Why the State Cannot Offer a "Moral Economy"

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In the latest issue of The Nation, sociologist Fred Block offers a compelling look into how we can restore a "moral economy". At least, it would be compelling if it didn't rely on the tired old economically-ignorant propaganda the left and right have used since time forgotten. In other words, Block attacks the free market, incoherently and inconsistently, and he doesn't offer a true solution besides -- you guessed it -- calling for more government instead of championing the institutions of free civil society. His case for a "moral economy" via the State is vacuous because the State has no morals.

Block begins by attacking what he calls "market fundamentalism" as a synonym for laissez faire capitalism. He laments that under Republican leadership, "Market Fundamentalism has ruled the country for close to twenty-five years. It has produced weak economic performance, corporate crime waves, government corruption and a coarsening of the culture." Neocon leadership has indeed produced these things, but remember, neocons are just right-wing socialists, not free marketers of any stripe.

Block continues, "In the 1930s, in contrast, the Democrats were successful in telling people a story in which government action could overcome the rot caused by business greed . . . Moreover, government assistance would create a benevolent community that could respond, as FDR said, to the 'third of a nation [that was] ill-housed, ill-clad, and ill-nourished.' Within this community of care, hard work would be rewarded so that individuals could triumph and achieve upward mobility for their families."

The premise of Block's article, then, is how to approach discussions of economic policy so as to sucker more unwitting people into statism. He explains that the term moral economy is "shorthand for the argument that sustainable prosperity must be built on strong moral foundations." He proceeds to give a recipe for such an economy based on four principles. "[R]eciprocity, responsible competition, conservation and cooperation interact and reinforce one another to enhance a moral economy's effectiveness." Let's break all that down and discover what it means.

His first principle--reciprocity--means "we need to behave toward others as we want them to act toward us. We should avoid force and coercion in our economic relations . . . Reciprocity is the foundation upon which trust is built, and high levels of trust are indispensable for economic prosperity."

One of the first lessons of libertarian/anarcho-capitalist ideology is that initiating force and coercion is wrong (NAP). Most people behave according to these principles without a gun held to their head. The State, as we understand of course, is based around force and coercion, as well as outright fraud. It does nothing to promote "reciprocity" and trust, and in fact protects those who are politically connected at the expense of the rest of us. When was the last time you trusted a politician?

His second principle -- responsible competition -- compares economic competition to sports. "In the world of sports, competition pushes people to elevate their performance beyond all expectations. But the competition is so productive precisely because it is structured by rules and because the referees are on the field waving penalty flags."

Yet there are rules in the marketplace. The question is whether a monopolistic State is the most efficient way to enforce them. A society and an economy based on theft, fraud, extortion, coercion, and violence would become totally dysfunctional. People have a natural aversion to chaos and therefore construct order around principles such as human/property rights. It's only with a powerful, wealthy government that people who abuse this system can get away with it with impunity -- especially when the regulatory agencies are controlled by politically connected businesspeople and politicians who want political points. The State rewards the wealthy and incompetent while legitimate players suffer. Overall, if the State is like a referee, it's a corrupt one immersed in payola scams. Not to mention it's the only game in town; there are no other alternatives as would develop naturally in a free, open market.

His third principle -- conservation -- refers to preserving the environment (and hence our natural resources) and "providing the maximal opportunity for each person to develop his or her capacities [as] the best way to avoid wasting our human resources."

Any economist will tell you that economics is all about conservation -- making the most out of scarce resources. A robust economy depends on a judicious allocation of resources as well as saving. This principle logically refers to natural resources (such as fossil fuels) as much as it refers to money or any other finite good. And the State has undermined this principle with soft fiat money, outrageous debt, excessive taxes, fractional reserve banking, and artificial interest rates that cause artificial growth. What we face now is the culmination of these policies. In short, the State never encourages conservation.

His fourth principle -- cooperation -- is explained thus: "Market ideology focuses only on competition, but a productive economy depends on cooperation. The most productive firms are those that create high levels of cooperation between employees and managers, and most large-scale economic efforts require complex webs of cooperation between different firms and public-sector agencies."

He's wrong; the market does not rely solely on competition. Far from it. The market depends on a mix of competition and cooperation. People trade and exchange goods and services all the time, and not just money. Murray Rothbard articulated brilliantly that we are social animals and depend on free interaction and specialization, in a market, in order to achieve an acceptable standard of living. When we engage in peaceful trades, we each gain something in the end. Politics, by contrast, is a zero-sum game; in politics, one party gains while the other loses. Individual rights mean nothing; the interests of whatever group is in power (or whoever can successfully suck up to them) come first and foremost. Cooperation or "compromises" exist in this realm, but conflict is the modus operandi behind them.

Basically, Block's theory is that in order to create a "moral economy," we must rely on the State to foster these four principles. In other words, only through the State can we create prosperity. Civil society, community partnerships, and peaceful trade and commerce cannot achieve social good; only a monopolistic institution based on violence, extortion, and fraud can fully achieve this. Despite its demonstrable failures on the local, national, and global scales, we must trust in the State and politicians to provide, and we must have faith in politics to do better for ourselves. This indicates a dystopian distrust of free people and society to achieve what Fred Block wants (in this case, a "moral economy," whatever that may be) without finagling them, through politics, into fulfilling his ends.

What does he have to say about this? "Market Fundamentalists are the utopians; they imagine that the market magically transforms everyone into angels who can be trusted to do the right thing. The moral-economy narrative recognizes that there is no "royal road," no magic formula, that will produce the desired combination of prosperity, order and justice. Rather, it is through the continuous exercise of democratic self-governance that we can reform our institutions to make both the economy and the government work better to achieve our shared objectives."

Question: How is an institution built upon coercion, corruption, hypocrisy, extortion, fraud, and war, going to create any sort of "moral" economy or "moral" society?

Question: how can any government promote those four principles -- reciprocity, responsible competition, conservation, and cooperation -- when it hardly follows them in its own affairs?

Question: Politicians are no more moral than you or I; they just know how to win popularity contests. So how can they be more qualified than the rest of us to decide how to foment a "moral economy"?

Question: If politics depends on power-mongers battling for supremacy using propaganda, resentment, and even violence, and the free economy depends on social cooperation, exchange, individual rights, and free association...which is more productive? Which is more mutually beneficial? Which is the moral choice?

Free market advocates (real ones, not Republican posers!) are hardly utopians because all of the principles Block cites are already essential aspects of a free society and a free market. If anything, we are pragmatic; we recognize that while this will have its problems, overall it could be much better than the system we have now. On the other hand, the State spits upon those lofty four principles in everything it does, so we can't depend on it to grant unto us moral principle from above. States and governments don't make people or the economy moral; neither does the market. The choices individual people make, and how they impact others, make them moral.

So there is no such thing as a "moral economy," and even if there were, the State couldn't hope to create one.