Free Markets and False Dichotomies

By Douglas Kmiec 1-11-2010


I've just completed reading Jim Wallis' new book, and Rediscovering Values: On Wall Street, Main Street, and Your Street - A Moral Compass for the New Economy is excellent. Indeed, I recently thought of the book's message against mindless consumption and materialism that distorts the true meaning of work and community as I met with a senior White House advisor on economic policy. He is one of the brightest economists in the land, so it was a bit disturbing that when he outlined his advice to the president, it did not contemplate the considerations of the book. Perhaps he did not mean to preempt the book's important admonition to rediscover true value, but his analysis by omission suggested that such considerations would be a challenge to the reliability of the free market to allocate goods efficiently.

This is a false dichotomy, however. Those of us who share Wallis' well-written concerns certainly do not challenge the free market, but simply ask for a recognition that there is no "invisible hand" which guides the market. Rather than solely regulated by microeconomics, the marketplace is merely the amalgamation of our own hands. And this is the question: are these hands committed to productive creation and concerned with sharing that productivity with those who have little? Or are they the grasping hands of mindless acquisition which ignore our experience and our faith -- faith that reveals how things never satisfy the emptiness of our exile and separation from God. As I read it, this book is not a call to the abandonment of freedom, but its reformation. The free market must be freed from the anxiety of over-consumption.

I do believe that those who observe no principle of fairness in their dealings within the market take us a good long way toward the elimination of the very freedom upon which the market depends.

I had to run to another meeting, so I did not have the opportunity to raise with that particular economic advisor Jim's important critique of consumption for the sake of consumption, but I infer from his caution against too severely criticizing the capitalist order that he might be uncomfortable with the book's terminology. He should not be, of course. Nevertheless, we cannot expect economists to possess the important non-economic insights that are derived from the truth of the human person -- insights that, if we are thinking properly and we act guided by Jim's insight, would limit the human appetite -- not by legal coercion, but by personal restraint. Since correcting the economic order -- that is, in the book's terms, finding "a new normal" -- does depend upon personal initiative guided by faith, I wish to congratulate Jim on this needed and important exposition and supplementation of even the finest economic analysis.

Of course, when we apply Jim's critique, we should anticipate that some of the president's opponents will caricature that as anti-American or even communistic, claiming that it prefers an alternative command and control economic system. This of course is the kind of false distortion and attempt to divide and divert us from the common good that far right politicians have been up to for some time, and which the people of the United States rejected outright in 2008. How ironic it is that these highly critical voices will claim to be family-friendly and yet disparage the importance of building up community by instilling within ourselves and our children the virtue of temperance.

It would be ideal if the president, having read this book, would respond to such disparagement in two ways. First, by sending his spokespersons out to repeat the message that Americans should reduce their level of borrowing to buy foreign goods, which only aggravates the trade deficit. Second, it would be preferable if a carbon tax or other similar economic signal could encourage Americans to save/invest a higher proportion of their income in American manufacturing firms that are making environmentally sensitive products, such as alternative fuel vehicles, that would likely be attractive to an export market. Such firms could employ a large number of individuals who are presently unemployed in, for example, Jim's hometown of Detroit -- where the unacceptable level of 20% unemployment continues.

Once again, America is indebted to the prayerful, sound, and honest insight of Jim Wallis.

Douglas W. Kmiec is the Ambassador to the Republic of Malta and the former Caruso Chair & Professor of Constitutional Law at Pepperdine University.

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