A Utilitarian Defense for Free Markets

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Mr. Marcks
was looking at a piece of property where he could have placed his
small flower-selling business, but now the place was filled with
construction workers and heavy machinery. He had been outbid when
trying to purchase the property; there was no way he could have
made a profitable business paying that much for it — even though
the site was perfect.

The big
industrial corporation now owning the property seemed to have a
never-ending stack of cash. It simply wasn't possible to outbid
them; they had easily paid a lot more than Mr. Marcks and his fellow
small-scale entrepreneurs in the Multiple Business Syndicate could
ever accumulate, and "won" the site. Now the corporation
had employed a hundred construction workers building another factory-in-a-shop
facility.

Should it
really be this way, he wondered. Don't I have an equal right to
put my business at an attractive site, shouldn't I have a right
to the same opportunity Mr. Bucks, the owner of the corporation,
once had had. I deserve a break, Mr. Marcks concluded, we all do.

To anyone in
the statist left, this story would be a typical example of the injustices
of the market. Mr. Marcks and his fellow syndicate entrepreneurs
are obviously "forced" to locate somewhere else since
they cannot compete financially with the big, immoral business of
Mr. Bucks. This is, they would say, how capitalism works: they richest
takes it all, while all others are left behind and have to play
by the wealthy's rules.

(The statist
right, on the other hand, would probably take an opposite position
and demand laws to protect Mr. Bucks's "right" to be wealthy,
and call for subsidies to make sure he stays that way. At taxpayers'
expense, of course.)

The thing is
Mr. Marcks, despite his name, doesn't necessarily have to be a leftist.
He could be anyone who has been "outbid" — anyone wanting
something they cannot purchase simply because someone else had more
money to offer. The conclusion people generally make from a situation
like this, just like Mr. Marcks, is that it is unfair and cannot
be right. Everybody intuitively feel they should have an equal right,
and so they feel stepped upon by anyone with more money — and perhaps
treated unfairly.

I know a lot
of people who would rather not think about buying a scarce commodity,
or the perfect property for a beautiful summer cottage, than take
part in a bidding together with people with a lot more money. They
gather they would stand no chance — that they would lose no matter
what. But the thing is, their logic is limited in the same way leftists'
logic is. They prefer thinking in one step only, instead of seeing
things in a context.

Leftists prefer
the "snapshot" view of society, where they anytime can
stop the course of time and compare people's wealth in order to
conclude it is "unfair" (meaning unequal). They prefer
not looking at things the way they happen and are brought about,
i.e. as processes. There is no one making investments for the sake
of investing, but rather for the sake of expected returns and profits.
Leftists enjoy analyzing their snapshot view when someone has worked
hard all his life and managed to satisfy a lot of people's needs
through providing employment and products and so become wealthy.

When thinking
about it, what is unfair is really the way they see things and how
they analyze the "unfair" state of affairs. How can you
judge someone for his temporary wealth without taking into account
his achievements the passed decades? I am not saying all wealthy
people have earned it. Contrarily, I think a lot of people have
become wealthy through gaining political privileges. But that certainly
does not apply to all of them.

The reason
people can get wealthy is that resources are scarce, and that's
the reason we have an economy in the first place. In a free market
the people creating most value for others receive most value in
return. That's why Murray Rothbard stated "[t]he greater a
man's income, the greater has been his service to others" (Power
& Market
, p. 224–225). The natural conclusion from
this, at least from a utilitarian perspective, would be that he
who can produce most value for others should have a right to the
resource.

That's obviously
not the way leftists think — to them, it is more important to have
equal wealth than to have more wealth. People are obviously
thought better off equally poor than unequally wealthy.

But that doesn't
change the fact of things: resources are scarce and people in general
are better off if they are used creating a maximum of output. It
is, to humanity (but not necessarily to the individual), better
to use a property for productive industry than for private leisure.
Since leftists are collectivist, they should therefore advocate
the "best use" in terms of wealth creation, i.e. the free
market.

The reason
Mr. Marcks does not find it worth the cost to outbid Mr. Bucks'
corporation in the story above is not necessarily that he has less
money. The main reason is he and his fellows in the syndicate do
not find it profitable to pay such an amount for the property
— they cannot use it efficiently enough to cover that initial investment
cost. Obviously Mr. Bucks can, and therefore he "wins"
the bidding process.

This should
not be interpreted as if the wealthiest always outbids the not so
wealthy. That is a leftist illusion, which can only be proved if
considering nothing but snapshots of society. If things are seen
as part of a process, i.e. in a context, it should be clear that
a free market "gives" a resource to the person(s) able
to create the most value out of it. If someone can create more value
than anyone using a certain resource, and is able to prove it, there
is always enough capital available in a free market to outbid any
competitor. (This does of course require some kind of ownership
rights, since without such nobody would ever dare invest in any
venture.)

A free market
is therefore not mainly for the wealthy, but for the productive,
and it always brings the most out of the limited resources nature
gives us. Eventually, through trade, the values created are made
available for the masses at minimum cost, i.e. to maximum net benefit.
Any leftist should embrace such a "system" as an ideal.
That is, if they cared about the level of prosperity in society
at all, instead of snapshot equality.

Actually, Mr.
Marcks should be happy he lost to Mr. Bucks's corporation. This
only means the most is created from the resource, and that means
Mr. Marcks does not have to bear the comparable loss of producing
less efficiently. Also, he will personally (as will all of us) gain
from the values created by the corporation when they are distributed
on the market.

Perhaps Mr.
Marcks should even thank Mr. Bucks for showing him there are more
efficient ways of using the resource — and that Mr. Marcks's assets
could be better used somewhere else.

April
14, 2006

Per Bylund [send him mail]
works as a business consultant in Sweden, in preparation for PhD
studies. He is the founder of Anarchism.net.
Visit his website.

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