Even though my readings in the philosophy of economics did not answer the questions with which I began, they were informative, and I have been fortunate in finding general works and authors who have been unremittingly clear, logical, interesting, insightful and intellectually stimulating. There may be no finer collective examples of intelligible, reasonable, and well-crafted English prose on any technical subject anywhere than many of the diverse authors I found on the topic of economic philosophy -- John Locke, Adam Smith, John Stuart Mill, Robert Heilbroner, Lester Thurow, John Kenneth Galbraith, and Milton and Rose Friedman.

John Stuart Mill, in his Principles of Political Economy, as in all his writings, stands out particularly in this regard even in this group. No one else I have ever read has expressed complex thoughts as clearly, logically, precisely, and beautifully as Mill. But I also am particularly grateful for the enjoyably keen wry wit and wisdom of John Kenneth Galbraith, who writes not only with clarity and insight, but with the extraordinary, well-practiced talent to turn the brilliant, and often deliciously and devilishly barbed, phrases that make his books as pleasurable (to those of us who like that quality) as they are informative. And although all the authors I have read capably illustrate economic principles in terms of their expected practical results, Galbraith seems to me to have the most perceptive, persistent, and sometimes the singular, understanding of the relationship between specific economic principles and goals on the one hand, and, on the other, the more general social and practical principles and goals they should be, but aren't always, derived from, and which they should, but don't always, serve. It is important for economists (and the politicians who follow their advice) to periodically think about what direction they are headed, not just how effectively and efficiently they are traveling. Galbraith reminds them of that, though he often is chastised for doing so. The purpose of my book is to penetrate into the ethical and philosophical roots of economic concepts and principles in somewhat the same way that Galbraith delves into the social and historical ones.

Since my quest for economic philosophical understanding has taken me down a somewhat different, though in part overlapping, road than that generally traversed by economists, I want to try to show how the ideas in this book relate and intermingle with some of the issues and points these authors make. Doing so may give an added perspective to this work, and to the relevant aspects of theirs.

Locke believed that using one's labor to make or gather something made it one's own because one's labor was in some sense "one's own", "The labour of his body and the work of his hands we may say are properly his." "[E]very man has a property in his own person; this nobody has any right to but himself." His claim seems to be that labor (without hoarding or limiting others' ability to meet their needs with their labor) is a sufficient condition for achieving ownership which "no one could without injury take from him." He does not address the issue of labor's being necessary for ownership other than to say "the penury of [man's] condition require[s labor] of him." Though in Locke's time one could obtain clean air without any more effort than drawing breath, such was not the case for obtaining food or water, neither of which leaps to an adults mouth without some effort on his part to get it there. Although he does not address it, with regard to the fable of the ants and the grasshopper (where the ants worked hard all summer to gather food for the winter, but the grasshopper just played and said he would get around to it later, ignoring the advice of the ants to work instead of playing; in the winter he had nothing and wanted the ants to share with him what they had gathered), Locke would probably say that the ants had every right to the food they gathered because they had gathered it, and the grasshopper had no right (of privilege) to what they had earned. (That is, the grasshopper had no moral claim on the ants' stored food, though they could share with him if they wanted to or if they felt they had an obligation of beneficence to help him out.) He does not specifically address whether from their own sense of benevolence they ought to freely share with the grasshopper, but his reference to penury without labor seems to imply that he sees no reason why they would have any obligation out of compassion to do so.

Further, he thought trading other things for what one made was reasonable, though he saw that the introduction of anything durable that could serve as money led to the amassing of more property than anyone would seek at any one time in terms of perishable goods. "Where there is not something both lasting and scarce, and so valuable to be hoarded up, there men will not be apt to enlarge their possessions of land.... For I ask, what would a man value ten thousand or a hundred thousand acres of excellent land, ready cultivated, and well stocked too with cattle...where he had no hopes of commerce with other parts of the world, to draw money to him by the sale of the product?" But he did not seem to think that problematic or in conflict with his other principles. "...since gold and silver, being little useful to the life of man in proportion to food, raiment, and carriage, has its value only from the consent of men, whereof labour yet makes, in great part, the measure, it is plain that the consent of men have agreed to a disproportionate and unequal possession of the earth...for they have found out and agreed in a way how a man may rightfully and without injury possess more than he himself can make use of by receiving gold and silver, which may continue long in a man's possession, without decaying for the overplus, and agreeing those metals should have value." He did not foresee how this might problematically effect the distribution of labor and resources in ways that could cause injury and hardship by keeping unused resources out of the hands of people that might well make use of them.

It is not clear how he would have suggested treating those unable to work, nor what he might have said about the validity of inheritance. Inheritance is a double-edged issue of merit, since although an adult receiver who is lazy and idle may not deserve what he gets, the giver who has earned his property by following Locke's principles, has the prima facie right to do as he wishes with that property, even if it is to give it to someone who does not deserve it. This is an issue of the conflict between rightful earning of money and wrongful spending of it (see Chapter 19). Also, Locke probably would not have imagined a world in which people were paid more to play games or to entertain others than they could hope to gain from direct efforts to meet the necessities of life, so, as with inheritance, it is not clear what he might have thought about athletes and entertainers or anyone's making the kinds of fortunes through the willingness of millions of people to pay them individually small amounts from their own earnings.

Locke also does not talk about fairness of distribution of the produce from divided labor. He gives the example of gathering apples in the woods as a case of earning those apples for oneself, as long as one does take more than one could use without spoilage, and as long as there were plenty of apples left others might pick for themselves. But he does not say how one might or should share with a person who plants an apple tree from which one picks fruit. Planting and cultivating an apple tree that bears more fruit than one could use oneself, especially if someone else picks the apples, causes conflict between two of Locke's principles, and makes one of them by itself difficult to apply. The planting and cultivating the tree would make the tree (and presumably its apples) yours, but not all of them if you could not use them all; and perhaps not if you were not the one who picked them. How should the tree cultivator and the picker, if they are different people, distribute the apples? They have both "mixed their labor" with the tree and its apples, but in ways different from two people both picking apples at the same time where one hands them down from a high branches to another who puts them carefully in baskets on the ground.

Nor does Locke address issues of patent or copyright of things which one person's using does not take away from others (see endnote⁽¹⁾) such as when one photocopies a book instead of buying it, which in some cases might be like the issue of the apple tree and its fruit, or drinking from a river. "So that in effect there was never the less left for others because of his [taking] for himself. For he that leaves as much as another can make use of, does as good as take nothing at all. Nobody could think himself injured by the drinking of another man, though he took a good draught, who had a whole river of the same water left him to quench his thirst; and the case of land and water, where there is enough of both, is perfectly the same." Can one then take apples from the tree another has planted and cultivated? Can one photocopy a library book as long as one leaves others plenty of paper, or plenty of other copies of the book to buy? Can one hook oneself up to the cable tv outlet or use a satellite receiver as long as one is not taking the signal "from" anyone else who might want to get it?

But these questions notwithstanding, I think there is merit and intuitive moral appeal in Locke's three principles. When I picked my daughter up from Sunday school one day when she was around four years old, she was in a tugging match with a classmate over a truck that was one of the toys available for everyone in the classroom. As we walked out I asked her who had the truck first. She defiantly said he did, and at first I thought that should have ended the matter, but it turned out she still felt she had the right to the truck because he had taken two toys, could not play with both at the same time, and he was not playing with the truck. She believed that gave her the right to play with it, just as if it had still been in the common area waiting to be picked up by someone. She believed that his not playing with the truck, and merely hoarding it, negated his original first-come-first-serve right to it. Notice, this was a toy for anyone who wanted to play with it and who got it first, and that just having it by your side did not necessarily constitute playing with it. It was not something the other person had made or brought with him to school from his own private collection, or had any other claim to other than that he had got to it first that day. I felt that if she was stating the facts of the case right, that her judgment was correct. And I believe it was an intuitive judgment; I don't think she had read Locke behind my back or heard me speak of his ideas; she did not cite him anyway. There is a difference between mere industriousness on the one hand, say, in picking apples, so that your family can have apple pies or so that you can bake pies for the neighbors in trade for something they work at, and on the other hand picking up all the apples you possibly can, leaving few for others, simply so that you can sell them for a greater profit. It is the difference between industriousness and piggishness; and that difference is reflected in the far different moral values of the two activities. Industriousness is generally an admirable trait, the selfish hogging of things purely for your own advantage is despicable.

Notice that there are potential conflicts between Locke's first principle and the second or third, a conflict between what you can do with what you own, and not wasting or taking things away from others that you do not need. If you can do whatever you want with what you own, then you should be able to waste it, ruin it, or let it lie idle, even if there are others who might enjoy it or be able to make use of it. What Locke says about gathering apples seems fine enough -- one has a right to what one picks from public trees as long as one takes only what one can use and leaves more for others to pick. But suppose one makes things that endure far longer than apples, suppose one carves toys, and sets them out in a window for children to admire. One can amass a great collection of such toys in a lifetime. Is it okay for one to keep them to oneself, or to burn them if one wants, if one has little use for them, and there are people who would want them? Does an eccentric billionaire have the right to deface a famous work of art that he buys, burning it or painting over it, or purposely marring it in anyway? In a sense, the painting is not just his, even though he has purchased it; it is a public treasure that happens to be in private hands. If he despoils it in some way, he robs the public of something very important that they cannot replace. (And, I am told, in France he could face criminal charges.)

The same question can be asked about land ownership or ownership of any sort of means of production, such as a manufacturing operation; does one have the right to do whatever one wants with owned land just because one owns it, or does one have an obligation to let others use parts you have no use for, when they could make use of land but cannot get their own because all of it has already been taken? Does U.S. Steel have the right to close a steel making plant altogether because it is not profitable enough for them, though it could be profitable enough if owned by those who work in it, but who cannot afford to buy it? By taking more than one needs, when it precludes others from having what they need, one is actually harming other people, and doing it for no justifiably overriding reason.

