HUMANE FREEDOM AND THE “FREE MARKET”

Why the “free market” does not make us freer and yet is loudly promoted

By Karl Mueller

[This article published in: Zeit-Fragen, Nr.43, 10/21/2005 is translated from the German on the World Wide Web, http://www.zeit-fragen.ch/.]




On October 14, 2005 the “Neue Zuricher Zeitung” newspaper reported about plans of the Australian government to deregulate the labor market of the country. The general thrust of the attack, according to the paper, “is to shift the center of gravity in regulating working conditions from collective to individual contracts.” Future wage- and working conditions should be negotiated “in direct conversations” between employers and employees. The government says this regulation will lead to “custom-made solutions.”

On October 19 the same paper published an important article by Peter Ulrich. Ulrich is professor of economic ethics at the University of St. Gallen and director of the Institute for Economic Ethics in St. Gallen. He writes:

“The `free’ market as a coordinating principle of a liberal civil society is not enough because of a structural bias. Under the conditions of property- and business law, its “practical logic” prefers the income- and profit interests of persons with ample disposable capital, whether financial-, fixed- or human capital. Other interests (for example, employee interests) or ideal desires (for example safeguarding human rights, social justice, ecological sustainability) oppose the logic of the `free’ market because they entail costs. The more intensive the competition, the more Max Weber’s perception 100 years ago is validated: `Whoever does not adjust in his lifestyle to the conditions of capitalist success perishes.’ Thus civilizing the market economy and the state is vital for the sake of the greatest possible real freedom of all citizens. This means integrating market forces in civil rights. The inherent logic of the market as a practical necessity is not a good reason to restrict the real freedom and justice of the rules of life together. Rather the free citizen is more important than the `free’ market in a true civil society.”

The plans of the Australian government aim in another direction and make clear what is uppermost in the demand for more market. In individual wage-negotiations between employees and employers, only that employee who can realize his irresistible demands has a chance. As a rule, these are only the highly trained and very specialized workers who come from the same milieu as the negotiating partners on the employer side. The majority of employees must accept what is offered because the next, equally well-qualified job seeker is already at the door. This is nothing new but was the central starting-point of labor associations and unions that in the 19th century demanded binding wage contracts for all their members. Employers with more pull in negotiations with employees should be restrained. Security through wage contracts played a lesser role when there was genuine full employment and everyone willing to work had good prospects for a good job.

The plans of the Australian government make insidious sense if “20 percent of the working population will be enough in the next century to keep the world economy going” and many others “will clean the streets for almost nothing or eke out a miserable existence as housekeepers,” The book “The Globalization Trap” predicted this in 1996.

What Peter Ulrich emphasizes in his article was formulated again and again in the last decades and can be found in Christian social teachings and in the intellectual fathers of the social market economy. Even if the Australian government did not read the article by Ulrich, a further inquiry by economists or historians would have revealed that academic thinking had long overcome the theory of the “free” market.

Politically active advocates of more “free” market are not focused on a policy oriented in the insights of the discipline or in public welfare. The Australian example demonstrates this. More “free” market is a social-political program involving a redistribution of power and money – in favor of a few special interests of the already rich and powerful.

Therefore articles like the one by Peter Ulrich are extremely valuable. First of all, they testify that the theory of the “free” market is full of inhumane weaknesses. They show it is wrong to only think in the alternatives “free” market or Marxist economic mode. Some tend to a rebirth of Marxism. They see – not without reason – the present development of globalization in the predictions of Karl Marx and Friedrich Engels on national economic development and the world economy in the “Communist Manifesto.” However they misunderstand that the theory of the “free” market and Marxism ignore personal anthropology and have a materialist foundation. Both materialist theories are only different sides of an ideology covering up the striving for power of elitist groups where the person has no place as a person.

The question about the origin of decisions discussed in Marx’ writings is very interesting. Marx started from historical laws. However in fact and truth, globalization in the world today is a conscious political decision of global power elites, not an inevitable development.

Therefore what Peter Ulrich wrote elsewhere in his article on the protagonists is important: “The ethical core of the political liberalism [in the 19th century] that amounts to the emancipatory power of the middle class social ideal is the concretion of the moral equality of all people in their human dignity as subjects of self-determined thinking and acting.”