The fairness of markets

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the-fairness-of-markets

The recent student protests and the threat industrial action have served as platforms for anti-market rhetoric. As we move into 2011 we should expect this rhetoric to become more common as well as more pronounced. Although some still deny the productivity and effectiveness of markets, even those who concede that markets are the most efficient economic system will often argue that they are immoral. Often we hear capitalism decried as an unnatural and cruel system that “makes the rich richer and the poor poorer” or exploits the underprivileged and unskilled. These moral accusations laid against markets require consideration.

Nevertheless, it is relatively easy to show that markets, and free markets in particular, are not only better economically but also morally, and should be embraced by those working towards a more equal and free society.

In discussing fairness in economics, it’s important to remember how rare and relatively new industrialized market economies are. In his book The Mind of the Market, Michael Shermer points out that if the last 100,000 years of human history were condensed into a twenty-four hour day, industrialized market economies would only account for 3.6 minutes. Shermer also shows that two hundred and fifty years ago the global average annual income was $200, while in 2008 the global average annual income was $6,600; Hans Rosling's presentation shows this dramatic shift especially well.

It is no coincidence that the last two hundred and fifty years which saw the rise of liberal market economies also saw an eventually global rise in wealth and a decrease in inequality. While there were undoubtedly other factors at work such as the suffragette and civil rights movements, together with advances in medicine the impact of markets on increasing wealth for everyone cannot be ignored. Indeed, many of the these advances would not have been possible without the development of a sizeable middle class, which only a market economy can create.

Throughout 2011 markets and choice will be attacked. Those who advocate 'fairness' will argue for limiting choice and increasing regulation. In preparation for the coming discussions and debates, free market advocates need not be apologetic about the history of markets, and the fairness and equality they enable.