Similarly one might ask the question with regard to money. In fact, with money, as long as virtually all resources are owned, and cannot be acquired by means other than money or the promise of money (credit), the conflict appears quite readily; some people make more money than they need, while others can barely get by, even though they work hard and contribute to society or would if they could get a job. Having more money than one needs when others have less than they need, in a world where access to resources virtually or generally requires money, where there is unemployment though able and willing workers, and where there are unmet needs that people without money would gladly pay for if they could, but people with money don't want and won't pay for, the excess collection of money by some does cause injury to others. In short, Locke's principles seem to conflict with each other in a society where penury is sometimes caused more by the parsimony of people than by the parsimony of nature, and where the parsimony of people seems somehow less acceptable than that of nature. And I believe, as I explained earlier in discussing his views in particular, Hayek fails to take into account, how much, in an interdependent society, some people's financial dealings cause economic harm to others -- by controlling or strongly influencing how labor is utilized, whether it is utilized, what products and services are available, etc. Business itself bemoans a high government debt which ties up money they could otherwise borrow at lower interest rates. But when any business ties up money in various ways, it also keeps that money out of the hands of those who might wish it to be used differently or in different business endeavors. As long as money influences labor and production as strongly as it does, and as long as money is distributed in ways that do not meet Locke's principles, then Hayek is not entirely correct that business transactions are simply private transactions between parties for their mutual benefit and thus essentially outside the purview of others' (moral) jurisdiction⁽²⁾.

Galbraith recognizes throughout The Affluent Society and The New Industrial State that in a society of (overly) abundant productivity, further increasing output by means of additional, and reasonably unnecessary, productivity (particularly when you have to artificially stimulate consumer demand in order to sell your products) just to achieve greater income distribution through greater employment, is not the most reasonable or sanest way to address the problem of fair income distribution or economic security. Further, he argues that inflation necessarily accompanies full employment and full capacity unless certain kinds of wage-price controls are put into effect to stop the tail-chasing price/wage upward spiral, such controls being something few people think they want, not only because of ideological free market beliefs or misconceptions, but particularly in regard to their own wages. And he points out, rightly, I believe, that practices such as (increasingly earlier) retirement, child-labor prohibitions, and decreased work week hours, are methods of achieving less than full employment (in the sense of utilization of labor) without attaching the stigma of unemployment. I would add to that increasing paid-vacation time. Paying people for not working (which is what paid vacations, shorter work days, retirement, etc. essentially do) decreases the amount of productivity possible, but does so without commensurately decreasing the distribution. Paying people not to work, but keeping up the level of overall productivity, is also a way of giving other people jobs, by adding second and third shifts or by needing enough workers to cover for those on vacation or out sick, or to fill positions vacated by retirement. This is a form of redistribution of wealth by redistribution of jobs (contribution), and by paying people not to work so that others can have their jobs, essentially splitting the income from the work between them. In Locke's terms, what paid vacations, shorter work weeks, paid sick leave, early retirement, etc. do is to prevent people from doing more labor than is necessary for their own needs while leaving sufficient means for others to labor at to meet their own needs. Galbraith's recommendations to prevent unnecessary production and to prevent inflation are to have specific, somewhat limited and easily managed wage-price controls that effect only the inflationary kinds of wage-price spirals, and to raise unemployment compensation to rates that would afford a decent living, so that increased employment, particularly of those unskilled workers who can contribute relatively little worthwhile work, is unecessary for economic security.

While I agree that it is better to increase leisure than to produce unnecessary goods by means of tiresome or debilitating effort, I believe Galbraith's characterization of inflation is not quite right, and that his unemployment solution is not the fairest, because it disregards the relationship between contributing to society (with work) and being distributed to from society (by payment for that work), in a manner consistent with the principle of earning property by labor that Locke at least partially recognized.

By shortening the work week, giving paid retirement, having paid vacations and paid sick leave, etc. under conditions of increased or abundant productivity, one is dividing the fruits of the contribution of greater productivity among more people rather than having some people work more while others have no jobs. If one allows some people to work more than others, but then taxes them to distribute wealth to those who are not working, one is going against all of Locke's principles -- (1) taking away from people what they have earned with their own labor, (2) allowing some people to earn more than they need, and (3) not leaving enough resources available for those who would like to work. In addition one is then paying people for not working and is thus giving them something they are not earning. If, however, one allows some people to work less while others are then able to work who would not be able to, one is not breaking any of Locke's principles but is keeping them all. Hence, shorter work weeks, earlier retirement, etc. are Lockean ways of redistributing wealth and are apparently also more palatable ways then what Galbraith recommends. I think they are more palatable because I think Locke's principles, under certain circumstances, are both accurate and in accordance with our intuitions about labor.

There is another way of solving the distribution problem between the employed and unemployed besides cutting back on the labor time and having more people working less time and besides simply redistributing the wealth of those who work to those who do not. That solution requires putting to work those who are unemployed at jobs different from those already being worked at by those who are employed. Instead of cutting back on the amount of labor an individual does in a particular industry only in order to give other people jobs in that industry, get jobs for the unemployed in other industries, and be certain that sufficient money is added to the economy to pay for that increased productivity, and be sure that money is added in a way that pays for the labor, and not some other labor. This, of course, is not easy, and it is merely at this stage a theoretical solution on my part. But it is an alternative end, one that is both palatable and legitimate I believe, if means could be devised to implement it, and if the jobs created are beneficial jobs, not unnecessary "make-work" jobs and not harmful jobs. Galbraith is rightfully concerned that large companies, industries, and advertisers create work by creating unreasonable and in a sense unnecessary demand. Others argue that people already have desires or demands or insatiable appetites, but that sometimes they don't realize exactly what they want until they see it advertised or see its becoming fashionable. I am inclined more toward Galbraith in this regard, but with some difference.

I believe there are plenty of real needs that go unmet, while at the same time many items are produced which are unnecessary and for which the kind of artificial demand Galbraith points to has to be induced. Real needs that go unmet are needs for food, shelter, clothing, medical treatment, and a great many psychological needs such as certain kinds of understanding and sympathetic companionship (such as when one is ill or dying and does not want to be alone, or when one is stressed out and afraid or anxiety ridden, or just needs some kind of human kindness for whatever reason), child-rearing help, better learning opportunities of all sorts, and, for many people, intellectual stimulation, aesthetic stimulation, etc. Many of the things we need are the kinds of personal services that are hard or impossible to mass market, and are the kinds of things that either pay little or that cannot be afforded by many. Many of these things are things that are now done for little pay or by unpaid volunteers --church congregations, service guilds, hospital aids, coaches in the youth leagues of various sports, friends, neighbors, relatives, etc. In a society of abundance of the sort Galbraith describes, and which I think exists in industrial or technologically advanced societies, it seems to me that we would be better served, and keep in tune with Locke's principles, by having mechanisms available that encourage and allow people to work, for a fair and decent living, at meeting these kinds of needs, rather than for paying people to be idle, and rather than for encouraging them to work at demonstrably socially unnecessary and harmful tasks. But this will require some social ingenuity or effort to facilitate, particularly if we are to do it with some sense of freedom rather than by fiat or centralized control. I think such social ingenuity is not impossible. If ways can be found to make voluntarily rewarding the processing of tobacco into products that increase the chances for cancer and heart disease, if ways can be found to make voluntarily rewarding the production and sale of pet rocks, memoirs and movies about mass murderers and crooked politicians, deafening stereos, frivolous cable channels, fertilizers that grow grass but kill birds, and expensive toys that kids find entertaining for only a short time, and if ways can be found to make very voluntarily profitable the sale of clothes or athletic shoes with one designer's label or logo rather than another though there may be no useful or other distinguishing characteristic between them and other brands, then surely ways can be found to make voluntarily profitable attending or nursing the sick, befriending the lonely, teaching and learning, researching crippling and fatal diseases, attending to children, and meeting the needs of the isolated, the elderly, the disabled, the homeless, the poor, and the dying.

I stress the notion of making these things voluntarily profitable because I think that one of the main differences between government enterprise and private enterprise is the feeling of freedom on two fronts that many people have about business but not about government. Many people feel forced to pay taxes though they do not generally feel forced to buy things they choose to buy, even when buying necessities. And many people feel a burden in obeying government regulations that seems to them more oppressive than the burdens imposed upon them by employers. Galbraith, I think rightly, mentions that one might be far more a slave to company regulations than to government ones, and that one might be far more a slave to the desires created by advertising, tradition, or social fashion, than to the rules promulgated by government; but I think he, being a rational person, does not realize how important to many people the feeling of freedom is, even when it is a false or irrational feeling.

Being enslaved by the control of one's desires is both a more powerful form of control and yet frequently a more happily received one. Few people object to being victims of their appetites as long as they see no harm in them. But people frequently do not like being forced to do even what they know is right. There are, of course, exceptions. Some people feel overburdened by company policies they feel unfairly intrusive. And some people do not like spending vast amounts of money on cars or doctors and would prefer to have good public health and public transportation instead. Unlike General Motors says, these people believe that their cars are not their freedom. And people who are fortunate enough to live in a country where they feel the bulk of their tax money is well spent on things that enrich their lives by more than taxes impoverish them, do not seem to mind paying those taxes, even when they are proportionally much higher than the taxes in America. But at this writing, Americans at least, tend to be unhappy with what government buys for them with what they feel was their own money, and would prefer to spend it on things other people make them feel is more important than what government "offers", and makes them pay for.

At the end of The General Theory of Employment, Interest, and Money Keynes remarks about the importance of economic individualism⁽³⁾ and gives reasons for its importance, including "the safeguard of personal liberty", but he does not analyze the notion of personal liberty or dwell on it. I think Galbraith clearly sees in a way that Keynes did not, that private enterprise does not necessarily encourage or permit very much personal liberty for most of those engaged in it. I believe Galbraith is right about business forces' manipulating people but that he does not significantly appreciate the difference it makes to people about their feelings of liberty, which is what I think Keynes was actually meaning. Some manipulations seem more coercive than others to the person who is the object of manipulation, and what business tends to achieve more effectively than government seems to, is the manipulation of people without their feeling manipulated. From a purely rational point of view, it makes little difference in terms of freedom whether someone is manipulated by control of his desires or by control of his options or actions, but from a psychological and social harmony standpoint, it often makes a huge difference. And it is a difference that can significantly affect the success or failure of given business, economic, or governmental programs. I believe it is important to many people that they feel free, whether those feelings are rationally justified and whether they actually have liberty in any rational or philosophical or deep sense at all. There is a politically and economically serious discontent that comes from feelings of (say, government) coercion regardless of whether those feelings are reasonable or not, and regardless of whether they are far less coercive than the advertising and other kinds of regulations, intrusions, and manipulations "voluntarily" accepted from private enterprise. (I will return to this matter shortly in discussing Galbraith's faith in the efficacy of wage/price controls in key areas to control inflation caused by full capacity, full employment.)

