Morality and the markets

Unable to criticize a market based economy based on how well it works in practice, especially compared to all of the known alternatives, markets are often criticized on moral grounds. It is argued that because they are based around individual selfishness that they are immoral. However this logic is wrong, it is because they are based around individual selfishness that guarantees that the result of market interactions is morally right.

The moral measure that I am talking about is of course Utility. First formulated by Jeremy Bentham this system is part of a thread of moral thought that goes all the way back to Aristotle. The principle of Utility is simply that the aim of a morally correct action is to bring the greatest happiness to the greatest number of people

As the critics of markets state a voluntary exchange, as in a market, will only happen because both parties involved in it think that the result will make them happy. Knowing themselves and their desires better than anybody else they are normally right in this belief. So for a voluntary exchange will only happen if it makes all those involved in it happier than they where before. Though their selfishness of looking out for their own happiness and interacting through a market they ended up happier than before, so that over time and hundreds of these selfishly driven exchanges the sum total of happiness goes up and up.

This contrasts with coerced action, even for altruistic reasons (and lets face it pretty well all coercion is claimed to be for altruistic reasons). The coercer will not necessarily feel happy about it, other than a smug self satisfaction, and the coerced certainly won't, if this wasn't the case they would be willing to do it voluntarily. Result a net decrease in happiness.

Therefore it is coerced action, such as by the State, that is morally dubious not that done through a market exchange, which is normally morally right.