The Ethical Foundations of the Market System

A Course with Professor Thomas Patrick Burke

Six Mondays, November 16 to December 21, 2009

The ethical foundation of the market system lies in the principle of mutual benefit. Any market transaction takes place only because both parties consider they will benefit. If only one party expects to benefit, no transaction will take place.  Each person, therefore, not only benefits himself; he also benefits the other person. He does this even when he has no intention of doing it. His intention is only to benefit himself. But he can obtain this benefit for himself only by doing something that benefits the other. This is true even where the benefits are unequal. One person may obtain twice the benefit the other does; it still remains true that the second person benefits.  It would be absurd to say he is harmed.

The idea of “exploitation” ignores this. It implies that a person can choose of his own volition to apply for a job advertised at a certain wage, and yet be harmed or made worse off by getting what he applies for.  That would be true if he were the victim of force or fraud. But if the only pressure on him is the press of circumstances, what he receives is a benefit and not harm. Even if I will die unless I get a certain expensive medicine, but I buy it despite its expense, that is still a benefit and not a harm.

These ideas, however, have been the subject of much confusion. What is meant by a “benefit”?  What is a “harm”?  What is the baseline for calculating that? What does it mean to act freely or for the market to be free? If the range of available choices is very limited, is this a restriction of freedom? What is the difference between the pressure of circumstances and coercion?  When does a person cause harm to others and when not?  When should a person be liable for the harm caused by his actions?  The text for this course is my book No Harm, which aims to investigate and clarify these and other common confusions regarding the market system.