And although I do not want a government involved in the purely manipulative, purely selfish, often less than honest or honorable, and sometimes wastefully and extravagantly expensive kinds of salesmanship that permeates much of private enterprise, well-intentioned and justified leadership at times will fail without good salesmanship. There are times government leaders must take somewhat unpopular (economic) positions, but the more they can do to make those positions acceptable and desirable instead of just legally obligatory, the better will generally be the compliance, the acceptance, and the overall social harmony. This generally will involve far more than making speeches on behalf of one's program. Establishing reasonable forms and limits of government "advertising" or "social engineering" or propaganda is beyond the scope of this book. I think there could be legitimate and reasonable forms, but I think there are definite boundaries that government should not be allowed to transgress in attempting to persuade citizens of the importance and necessity of a given course of action.

Galbraith points out cases of differential inflation (Chapter XIV --"Inflation"-- of The Affluent Society) but he speaks of such differences sometimes as lags of one groups' increase of wages in keeping up with others. Unfortunately some groups' wages never catch up, and in the meantime, even for those groups whose wages will catch up, but are currently lagging, it is not exactly inflation that they are suffering from. It is a relative lack of economic demand for their services compared with the economic demand of other services. Differential changes in wages due to differential demands is not the same kind of true inflation in which all prices and wages rise more or less equally in proportion to the increased ratio of money to the goods seeking them all. In 1942 when, as Galbraith writes, "a grateful and very anxious citizenry rewarded its soldiers, sailors and airmen with a substantial increase in pay," Honolulu prostitutes raised the prices of their service, thus benefitting both from increased volume and higher unit prices. The fact that Honolulu school teachers and others that the armed forces did not patronize did not also get pay increases is not so much a case of inflation as a case of proportionately increased economic demand for a particular service. The fact that current (1993) medical costs are rising relative to other sectors of the economy is not part of general economic inflation (other than inflated prices in some cases) but is due to a proportionately greater increased demand for medical services relative to other segments of the economy, with, in some cases, additional medical services being offered, particularly with the addition of expensive new procedures and equipment. There is more health care possible, more health care available to those that can afford it, and perhaps people want more health care, or want it more than previously, so more money is being spent on health care than before --greater volume-- and in some cases higher unit prices because of greater demand. Further, health care costs rise disproportionately because health insurance allows for the payment of larger fees than health care facilities and providers could be able to even imagine collecting from individuals who would have to pay their own bills.

Similarly, many college tuition costs have recently increased at a pace greater than inflation as the demand for attending college in general (and those colleges in particular) grows and more people feel it is a necessary investment. The higher demand for college allows an increase in prices that has nothing to with inflation.

I believe that the full employment, full capacity wage-price spiral Galbraith refers to, and which he thinks can best be halted by wage-price controls, results from insufficient understanding of the relationship, and insufficient balance, between increased output (gross or net national products) and increased money supply, particularly when this affects different industries unequally. Theoretically, increasing the total output (productivity) of goods that can be sold simply increases the size of the goods and services we are dividing among ourselves. If 100 million people increase their productivity by 10%, than theoretically the fruits of that increase can be divided among the participating traders. People that produce more than they did in the past, will be able to trade with others who produce more than they did in the past.

The problem arises when companies or wage earners successfully try to make more in money increases than is commensurate with the increase in productivity. This can occur (1) when demand goes up so that people will pay more for that product by paying less for (or purchasing fewer) other products -- but this case is not inflation; it is a change in priorities or fashion. But it also can occur (2) when more money is added to the economy than is somehow warranted by the increased productivity. The amount of money added to the economy over and above what is warranted by the increased output, is inflationary. Because money behaves differently from products in the physical world, as explained in chapter 18, it is difficult, if not impossible, to judge how much money needs to be added to make purchasing power exactly equal increased output to be purchased. If too much is added, the effect will be generally inflationary, or differentially profitable in whatever particular industries people will spend the extra money. If too little is added, the increased output will be unable to be sold for its full price, or some other service or product will lose money as people have to use money they would have spent elsewhere in order to purchase the increased output. The amount of money available for (real economic) activity is important for labor and trade to be able to work smoothly, but so is the "location" or distribution of the money at any one time -- distribution, not in the sense of fairness, but in the sense of whether money is at an effective place to allow work that needs to be done, that people want done, and that there are people willing and able to do, for pay. In this sense of "distribution" barter is an economic system that does not have good distribution; it is fair, but not very effective. Similarly, money distribution can be fair, but not very effective. If, say, the steel industry increases output (at the same unit costs and prices) by 10%, and the amount of money necessary to buy that steel is added to the economy, but gets in the hands of people not interested in buying steel, but of buying bigger stereos, than that steel cannot all be sold (at the wanted price), and stereo manufactures can increase the price of their stereos because wealthier people will have more money they will be willing to spend on them.⁽⁴⁾

I believe there are two additional phenomena that show it is difficult or impossible, at this stage of economic knowledge to get money to have the intended kinds of economic effects in the physical world. One is the history of banking practices and government banking policies, which is a history of major changes and adjustment as it became obvious, sometimes painfully obvious, that intended policies were not having the desired consequences or were causing unforeseen and undesirable problems, or that at the least were not sufficiently general to work under unanticipatedly changed social/technological conditions. I realize that some of these policies were political or social in whole or part, and therefore may have failed or erred because of mistakes about human behavior or human needs rather than because of any misunderstanding of how money and financial policies work causally. However, there is sufficient evidence, I think, that there have been frequent errors in the understanding of how money, and policies relating to money, work on an economy, not just erroneous philosophical and psychological assumptions about fairness, the nature of real needs, or what incentives best govern human behavior, etc. Further, economics is a social science, and to some extent economists should understand the causal relationships of money and financial policies in terms of human nature. One cannot simply say that financial or money policies will do certain things if people will only behave certain ways in response to them, and not care or be able to reliably predict how people will actually act. The actual human response to any particular monetary policy is part of the phenomena the economist must understand and reliably predict (not ignore), I think, if his theories are to have merit as science.

The second phenomena which I think shows that we are not yet able to use financial types of policies alone (whether monetary, fiscal, banking practices, or whatever, either in isolation or combination) to help govern what people do and produce, etc., is the fact that quite talented and knowledgeable economists disagree about what sorts of financial manipulations will achieve or most effectively achieve what sorts of results. Again, I am not talking about the kinds of philosophical disagreements which exist among economists about what sorts of ends or goals a society ought to have or how wealth ought to be distributed in order to be fair. I am talking about contradictory disagreements over the necessary and sufficient, purely causal, means to produce agreed upon ends and goals. For example, whether a capital gains tax decrease at a given time will create more jobs or simply more profit taking.

But whether my idea of the cause of this kind of inflation is correct or not, I think Galbraith extrapolates too far from whatever success during World War II that wage/price controls may have had in curbing or checking this sort of inflation. Wars which have broad public support allow the suspension of normal economic trading practices in the same way that natural disasters do. When a society is cohesively engaged in a war effort, they will tolerate many policies, including economic ones, they would not tolerate under conditions of less monolithic national purpose. Curfews, gasoline rationing, blackouts, military draft, etc. are some of the kinds of practices that people willingly accept during war, but would not accept during normal peacetime. Similarly with regard to wage/price controls, which are seen during war as preventing profiteering, but are seen during peace as preventing free market choices. They prevent the very same free market choices during war, but during war that is seen as a good thing in order to try to make certain no one profits unfairly from the sacrifice of others. During peacetime, since people are not called upon to patriotically sacrifice (nearly as much), there is little concern about protecting their interests from profiteers who take advantage of "normal" market forces or people's needs. During "normal" conditions, price increases due to market forces such as increased demand, though it may take advantage of that demand, does not always seem to many to take unfair advantage of people. Even if Galbraith is correct that wage/price controls would curb or cure full employment/full capacity inflation, it is not a policy that would generally be broadly acceptable without consensus about broader social directions. And that consensus is not as likely to occur without some sort of war or disaster. Wars and disasters tend to make acceptable a much greater direct control of labor toward common ends than would ever be tolerated in a free market democracy during peace or normal times. In part that is because (apart from any obvious ineptness by "management"--whether government or otherwise) during wars and disasters management goals tend to be the same as workers' freely chosen goals, so there is less or no conflict between freedom and control.

Galbraith has obvious faith that government can serve people's needs, though he realizes government does not always do so in the way it should. His faith in the possible efficacy of government opposes Milton Friedman's and many other people's pessimism in that efficacy. But in his chapter XVII on "The Theory of Social Balance"⁽⁵⁾ he in part gives two of the reasons I discuss in my chapter on social goals for why government [or, I would simply say society, in case government is not the best social means to use] should have public services at all. Put negatively, "Failure to keep public services in minimal relation to private production and use of goods is a cause of social disorder or impairs economic performance." From the positive gain side, "By failing to exploit the opportunity to expand public production, we are missing opportunities for enjoyment which otherwise we might have had. Presumably a community can be as well rewarded by buying better schools or better parks as by buying bigger automobiles. By concentrating on the latter rather than the former, it is failing to maximize its satisfactions. As with schools in the community, so with public services over the country at large."

However, this only partially addresses the issue raised by Hayek and others which is essentially that (call this argument ANT, after the fable of the ant and the grasshopper): one can, and should, consider the community to be simply those that work and successfully participate in the market system. Insofar as those people want to pool their resources to make schools or recreational areas they can do so and use those facilities themselves or charge a fee for others to use them. But there is no reason to freely include those who cannot pay. They have no right to participate if they cannot afford to, and [I assume, though Hayek might have some other solution, it would follow that] if those unable to pay threaten social disorder then we shall have to meet that threat just as we would have to meet such a threat from any foreign country that wants to take over our resources and the fruits of our labors. And even if it may be in our own best interests to provide schools for at least some of the poor so that they can become productive and then afford to enjoy the various facilities we have built, there is no reason to build parks for them or to share our hard earned benefits with them. As Galbraith has pointed out, [advances] that are not made, like babies that are not [conceived], are rarely missed.⁽⁶⁾ We simply shall not miss the things that might occur if we were to invest more. One cannot invest in everything, so it is simply too bad if we miss some opportunities we did not know about. We cannot invest on mere possibilities; we need some higher probabilities for investment return in order to spend our money on these things.

