The Free Market: The Enemy of Freedom?

In an essay titled Freedom and Unfreedom, William T. Cavanaugh, the Roman Catholic theologian , attempts to deconstruct the ideology of the ‘free market.’  He takes his working definition of free market from Milton Friedman, a classical economist who draws heavily on free-market developer Adam Smith, who defines freedom as the absence of external coercion in the process of buying, selling, employing or working in the employ of another.  According to Friedman,

So long as the effective freedom of exchange is maintained, the central feature of the market organization of economic activity is that it prevents one person from interfering with another with respect to most of his activities.  The consumer is protected from coercion by the seller because of the presence of other sellers with whom he can deal; the seller is protected from coercion by the consumer because of other consumers to whom she can sell; the employee is protected from coercion by the employer because of other employers fror whom he can work, and so on.  And the market does this impersonally and without centralized authority.

So according to classical free market ideology, while a government may be necessary to maintain law and order and insure that coercion is not happening and that contracts are honored, no government may interfere into a market if it is to remain free.  Friedman goes on to mention that a free-market economy “gives people what they want instead of what a particular group thinks they ought to want.  Underlying most arguments against the free market is a lack of belief in freedom itself.”

Cavanaugh finds the key to free-market ideology here, in Friedman’s understanding of freedom.  Cavanaugh finds two necessary corollaries to Friedman’s view of freedom.  The first is that this concept of freedom is purely negative, a freedom from, and is “agnostic about the positive capacities of each party to a transaction, for example, how much power or property each party has at his or her disposal.”  Mere absence of external interference is enough to signify a free exchange.  The second corollary is that this freedom has no end: it is undirected freedom.

And here is where Cavanaugh’s argument really takes off, for Cavanaugh argues that for freedom to produce freedom, there must be a telos, or end for such freedom.  “The absence of objective goods [moral ends worth pursuing] does not free the individual, but leaves him or her subject to the arbitrary competition of wills.”  Said more succinctly, “In the absence of any objective concept of the good, sheer power remains.”

It is this sheer power that the free market necessarily leaves unchecked, and which destroys the freedom of all other participants.  Cavanaugh cites three examples of areas in which the free-market ideology actually produces what he calls “unfreedom,” as consumers and even producers are carried along by the power of the market.

  1. Advertising.  While free-market supporters laud the consumer as a chooser, corporations spend billions of dollars not only to persuade consumers to purchase their products over another, but to tie the consumption of goods to “goods that cannot be commodified, such as self-esteem, love, sex, friendship and success.”  What is more, corporations also invest in what GM calls “the organized creation of dissatisfaction,” the means by which consumers are convinced that last year’s model of car/television/computer/t-shirt was perfect then, there’s no possible way we could think they are enough now.  Citing Michael Budde’s (Magic) Kingdom of God, Cavanaugh compares making purchases in our free-market economy to playing poker against an opponent who has seen the cards you are holding in a slightly blurred mirror.  “You still exercise free will,” he writes, “but the dynamics of power have shifted because the situation is set up to advance the interests of others.”  How so?  Cavanaugh cites two interrelated examples.  Corporations have developed complex strategies to prevent consumers from finding out information about products, and has developed extensive methods for profiling consumers’ purchasing habits, as exemplified by Erik Larson, who brought home his newborn daughter from the hospital to find a complimentary package of Luvs diapers on his doorstep, courtesy of Proctor & Gamble.  What is more, advertising exists everywhere, on virtually every space.  “To pretend, as Friedman does, that the consumer stands apart from such pervasive control of information is to engage in fantasy.”
  2. Asymmetrical power relations within companies.  In 1980, the average CEO made 42 times what the average worker made; by 1999 that ratio had increased to 475 to 1.  Why do CEOs pay themselves so much?  To Cavanaugh the answer is clear: because they can.  As the owners of capital gain power, labor loses power.  This trend is largely tied to the capability of transnational companies to move production overseas, where they pay wages as low as 30 cents an hour, which gives employers the power to say to the workers of a community, “You can be happy with this, or you can have no jobs.  Take your pick.”  Cavanaugh cites several horrifying examples of the lives of overseas workers for American and transnational companies, working sixteen hour days for wages that do not support their livelihood in dangerous and harmful conditions, often under armed guard.  Why do companies do this?  Cavanaugh again notes that it is because they can, but also notes that in many cases it is because they must, which brings us to the third aspect of the unfreedom that free-market ideology produces.
  3. “Because we have to.”  In an economy of unbridled powers competing, managers and other employees often find themselves powerless to do the things they would want.  Managers often lament having to close American plants to ship production overseas.  “In a world of consumption without ends, it is assumed that the consumer will want to maximize his or her own power at the expense of the laborer, and the manager does not feel free to resist this logic, lest his or her own corporation fall victim to competition from other corporations that are better positioned to take advantage of cheap labor.”  The same situation is the case for farmers who find they must change to a single-crop income due to the demands of the market even as that makes them more dependent on the market and, hence, less free.  The same is also true of consumers who might believe the sweatshops are unethical, but either do not know or could not imagine a way to purchase t-shirts, shoes or jackets that were not produced in them.

In short, Cavanaugh criticizes the ideology of the free market by critiquing the concept of freedom that underwrites it, saying that “Giving free reign to power without ends is more likely to produce unfreedom than freedom.”

Throughout his essay he also presents an alternative understanding of freedom that draws heavily on Augustine’s understanding, and uses that not to abandon the free market altogether but to offer a possible account of it that Christians could embrace and work toward.  But that will be the subject of a future post.

For now, let me suffice to ask the simple questions.

  • Do you agree that the free market produces more unfreedom than freedom?  Why or why not?
  • At what points is it necessary for an authority to intrude on markets?  To break monopolies?  To protect the environment?
  • If Cavanaugh’s problem is with the undirected freedom of the market, what direction could we possibly give to a “free market”?
  • Is there any sense in which our trust in “market forces” takes on a religious tone?  If so, when?  Is that ever problematic for Christians?

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