interactions depend as much on cooperation as on competition. People who complain that others are putting “profits over people” are most likely angry that people who exchange value without their permission didn’t decide to prioritize the complainant’s goals instead. Economic freedom does not always lead to perfect results, but it does produce bad results less often than any other system of economic regulation.

Utson has a knack for introducing a relatable human element into textbook examples of economic phenomena. Students of antitrust law might read about how some companies engaged in “uncompetitive” pricing and unfairly affected the profits of their competitors. Tariff promoters may also complain that domestic firms have fallen victim to lower-cost producers abroad. Should the choices of producers and customers be restricted so as not to harm competitors? That might sound reasonable… until you meet Jack, Jill, and Joe.

We were asked to imagine two people, Jack and Jill, who are in love and decide to get married. But there’s a catch: Joe is also in love with Jill, and he’d also very much like to marry her. By depriving Joe of his most fervent wishes and important purpose in life, Jack and Jill certainly kept Joe from self-fulfillment. But do either of them owe Joe some kind of compensation for this negative impact? Ottison’s answer is no, because this situation is the result of choices that each side makes freely. Joe may be unhappy at not choosing a new husband for Jill, but being denied a benefit doesn’t mean he’s actually being hurt. Jack and Jill’s goals and desires are just as important as Joe’s – and as such, they owe him no debt and need not accept any limitations on their mutual agreement.

The implications of this humble example are wide ranging. Many interventionist economic policies, whether progressive tax rates, professional licensing, or zoning rules, override the preferences of market actors in serving some (often assumed or hypothetical) third party. But it is seldom clear that these third parties have a moral claim about state intervention that should negate the parties’ essential wishes. I want to be able to buy tacos from a taco truck, and there’s a taco truck owner who wants to sell them to me. But in many cities, owners of traditional restaurants have pressured the local government to prevent such transactions in most areas. This is like giving Joe veto power over Jack and Jill’s wedding day. It is a mistake, and more importantly a limitation that most advocates of the same policy would not accept as legitimate, if a similar intervention were applied to their lives.

To be sure, Utson is not the first economist or politician to attempt to debunk economic ideas he considers to be flawed. Australian economist Steve Kane wrote a bestselling book on modern economic theory in 2001 (with a second edition in 2011) titled Exposing Economics: The Naked Emperor of the Social Sciences. unlike Seven deadly economic sinsCaine’s critique was very mathematical rather than philosophical and was more concerned with reconciling neoclassical economic theory with observed market conditions. However, whether his criticisms spared the world some of the effects of the Great Recession (as some later reviewers suggested) is certainly relevant to the realpolitik implications Ottison considers.

While coming from a very different ideological perspective, Paul Krugman Arguing with Zombies: Economics, Politics, and the Struggle for a Better Future (2020) may be closer to what Otteson is trying to do. Krugman, like Ottison, claims to combat stubborn myths and misinformation and insists that while there are legitimate topics for debate in the economics world, he focuses his writing on topics that are already generally agreed upon: “The reality is that the majority of economic controversies in the real world take place about easy questions, questions for which there is clearly a correct answer. Krugman even invokes his own personal philosophical inspiration, writing that he and other “people on the left” look to John Rawls for formulating their views on social justice.

Contra Krugman, and Ottison’s citations go more to Deirdre McCluskey, Frédéric Bastiat, Aristotle, and Friedrich Hayek (although at one point he argues that free market capitalism is in fact Do Satisfying Rawls’ requirements for economic justice in society). On this matter, as with so many other things, we can assume Krugman and Attison fans will disagree. Still, left-leaning critics will have plenty to think about and chew on if they give the latter’s work a fair shake, especially given that Ottison endorses many of the same moral assumptions as the Progressives. He bases his arguments on fundamental equality and respect for human dignity, but reaches very different political conclusions. His interpretation of the rational, rights-based economic system is also clear, methodical, and respectful, happily ignoring heated rhetoric and to a man Characterizations have become very common in discussions of economic policy in the 21st century, both on bestseller lists and in social media posts.

Fans of market economics will also get a welcome and even inspiring refresher course in ideas they may have first been introduced to as students. The Cambridge University Press does an excellent job of providing references and resources for further study without obfuscation, pedantry, or repetition. Anyone who takes economic ideas and their ethical implications seriously would do well to make room for them on their bookshelf Seven deadly economic sins.

Richard Morrison

Richard Morrison is a research fellow at the Institute for Competitive Enterprise, where his work focuses on the relationship between economic and political freedom. He was previously a Senior Editor at CEI and Managing Editor of the OpenMarket Blog.

He holds a Bachelor of Arts in Government from Claremont McKenna College.

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