Where Galbraith sees the community as some sort of cohesive "whole" or unit, people who hold the ANT view do not. And where Galbraith sees the benefits and the returns in the kinds of public investments that he espouses, those who hold the ANT view do not, or do not see them as worth the investment costs. In addition, people who hold the ANT view may also hold that not giving free services to the poor gives them an incentive to enter into the existing economic system whereas providing free services removes that incentive. But that is a separate argument and is an empirical one about what most effectively motivates people to work. I myself doubt that the causes of motivation are such a simple or general matter. Different individuals seem to me to be motivated by vastly different kinds of things, and peer and role model expectations and example seem generally to have more to do with incentive than desires for certain kinds of distant or general rewards. I will leave that for social scientists to investigate. The argument from motivation, however, is not central to the ANT argument which looks, not to the future, but to the past -- in order to see what people have earned or might reasonably be expected to earn, not what they might merely perhaps earn. When Galbraith says that by not having public investment "we are missing opportunities for enjoyment which otherwise we might have had, the "we" he refers to is the society taken as a whole, but for those with the ANT view, the society as a whole is not as deserving as those within society who have successfully participated in the economic system or market through their own labors and received their rightful reward for doing so. And if the "we" in question are simply those who can afford to provide the investment, those who hold the ant view believe the statement about missing opportunities not to be persuasive or interesting. They would rather have the bigger cars. And as I pointed out with regard to the preschool that my children attended, most of the parents seemed more interested in luxury cars with expensive conveniences in them then in spending a bit more to get additional educational services for their own children. Such people are not likely to invest in other children's education.

I personally agree with Galbraith's view that in modern industrial, affluent society, those who are very successful need to help the unfortunate who through no particular fault of their own are not, but I think both he and I need to bring more force to bear against overgeneralization of the ANT argument⁽⁷⁾ than our vision of the ideal society. I have tried to do that in part by arguing that in many cases people are unfairly and meaningfully excluded from an economic system through no fault of their own (costing us their potential contributions, as well as costing them their potential distribution), that work or contribution is not always fairly rewarded in an economic system, that market forces don't always work in the same direction as rational judgment might in rewarding those who benefit society and penalizing those who harm it or give no benefit, that blind luck or the unrecognized efforts of others often play as much a role as judgment and hard work in deciding success or failure, that we can probably strike a more reasonable balance between certain kinds of consumption and certain kinds of investment, that too often concerns about the distribution of wealth prevent a highly probably increase in wealth for all (i.e., a much larger pie to divide), that the introduction of money into economic contributions and distributions causes some undesirable anomalies that need to be addressed, and that pure or strict quid pro quo "business" principles are not reflective of the way we actually tend to treat each other and should not be the general standard for how we behave toward each other.
 

Milton and Rose Friedman, in their book Free to Choose, argue that government solutions to supposed problems of the free market are at best often ineffective or inefficient, and are generally unfair and harmful (often even to those they are trying to help), extravagant and wastefully expensive, virtually impossible to eliminate, and essentially imposed on people against their wills, thus curtailing or destroying liberty and freedom of choice -- liberty being essential not only as an important personal end, but as a necessary ingredient, the elan vital of increased productivity. Moreover, they do not think that the nature of government permits government to do any better since constituencies that benefit from government programs and policies lobby so heavily for them and since there are no mechanisms to terminate failed programs other than the wisdom of legislators, a wisdom which they seldom, if ever, exercise, particularly against a vocal constituency. They would probably think Mill too optimistic when he observed that when the well-being of society depends on the wisdom and benevolence of government, it is at all times precarious. Unsuccessful market enterprises lose money or go bankrupt for lack of earned income; unsuccessful government enterprises tend to be expanded, supported by increased taxes or increased debt. Yet they recognize or agree that there are people who need assistance to survive, and they favor a negative income tax where people with insufficient income are given a certain amount of money to utilize in the market as they need to, thus meeting their own needs through freedom of choice and through use of market mechanisms which are more efficient and effective than government programs. They cite numerous specific examples in specific areas to justify their pessimistic despair about governmental prospects for social salvation.

Unfortunately even if their examples are accurate, it still leaves the problems raised in this book that free markets theoretically cannot solve, problems that need some sort of non-business mechanism or non-financial-profit motive to solve.⁽⁸⁾ And it leaves the kinds of problems Galbraith and others point to when businesses, especially large (bureaucratic) corporations operate in some of the same ways government, especially large (bureaucratic) departments, operate. Although it is true that unsuccessful businesses cannot continue, grossly inefficient or unfair businesses can survive and even flourish for a long time, particularly when there is no real competition and cannot easily be any. Businesses often become or remain successful in ways that are less than desirable, less than beneficial, and less than reasonable. Further, through their access to national and international advertising, large corporations virtually blur the distinction between free choice and dictated homogeneity. Until government promulgations can even approach the success of market manipulations of desires, there is frequently far less need to fear government restrictions on freedom than corporate ones. At this writing, at least often when government limits your choices and your options, at least you tend to know it.

Further I believe the Friedmans give the average businessmen too much general credit for being "more than a calculating machine responding, only to monetary stimuli" and for recognizing self-interest as being more than "myopic selfishness, [and] exclusive concern with immediate material rewards" (pp. 18-19). Yet Milton Friedman himself has argued that the business of a corporation ought to be solely to give the greatest monetary return to its stockholders, and that the only social programs that business should contribute to are ones that save its stockholders money (e.g., by contributing to a stockholder's charities for him in order to earn a pre-dividend corporate deduction) or, "it may well be in the long-run interest of a corporation that is a major employer in a small community to devote resources to providing amenities to that community or to improving its government. That may make it easier to attract desirable employees, it may reduce the wage bill or lessen losses from pilferage and sabotage or have other worthwhile effects."⁽⁹⁾ Friedman persuasively argues that corporate executives are hired to maximize the return to stockholders, but he seems to me to have a limited notion of return, even when that return involves the purely financial self-interest of the stockholders. If stockholders live in the small community that Friedman refers to above, it may cost them less money in the long run to have the corporation treat the community well than for them to have to lay out their own personal funds for amenities the corporation collectively could have more economically provided or for remedies to problems the corporation caused the community by pollution or by fostering crimes -- crimes attributable to frustrations and anger over perfectly legal but nevertheless ruthless or inhumane mercenary corporate business practices. And if the stockholders do not live in the community where the corporation operates, presumably on Friedman's mistaken view, such costs to the community are morally irrelevant. Of course, Friedman can say that if that is what stockholders want to do, they can direct their corporate executives to operate more humanely and to do more good for the community they are located in at their own financial expense, but it seems that if "absentee corporate owners" are rapacious and totally self-centered, he sees nothing wrong with them profiting financially at whatever costs they can get away with to the community where they do their work. Repeatedly in Free to Choose the Friedmans seem to think there are few or no real Scrooge's in the world of business and few owners or bosses who will harm other people's lives just in order to make a dollar. Further, he thinks most managers, owners, stockholders, etc. enlightened enough to realize that their own self-interest requires both a long-range view and the humane treatment of others. But if even a small part of the corporate behavior that is reported in the news is accurate, executives and stockholders will too frequently take every advantage they legally can, and whatever illegal advantage they think they can get away with, or whose penalty they can most cost-effectively afford and still benefit from. Perhaps the Friedmans believe business owners would never take advantage of employees, and that there would be no sweat shops or their psychological equivalent, even when the physical surroundings are more pleasant and the hours somewhat shorter, if businessmen were just allowed to look out for their own self-interests.

Self-interest, no matter how broadly interpreted, is not going to consider the needs of future generations or the needs of people who have little to offer in trade for one's product or service, and whose patronage is not necessary for a satisfactory level of profit. Caring for future generations or those left out of the economic system (when there are plenty of people in the system to do all the trading one wants, and when there is no real fear of violence or insurrection from those left out) is not a result of self-interest but a result of concerns for other people. It is a part of benevolence; and though benevolence is frequently misguided, it is not to be maligned. Misguided benevolence can be corrected with awareness of its results. The problem with government is not that its benevolence is misguided; it is that it does not necessarily have any more benevolence than it needs to appear to have to attract sufficient votes to remain in office in a democracy or, more generally, sufficient power or support in any form of government. The "broad" self-interest of most legislators is hardly a model for children. It is no different from the "broad" self-interest of businessmen who need to be, or who only even need to appear to be, no more benevolent than necessary to attract sufficient customers. As I pointed out in my discussion of "the invisible hand", not all self-interest is benevolent; only that which somehow depends for its satisfaction on benefitting someone else. Benefitting those who cannot help you (or who might help you only marginally), and whom you do not need to benefit in order to attract other customers impressed by your generosity, is not a characteristic of self-interest but of benevolence.

In general the Friedmans argue that the free market, combined with the most governmental liberty, is the best hope to solve the problems they discuss. Yet the very problems they discuss are ones that the free market often seem unable or unwilling to remedy. I have pointed out other problems for the market in this book. Both Adam Smith and the Friedmans seem to assume there is sufficiently broad humane, ethical, and social understanding and consensus operating among individuals to foster fairness, encourage civility, and engender good. Whether Smith was right about his age or not, I think that assumption is unwarranted and untrue today. The Friedmans are most persuasive when they point out that government remedies and trade union remedies are often ineffective, and frequently worse than the problems themselves or market responses to those problems. That does not mean there are no problems or that there are no solutions different in kind from government regulation or union opposition. The Friedman's themselves propose a negative income tax as a way of helping those whose incomes are low, for whatever reason. It is not that the Friedmans are uncaring of those in poverty; it is that they think the kind of government programs that are supposed to help them, harm them more, and harm everyone else to some extent in the process. For reasons I have given throughout the book, I do not believe the market, even with a negative income tax, will solve the problems that can be solved and that people want solved. In some cases what are needed are methods by which market problems and market limitations can be pointed out and addressed in ways that work well and that are most freely adopted. It may take non-market remedies or organizations to do this, but those need not necessarily be governmental. It is important to keep in mind the difference between a problem and the failed solution to that problem; particular failed solutions, or even particular kinds of failed solutions, do not mean the problem is non-existent or insurmountable or nothing to fret about.

And the Friedmans seem to me to use freedom in a selective sense, a sense (1) that ignores employers' (often coercive and detested) regulations, (2) that ignores the kinds of concerns about the manipulations of desires by social pressures that Mill points out and by advertisers that Galbraith points out, and (3) that ignores the fact that in a free market society with certain civil liberties, only those with money, influence, or influential friends can afford to exercise many of those liberties (such as changing jobs, starting a business, getting good health care, going to better schools, meeting influential people, etc.) and that some liberties -- such as the freedom to walk alone safely down certain streets may not be exercised by anyone because of other freedoms of the society. Freedom is not the simple notion that the Friedmans seem to assume.

