I am reading Milton Friedman’s book Free to Choose, a plea for the free market. Friedman has some very compelling claims against government intervention in economic transactions – both domestic and international ones. Price is – as he claims – the most informative entity there is in communicating society’s demands and supplies of goods and services, and – in a capitalistic society – provides people with the incentive to act upon this information, thereby satisfying the needs of those that demand the goods/services and providing themselves with the resources required to live a decent life. But although the free market, as Friedman describes it, seems a beautifully simple and elegant construct, there are some “side-effects” of the system that might run against our intuition of the notion of “fairness“. Because while the free market is likely to be the best mechanism there is for releasing the everlasting pressure between supply and demand, it seems to require some (large) modifications in order for it to be compatible with our inborn – or socially conditioned – perception of fairness; modifications that come forth from our compassion with the ones less-fortuned, and modifications that strive to push us further and further away from the nice and clean “invisible hand” creating order in the chaos called economy.
It seems clear that the free market is the most efficient medium there is for maximizing the value of each of the persons involved. And that (the “maximizing of value of each person involved”) is, according to libertarians, what makes the free market a fair system. After all, if you want to sell a computer, and another person is prepared to pay you the price you charge, then it’s only fair to let this deal take place, isn’t it? There’s mutual consent between the parties involved, so what – if anything – could give a third party the right to intervene in this seemingly flawless transaction?
While there indeed might be nothing wrong with the free-market mechanism when it comes down to the exchange of value, it might be doubted whether it is fair to make this mechanism the only mechanism for exchanging value. Since while it’s no problem – and might even be beneficial – for those parties in a free market that possess the means to participate in this game of exchanging value, it might be harder for those that – by nature or environment – have been unfortunate in acquiring the means required for satisfying their needs.
Because what if you’re not as intelligent as the average person, therefore getting a relatively low-income job as a plumber, and because of that aren’t able to satisfy your needs to the same degree as – let’s say – bankers or lawyers are? Of course, a libertarian might say, the plumber can still participate in the free market, just like the banker or lawyer. But, even though the three parties might have the same needs (for luxury or otherwise), the plumber cannot satisfy as many of his’ as the banker and the lawyer can of theirs'; only because nature happened to endow him – in contrast to the banker and lawyer – with capabilities that apparently are less appreciated (since less demanded) in society. So the question is: is it fair to let nature – and thus chance – play such a drastic role in the ability of any person to satisfy his needs?
A libertarian can answer this question in either of two ways. Either (A) he admits that the extent in which we’re able to satisfy our needs is indeed – in the basis – determined by nature’s authority over our capabilities, or (B) he must come up with an ingenious invention of how to solve this negative side-effect of the free market without thereby endangering the libertarian heart of his plan. (A), although this is mostly ignored by libertarians, seems to imply a notion of “fairness” that I – and I assume many others – find highly questionable. On the other hand, it is a notion and, given that this truly is the libertarian’s view of a fair world, should be accepted for what it is.
The latter option – on the other hand – provides more room for discussion. Because how – if ever – could it be possible to solve nature’s capability-casino by means of a libertarian solution? There are of course many plans one could come up with, all of them mitigating the negative effects, but all of them being either (1) in conflict with the libertarian aspiration of a free market or (2) don’t get down to the root of the problem (that is, the unequal distribution of capabilities over mankind). It seems fair to say that (2) is a “kind of unfairness” that is inextinguishable – not by socialism and not by libertarianism. We after all cannot redesign our beings in order to endow everyone with the same capabilities. And even if we could do so, it’s high questionable whether this choice would be beneficial to society as a whole. But still: it seems we’re stuck with (1), pointing us to the possibly unfair consequences of libertarianism/the free market.
The above reflection shows that there seems to be an intuitively unfair “side-effect” of the free market; a side-effect that is unsolvable by means of the free market-paradigm itself. It either requires us to adopt the libertarian notion of “fairness”, or requires some sort of (government) intervention in order to compensate for nature’s “unfair” distribution of capabilities.
What do you think?
