Morals and the Free Society: 4. The Moral Contradiction of the Free Society

Here is the fourth chunk of the argument. To return to the third chunk, click here. To advance to the fifth chunk, click here. The complete essay is posted here.


We have arrived at a peculiar situation. For the free market to exist at all requires that people adhere to certain moral principles that constrain their pursuit of their own utility, such as respect for property rights and the principle of noncoercion. And these minimal principles aren’t sufficient for a perfectly efficient free market (one that satisfies the conditions for perfect competition), only for a modestly efficient free market. Of course, no market will exhibit perfect efficiency, but efficiency will improve the more open, honest, probative, loyal, forthcoming, fair-minded, and so forth that people are, again at the expense of their pursuit of their own utility. And this generates the apparent paradox that people must be community-spirited in order to set the stage for them to be selfish!

So, what is the message here? Are people supposed to be egoists or not? In the purely competitive market, people are supposed to follow only one principle: egoistic utility maximization. But for such a market to exist, even approximately, people have to follow certain “moral” principles—principles of good behavior distinct from egoistic utility maximization and that often conflicts with egoistic utility maximization.

To be clear: The problem is not that the free society seems to require two different sorts of moral principles. It’s that the different sorts of moral principles conflict, and no rationale is provided for resolving the conflict. We have seen that the egoistic utility maximizer has no reason to forego his own utility to promote an efficient free market (or any free market) where this can be avoided. On the flip side, it’s at least ironic to insist on “moral” rules to create an egoistic free-for-all. Why should people care about nonegoistic constraints on the pursuit of their own utility if their observance is only in the service of egoism?

That a social order should require devotion to principles that sometimes require individuals to restrain their pursuit of their own utility is hardly very surprising or problematic. It’s the mixed message that is the problem. It’s that we demand that people care about the rights of others and simultaneously embrace as their moral vision egoistic utility maximization. On the one hand, we’re supposed to care about community-spirited values; on the other hand, we’re supposed to care only about our own benefit. The problem is to reconcile these two directives.