Nor are all cases of industriousness Lockean. There are not freely available resources lying around untapped just waiting for people with the "right stuff" --the energy, the will, the work ethic, or the daring-- to go out and make use of them without affecting anyone else. Most resources are already owned by someone, and most work affects other people one way or another, sometimes even costing other people their jobs. We are interdependent and mutually entangled in a great many ways that give us obligations to others in ways we don't even always realize or appreciate. In a modern technological society, our own actions have effects on others whether we mean them to or not and whether we are aware of them or not. As Mill points out, when money is spent on luxuries, that may attract labor to produce those luxuries - labor that would otherwise be used to provide necessities for less affluent people. It is one thing to extol (aspects of) a market system in which people can prosper without costing others anything. It is quite another to extol (aspects of) a system in which some people's enrichment results from, or in, other people's expense, particularly if that creates very wide disparities in wealth and well-being.

Further, as I have argued earlier, it seems simply unreasonably dangerous, in an age when industry and technology have the ability to do not only tremendous good, but also tremendous harm, for a society to have no sources outside of a given business or industry to try to monitor and prevent such harms --trying to keep Pandora's box closed. As much as any company might have good intentions, they can still make horrendously damaging mistakes. And companies with little, if any, social or ethical consciousness can do the same damage through negligence or design. It seems to me highly irrational and risky for a society not to have some sorts of mechanisms besides businesses or industries themselves to try to provide protection against potentially devastating accident, negligence, or greed. This need not necessarily involve regulation and control as we have come to know it and sometimes to regret it; but it means some sort of reasonable effort to protect ourselves from disaster even if it means in some cases causing us to be less productive or less free. There is no productivity or freedom in death. The Friedmans put much stock in freedom; but freedom, as numerous people have pointed out, is not always the greatest good, particularly when life itself is imperiled by it in ways that could be prevented. Death and liberty are not always mutually exclusive in the way that Patrick Henry was concerned. We need not be vigilant only against foreign enemies who would harm us and powerful government officials who would enslave us, but against business interests among us that have great power to do great damage without intending expressly to do so. There is more than one regard in which the price of freedom is eternal vigilance. I propose no solution here; there may be many; I am only trying to point out the problem. It is not a negligible problem.

The Friedmans write, in admonishing those who seek a fair society "fairness...is difficult, if not impossible, to define precisely." "Fairness...is in the eye of the beholder. If all are to have 'fair shares,' someone or some group of people must decide what shares are fair--and they must be able to impose their decisions on others, taking from those who have more than their 'fair' share and giving to those who have less."

"In addition, if what people get is determined by "fairness" and not by what they produce, where are the "prizes" to come from? What incentive is there to work and produce? How is it to be decided who is to be the doctor, who the lawyer, who the garbage collector, who the street sweeper?"⁽¹⁰⁾

But precision in "defining" fairness is not what is necessary in order to have a society that is not unfair. And understanding what is fair in general is quite easily divorced from one's own circumstances by anyone who really is trying to decide what is fair, and not just what is in his own selfish interests. If people could not objectively or intersubjectively agree about what is generally fair, we could have no sports leagues, since sports, by and large, is essentially about fair competition. Nor could we have courts that anyone would respect. And business would grind to a halt, because all the fine print in all the contracts in the world would not be helpful if there was not general fair play in business and general understanding about treating each other fairly. Fairness is not an irrational, individual, totally subjective personal concept about which people cannot reach broad agreement without someone's imposing his views on another. Though there are disagreements about what is fair from time to time, those are either just the difficult or borderline or marginal cases, or they are disputes about self-interest, not fairness. It is not that people seek perfect fairness, but that they do not want egregious unfairness.

Further, neither equality nor gaining something for nothing is what fairness is about. The "prizes" will come from those who produce and go to those who produce, or who have some other legitimate grounds for having distribution -- the young, the infirm, the elderly -- not because they have rights or demands, but because good people who have blessings ought to share their blessings with others for the reasons given in Chapter 16. Fairness means things like having reasonable opportunities to develop and use one's worthy talents and skills when nature does not stand in the way; and it means getting a reasonable (not necessarily an equal) compensation for one's worthy efforts and results, again when nature does not stand in the way. When reasonable opportunities are denied by people to some and provided to others for no good reason, that is a kind of unfairness; when people work equally hard and equally long at jobs that are equally necessary or equally important but one is rewarded, just on the basis of some arbitrary bias, 10 or 100 or 1000 times more at the expense of the other, than that is a kind of unfairness. The Friedmans are right that life is not always fair and nature does not always distribute abilities and resources equally, usefully, or happily, but that does not mean that people do not need to be fair and reasonable with each other when they can. And it does not mean that some people should be allowed to take advantage of others just because of accident of being born into more fortunate circumstances. Many kinds of re-distribution would not be necessary if initial distributions were not unfair and people were not taken advantage of or denied the opportunity to contribute and be rewarded to begin with.

Further, there are some distributions that are fair in Nozzick's sense of being fairly traded for, which nonetheless work out to huge rewards because of the nature of the market, rather than because of some intrinsic merit for the work itself. There can be much money in mass production and mass distribution, particularly of items that can be made and sold or distributed relatively inexpensively so that great sums, for example, can be made with recordings or tv or radio broadcasts. These huge sums are far out of proportion in a sense that everyone understands to the work that went into making them, which might be all right -- but not when it also happens that these huge sums might not thereby be re-invested into useful work that might serve others. It is not that any rational person begrudges some sports superstar or popular entertainer for being lucky enough to be able to successfully work in a kind of industry that can generate mass sales, but it is important for the society and market from which that money comes that the money be re-invested in some way so that it can be put to use. Just as that money can cause harm to the market if it is hoarded, so it can cause harm to people by being used in bad ways or even in simply wasteful ways. Society does get harmed when money is used in ways that cause harm or do no good, when there are people who cannot get jobs that need to be done because the money has effectively been taken out of circulation from those jobs. It is a case where by taking too much, though one has earned it, one does not leave enough for others -- simply because the way the market works.
 

The Friedmans write about income distribution and incentive: "If Red Adair's income would be the same whether or not he performs the dangerous task of capping a runaway oil well, why should he undertake the dangerous task? He might do so once, for the excitement, but would he make it his major activity? If your income is the same whether you work hard or not, why should you work hard? ... If there is no reward for accumulating capital, why should anyone postpone to a later date what he could enjoy now? Why save? If there is no reward for maintaining capital, why should people not dissipate any capital which they have either accumulated or inherited? If prices are prevented from affecting the distribution of income, they cannot be used for other purposes. The only alternative is command. Some authority would have to decide who should produce what and how much. Some authority would have to decide who should sweep the streets and who manage the factory, who should be the policeman and who the physician."⁽¹¹⁾ But the alternative to the unfettered free market, with distribution chips falling wherever they may, is not just a command economy. When the draft was in force, people did jobs far more dangerously than Red Adair's for far less money, yet that was not necessarily their whole life's work. A non-military form of temporary service or reserve service may also be effective. The peace corps attracted a number of people without paying much, and they attracted some of the best and the brightest. The Friedmans themselves have forgotten that "man is not simply economic man", that people do things for more than mere money. And if the Friedman's wonder why people would work hard for no more money than other people get, how do they explain why many people today work at hard, dirty, dangerous, or alienating jobs for very much less than other people get? Further, many people who make a lot of money hate the jobs they have and feel pressured to remain in them in order to have any moments of freedom and happiness; perhaps in a different kind of society with different (equally freely) chosen ends, one might be happier and better off with a happier job that brings in less money. Many people seek that sort of life now. Many physicians work for relatively little money in research posts or public health. Teachers and nurses make little. And although some jobs may be difficult to "sell" without offering monetary incentive, many are not. It would sound funny, for example, to ask the Friedman's question thus: "Who would play golf or basketball or make movies for a living if there were not lots of money it in it?" The answer is a whole lot of people. There is no reason to think that money is most people's motivation or that some substitute besides lifelong total governmental command is the only way to fulfill certain societal job positions.

And moreover, the obverse of the Friedmans 'concern is of concern also, sometimes even greater concern. The pursuit of money may, and often seems to, impoverish both society and those who pursue financial wealth but who come up short of securing it and instead waste efforts that could have been put to much better use had they not been pursuing money. The easiest case to point out is all the would-be athletes that jeopardize their educations by putting inordinate amounts of time into trying to get good enough to have lucrative professional sports careers even though the mere numerical odds against their success is great, and all the proportion of failures cause much individual grief and obvious loss to society. If a student who could have been productive and happy had he or she learned the right skills instead misses acquiring those skills because they are playing some sort of ball to get good enough at a career they simply cannot make, the cost has been great, for them and for society.
 

In short, though Galbraith and the Friedmans would quarrel with many of each others' solutions for what appear to be good reasons, that still leaves the problems; and the problems should not be dismissed because some particular kinds of solutions have not worked. The search should be for solutions that are not (as) subject to the kinds of problems that either Galbraith or the Friedmans point out -- solutions that solve or ameliorate both market failures and government ones.
 

Philosopher John Rawls⁽¹²⁾ argues that the rules which govern a society ought to be rules that people would accept if they did not know what their position in society would be. He seems to believe this would induce or make people generate rules that are fair. I do not share the belief in this outcome, because I believe those who believe in the ANT argument or in social Darwinism believe that in an unfettered market system those who should be successful will be, and that those who are not successful do not have any reason to be. They might change their view after they were to fail, but they might not. Either way, it does not solve the problem for Rawls that people can idealogically be wedded to the belief that certain kinds of rules are fair though there may be evidence they disbelieve, discount, or don't know about to the contrary. There is no reason to believe that if Ronald Reagan and Karl Marx were to be given the chance to be reborn as babies under random social or financial circumstances that they would want to be born into societies with the same economic rules or rules of distribution as each other. When I teach introductory ethics, one of the "thought experiments" I do with students in order to get them to see that not all acts that create the greatest good for the greatest number are necessarily the acts they would think best is to get them to choose between the following alternatives: a) a drawing among all the students in the course where the one student whose name is drawn will get $100,000,000 and the rest will each get $10, or b) we don't hold the drawing but each student gets $100,000. This seems to me to be one instance of Rawls' veil of ignorance. Most students opt for the sure $100,000. But once in a while a student will choose the lottery. If you vary the payoff amounts, particularly if you lower the $100,000 "sure" payoff, to $10,000 or $1500 or $500, you get different results and you get far less unanimity. Of course part of the difference can be traced to how much a certain amount of money might mean to someone in his current station in life, but I don't see that changing that person's station, or possibly changing it, might necessarily make him give up his view about the value of money versus risk. People that grew up in the Great Depression years often tend to have very different views about money and taking care of their possessions than people who grew up under affluent conditions -- even when the people reared during the depression become quite affluent. Certain beliefs and values are not necessarily related to being in some particular circumstances in the way Rawls seems to assume.

