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
"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
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
"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
• Ian Harris is a journalist and commentator.