The market and the moral man

Free Market advocates often make arguments for the strength of their system based on the strength of the market, or the effects that may be produced by the market for the economy, society, technology, etc.

When however, we come to the subject of morality, there is very little cause effect argumentation which is demonstrated for the market and morals. This is because it is painfully obvious that the market does not of its own workings produce moral men. This does not mean by contrast, that there are no moral men in business today, though in places like Goldman and Sachs they are no doubt difficult to find. Rather, I mean to say that when we look at the effects of the market on man, we must say that it creates primarily greed, and spirals to many other vices.

Moreover, the market does not of its own accord make the populace moral. If by no other method, we could show this by tracing the decline in religion and morals since the advent of English Capitalism in the 18th century. The most preeminent case to be made against the market in the area of morals, is pornography.

In the year 2000, Hollywood put out just over 400 feature films. The "adult entertainment" industry, so-called, produced 11,000. This is not some communist scheme to undermine American morals. Crypto-commies are not funneling millions into production and spiriting away billions to fund revolution for the proletariat. Quite the contrary, the rise of the "adult" industry, which was estimated at $5 million in 1970 is estimated around $10 billion today (Reefer Madness, Sex drugs and cheap labor in the American black market, by Eric Schlosser, pg. 115) is due precisely to the demands of the market. This is not merely a modern phenomenon, it started in the 1920s where peep shows, seedy stores and back alley theaters began making profits from men who would slip away. I mention by the way communists because in arguing this point previously with a colleague, he argued pornography's presence was due to the ACLU, which is sadly naive at best.

Two main revolutions happened to increase both the demand and the distribution of pornography by moving it out of the seedy back alley into the home or an accepted mainstream. The first was Hugh Heffener, who took sex to the next level and moved his cut and paste operation on his kitchen table to his first issue with a Marylin Monroe centerfold which printed 70,000 copies in its first run. Within three years he had a millions subscribers.
The second, and far less known, is a hard working entrepreneur by the name of Reuben Sturman. Sturman worked hard selling comic books he had obtained which were sent back to the publisher or to be destroyed, and moved into several other fields. The success of Playboy had brought about numerous imitations, and the high demand for magazines and books caught his eye. Seeing the chance to make money Sturman embarked on distribution of as much as he could get his hand on. This is important, whether Sturman viewed the stuff he distributed is largely immaterial, he was a hardworking businessman who saw a chance to make millions, like any good entrepreneur, and he went for it. He was not a communist or an ACLU guru, he was a hard working capitalist responding to the demand of the market, and even increasing the demand. When he came hard up against obscenity laws, he laid out a clever procedure, sue the government and drag cases out. To avoid the government, he began setting up shell companies for distribution and paying men money just to have a name on paper who didn't even have to do anything. At one point, according to Schlosser, Sturman actually picked names out of phone books to make as CEOs of distribution companies.

A clever businessman, Sturman realized that his business could be taken to the next level, and in 1976 prepared for the audio visual tape, we know today as VCR. Hollywood studies resisted the medium, but adult video was ready for it and in 1979 75% of all video cassettes were pornography. (Schlosser pg. 148) This means functionally that the porn industry was responsible for the launch of the VCR. He would not have entered into a medium that was at first cost prohibitive unless the demand was there. Sturman's logic is impeccable, most of his clients don't want to handle the stuff, and most men who deal in porn or would otherwise venture to a seedy theater are afraid of the social stigmas attached to it, or if the wives find out (since most women, retaining their common sense, have righteous indignation over the sacrilege against their wedding vows. People commonly site playgirl as evidence of womens' interest in porn, but the majority of the subscribers are gay men); thus Sturman took the business to them.

In 1992, after failing for 20 years to prosecute Sturman for obscenity, the he was prosecuted for tax evasion once one of his Swiss bank accounts were discovered. This ended his control over distribution and control of adult entertainment. He had established numerous front companies, which with him out of the picture took control themselves. As I mentioned, in the year 2000, Hollywood produced over 400 feature films. The porn industry produced 11,000. This is due to the market. People want these products. It is the largest export in America and perhaps the most shameful tribute to our decadence.

All of this should serve as a reminder that the "market" is a-moral, it is not moral in itself or immoral. It is a tool, and it must be controlled by a user as all tools. Irrespective of who controls it, it will be controlled because there is in truth no such thing as a "free" market. It is simply the market, and it will be controlled by those with the most wealth in influence if there is a vacuum, and if the government exerts too much control such as in a command economy or a communist country, there will be little activity in the market to sustain healthy economic activity. Yet the market is not capable of producing moral men, it is only capable of producing goods to be bought and sold. Sturman is an example of a product of the market, and if anything a champion of it. He responded to demand by increasing and distributing the supply, including financing new mediums that would take years to hit critical mass such as VCR. He did it by contributing to America's moral decline and descent into anarchy.

