The market as an institution enjoys widespread popularity today. It is
held by many economists, those of the Chicago School especially, that all social problems
— crime, education, health care, and discrimination — are solvable by use of the
market mechanism. (1) Politics and government, by contrast,
are considered by many to be problems rather than solutions. Some today even seek public
office precisely to prevent government from carrying on its functions, because they and
their constituencies have lost faith in government and public life. These
"conservatives" believe that "privatizing" government functions, by
replacing public initiatives and agencies with private firms, will establish new freedom
for people to act on market choices rather than to acquiesce in laws and administrative
decisions reached through the political process. Others would reconstitute government in a
more market-like way, so that political deliberation and decision should follow from
"public choices" as merchandisers follow the tastes and preferences of
customers. For "public choice" theorists, as well, the public character of
politics should be replaced by the private decisions of voters/consumers on the options
presented them by their erstwhile leaders. (2) The public
character of life is being lost. Our society is being structured by the choices of
citizens concerned with themselves and their families and acquaintances, rather than with
the larger public, which is increasingly but an aggregate of private persons anyway.
Certainly, there are many who oppose privatizing public life. Some warn
of the emergence of a society so deeply splintered along class lines that any sense of
common good or national interest will be lost. (3) Some fear
that an important aspect of human life — participation in creating a common world
that transcends and outlives the individual — is being replaced by a straitened view
of the world and of one's small place in it. I share this fear, and in this paper I want
to address it by considering, howsoever briefly, what it means for a market to be truly
public. The point from which I begin is that an aggregate of private persons, engaged in
personal pursuits and associating with others like themselves, is different from and
offers far less to its members than does a community of persons realizing themselves in
public action. Public action involves persons exchanging their distinct perspectives in
spirited words toward creating solidarity with one another and undertaking concerted
actions in the world the responsibility for which they share. I will offer a brief
discussion of public markets, including their social interdependence which is implicit in
Adam Smith's famous notion of the "invisible hand." I will then clarify my
meaning of a public as opposed to a private life. I will then suggest that we ought to
recognize and emphasize the market's inherently public character far more than we do. That
is, I am not taking a position in opposition to the market, so much as I am suggesting
that today's market should be a locus of activity supportive of public life as I shall
define it.
The marketplace has been praised since the time of Adam Smith due to
its efficiency at satisfying individual preferences and rewarding creativity in those who
enter it, whether as manufacturers, merchants, skillful workers, or ingenious
entrepreneurs. Indeed, there is little argument that the market has proven to be far
better at organizing resources and structuring the power of labor so as to provide the
goods and services needed by society than centralized systems of economic control. Rather
than the dead hand of centralized bureaucracy that fails to note changes in needs and to
encourage innovation in products and production, the market works "as by an invisible
hand" to provide what is needed for those who are willing to pay, through enlivening
the individual initiative of many who seek their livelihood in market exchanges. Adam
Smith's famous "invisible hand" describes the mysterious power of the market to
generate successful moves as though there were an overriding intelligence directing
things, rather than a large number of independent agents seeking their own welfare through
successful transactions with other, like-minded agents.
In the modern world the Smithian account of the market has been joined
with a popular form of Lockean or even Hobbesian individualism to suggest that people are
nothing other than self-interested maximizers of their own utility (or profit). The market
has become a place where people totally indifferent, if not hostile, to one another seek
their best options through voluntary exchanges with other egoists. Libertarian defenders
of the market propose that society would be better off with as few social institutions as
possible, so that all intercourse could take on the market character of voluntary
exchanges between individuals. Milton Friedman has asserted, "Society is a collection
of individuals and of the various groups they voluntarily form." (4)
If we return to Smith's image of the "invisible hand,"
however, we find a view of market behavior that is social in a way far more fundamental
and pervasive than contemporary market rhetoric permits. Adam Smith was no Hobbesian, nor
even a Lockean. For Smith, as for other Scots, such as David Hume, humans are not
primarily self-interested creatures, but social ones. We have a natural capacity for
sympathy, for recognizing and feeling the pains and pleasures of others. Sympathy is the
main spring of our moral nature, for we are each able to approve or abhor the conduct of
some — including ourselves — toward others. We are, in fact, capable of taking
the position of an impartial spectator as observers of moral conduct about us, on the
basis of which we form moral tastes that direct our own conduct and that of those whom we
influence. A happy, prosperous society is one in which beneficence for others has led to a
"contagion" of happiness, as one person's happiness enlivens sympathy,
fellow-feeling, and beneficence in others. (5) Even economic
activity originates in, and endures through, a spirit of cooperation among members of a
community. Smith emphasizes that, whereas many other animals become independent upon
reaching maturity, every human "has almost constant occasion for the help of his
brethren . . . ." (6) From this observation, we may
infer that business — no matter how self-seeking its participants might be — is
at heart a cooperative activity. This is true in traditional communities, in which people
take up specialized tasks due to their facility for them, and in modern communities, in
which people are given tasks integrative of production for which talent has been rendered
moot by the simplification of labor. We have reason to believe, however, that, in our age
workers would gain greater satisfaction and work better were their opportunities to engage
their talents fully in association with others greater. (7)
Although we are moral creatures due to sympathy, we are also
self-interested creatures who will act against our moral beliefs when the advantage is
great enough to tempt us. For Smith, we live lives finely balanced between fellow-feeling
and self-interest. It is often quite hard for us to decide with certainty which side we
should take in particular cases. Smith's moral thought presents the dilemma of a member of
a market society: Ought I to forgo a success for which I have planned and struggled for
the sake of an individual act of moral goodness? Or ought I to achieve the success, the
better to act as a beneficent and caring member of my community for a long time to come?
