So-called 'free market' thrives on the enslavement of others

Producing goods for the free market while earning less than a living wage can mean a crushing unfreedom for workers, writes Ian Harris.

Wouldn't it be nice if the free market really freed - that is, made people free, not just to buy and sell in an open market, but in rounded human terms?

An open-slather market certainly does not deliver that - all too often, it ends up exploiting the vulnerable and leaving them helpless. What's freeing about that?

These and other questions bubbled up from an address on The Myth of the Free Market by Prof William Cavanaugh, of DePaul Catholic University, Chicago, in Wellington last month.

To Prof Cavanaugh, the ideology behind the free market has a huge hole at its core: it confuses the accumulation of wealth with human flourishing.

In the free-market world view, freedom means unfettered market transactions with no concerns beyond the marketplace, least of all for what will serve the common good. Economist Milton Friedman's definition of a free-market economy makes that clear: "one that gives people what they want instead of what a particular group thinks they ought to want".

That defines freedom negatively, as freedom from others. Something may be beneficial or harmful, necessary or indulgent, but none of that matters: if you can pay the price, you should be free to have it.

Prof Cavanaugh contrasted that with Christianity's positive definition of freedom as a capacity to achieve a good end. That end might be God, compassion or anything else that serves the common good. This takes the question beyond "Can I have this without interference?" to "Is what I want a good or bad thing?"

"The alcoholic with plenty of money and access to an open liquor store may, in a purely negative sense, be free from anything interfering with getting what he wants," said Prof Cavanaugh. "But he is in reality profoundly unfree ... He can only be free by being liberated from his false desires and moved to desire rightly."

Among forces undermining freedom are the market manipulators who persuade consumers to want their products, whether they need them or not.

Advertising provides a vital function when it equips consumers to make an informed choice. Much advertising, however, associates products with images of glamour, sex, friendship and success that tell us nothing about the qualities of the product.

Such advertising limits the consumer's freedom. "To pretend, as Friedman does, that the consumer simply stands apart from such pervasive control of information is to engage in fantasy," Prof Cavanaugh said.

Large international corporations exercise another kind of free-market power, especially in poorer countries, but not only there. Many keep wages as low as possible to boost profits, dividends and share prices.

Prof Cavanaugh cited a company selling jackets in the United States for $US178 ($NZ215), and paying the El Salvador workers who made them 56c an hour, or 77c a jacket. They accepted the job and the hourly rate, which meets the free-market test. But with no concept of a common good to moderate the harshness of the market, exploitation runs amok.

Boards offer executives incentives to favour the interests of shareholders over employees and communities, and those at the top wallow in the wealth produced. In 1980, American CEOs received, on average, 42 times the wage of an average production worker. In 1999, the difference was 475 times.

If there is no consensus on serving the common good, Prof Cavanaugh said, the one with the most power wins. Working for less than a living wage may be free in Prof Friedman's terms, but for the workers it is a crushing unfreedom.

Meanwhile, the freedom of consumers is curbed when large conglomerates absorb or drive out smaller competitors. Yet state power favours the corporates, and governments have recently poured billions of dollars into bailing out failing financial institutions.

Christianity, by contrast, holds that human freedom involves a lot more than ensuring markets give people what they want. It offers a vision of the true ends of human life - "yet such ends are precisely what free-market advocates would banish from the definition of free market". The word "love" sums them up.

"Giving free rein to power without ends is more likely to produce unfreedom than freedom," Prof Cavanaugh said. "The practical task is to judge what kinds of exchange are conducive to the flourishing of life on Earth, and what kinds are not."

• Ian Harris is a journalist and commentator.