B. Promoting personal virtues
Promoting personal integrity and truth-telling
Zupan writes that the virtues of free markets produce an underlying morality. He argues that because of the repeated nature of exchanges, free markets create—or at least provide incentives for—integrity and other cooperative virtues.[1]
When future exchanges are expected, individuals are more willing to do the right things today. Free markets, he says, should be praised for fostering integrity and cooperative behavior through their promotion of ongoing mutually beneficial exchanges. Integrity in this case, according to Zupan, is not about good or bad, or what should be or not be, but is about truth-telling. You either keep your word or you don’t, and using that definition, he shows that free markets, as compared to other economic systems, more fully promote the practice of integrity and other desirable virtues.
It is not surprising that free markets tend to produce truth-telling, especially for established businesses in a relatively stable population. The very nature of repeated, even frequent, voluntary exchanges reinforces truthfulness. (You won’t likely return to a grocer who lied to you about the freshness of the bread or milk, or an auto mechanic who lied to you about a repair that he did.) Lying destroys trade.[2]
The overwhelming levels of corruption seen in non-free-market economies throughout the world compare unfavorably with the greater honesty of free-market, private-property economies where repeated exchanges take place. For example, India still ranks as “mostly unfree” in the 2012 Index of Economic Freedom (54.6 points out of 100): “Despite India’s high economic growth, the foundations for long term economic development remain fragile in the absence of an efficiently functioning legal framework. Corruption, endemic throughout the economy, is becoming even more serious.”[3]
The 2012 Index of Economic Freedom[4] ranks “freedom from corruption” in 179 countries around the world.[5] The countries that rank at the lowest end of the scale for freedom from corruption (with a horrible score of 14-25 out of 100) include many unfree, government- controlled economies, such as Myanmar (14 out of 100), Uzbekistan (16), Venezuela (20), Russia (21), the Democratic Republic of the Congo (20), and Zimbabwe (24). By contrast, the highest ranking nations in freedom from corruption are all free-market economies, such as Denmark (93), New Zealand (93), Singapore (93), Canada (89), The Netherlands (88), Australia (87), Switzerland (87), and Hong Kong (84). There may be some countries with free markets and significant corruption due to various cultural or legal factors, but the general pattern is clear: countries with higher economic freedom tend to have lower levels of perceived corruption.
- [1] Zupan, “The Virtues of Free Markets,” 177.
- [2] However, in cases where it is difficult for consumers to obtain adequate information to make a decision, there is a proper role for government regulation (for example, regulating sanitary conditions infood production facilities, which consumers could not personally investigate).
- [3] Terry Miller, Kim R. Holmes, and Edwin Feulner, eds., 2012 Index of Economic Freedom (Washington:Heritage Foundation/New York: The Wall Street Journal, 2012), 225.
- [4] Ibid., 8-12.
- [5] The information on corruption is derived mostly from the Corruption Perception Index publishedperiodically by Transparency International; see Miller, Holmes, and Feulner, 2012 Index of EconomicFreedom, 456-457.