There are some who find Smith's compartmentalization of business and other private
activities troublesome, for he seems to present a double-standard or a contradiction
within life. This is a sound observation about Smith, but it is a familiar enough
difficulty faced by many business people from Smith's time to our own. (8)
We ought to be grateful, at least, that the dilemma persists in many people's minds.
Economic activity is self-interested almost by definition. Many modern
exponents of Smith mistakenly make self-interest the sole driving force of human nature. I
want to suggest that, not even in economic activity, is sympathy fully absent. True, those
engaged in an endeavor might hold their own profits to be their reason for involvement.
Nonetheless, sympathy is active here if only implicitly. When people enter the market,
they seek their advantage there. They do this by attempting to discern the needs and
desires they can satisfy for others in the marketplace. This, I propose, is the secret of
the "invisible hand." Although business is carried on due to self-interest, it
is successful because business people are heedful of the others in the market; it is a
tacit cooperation of each providing for others. Many, making decisions through their
comprehension of the market, perform actions in such a way that, as a whole, they seem to
be directed by one mind. Competition is not eliminated on this view of the market. Rather,
it is a secondary, but essential, principle forcing all to offer products, produce, or
services of the highest quality as cheaply as possible.
In a congeries of small 18th century markets, it might well have been
possible for participants to read the needs of the others with great accuracy. In fact,
business people in many markets can no doubt read others' moral expectations as well as
their commercial preferences. Just as certain products will not sell, so certain kinds of
business practices will not be acceptable, and the people of the community will quickly
and effectively communicate these facts to businesspersons. For Adam Smith's
"invisible hand" to work effectively, it relies upon a decipherable coherence in
the community within which the market is set. Smith also recognizes that there are good
reasons for setting limitations upon business by government: laws prevent disputes and
antagonism; policies such as universal education help the young grow into more capable and
successful participants in the life of the community and its market. Adam Smith was not a
laissez-faire economist.
Smith thought of persons as sociable, sympathetic, and cooperative. In
business, they were self-interested, but in their personal lives their sentiments led them
to be beneficent toward others. Whether in business or personal dealings, however, Smith
concerned himself with private life. There is little place in Smith for civic minded
public action. Nonetheless, Smith recognized, "[T]the wise and virtuous man is as all
times willing that his own private interest be sacrificed to the public interest of his
own particular order of society." (9) Politics, for
Smith, is of importance because it provides justice as the settlement of antagonisms; and,
at its best, politics also provides the opportunity for the "system of liberty,"
the free market, to work unhindered except as necessary for the protection of its
participants. For Smith, people go into public life, not from the virtuous motives of the
ancients or from a love of public action in solidarity with others, but for
self-aggrandizement before others. By contrast, David Hume, another Scot deeply suspicious
of political life, recognized the possibility of the public happiness of citizens in a
good polity. Hume saw that politics offers the opportunity to nurture and display
"artificial" virtue, that is, the growth and expansion of sympathy and
beneficence beyond the natural ties of family and other intimates so as to encompass an
ever larger community on behalf of whom citizens willingly commit themselves. Although he
remained skeptical of the emergence of such a polity, Hume acknowledged its possibility
and, indeed, its potential greatness, should it ever be realized. (10)
Political leaders in such a regime would, no doubt, be ambitious for glory, but their
glory would be tied to the advancement of their polity, not its exploitation. (It is not
surprising that Hume and Montesquieu are the most frequently cited philosophers in The
Federalist Papers.)
