The Moral Economy

I was wondering why we shouldn’t apply the free-market ideology to everything. The basic idea behind the free market is that the system will self-regulate and will automatically settle into some kind of state that is optimal. Why can’t we apply this to everything and simply have no laws whatsoever. Presumably everyone wouldn’t simply go out and commit all sorts of heinous crimes. The truth, however, is that some sadly would. One might expect people to drive carefully (because it’s sensible to do so) but most wouldn’t. I’m sure that a system without laws would settle into some kind of state, but possibly not the kind of state that most would be comfortable living in. Essentially, we are an intelligent species that has developed a set of morals that most would agree are reasonable and we impose laws so that our society is one that satisfies our sense of morality. Our morals wouldn’t disappear without laws, but what would you do with those who didn’t behave according to society’s norms and how would you define these norms? As soon as they’re defined, you essentially have the beginnings of regulation.

I don’t see why something similar should apply to our economies, especially as these are not technically independent of our societies. Economies don’t develop by themselves. They develop as a society tries to provide food, shelter, transport, entertainment, education, healthcare, etc. The goal of an economy is not to create a profit for investors. It’s to provide services. Investors should be rewarded for careful and useful investments, but not at the expense of the services being provided. Similarly, those who contribute most and are regarded as the more creative members of our economies should be rewarded more highly than others. However, they shouldn’t then be able to use this to then leverage extra rewards over and above what might be regarded as reasonable. I accept that it is difficult to define reasonable, but the top 25 investment bankers in the US earning 3 times more than all of the 80000 teachers in New York state seems immoral to me. Similarly, the richest 1000 people in the UK increasing their wealth by £155bn since 2008 also seems hard to justify. This would wipe out two years worth of deficit, something the government regards as so important that almost 1 million people have lost their jobs since 2008.

I accept that economies are very complicated and that some will (and should be) rewarded more than others. However, following a path of austerity in which the poorest will potentially lose all they have while the wealthiest continue getting richer seems immoral. To argue that this is the moral path (since future generations will have to pay for any extra borrowing today) seems entirely disingenuous.

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