Freeman

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The Golden Rule and the Free Market

The Golden Rule Runs up Against a Cultural Wall When It Comes to Business

JUNE 01, 2000 by WILLIAM H. PETERSON

Filed Under : Free Market

William Peterson is a Heritage Foundation adjunct scholar and Distinguished Lundy Professor Emeritus at Campbell University, Buies Creek, North Carolina.

How tantalizing to find that virtually all the world’s major religions exalt the Golden Rule in one way or another:

Christianity:

All things whatsoever ye would that men should do to you, do ye even so to them.—Matthew 7:12

Judaism:

What is hateful to you, do not to your fellow man.—Talmud, Shabbat 3la

Islam:

No one of you is a believer until he desires for his brother that which he desires for himself.—Koran

Buddhism:

Hurt not others in ways that you yourself would find hurtful.—Udanavar-ga 5:18

Confucianism:

Is there one maxim which ought to be acted upon throughout one’s whole life? Surely it is the maxim of loving-kindness: Do not unto others what you would not have them do unto you.—Analects 15:23

Yet how equally curious to find that this near universality of the Golden Rule doesn’t always mean like exaltation in its natural expression in trade, commerce, business—that is, in the free market. Look: A not uncommon campus joke today is: “Business ethics—isn’t that an oxymoron?” And there’s Oliver Stone’s character Gordon Gekko in the movie Wall Street proclaiming that “greed is good.” And there’s First Lady Hillary Clinton on the campaign trail in New York State condemning high prescription prices. And there’s “globophobia”—Mexican president Ernesto Zedillo’s neat word for the fear of world market integration. And there’s U.S. Judge Thomas Penfield Jackson ruling that software giant Microsoft is an anti-consumer “monopoly.” Those are the sorts of things that compelled Ludwig von Mises in 1956 to pen The Anti-Capitalistic Mentality.

The long and short of the Golden Rule is that, for all its common sense, it runs up against a cultural wall when it comes to the world of business. Oh, all right, business has a place in the big scheme of things, but laissez-faire economics is simply bad; unconstrained business activity will never do; and government regulation such as OSHA and antitrust enforcement has to discipline wayward commerce. Of course.

Sadly, the history of such anticommerce sentiments is as long as the history of the Golden Rule. Sophocles, for example, complained in Antigone (c. 450 B.C.), “Money lays waste cities; it sets men to roaming from home; it seduces and corrupts honest men and virtue to baseness; it teaches villainy and impiety.” Plato groused in The Republic (c. 390 B.C.), “Wealth is the parent of luxury and indolence, and poverty of meanness and viciousness, and both of discontent.” Paul in his first epistle to Timothy (3:8) complained of greediness and “filthy lucre.” Later in the same epistle he protested that “The love of money is the root of all evil.”

What to do? Let me respond: Educate, educate, educate.

Educate just what? Educate, first, that “greed” denoting narrow-minded cupidity and covetousness is often a pejorative for innate self-interest, that self-interest is in fact an integral part of human nature, a point captured in the very title of the Mises masterwork, Human Action (1949). Indeed, here Mises introduces the word “praxeology” as the science of human action, saying the “ultimate end of action is always the satisfaction of some desires of the acting man” (emphasis added). Too, Nobel-Prize-winning economist Milton Friedman said self-interest serves both money-grubbing misers and the “great Saints of history.” Friedman continued, “Every individual serves his own private interest,” adding that the “private interest is whatever it is that drives an individual” (Encounter, November 1976). Or as the late Nobel economist George Stigler reflected, “Man is eternally a utility-maximizer—in his home, in his office (be it public or private), in his church, in his scientific work—in short, everywhere” (Tanner Lectures, Harvard University, April 1980).

The Sovereign Consumer

Educate further that the real bosses turning the wheels of industry and commerce are not the captains of industry, nor tycoons and bankers bestriding Wall Street, nor Matthew Josephson’s “robber barons” of yore, but the sovereign consumers. These individuals, with their life-and-death power of the purse in the marketplace, vote poor people rich and rich people poor. Mises adds to this line of reasoning by reminding us that inequality of income and wealth is but the result of previous consumer votes, that to stay successful entrepreneurs must continue to serve best the demands of the very demanding and often fickle consumers.

Finally, educate that the Golden Rule reaches magnificent critical mass in the global marketplace, that it tends to enlist peoples and private-property rights everywhere to engage in “World Peace Through World Trade” (a motto of IBM), that buyers and sellers, consumers and producers—all broadly embodied in one and the same person, by the way, if in different modes at different times and different places—serve others to serve themselves, that they say in effect: “Let me buy/sell with you in order that you will buy/sell with me.”

Thus does the marketplace become a vast vehicle for “social cooperation,” in the phrase of Mises, or for “spontaneous order,” in the language of F. A. Hayek. And thus is the market, unlike the state, strictly voluntary and self-regulating, with high prices repelling demand and encouraging supply, and low prices repelling supply and encouraging demand. It spurs a spirit of service and community, of contract and duty, of self-accountability, self-responsibility, and future-orientation; it nurtures saving, entrepreneurship, and invention to boost capital creation, resource optimization, world job productivity, and living standards. And all without the dead weight of party and politics. No wonder Hayek called the marketplace a “marvel.”

I call it the Golden Rule in action.

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June 2000

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Unfortunately, educating people about phenomena that are counterintuitive, not-so-easy to remember, and suggest our individual lack of human control (for starters) can seem like an uphill battle in the war of ideas. So we sally forth into a kind of wilderness, an economic fairyland. We are myth busters in a world where people crave myths more than reality. Why do they so readily embrace untruth? Primarily because the immediate costs of doing so are so low and the psychic benefits are so high.
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