Dogma Premise # 17
The only way to make a profit consistently in a market based on voluntary exchanges, is to give people what they want.
Dogma Premise #17 is very close to the heart of the moral justification for Capitalism. The idea is that in an economy of voluntary exchanges, no one gets anything but what they bargained for. Therefore no one has any right to complain, and everyone’s position is constantly improved, each time they agree to a trade -- or else why would they agree?
There are two ways to drench this fantasy in the cold water of economic reality.
The first and most apparent is that not all trades in a market-based economy ARE voluntary. A trader’s will is overridden any time they are misled or circumstances turn out badly due to unforeseeable circumstances. For example, suppose a person trades money for a house with a hidden defect -- the lightning rods are ungrounded. The house is subsequently struck by lightning and burns down. There is no sense in which this person “deserves” the result of this voluntary exchange.
And there are many ways to assert an economic advantage besides outright fraud. For example, if there is only one store in town, and the owner decides not to stock organic foods, it cannot reasonably said that the local residents “chose” not to buy organic, even if they chose to buy from the store. There are all kinds of reasons why moving to a different town might not feasible, and undoubtedly some of the residents lacked the capital to start a competing store with different types of food. The people who own the stores, or who own the capital that gives them a chance to create a competing store have more choices, and therefore more freedom. Those at the bottom of the economic spectrum have the rules of the game dictated to them, and so their participation in economic life is not voluntary in the same way as participation by the wealthier.
It is sometimes supposed that those without capital nonetheless “volunteered” to be economically powerless by failing to work hard and accumulate capital. The transparent hypocrisy of this argument is that it ignores that the children of both the wealthy and the poor neither worked hard for their relative wealth nor volunteered for their relative poverty, so assigning moral blame or praise is simply inaccurate.
But there is a much deeper flaw with theory that the result of voluntary exchanges is giving people what they want. Even if it is assumed that every individual exchange is voluntary, that does not mean that the sum of all the exchanges creates a situation that anyone volunteered for. Economic power includes the power to determine who works and who doesn’t, what gets built and what doesn’t, which amenities and services are available to a community and which are not, and who gets well paid for easy work and who works hard for low wages. And the economic power to make these decision results from a concentration of wealth to which no individual trading partner might have agreed.
Philosopher Robert Nozick famously described a basketball player who grew wealthy because a multitude of local fans each paid the basketball player an extra 25 cents to watch him play. Nozick’s conclusion was that if each individual transaction was voluntary, then the overall effect of all the transactions must also be voluntary. However, it cannot be fairly said that basketball fans who buy tickets to a game are voluntarily willing that a private citizen obtain unequal power over living conditions in the community completely unrelated to the basketball game -- and yet that is precisely the result.
And so it is fallacious to say that if a market of profit-generating exchanges is voluntary, then any distribution of wealth that results is a manifestation of giving people what they want, let alone, fair, prudent, and socially just. The use of markets to turn innocent, isolated, individual trades into the unilateral ability it save or damn other citizens is exactly what Honore Balzac meant when he said, “Behind every great fortune lies a great crime, undiscovered because it was properly executed.”