If we take Smith's "invisible hand" beyond small markets with
businesses subject to true competition and out of a surrounding society that imposes
morals on and rewards honesty in tradespeople who respect the community's values, we can
readily see reasons why Smith's principle might well break down. Today there are many
disruptive influences within markets: oligopolies limit competition's control of prices
and quality, inequality of knowledge between buyer and seller affects the wisdom of many
market decisions, firms pass on costs (and harms) to others as externalities. (11)
There is also an inexorable pressure for managers to frame all choices on the short-term
need to boost the price of a firm's stock. Among consumers, as well, the market helps
reshape values and perceived needs so that consumption is increasingly a central. although
unreflective, force in people's lives. The financier George Soros warns, "As the
market mechanism has extended its sway, the fiction that people act on the basis of a
given set of nonmarket values has become progressively more difficult to maintain.
Advertising, marketing, even packaging, aim at shaping people's preferences rather than,
as laissez-faire theory holds, merely responding to them. Unsure of what they stand for,
people increasingly rely on money as the criterion of value." (12)
It has been argued since the 18th century that, despite its many
pernicious effects, the market does generate certain moral values. Most recently Ian
Maitland has argued that the market develops trustworthiness because business is
impossible between people who so fear being cheated that they demand all possible
protections. For similar reasons, successful businesses display fairness in their dealings
with various stakeholders. The market also breeds self-control, for people in business
must learn to restrain themselves for the sake of long-term gratification. (13)
Maitland makes good points that doubtlessly hold true for many firms that are settled and
prosperous in their secure niches within the market and community. In an era of downsizing
in order to increase profits, leveraged buy-outs, poison pills, two-tiered employment, and
the like, however, Maitland's assurances take on an air of nostalgia for a form of
business fast disappearing. Moreover, as Bill Shaw notes, Maitland's enumerated virtues
are not developed because they are goods in themselves, righteous ways of doing business,
but only because they produce profits. (14) When fairness to
employees is measured against a boost in stock price, for example, management usually
seeks to raise the stock price.
One fact is undeniable: the market looms large in all political thought
and policy formation today. Although modern market theory stresses radical individualism
and self-reliance, in fact, markets rely heavily upon government for such things as
infrastructure, education of the workforce, and stability among trading partners.
Citizens, likewise, look to government for regulation in the workplace, safety in
products, truth in advertising, and the like. At the same time, today's global markets are
less and less under the sway of the state. Nowhere is this clearer than in employment, for
within the global market firms can relocate production anywhere that labor is cheap and
submissive. The result is greater job insecurity everywhere, with increased pressure on
governments to provide for the unemployed and unemployable. The private enterprise system
inevitably depends upon public support from government as well as from various nonprofit
agencies that provide education, housing, healthcare and other services for sometime
workers.
Given the market's dependence upon public agencies, the description of
business as 'private' enterprise is bewildering. 'Private' here means that business
transactions are between private individuals and firms. At the same time, the market is
'public' in that anyone may voluntarily enter and participate in market affairs. Market
freedom appears genuine, however, only for those with sufficient capital or managerial
power to compel others to do their bidding. Moreover, information on firms that trade
shares on the stock exchanges is 'public' so that all investors have access to knowledge
needed to forecast a firm's future performance. The market is 'public' in another, quite
different sense, as well, because what goes on there affects not only the participants,
but the whole society. If we are to speak of private enterprise in public markets, we had
best consider more carefully what 'public' and 'private' really mean in this context.
Hanna Pitkin proposes that 'public' carries three crucial meanings: (1)
open or accessible to others; (2) having a far-ranging effect or influence, and (3) under
the direction or control of the people at large. (15)
Certainly, the market and its institutions are public in the first and second senses. They
are public in the third sense only insofar as government regulations, social pressures,
and the "social responsibility" of business people limit business transactions
to those compatible with the well-being of society. Of course, the freedom of the market,
in many ways, is in the interest of the people. Therefore, there should be limits to the
limits placed upon market activity, so as not to crush the ingenuity and daring that
market freedom encourages.
Pitkin draws her notion of 'public' from a critical study of Hannah
Arendt's notion of public or political action. For Arendt, political or public action is
not limited to government. Whenever people come together in order to discuss critically
their common world with its problems so that they can exchange perspectives, conceive
courses of action, decide upon one, and act for the sake of their world, they are engaged
in public action. Public action requires courage for those who engage in it must step out
of their private lives into a public space to be heard, interrogated, and criticized by
their fellows. Public action, which Arendt traces to the beginnings of democracy in the
ancient world, is also a form of freedom for those who partake of it, who step out of the
enclosed world of private necessity and desire, by helping to create a world for
themselves and for those who follow them. Public action is not a form of self-denial; it
is a form of self-fulfillment — "public happiness" — that comes from
expressing one's true individuality by speaking and acting from one's unique perspective
for the sake of what is shared. (16) Pitkin's sharpest
insight in her critique of Arendt is to propose that people need not gather together in a
physical space in order to engage in public thought and deed. Public action displays an
"attitude" that liberates one from self-absorption in private interests, so that
one is able to participate in the world-building activity of responsible and engaged
people whether or not one acts in physical concert with others. This does not mean one
denies one's private perspective or gives up one's self-interested projects, but that one
is able to shift back and forth purposefully between private and public standpoints and
choose goals appropriately. Pitkin writes, "From this perspective, to say that we are
political animals is to say that we have the power to take charge of the forces which
shape and limit us, and that our full development as human beings depends on our
exercising that power." (17)
The public forms of action and freedom receive less attention than they
should in much liberal thought, because liberalism from its beginnings has stressed both
the right of people to live private lives of their choosing and the obligation of the
state to provide security for that right. The individual has most often come first in
liberal argument; participation in public life has been of secondary importance and it has
not always been taken as a duty. To be sure, there have been theorists arguing for the
importance of political participation throughout the modern liberal era, but theirs has
been a minority voice. (18) Our concern here, however, is
not with political participation, but with public action within and with respect to the
market. For that reason, it is important to note Arendt's point that public action is not
the same as government action. People can act publicly along side, in opposition to, or
independent of government.