Similarly, there are people who have considerable advantages under a particular system who still believe that system is unfair; and there are people who at considerable disadvantage under a particular system who feel that system is perfectly just, reasonable, fair, or right anyway. I enjoyed academics and learning, and I fairly easily got straight A's in high school and then, with much more effort, got straight A's the first year and a half of college. Yet I thought, and still think, grades were an unfair assessment tool, and that rewards based on grades were not right. At the same time adults I knew who themselves had not received good grades in school seemed to genuinely respect, and admire, that I did. I thought their respect and admiration were misplaced, and was surprised they did not know better. I knew many students who I thought were better than I at certain kinds of thinking but they got poor grades because the skills they had did not show up on tests in the way that the skills I had did. I felt guilty about my good fortune because I thought it was somehow artificial and undeserved. Eventually I got into a program, based on my grades, that was not a good program for me to be in, and that I would not likely have selected or been selected for had grades not been the dominant criteria for probable success. That program, over the ensuing two years, caused me much unnecessary agonizing reflection about my future, and so, though I still continued to get A's and B's, and felt the same about grades that I had before, I no longer felt guilty about getting good ones. I was even more convinced, however, that grades were a bad and unfair way to judge merit.

And I think my view of grades, even when I was getting rewards for having good ones, is not dissimilar from many people's views about their own circumstances, whether economic or otherwise. People who are not wedded to ideologies because of their own circumstances or some other narrow perspective, I suspect have a sufficient general or initial understanding of fairness to be able to judge and reach agreement (after the presentation of evidence and discussion) about what is fair without having to lose their identities to do so. And those who are wedded to ideologies or who cannot appreciate evidence contrary to their initial views, I suspect would not likely have better ideas about what is fair if they did lose their particular identities or not know their future circumstances.

Rawls also holds that a just social or economic rule is that "Social and economic inequalities are to be arranged so that they are both:

(a) to the greatest benefit of the least advantaged..., and

(b) attached to offices and positions open to all under conditions of fair equality of opportunity."

"General Conception

"All social primary goods--liberty and opportunity, income and wealth, and the bases of self-respect--are to be distributed equally unless an unequal distribution of any or all of these goods is to the advantage of the least favored."⁽¹³⁾

But it seems to me that the most possibly reasonable approach of this sort would be to say that no one should be expected to accept a rule that would end up depriving himself of necessities in order for others to gain greater conveniences or luxuries. I cannot imagine anyone being able to reasonably hold that no one should be able to have a bigger yacht until everyone else has a yacht at least as big as that person's current one, though I can imagine that no one would knowingly accept rules which deny him necessities because someone else gets a bigger yacht than the large one he already has. And, of course, if conditions are in effect that meet Locke's principles, then one person's yacht has nothing to do with another person's necessities. Rawls' rule or my modification of it only has any merit at all under conditions where one person's gain actually depends on another's loss, not where one person's gain has nothing to do with another person's circumstances one way or the other.

Heilbroner and Thurow⁽¹⁴⁾ hold a position somewhat like Rawls' for inequality: "We agree that inequality is justified if everyone has a fair chance to get ahead." But they also hold:

"We agree to inequality when it is the outcome of individual preferences."

"We abide by inequality when it reflects merit."

"Finally, we agree on violating the spirit of equality when we are convinced that inequality is for the common good."

They cite some problems with these views, but seem to think them worthy anyway, or able to stand up, saying in one case in particular "There is no correct solution for this or any other problem involving value judgments."

I would dispute there are no correct solutions to problems involving value judgments. There may be more than one correct or acceptable solution, and any solution may not be a simple or simplistic one, nor may it be readily apparent to people without explanation or without reasonable and reflective scrutiny. And people unwilling to be rational or reflective may not accept any solution, just as irrational and unreflective people may disbelieve science or anything they choose to. But that does not mean there are no correct answers (and by extrapolation, no incorrect answers) to problems involving value judgments. In fact, it is my experience that when people consider the same evidence and each others' reasoning about that evidence, there tends to be remarkable agreement about what is correct. That does not mean they are all correct. But the claim there are no correct answers in issues of value generally is made because there is so much disagreement about matters of value. And I maintain that is true to a large extent because people are working from different evidence and perspectives that they do not realize, do not examine, and do not share with each other, not because they have different values. And it is sometimes true because a solution that takes into account and resolves the perspectives and evidence of both sides has not been discovered yet. I find in teaching ethics that it is not that difficult to help students find mutually agreeable positions once you get beyond the sort of superficial analyses of situations that tend to generate disagreement. And frequently jury members from quite different backgrounds show agreement about complex court cases since they will deliberate over the same relatively small, particular, controlled amount of evidence presented in a trial.

But I would like to examine Rawls', Heilbroner's, and/or Thurow's particular views about opportunities for greater wealth or other social benefit being fair when they are available to all, when they are the outcome of preferences, or for the common good. Heilbroner and Thurow's view with regard to this latter position falls short for the same reason Rawls' does -- inequalities when everyone is well off are generally more acceptable than inequalities that give some people luxuries or conveniences at the expense of other people's necessities.

But I also think that inequalities are not made fair by having them "attached to offices and positions open to all under conditions of fair equality of opportunity" or by everyone's having a fair chance at them or a preference for them, whether by having more "merit" or not. Suppose that the only way great sums of money could be made were by playing tennis well enough to win one particular, or any of a number of, tournaments. In a sense such an arrangement would be open to all. If you wanted it to be "even more fair", we might have some sort of handicap arrangement; and there may be different categories by gender, age, weight, state of health, etc. And society can make certain everyone can have use of a racquet of his or her choice and all the practice time, training, etc. one wants on adequate courts. I maintain this would be an obviously terrible way of deciding how to share the total output of society. Not everyone wants to play tennis. And more importantly, not everyone would think it right to spend their time playing tennis when there are other things they think much more important. Further, it seems somehow arbitrary for tennis to be the determining factor when it might just as easily have been boxing or balance beams or chess or tiddly winks, in which case different people might have been the more successful.

In other words, just having the benefits attach to particular "offices" will already begin to skew or prejudice the outcome in favor of those with interests and abilities in those offices, and disfavor others. This would not be necessarily morally bad if it were unavoidable and there were no ways to share benefits; and it would not be necessarily morally bad if there were some morally good reason why a particular office is somehow more deserving of benefits than other offices. But, as I have tried to show, greater wealth tends to attach itself in a market society to offices in ways that do not seem to be morally relevant. The fact that some activities are more desired or prized by society at a particular time often seems to be a matter of pure historical accident rather than any universal human need; the fact that certain prized activities are accorded more monetary reward rather than simply, say, more honor, seems to be a result of historical accident or unnecessary choice as well; and the fact that technology at any given time allows mass production of some products and labors (such as stand-up comedy or plastic forks) but not others (such as child care or house cleaning) seems to be a morally irrelevant reason for attaching far greater wealth to those things that can be mass produced or distributed.

And just as it would seem both silly, unfair, and unreasonable to attach the benefits of inequality to tennis championships, no matter how fairly contested tennis matches were, that unreasonableness is not substantially minimized by adding additional sports or additional activities as long as there are obviously worthy activities excluded. I do not agree with Heilbroner and Thurow that it is fair for one person to be very wealthy and another to be living on the edge of poverty simply because one is predisposed toward tennis or law or politics or commerce, particularly commerce directed at aggressive financial acquisition, and the other toward farming or teaching. It is only in some uninteresting and morally unhelpful sense of "open to all" that certain vocations are open to all; they are open to all who are interested in them and who have any talent at all for them; and they are open to all who simply don't care what they do as long as it is something that is financially rewarding. The wealth of politics and law are open to all in the same way that the wealth of tennis or of legalized prostitution is. And it is no more right to make an interest in law or politics or selling plastic forks the determining factor in financial benefit than an interest in tennis or sex. Just as it is not right to consign someone to a lifetime of financial difficulty because they choose to farm, teach, or provide services to the poor. While it is obvious that dividing society's benefits solely on the basis of everyone's tennis ability or one's athletic ability would be unfair and absurd, the principle is the same if the division of benefits is made on everyone's ability at business or politics because (1) business and politics are not the only way to make a contribution and (2) because not all business or government work does make a contribution, even if it reaps great reward.

What is needed for something like the Rawls-Heilbroner-Thurow position to begin to be tenable is for special benefits to attach to all and only those people who do good work in all and only those vocations that are socially and morally good or worthy, and that every person who wants to and would do a good job in a good office, has such a job. If somebody chooses then to be poor because they do not care to do any worthwhile work or to do it very well, their poverty is fair. But this position still requires working out fair desert for those unable to work or those without much talent but who are willing to work. And it requires some way of making certain that, to paraphrase Shakespeare, money which is resolutely earned is not dissolutely spent -- if dissolute spending weakens the economy or society by channeling labor into harmful vocations, by disrupting trade (e.g., as in hoarding), or by causing any of the problems that would have been avoided by a wiser application or dispersion of concentrated money.

Heilbroner and Thurow also hold "the workings of the competitive system transmute self-regarding behavior into socially useful outcomes. The Invisible Hand-- the words that describe the overall process-- keeps society on track, assuring that it produces the goods and services it needs." "[Smith] showed his generation and all succeeding ones that a market system is a powerful force for orderly social provisioning.

"He also showed that it was self-regulating. The beautiful consequence of the market is that it is its own guardian."⁽¹⁵⁾

And though Thurow and Heilbroner recognize that the market mechanism does not always work to secure society's best interests, and may even work against those interests ("it may produce goods that are profitable to make, but harmful to consume.") I do not believe they fully appreciate how dependent the Invisible Hand's real success is on ethics or at least on socially accepted standards⁽¹⁶⁾ of behavior, probably presupposed by Smith, that subordinates the market to its principles, rather than subordinating ethical principles and shaping society to the market. The market does not produce "goods and services it needs" [emphasis mine] but those which can be paid or traded for. It will produce what can be sold that is desired, but not necessarily what is desirable. Insofar as people will, for money or trade, produce, sell, or do what is undesirable or in some way bad, the market succeeds economically but fails morally, as the authors put it on pages 227 and 228. "This is not just an economic failure. It is a moral failure. Market systems promote amorality. We count as gains the increases in GNP that result from the market system, but we do not give much heed to the commercialism, the trivialization, the psychological frustration and dissatisfaction that also accompany so much market activity." Not to mention the actual harm people are willing to inflict upon themselves and others for money because the market entices them or drives them to do so.

