On the moral rightness of markets

This quotation comes, via Cafe Hayek, from Pope John Paul II's encyclical Centesimus Annus from 1991:

In this expanding economic community, the pope observed, a market system encourages the virtues of “diligence, industriousness, prudence in undertaking reasonable risks, reliability and fidelity in interpersonal relationships, as well as courage in carrying out decisions which are difficult and painful but necessary, both for the overall working of a business and in meeting possible set-backs.”

Too many people spend too much time trying to tell us that markets are some sort of moral vacuum and that, for all their usefulness, markets are essentially a necessary evil. Or even that they don't exist at all.

Truth be told markets are, as Pope John Paul II recognised, one way in which humans interact and for most exchanges in most markets the principle of the handshake applies. I recall a friend who provided legal support for the Showman's Guild describing a land deal between two showmen and how the seller, having spat on his hand and shaken with the buyer, would not even meet with another man who wanted to offer more money.

When I think of all the transactions and exchanges - whether or not money is involved - that rely on a high degree of trust in the other party (trust taken on faith not through some lawyer's contract), it seems to me that the market is a powerful force for goodness, for those virtues the late pope named. There are billions of exchanges and transactions every year, all taking place in a market, and a vanishingly small proportion of those events are corrupt, exploitative or unethical. It is, perhaps, this truth that we should focus on rather then the dry, utilitarian benefits of the market the economics text books speak of.

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