From Political Scientist James Stoner:
Is there a moral basis for the free market? As libertarian and traditional conservatives debate the best tactics for breaking the current wave of government expansion and its assaults on freedom, this is a question worth asking—both to make a cogent case to the public in favor of free markets and to clarify to one another the extent of agreement among free-marketers of different stripes.
In American political thought, the case for market freedom rests on the right of individuals to pursue their own happiness and to decide for themselves how to achieve it. The freedom of thought and action that lets people take charge of their own affairs entails freedom to exchange goods and services in an open market. As Michael Munger has pointed out, if the exchange is truly voluntary, both parties will necessarily be better off as a result, at least in terms of their needs and desires at the moment of sale.
The basic goodness of free exchange has been ratified by success. Market economies in the modern world dramatically reduce the material poverty endemic to the human condition, battling hunger, cold, disease, and isolation. We have seen such progress in Western societies over the past five hundred years and, in recent decades, in China, India, and a host of other nations as well. By allowing individuals freedom to acquire and sell, markets tap unexplored sources of human activity and inventiveness.
A century ago, advanced opinion treated this as a one-time effect of modernization and demanded redistribution of the bounty. Now it appears that the dynamic is ongoing: global markets seem to be the most efficient way to distribute modern plenty to all places, and technology continues to develop and amaze.
Now, “If men were angels,” as James Madison wrote in The Federalist Papers, or “if angels were to govern men”—that is, if we were perfectly rational beings seeking innocent ends, or were governed by such—then the logic of the market might be sufficient to guide our social relations. But we aren’t, and government isn’t, so the morality of markets cannot rest only on the logic of voluntary exchange. For a market to be free, there has to be protection against coercion or fraud. Accordingly, defenders of free markets are rarely anarchists, but instead insist upon strict justice.
Justice cannot be bought and sold—or, rather, we know that doing so is corrupt. Rights should be accorded equally and impartially, following law and equity; they don’t belong only to the wealthy or the well-born or the popular, but to everyone, simply by virtue of his humanity or his citizenship.
How, then, are rights defined, adjudicated, and enforced? According to American thinking, the origin of government is in the consent of the governed—consent in part to custom and tradition, embodied in common law; assent to reforms to make the law more reasonable as circumstances change and society learns; and election of representatives to make formal changes in law and to administer common affairs. Though we vote as individuals, voting is not like buying a product, because as voters we are concerned, or ought to be concerned, with achieving the common good, not just our individual values. While markets work to distribute the kinds of goods that we can hold individually, justice is a common good. Like many other common goods, such as protection from foreign enemies who would raid our markets and depose our freedoms, we secure justice through government.
Citizens give consent as members of a community, or rather, since ours is a federal constitution, as members of overlapping communities. This is not an easy process; we often disagree about how to define the common good, about what justice is, about what dangers and opportunities the world presents us, and much more. But through long experience as a self-governing people, guided by the wisdom of those who fashioned and refashioned our institutions, we have arrived at various settlements, whose imperfections we tolerate because they remain open to improvement.
Often, when we talk about government in relation to the market, we focus on bloated and inefficient bureaucracies, but I am referring to the constitutionally designated institutions through which we rule ourselves as a free people. We grow frustrated with them when we fail to understand their purposes and limits, and when we grow impatient with the very social diversity that is the natural consequence of the individual freedom we cherish. Thus, the first limits on market freedom are those that political freedom itself entails.