I don't believe that Smith thought market systems promoted amorality; I believe he thought they promoted morality, or at least socially acceptable behavior because he believed people would see it was in their own best economic interests to behave in ethical or, at least, socially acceptable ways. If a vendor treated customers unfairly, they would go where they were treated better; if an employer mistreated employees, those employees would prefer to work for someone more acceptable. I think Smith would be surprised and disappointed by a society that let the market determine what was socially acceptable rather than having to conform to it, particularly if his misconstrued explanation of the Invisible Hand was used to justify the dominance of "pure" (or amoral) market principles or behavior over ethics and social standards. Smith more than likely was unable to anticipate many of the social and ethical problems that are caused or exacerbated by the immensity of national and international markets separating suppliers and customers by vast distances and essentially making them unknown to each other and often shielded or hidden from each other. And he probably did not anticipate the social, psychological, and ethical problems created by pronounced specialization and division of labor -- from alienation to diffusion beyond recognition of personal responsibility within organizations to ease of taking advantage of customers⁽¹⁷⁾. And he was unlikely to have anticipated the scale of potential harm that technology and the power of the market might make possible.

Further, in a sense, much heed is paid to the "commercialism, the trivialization, the psychological frustration and dissatisfaction that also accompany so much market activity." It is simply not recognized by many people as a problem caused by market activity that is given over to an "Amoral Invisible Hand" theory rather than a "Moral (or Socially Acceptable) Invisible Hand" theory. It seems to me that "bad" ends are tolerated when they result from means that seem innocent enough, or means that produce useful and beneficial results under other conditions. But, as I pointed out in discussing Nozzick's view of this, means do not justify the ends; means that at a particular time result in wrong ends are not justified just because in other cases they are innocent or beneficial.

Foreign cultures opposed to Western ways understand this point, but overreact to it by tending to believe the market is responsible for the kind of society we have and that they adamantly oppose. But it is not the market that produces the outcome; it is the market unguided by social or ethical dictates that produces the outcome. The market is not amoral unless it is allowed to be. If I am right, the Invisible Hand was never meant to be a totally unguided hand that overroad moral (or social or cultural) forces. It was meant to be a hand that, with moral or cultural impact at individual points -- using self-interest to promote individual socially acceptable morality-- wove together in an invisible way, a good and useful fabric. The point was that societal progress could be made by individuals acting on their self-interest and individual needs --provided that self-interest was governed by moral or by at least socially accepted values. It was not purely selfish and socially harmful self-interest that was to operate, but self-interest that could be accepted when exposed to the illumination that a market would bring.

Frequently there is the failure to recognize that any economic system should only be a means to justified ends; and that at any time it becomes clear the system is creating unacceptable results, it is the system that must be modified in some way, not the ends. And ideally, the modification should protect in some important ways the entrepreneur and investors who were using apparently legitimate means in good faith to achieve both personally profitable and socially desirable ends, and which still could achieve them with the right modifications in the means. And, of course, the modification should be one which solves the particular problem without creating worse problems. And frequently there is the failure to recognize that any economic system may also not be able to solve certain kinds of problems and that some other solution may be necessary to supplement whatever good the economic system itself does.
 

There is not just one, but many sorts of moral or social failure, one of which can be much more easily remedied than the others, and which sometimes is, though not generally enough. The one that is easy to eliminate is the idea that the self-interest that the Invisible Hand guides into social usefulness is just any self-interest, rather than socially or morally acceptable self-interest. In the United States you can make and sell chocolate ice cream for a profit if you want to, but you cannot make and sell cocaine if you want to; nor can you sell babies if you want to.⁽¹⁸⁾ It is unlikely that Smith would have written with as much enthusiasm about a similarly organized cocaine manufacturing plant or white slavery operation as he did the pin factory. There is no market reason or sound Invisible Hand argument that requires a society to tolerate business behavior that yields morally, socially, or culturally unacceptable consequences. That fact seems to be lost by people who mistakenly think markets ought to be allowed to have their own morality in order for them to work properly. But laissez-faire does not have to be construed as permitting morally or culturally unacceptable ends or behavior; it can legitimately be construed as intending to keep government from interfering with business that is operating well within morally or socially acceptable and legitimate bounds, both in terms of means and results.⁽¹⁹⁾

The second kind of moral/social failure has nothing to do with markets, but involves not knowing or being able to reasonably agree about what is right or wrong, good or bad. Insofar as a market reflects the values of a society, conflicting social values will also show up in the market. But a more culturally monolithic society, whether for better or worse, does not need to have that problem. Hence, foreign cultures may not need to fear a free market's destroying their values any more than we need to fear our free market's being extended to include baby selling.⁽²⁰⁾ The market can be tailored to a society that has essential agreement about moral priorities and that understand the market should be a means to higher ends, not the force that shapes those ends. Markets shape ends, as well as means, only when societies allow market forces to operate with little or no obstruction in a social and moral vacuum.

This does not mean that legislation alone is sufficient to stem market tides. Bootlegging during America's prohibition period, cocaine trafficking today, and black market forces in all sorts of prohibited but desired goods and services in general, demonstrate that legislation which does not reflect strong social and moral beliefs, is generally insufficient to stem market forces. Slavery, prostitution, child labor, judicial bribery, etc. will not tend to succumb to market forces at this writing because they are generally socially viewed as abhorrent.

Now new inventions (such as satellite communications), discoveries (such as surrogate motherhood), and forms of social organization sometimes create unintended and unanticipated conflicts with tradition, and insofar as the market fosters such invention, discovery, and institutions, it may make it difficult for traditionalists in any society. And any society that loses sight of the fact that Smith himself stressed, that money is not wealth, may foster conflicts between money and (traditional understanding of) well-being. But if a society has a good way of recognizing and resolving such conflicts, there is no reason to believe that a market in itself, will undermine the society or the worthy traditional values. Unfortunately many societies do not have good methods for recognizing and resolving such conflicts, but it is not clear that eschewing any sort of market is the best solution.
 
 

1. "Intellectual property," copyright and patent are legal contrivances invented for at least two purposes: to keep persons from falsely claiming that the work of others is their creation, and to allow the originators of any invention or composition to sell it exclusively (or to authorize others to sell it exclusively) without fear of competition. These are two totally different purposes since one is about receiving proper recognition and credit, and the other is about receiving financial benefit.

Copyright and patent are often said to protect intellectual property from theft, but there is a fundamental difference between theft of intellectual property (in the sense of reproducing it or copying it, not in the sense of stealing the only manuscript or a first edition, or some other particular physical manifestation of the work) and theft of physical property. The difference is that when one "steals" intellectual property by reproducing it, one is not taking it away from the owner; one is creating another copy for oneself, leaving the owner the same thing he had originally. That is not the case with physical property, for if a thief takes your car, you no longer have the car. But if someone else gains your ideas or any reproduction of your work, you do not lose your ideas or your copies of the work. Reproduction of something leaves even more for others than does taking Locke's draught of a large body of water, for one is using up none at all of what was taken, not just merely a minuscule portion of it. So the point of protecting intellectual property from theft is not to make sure the originator still has the property; the point is to make sure that s/he legally retains the economic value of having it.

As copyright and patent are practiced today, an ethical anomaly is possible, and sometimes occurs. The anomaly is that copyright and patent keep other people from having something they could easily and often inexpensively obtain. They do this in a number of ways. First, they do not allow anyone to make a simple copy of the work using their own labor and expense to do that; e.g., to use a photocopy machine or an audio . Second, they keep the price of legal copies artificially high through the use of, in essence, monopoly, so that although Microsoft, for example, could have, according to their own testimony, sold Windows 95 and 98 for as little as $49 and still made a profit, they chose to sell it for $89. They considered that a good price for the public because competing operating systems were priced at $129 and higher. However, the Windows operating system at that time was already well-entrenched and well-accepted, and stood to make a great many more sales than the competition. Furthermore, the system sold on a CD that cost less than a dollar to manufacture, and the CD was legally restricted to use for installation of Windows on just one computer, even though it could physically have been used to install Windows on hundreds or thousands of computers. Third, copyrights often outlast publication and availability of a work, and yet the owner of the copyright will not allow someone to make a copy of that work for him/herself. Television networks also have in the past bought the rights to a particular sporting event and then not televised the event (at least not in all viewing areas) because they could make more money showing something else.

The claim is that copyright is a good thing for an economic system because it gives incentive for people to create things, since they can then profit from them in a way that they would not be able to profit if their work could be reproduced inexpensively by others who would then have no need to purchase it at a price profitable to the creator. That, however, is an empirical claim, and it might be a questionable one because (1) many people do like to disseminate their work even if it does not make them any money; the Internet is a good example, because there is a great deal, not a dearth, of free information and free advice and free teaching available on the Internet, and (2) there are other ways of profiting from something besides having monopolistic rights to sell it: as of this writing, for example, network television does not sell its programming to viewers, but sells advertising space instead; similarly many Internet sites have advertising on pages where they give away things. Another approach is something like Netscape's: Netscape gave away free downloads of its browser in order to compete with Microsoft's browser and in order to make money in other ways from the widespread end use and potential of the browser. This is similar to mobile phone giveaways for people who sign up for cellular service for an extended time, or the recent Compuserv computer rebates, and free computers, for people who sign up for their Internet provider service for three years. Another approach is the one Sony worked out with the recording industry whereby copying of recorded music for one's personal use was permitted freely, but the price of blank tapes had an extra, minimal charge built in that essentially took the place of revenue lost to the industry by the practice. The assumption was that some percentage of the blank tapes would be used for the copying, for personal use, of purchased recordings.

But mostly the claim that copyright is a good thing is made by producers, and by consumers who can afford to pay for copyrighted works, rather than by those consumers who would benefit the most from stealing or buying stolen material. Until the late 19^th or early 20^th century, U.S. law protected publishers who stole and published copyrighted material from England and the rest of Europe. The U.S. was more a consumer of literary goods than a producer, and it was in their interest to allow piracy of intellectual property from the producer nations, just as China now seems to permit piracy of U.S. software, about which the U.S. is incensed. Consumers seem to have no difficulty decrying copyright, with their argument being that if pirates have an economic incentive to sell for far less than the producers, they are selling at a price the producers should have been selling at to begin with to have avoided the piracy and still make a healthy profit. That argument, of course, would need to include in it somewhere "development costs" to be more forceful, but at some point it seems to me to be a prima facie reasonable argument, and is the argument essentially that is given for economic competition in general and against allowing monopoly to be legal. It is the argument that a more reasonable price would both sell more of the work, make more products available to more people, and prevent piracy in the first place by rendering unnecessary and unprofitable.

