Can markets be made moral? Ask a silly question…

An organisation called Catholic Voices organises seminars – amongst other things – to help young Catholics in the media. A few months ago, I spoke at one of their seminars about ‘Broken Britain’. It was not remotely hostile, unlike a Theos meeting a few weeks later in which I debated whether Anglican Bishops were addicted to the welfare state and in which I was told by an Anglican Bishop that the welfare state was an extension of the communion of the last supper…

The young Catholic Voices at the event I attended gave the impression of either being broadly pro-market; sceptical of the market whilst being broadly welcoming; or ‘Blondite’/distributist – anti-state but also sceptical of big business. This is progress – indeed it is huge progress in just a generation. The IEA book Catholic Social Teaching and the Market Economy is being received on more fertile ground.

Today’s Catholic Voices’ seminar is on ‘Can markets be made moral?’ As my mother used to say, ’ask a silly question…’ I am sure that the answers on the night will be more sensible than the question, but, for the record, here is my answer.

Asking whether markets can be moral is a bit like asking whether sex can be moral. Of course they can, given the appropriate behaviours in the appropriate contexts. The market is simply the result of allowing people to freely and resourcefully use their human reason and action to satisfy their needs and desires by free exchange with others. How can this activity not be undertaken in a moral way? In Catholic terms, some of the desires we might try to satisfy are sinful and some of the ways chosen to satisfy those desires may be sinful. Pornography is an example of the first and stealing an example of the second.

The Catholic Church has broadly welcomed the free economy. As John Paul II stated:

‘Returning now to the initial question: can it perhaps be said that, after the failure of Communism, capitalism is the victorious social system, and that capitalism should be the goal of the countries now making efforts to rebuild their economy and society? Is this the model which ought to be proposed to the countries of the Third World which are searching for the path to true economic and civil progress?

The answer is obviously complex. If by “capitalism” is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a “business economy”, “market economy” or simply “free economy”.’

The late Pope goes on (immediately) to criticise exploitation, the pursuit of consumer goods for their own sake and many other manifestations of free economic activity that the Catholic Church has generally regarded as immoral. He also went on to say that the market economy needed to be restrained within a juridical framework.

Clearly, what to consume, what to produce and how to behave within a market economy are moral decisions. Sometimes those moral decisions will be compatible with self-interest, such as in the old self-regulated stock exchanges where poor behaviour would have led to one’s ejection. Whether markets are moral depends entirely on whether people taking decisions are moral. Indeed, talking about the financial crisis, Pope Benedict has said:

‘Economy and finance, as instruments, can be used badly when those at the helm are motivated by purely selfish ends. Instruments that are good in themselves can thereby be transformed into harmful ones. But it is man’s darkened reason that produces these consequences, not the instrumentper se. Therefore it is not the instrument that must be called to account, but individuals, their moral conscience and their personal and social responsibility.’

This leads to the question of where the state should intervene. I will not pursue that subject here except to say that free-market liberals and proponents of Catholic social teaching are generally agreed that a legal framework to promote private property, the enforcement of contracts and so on is appropriate. How much further we go is more complex for the Catholic than it is for the free-market liberal.

In dealing with the question so far, I have deliberately changed the wording of the question from one which is completely bizarre. The question does not, in fact, ask whether markets can exhibit moral behaviour but whether they can be ‘made moral’. Of course, the market cannot be ‘made moral’ by some kind of outside entity as if the market is something that is deliberately shaped and designed. Furthermore, if the market is shaped and designed and people are not allowed to take free decisions then those decisions are not moral decisions. The state cannot force me to take a moral decision. If I am not reasoning, acting and choosing, I am not taking a moral decision.

Lest I be accused of being reductionist and reducing the market to a collection of individual decisions unaffected by culture and so on, relaxing that assumption makes no difference to the fundamental argument. Clearly, somebody taking decisions in a particular cultural context might find it extremely difficult to behave in a moral way. According to Catholic thinking, sin and disorder affects culture and society – it has a social dimension and, in a sense, becomes social. But Catholic teaching on sin is clear. Social sins or structures of sin (which then affect culture and so on) have their root in individual sin. For example, an individual buying and wearing an immodest swimsuit may well be affected by culture to such an extent that the individual may be barley culpable if he or she has not been properly instructed about modesty or comes under intolerable peer pressure or pressure from advertising. But that culture is itself rooted in individual sin: the teachers, priests or parents that have failed to instruct; the friends who make fun of him or her; the owners and managers of the firms that use explicit images in advertising are those that commit the immoral acts, not the market per se.

So, there are three questions within the title for tonight’s seminar, all of which are rather ridiculous for a Catholic.

  • Can the market be ‘made moral’? Of course it cannot be. If it is ‘made moral’ from the outside, then people are not choosing the moral path.

  • Can the market become more moral? Of course, if people behave in a more moral manner (as with sex, drinking, family relationships and all other human activity).

  • Will the market reach a stage of moral perfection? No – not as far as Christians, Jews and Muslims are concerned. Man is imperfectible.

I don’t blame the organisers for asking such a silly question because I should imagine the answers will be illuminating – at least I hope so. But, asking whether markets can be moral – in other words, asking whether free human activity in the economic sphere can be moral – is no different from asking whether social relationships can be moral. And the answer is the same.

Philip Booth is Senior Academic Fellow at the Institute of Economic Affairs. He is also Director of the Vinson Centre and Professor of Economics at the University of Buckingham and Professor of Finance, Public Policy and Ethics at St. Mary’s University, Twickenham. He also holds the position of (interim) Director of Catholic Mission at St. Mary’s having previously been Director of Research and Public Engagement and Dean of the Faculty of Education, Humanities and Social Sciences. From 2002-2016, Philip was Academic and Research Director (previously, Editorial and Programme Director) at the IEA. From 2002-2015 he was Professor of Insurance and Risk Management at Cass Business School. He is a Senior Research Fellow in the Centre for Federal Studies at the University of Kent and Adjunct Professor in the School of Law, University of Notre Dame, Australia. Previously, Philip Booth worked for the Bank of England as an adviser on financial stability issues and he was also Associate Dean of Cass Business School and held various other academic positions at City University. He has written widely, including a number of books, on investment, finance, social insurance and pensions as well as on the relationship between Catholic social teaching and economics. He is Deputy Editor of Economic Affairs. Philip is a Fellow of the Royal Statistical Society, a Fellow of the Institute of Actuaries and an honorary member of the Society of Actuaries of Poland. He has previously worked in the investment department of Axa Equity and Law and was been involved in a number of projects to help develop actuarial professions and actuarial, finance and investment professional teaching programmes in Central and Eastern Europe. Philip has a BA in Economics from the University of Durham and a PhD from City University.

2 thoughts on “Can markets be made moral? Ask a silly question…”

  1. Posted 08/02/2012 at 12:05 | Permalink

    “Man is imperfectible”. If this means Man cannot become perfect, then that is true . If this means that Man cannot move towards perfection, then that is false.

  2. Posted 08/02/2012 at 14:29 | Permalink

    It definitely means the former. Indeed, the whole thrust of the post would be invalid if it meant the second.

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