As I have remarked, government plays an important role in the market
today through regulation. Nevertheless, government cannot be relied upon exclusively to
introduce nonmarket standards or ideals into business. Government regulation tends to be
reactive, limited in scope due to expense, and influenced by those who are to be
regulated. The best source of regulation is business itself. That is, the best option is
for business people themselves to take public action concerning questions of safety,
truthfulness in advertising, fairness in employment, and so forth. Business people are on
the scene, know what is happening, can predict what could result from their products and
practices. (19) The call for "social
responsibility" among businesspersons is another way of saying that they should take
action so as to make the market genuinely public.
A truly public market must serve a public good, otherwise it will be
pernicious through its effect upon many people. Paul Camenisch proposes, "Society has
no need for profit-making as such. But rather, societies generate, encourage and sustain
business because societies need the available raw materials transformed into needed goods
and services, and because business in its contemporary form has been conspicuously
successful at doing just that." (20) That is, business
is important to society not because it makes profits, but because it earns them through
making needed goods and services. When the market helps turn business toward beneficial
pursuits, well and good. When the market does not do so, for example, when it encourages a
short-term outlook due to stock speculation, the market needs purposeful curbing. (21)
Business people and consumers alike must be aware of what they are doing and supporting.
Business might not appear to be anything like public action as it is generally understood;
nevertheless, it is an activity that needs to be consciously integrated into our
comprehension and augmentation of our public world. (22)
One hint of what a more public market might mean is suggested by the
practice of professionals. The term 'professional' is honorific in our society. It
indicates agents who skillfully perform a "practice," a service that is an
"intrinsic good" due to its benefits for society. In return for performing their
practice, professionals receive "extrinsic goods" such as a substantial income
and social esteem. (23) Professionals' occupations, then,
are both public and private, both callings and careers. (24)
Professionals are expected to act for the good of those they serve. Moreover, as
professionals, they belong to public organizations in which ethics and standards are
articulated through ongoing discourse among colleagues. These standards are enforced by
the professional organization and the states through institutions such as licensing
boards.
Business managers do not, for the most part, claim to be professionals,
although they increasingly participate in advanced education and quasi-professional
organizations. Whereas managers have traditionally been responsible as agents protecting
stockholders' monetary interests in their firms, today there is widespread discussion
about realigning managers' responsibilities to accord not only with stockholders'
interests, but also with those of other stakeholders — employees, customers,
suppliers, and the general public. That is, the purpose of the corporation has been under
discussion by business educators and ethicists, and the responsibility of managers has
been a central element in that discussion. If it is through firms that business performs
necessary social practices, then stakeholders make investments in important social
institutions: workers invest their time and talent, customers their money and safety,
neighbors their tax proceeds, and stockholders their capital. For managers to serve the
interests of one group of stakeholders alone is to fail to respect and reward the
contribution of all the others. Managers have the public or professional obligation to
deal fairly with each stake-holder group as well as the encompassing duty of coordinating
the firm itself because it is of vital interest to a great many people. (25)
The modern business firm would, on this view of public action, become a
space within which groups of stakeholders form and act together both to serve the public
good and their own best interests. Managers would then truly be leaders, for they would be
public actors rather than merely private agents. (26) In a
truly public firm, worklife would not be alienating or degrading because it would have a
publicly recognized, respected purpose. Workers would no longer fear for their jobs due to
ruthless cutting of overhead; they would be partners with a voice in the firm's decisions
and a duty to improve and apply their skills. The workplace would become a public space
with reciprocal responsibility and cooperative effort grounded in the public attitudes of
all working there. In this brief paper, I have not depicted political action in any
traditional sense, but a genuinely public form of action as it would be performed by
people in business intent upon enriching their world and their lives through their work.
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