The second decade of 21 century can be marked for movements against free markets. The decade started with “Occupy the Wall street” in the New York for rising economic inequality. The exit of the Britain from the European Union, US protectionist policies, and the scrapping of Trans Pacific partnership are all signs of restrictive policies.
Rising inequalities all around the world had once again raised the question of the morality of free markets.
How Old is the Question?
The question is as old as the as the concept of Markets. Markets in human history were evolution after humans formation agrarian societies. At that time, markets were limited to only barter & exchange process of few goods. In those time also, markets and the activities of merchants were considered immoral. Merchants had lower status than farmers, soldiers, and teachers. The agrarian societies believed that amount of wealth is fixed since the land is fixed. Therefore one can become wealthier only exploiting others. It was markets which through business activities proved that wealth is not fixed & it can be created, increased.
Since then to present world criticism of free market & business remained present in every part of history. These criticisms for markets are majorly based on two views. First is that individuals put profits above to other human virtues like honesty, truth. And second is that business had many adverse impacts on societies directly or indirectly.
A Look around us
Everywhere in the world, there is rising inequality. Economies are booming, wealth is of continuous creation but is being accumulated in the hands of few. There are masses of poor who are living at subsistence level in an inhumane environment. There are giant corporations who destroyed the environment and created wealth out of it for few stakeholders.
On the other side, if compared with the past, then the level of living standards is very high. The advent of technologies had made life simpler. Things which were not even thinkable to our ancestors are possible for us.
Therefore, though the wealth had been created & technological advancement has been achieved with this wealth. But, Things are not all fine and there are still much more to achieve and do.
Business & Free Markets
Free Markets are like mathematical formulations. They follow rules of economics, under which markets facilitate to match supply & demand of goods. And any mathematical model or a simple equation is neither good nor bad. They are just; they do what they mean to do. It has been proved over and over again that free markets are the most efficient systems.
If regulated or controlled than there are discrepancies & loopholes are created into the system. During the emergence of socialist views, many nations followed public systems & markets were fully controlled and regulated by governments. The results were increased costs, inefficiencies & corruption. Though the gains were more equally distributed than capitalism (free markets) but they were too small.
Now, even the most developed nation’s Governments are offloading their public works to private players. Because this saves them cost while providing the required level of service to the public. Everywhere in world governments are selling public units to private players under some guidelines to save cost and avoid losses in public sector units.
All this proves that the free markets are more efficient system than a regulated & controlled one.
Markets, Society, and Morality
Markets consist of people and work within a society. As mentioned earlier Markets are like mathematical relations and thus doesn’t have a virtue of morality. An organization sole purpose of making profits, through business activities will have contradictions with social interests. This brings the concept of public property rights and its distinction with individual property.
Hazardous Chemical plants are one of such examples. The chemicals produced by these companies are demanded by peoples & is consumed in various forms across different regions. But the harmful effects of the plant waste impacts the surrounding whose cost is bear by locals in the area. Environmental degradation might not be the concern of a company but it is a concern of society.
It is the peoples who work in the market & provide the moral aspect to it. Moral values of the individuals performing in markets decide the morality of markets. The emergence of corporate social responsibility & people’s inclination towards the socially responsible companies had raised the level of moral value in the business. Now while purchasing products or investing in shares, individuals give weights to the social activities of the companies. Thereby forcing corporates to fulfill their social responsibilities.
Regulations and free Markets
We have seen that free markets are most efficient but their outcomes are not always socially acceptable. And hence we need some regulations on free markets. Regulations are needed only to make markets socially inclined. They shouldn’t interfere with the efficient working of the markets.
The point here is that social interactions with free markets evolve over time. As technology change, free markets functioning change. The new outcomes are then compared to social just or unjust. After some arguments and counter arguments, new regulations come for the efficient functioning of markets.