The fact is, and this can be observed in all societies and follows from natural law, vicious men must be controlled either from the inside (by changing their will, doing penance and converting to good) or from the outside (prison). A society that becomes dominated by vicious men is doomed. This is due to the fact that it can not operate for the common good. Those in charge look to what pleases them, and we see this today with our representatives in government. They don't care about the common good of this country. Men do not care what is good for their families. As Pope Leo XIII observed in Rerum Novarum, the family is the basic building block of society. As the family goes, so does society. Plain and simple.

Thus the market needs to be regulated by some force, not necessarily by a central government, it can also be by a local government accountable to its local citizens. Yet if a government does not rule justly, then men will rule for themselves and when that happens the most puerile and wealthy rule for their own interest. As the old rule goes, might makes right, and when man is left to his own devices, without grace, he will incline toward evil, not good, because the will is fixed on imperfect goods after the fall.

Michael Novak observed, in response to Sohltshenitsyn's Harvard address, that he would rather see a government that allowed pornography because that meant we are free. This is the same bedrock principle of men such as Sturman, Heffner and Flynt, they should be absolutely free to market filth, and to profit from it. The problem is it is not true freedom. Even if all of religion were wrong and porn were okay rather than a complete degradation of the human person to an animal and sense experience without dignity, the concept itself does not represent freedom, but anarchy. If everyone is free to do what he wills he is not capable of choosing the good, or at least, something outside himself. He is only free to choose what is on the inside, what he immediately desires. This principle is the complete corruption of the common good. There are some things which are more important than market forces, and which need to be suppressed. Now could the government stop all pornography if it criminalized it? Probably not. This is a long standing problem stretching back to the 19th century when the work of some entrepreneurial French photographers had produced a flood of nude photos circulating around the US and especially in the Union Army. Yet a culture which vilifies and prosecutes porn, keeping it out of the public as best it can, will find that vicious men are kept in control, and is a fundamentally healthier society than where men are free to do whatever the market leads them. Just ask your wife.

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Unethical = Uneconomic

John Connolly, in response to my “Why Economics Needs Ethics” post, brings up an excellent point. He says, “What you say is true, but I'm not sure that the argument will hold up as exploitation (I've heard arguments for sweatshop labor at low rates because it keep the workers working harder). The argument could be that with $5 over $2 a day, even though the worker can't buy what he's making, he can buy more of other things in his country. If he's making soccer balls, he probably won't want to buy them anyhow. But we do, so what's the harm in hiring them out to make them at what they consider to be luxurious rates? Everybody wins, right?” This is an excellent point, and needs to be considered.

Let us be clear here: It is not that workers in all countries should be paid the same. Workers should be free to leverage their lower standards of living into a competitive advantage. But this only works if the object is to raise their material well-being above the level of subsistence as defined by their particular society. Obviously, this level will not include everything it includes in our society; it is unlikely to include a car, a big house, or even indoor plumbing. But if workers get subsistence and something to spare, the “something to spare” will support many local businesses, which will then raise the demand for labor and with it the average wage. Further, the excess over subsistence will contribute itself to trade, as workers, or at least the lowest level of businessmen, have incomes sufficient to buy foreign goods. Within a relatively short time, the country becomes a real trading partner and not just a source of cheap labor.

But if, on the other hand, justice is absent, if workers can command no more than subsistence, then subsistence itself will be defined downward; the human capacity to endure hardships will allow for increasingly oppressive conditions. As this process continues, workers will lose what little bargaining power they have, because there will be no excess to support them in times of unemployment, and they cannot withhold their labor, even for a day. In such cases, the only thing worse than being exploited is not being exploited; one must work at the terms offered or starve. At this point, all the positive values of trade disappear into a black hole. Education will not be advanced because only the meanest labor is desired, labor which can be done by mere children, the easiest of all groups to exploit. Women will not be able to attend to the home, since they are the next easiest group to mistreat

Business begets business; the more flourishing businesses there are, the more supporting businesses spring up. But first, business itself depends on having a broad base of customers with sufficient income to support business. With just a little justice, a virtuous business cycle ensues; the little excess fuels little businesses which fuel more businesses, which creates more excess over subsistence, a higher demand for workers, and more businesses. This “virtuous cycle” has been tested in such places as Taiwan, and Singapore, and in many other examples of successful development. But if justice is absent, the reverse happens. If the workers in Bangladesh won't moderate their demands, we'll move to Indonesia. And then we will play Indonesia off against Vietnam, and from their we'll threaten to go to Ghana. The poor in each country are played off against each other, and a vicious cycle results, pushing wages to subsistence and pushing subsistence itself to lower and lower levels.

When we hear of sweatshop conditions, we like to comfort our consciences by saying, “yes, but its a good rate for their society.” Alas, this is not true; the very logic of the trading argues against it, as owners seek greater and greater profits; indeed, the market punishes the owners if they cannot continually increase their gains, and the logic of competition, unrestrained by the natural and customary rights of workers, dictates a continual search for ever-more exploitable labor.

Such systems are unstable. Not only socially unstable, fueling growing resentment and discontent, but economically unstable, as the whole logic of trade is broken, a logic that depends on a certain balance. The unethical is also, ultimately, the uneconomic.

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