Value in the Markets
In the world of finance, generating wealth is undeniably among the driving values, if not the chief value. Yet regardless of the extent to which the value of generation of wealth is highlighted, it is not, nor can it be, the only value in the market. After all, fairness and honesty are presuppositions of a functioning free market, as is liberty. Without these ‘action-guiding’ values, the free market system cannot stand.
But values like fairness, honesty, and liberty, which enable a thriving market, are not the sole values in the market. Other societal values, including moral values, are also essential. (It should also be noted that honesty, fairness, and liberty, too, are moral values). This claim is predictably dismissed by so-called ‘Free Market Fundamentalists,’ who claim that, within the free market, the market itself determines what is right and wrong.
Free Market Fundamentalists often invoke Adam Smith, the great economist and author of Wealth of Nations, in defense of their claim. Yet, as the Nobel Prize-winning economist and philosopher Amartya Sen rightly points out, this reading of Smith is, in fact, misconceived. Sen writes:
“Beyond his attention to the components and responsibilities of a well-functioning market system (such as the role of accountability and trust), he was deeply concerned about the inequality and poverty that might remain in an otherwise successful market economy. Even in dealing with regulations that restrain the markets, Smith additionally acknowledged the importance of interventions on behalf of the poor and the underdogs of society. At one stage, he gives a formula of disarming simplicity: “When the regulation, therefore, is in favour of the workmen, it is always just and equitable; but it is sometimes otherwise when in favour of the masters.” Smith was both a proponent of a plural institutional structure and a champion of social values that transcend the profit motive, in principle as well as in actual reach.[1]”
Thus, even Adam Smith, who is commonly held to be the champion of free market capitalism, recognized the importance of moral values in a well functioning market system.
Given the complexity and reach of today’s global economy, attention to the values – moral values in particular – that guide our decisions in the market are more crucial than ever.
[1] http://www.newstatesman.com/ideas/2010/04/smith-market-essay-sentiments« Back to Glossary Index