Monopolistic pricing rights are more odious when they involve necessities than when they involve luxuries and conveniences because they keep those necessities out of the hands of less affluent people for no reason other than higher (perhaps even excessive) profit. Charging excessive prices for unnecessary luxuries does not seem to be particularly immoral.

There are other anomalies with regard to patent and copyright, though they are not of a moral nature. They protect the specific composition but not the ideas behind the composition. So it is not illegal to read a work and then to tell about what it says, as long as you do not quote without permission. In those cases where the ideas are more valuable than the specific application and can easily be applied in a different way, patent and copyright do not protect the element of most value.

Second, if I pay you to teach me your ideas or your artistic techniques, I can then charge others to teach them. Or I can apply them to my own work, as can my students or their students.

If you have physical property, I am not allowed to take it, but I am allowed to craft my own replicas of it, so, for example, a seamstress can make a reproduction of a designer gown, or an auto body worker might make his VW look like a Rolls Royce or a Mercedes. There is a certain irony in that physical property can be copied but not taken, whereas intellectual ideas can be taken but not copied.

Third, while it is not likely, it is possible that two or more people will independently get the same idea for, particularly, a patent. If that happens and one of the persons receives the patent, the other(s) will not be able to earn anything from their work or their idea. That seems unfair.

Fourth, there are ideas for new works that would utilize other works in part if they could, say as demonstrative examples in mass produced educational materials. But many companies charge so much for the right to use the work even in this way, that it makes the educational material prohibitively expensive to produce. Hence, an educational opportunity is lost because mass produced educational works do not fall under the fair use exemption division of the copyright laws (in the U.S. at least).

Fifth, there seems to be something wrong with employing law enforcement agencies and engineering skills and technology to prevent people from getting things they could easily get with their own labor and ingenuity. I am talking about building successive generations of scrambling and descrambling devices so that much effort and labor is put into preventing people from having for less money things one wants them to pay for. It would be interesting to compute the cost of offering cable or satellite movies or other entertainment if people were merely to provide their own hookups or ways of getting the material from a central hub without having to pay for descrambling and the original scrambling in the first place. 

It seems to me that there would still be ample profit, and there would be greater benefit for more people if the granting of a copyright or patent did not give total monopolistic rights to intellectual material, but instead allowed partial or regulated monopolistic rights that successfully addressed the anomalies.  (Return to text in this chapter.) (Return to text in chapter 34, "Pricing".)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2. When my ethics course students said that banks kept money out of the hands of black (potential) businesses, I invited a bank representative to respond, since I had heard that local banks had organized some sort of mechanism to channel money into black businesses. The (black) representative that visited the class explained that though banks were no longer allowed to discriminate on the basis of race, American black culture, for historically understandable reasons, did not generally know what things they needed to do to qualify for loans or for investment money, etc. He said that blacks needed to learn the ways of the financial institutions so that they could do the kinds of things that would allow them to utilize services that would then be available to them. I commented that I thought it was the moral responsibility --and ultimately to the benefit-- of those institutions to inform citizens how to utilize their services, since it is just as unproductive, and in some sense unfair, to keep knowledge about getting money away from people as it is to keep the money away from them in the first place. He responded that the banks were beginning to see that and to institute such programs.  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

3. Keynes, p.380  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

4. In a sense, or at least in some circumstances, the kinds of inflationary wage-price spiral Galbraith believes important to control seems to be that which is based more on profiteering than increasing profits legitimately, say, through increased production, increased efficiency, etc, or to get sufficient extra money in order to increase needed supply. However, though some cases of increasing profits merely through taking unfair advantage of buyers are obviously profiteering, other cases are not necessarily profiteering, such as when a manufacturer raises prices a little when there is increased demand, not in order to make "outrageous" or, in some sense "unnecessary" or unwarranted, profits but in order to have a comfortable profit margin when before he was perhaps living on the brink of economic survival. Further, keeping prices unnecessarily and artificially low sometimes keeps supply unnecessarily lower than would be desired and desirable. Wage-price controls as such, unless there is flexibility and some sort of appeals process that allows reasonable exceptions, cannot distinguish legitimate price changes from ones which are merely profiteering. I presume that the kind of wage-price controls Galbraith is talking about contain such understanding and flexibility.  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

5. Galbraith (1), p.203  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

6. Galbraith (1), p. 120  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

7. The ANT argument is a formidable prima facie objection for any form of egalitarian or utilitarian view of economic ends and policies -- any view that economics should benefit a society or community in the most equitable or broadest way, rather than simply benefitting those who actually join together in certain ways to get the fruitful work done. In order to rebut the ANT argument, one essentially has to show why the less affluent are not in any morally relevant way like the grasshopper in the fable, whose poverty is in some clear sense the result of his own fault and who is undeserving of assistance or another opportunity.

The ANT argument is different from so-called "social Darwinism", the view that those who prevail or flourish socially, politically, or economically are those who should because they are the most fit and therefore the most deserving. Scientific evolution does not make any moral judgments about the value of species that survives; it merely explains the forces at work that permit one species to survive rather than another or to prevail under particular conditions. If a time and conditions come that bacteria and fungi survive when higher level animals do not, bacteria and fungi will have proved the most fit, but not necessarily the most "deserving" in any moral sense. Other conditions might have produced other results.

Social Darwinists often consider the unfettered free market to be the ideal condition, and those who can best flourish in it to be the most fit and deserving. But I personally cannot see as the most morally deserving those who might be the most successful because they profiteer or who are the most successful because they produce luxuries for the rich while ignoring the necessities of the poor, though they have the capacity to provide for both or provide greater necessities with only a slight diminution of luxuries. On the social Darwinists view, if a violent, ruthless faction of society can successfully take over a country and maintain their position in it by force, than they are the most fit to run it. They are the most fit, however, only in the sense of "able" not in the sense of "deserving" or "desirable". Likewise those most able to prevail in a free market might not be the most deserving or desirable.  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

8. In Free to Choose the Friedman's argue that private schools will be better for education than government operated public schools. I have argued against that notion already in my response to Elizabeth Anderson's claim that there is a difference in responsiveness to (potential) clients between public and private organizations, specifically to parents' wishes about their children's schools. The Friedman's fear massive mediocre or deleterious uniformity imposed by a centralized government, but not that imposed by zealous salesmanship. There is no safeguard against bad schools except the knowledge and judgment of the community and the receptivity by those who run those schools to that knowledge and judgment. And it is not clear to me that any system can formalize knowledge, judgment, and receptivity.

Further, public school governance does not need to be centralized or to suffer from the flaws common to any centralized bureaucracy; and the current trend is to decentralize the operation and management of schools. Given deeply and broadly entrenched educational practices, however, I believe that in most cases decentralization will bring only cosmetic changes, if that. But private schools run just as much risk of eventually becoming some corporate monolithic McSchool's R Us as any public school. Perhaps in a different way, even more likely and more successfully. And there is no reason to believe that more popular schools will be better schools.  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

9. Friedman, Milton. New York Times Magazine, September 13, 1970, reprinted in Donaldson, Thomas and Werhane, Patricia H., Ethical Issues in Business (3rd Edition): "The Social Responsibility of Business Is to Increase Its Profits" (p. 217)  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

10. pp. 125-6  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

11. p.15  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

12. Theory of Justice  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

13. Rawls; pp.302-3  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

14. Economics Explained, p. 194-5  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

15. p. 28  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

16. (even if they are not quite the best principles that moral reasoning might suggest)  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

17. As specialization increases and as technology fosters the creation of more and more complex products and services whose relative quality at time of purchase can only be ascertained by people with specialized knowledge, consumers depend more and more on the wisdom and benevolence of manufacturers and vendors. Thus they lose much of the protection afforded by a market operated where the quality of a product or service is more easily and more immediately discerned, where consumers tend to have similar standards for judging quality, and where they more readily and easily communicate their judgments to each other. Although one can consult other specialists for their advice, the process is frequently like judging what movie to go see by reading reviews by critics who may have no more, and sometimes less, expertise or scruples than those who made the movie in the first place, or whose tastes or standards for judging may be vastly different from yours.  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

18. And even if you have a legitimate, socially valuable and personally profitable business, if your legitimate business practices give you such market dominance that you are essentially a monopoly in an important industry, you may have to give up certain practices or results of those practices. In such cases, the ends are seen not to justify the means, even though the means were (apparently or actually) legitimate up until the result occurred. Since I do not think monopolies, in and of themselves, are necessarily evil, it is ironic to me that "good" business practices may be outlawed if they lead to monopoly, but that the same principle is not observed about forcibly correcting "good" business practices that may lead to far worse or actually terrible results than monopoly -- such as the depletion of a forest merely for quick profit without sufficient reforestation to insure future income for the residents of the region or available wood for the potential customers of the future.  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

19. I believe that for Smith morality does control the market, but the "point of impact" where morality enters is in customer and employee acceptance of the practices and results of a business; and this assumes enough knowledge, enough freedom of choice and alternative options, and enough ethical (or social) understanding and conscience by customers and by employees to exercise that choice. The point of impact for Smith, in the society he was considering, ought not to be in the government's saying something is illegitimate that employees and customers don't have a problem with. Problems with this form of market self-regulation arise in a society where there are (broad) conflicts of moral value or moral understanding, or where there is broad lack of moral understanding, and where there is no accepted and reasonable method of resolving moral issues. (Such a society is often referred to as a pluralistic society, but I believe that misconstrues the problem. There can be many different customs and different, non-conflicting, equally valid traditions, values, and practices in a given society without there necessarily being significant unresolved moral differences between different sub-cultures in the society. A society can be pluralistic in many ways without having to be morally "pluralistic", that is, without having unresolved or unresolvable conflicting moral views.) A monolithic society with strongly accepted homogeneous moral views would be able to control the market through the kind of moral point of impact I attribute to Smith's model of the Invisible Hand. The market would not oppose the culture but would reflect and even reinforce it.  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

20. Conflict has arisen about the "market" for surrogate mothers who give birth to other people's genetic babies for a slight fee. And conflict arises periodically about the morality of some adoption practices that involve money. While there may be non-market related moral problems arising in any kind of baby adoption or transfer to other parents, and while in some cases it may be difficult to distinguish legitimate motives for transferring babies from motives that seem driven by market or monetary concerns, still the point is that we do not legally permit known or obvious cases of market-mentality baby-selling. And whatever black market baby-selling is done could be done in any culture or country; black markets are not peculiar to market economies or to Western culture.  (Return to text.)