Monday, September 10, 2012

The Deontology of Liberty in Trade

The main points of euvoluntary exchange:
  1. Euvoluntary trade unambiguously makes each party to the transaction at least no worse off than without the trade.
  2. Even if bargaining from a weak position due to poor alternatives, voluntary trade still makes each party to the transaction at least no worse off than without the trade.
  3. Voluntary trades made under conditions of radical uncertainty may make one or more party to a trade worse off than without the trade. The expectation of gains drives people to trade.
  4. Involuntary trades can be expected to make at least one party worse off along some dimension than without the trade.
Underpinning our approaches to these categories of exchange are mountains of philosophy. Much of the ethics of the market can be found in Mill, Locke, Bentham, Paine and other Enlightenment thinkers. A revival of moral thought in economics that hearkens back to some of Adam Smith's work is underway thanks to the tireless efforts of people like Deidre McCloskey, Daniel Klein, and Peter Boettke. McCloskey's idea is to reject the principle that prudence is the one and only economic virtue, that inter alia, virtues like mercy, love, justice, temperance, and loyalty are all relevant in the study of human behavior in the marketplace. At a more basic normative level, we should ask whether we care about these things for their ends (consequentialist ethics) or their means (deontological ethics). One might argue that though rap videos about Keynes and Hayek get more attention, it's the ongoing struggle of Kant vs Bentham that drives much of the disagreement over the nature of freedom in exchange.

Pure euvoluntary exchange is acceptable on both utilitarian and deontological grounds. These trades don't hurt anyone, they make some people better off, and they don't violate the presumption of liberty or injunctions against the initiation of violence. Moving further down the spectrum of exchange, we can imagine butting up against one or another principle somewhere along the line. Expropriation by violence runs afoul of the non-aggression principle and may be inefficient using standard economic criteria

In a world of pure consequentialism, any trade that's Pareto or K-H efficient is morally acceptable. This means that JorgĂ© can charge whatever he wants for the water in his taco truck, as long as Jimbo prefers that price to death, the trade was a-ok. In a world where justice, fairness and charity matter, JorgĂ© is obliged to refrain from gross exploitation, n'est-ce pas?

Utilitarianism has no shortage of shortcomings. Many of these shortcomings persist even after resorting to rule utilitarianism or even meta-rule utilitarianism. One big advantage it retains over deontological arguments is that its metrics are clear: measure and compare outcomes. Deontology scrutinizes process but features severe and persistent disagreement over just what imperatives are appropriate. Indeed, many intro to philosophy courses (and innumerable late-night college dorm discussions) are filled with thought experiments intentionally designed to pit various potential deontological principles against each other. Economists, weird as we are, look at you like you've got two heads when you suggest that throwing a man onto the tracks to stop a runaway trolley from killing ten is even the slightest bit different than refraining from throwing a switch that would generate the exact same results.

So when we here at EE claim that sweatshops are good, do we rely on utilitarian arguments? We can. We regretfully remind our readers that people work in light manufacturing under unpleasant conditions for long hours and for (what seems to us) low pay because it's better than their alternatives. This is a utilitarian argument. But we can also make a legitimate deontological argument that it's immoral for third parties to interfere unsolicited in the peaceful arrangements of others. We can claim that the ethics of locking up prostitutes for agreeing to a peaceful exchange of cash for sexual activity or detaining drug users for the peaceful ingestion of arbitrary substances or fining peaceful guitar makers for the "crime" of failing to fill out paperwork for imported wood are suspect without having to rely on arguments that most people outside of the economics profession (or without much in the way of economics training) find especially compelling.

But what then are the deontological principles of euvoluntary exchange? Is non-aggression enough? Do we need to invoke Bastiat's unseen? What about aesthetics? Is it unseemly that so much is now available for sale? More to the point, with whom does the burden of proof lie? Do defenders of liberty in trade need justify the euvoluntarity of an exchange to elite overseers or do public servants who have been hired by the people to provide law and order need to justify interference to their employers before meddling in the affairs of the marketplace?

The answer to that last question there goes a long way in describing the sort of civil society in which we live. I'd encourage you to consider how you might answer it as you vary time and location.

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Do you have suggestions on where we could find more examples of this phenomenon?