Markets and Exploitation
Greg Mankiw has annoyed some folks enough that there is actually an “Anti-Mankiw” blog. Predictably, it is generally a diatribe against Mankiw and against markets, the latest of which is on the topic of exploitation. The basic idea is that markets are somehow inherently evil partly because they exploit people.
The authors suggest we work backward to understand this exploitation:
Instead of beginning with the idea that everything should be marketized, begin from the idea and theory that nothing should be marketized, and then ask what would qualify something to be marketized.
They go on to attempt to make a historical anti-market argument, but it is strange logic indeed. Here’s what they say:
In fact, if you think historically, this is actually the way in which the debate occurred — we didn’t start out with a fully marketized society and we only got there from peeling off various layers of social-institutional control!
I agree that we did not “start out” with a “fully marketized society” (although I’m not quite sure I understand what that means); rather, we had a slow and unsteady emergence of markets. That’s because folks gradually figured out that by trading with their neighbors, they could improve their lot in life, and that’s what market economies have done. Would the trade privileges of Elizabethan England – granted to the wealthy merchants at the expense of the laboring poor – have been a better place? Would it have been less “unfair” or less exploitative? Or, hit the rewind button a bit longer and consider the feudal society of medieval Europe. Less exploitative than modern market capitalism? Hardly. Industrialized economies, as the economic historian Greg Clark has pointed out, do indeed save their best gifts for the poorest.
But more than that, as Deirdre McCloskey has been arguing for years, markets nurture our virtues. Commerce, in her view, helps to develop our ethics (she reminds us of something Chief Rabbi of Great Britain Jonathan Sacks once said: “It is through exchange that difference becomes a blessing, not a curse.”). According to McCloskey, “Even an ethics of greed for the almighty dollar, to take the caricature at face value,” is not as bad as the opponents of capitalism would have us believe. ”…It is better than an ethics of slaughter, whether by patrician sword or plebeian pike.”