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Volume 45, Number 3 (Fall 2007)

Order and the Market

book cover imageThe Commercial Society: Foundations and Challenges in a Global Age
by Samuel Gregg.
Lexington Books (Lanham, Maryland), 190 pp. cloth, $75.00; paper, $18.00, 2007.

Thomas E. Woods, Jr.

Traditional conservatives have not always been friendly to the market economy. Some, like John Ruskin, have been inclined to reject the market because of the instability it is said to introduce into social and economic life. Whatever the market’s merits otherwise, its alleged interference with the settled existence favored by the conservative made it an unwelcome social innovation.

Samuel Gregg, on the other hand, although a classical liberal, makes an excellent conservative case for the market economy—or, more precisely, for what he calls the “commercial society.” The latter term is meant to evoke more than the merely economic, and to call to mind as well a certain set of ideas and social relationships that a healthy market economy presupposes.

According to Gregg, the merits of the commercial society he describes are not fully captured in economic statistics. When capital is moved from one place to another, people can find themselves uprooted, and arguments to the effect that overall wealth is increased when capital flows are unre14 stricted are liable to seem remote and abstract against the actual experiences of those who have been displaced.

The Commercial Society, therefore, is Gregg’s attempt to ground the case for the market order on a broader set of arguments. To be sure, the case for the free society has indeed been made numerous times on non-economic grounds. But Gregg believes that elaborating on that case takes on particular urgency at a time like our own, in which globalization and economic liberalization continue to expand, and with them—because they can indeed carry instability in their train—the arguments in favor of reversing them.

In one sense Gregg is setting an unnecessarily difficult task for himself. Even the most compelling, multifaceted set of arguments is unlikely to persuade a neighborhood facing a major plant closing not to support interventions into the market economy. Only the most resolutely libertarian souls can be so dispassionate when it comes to their own situation. The people he actually needs to persuade are everyone else, to show them that although they should help their fellow human beings through this necessary adjustment process, they should not let their kindly sentiments lead them to favor state intervention. Such policies will undermine the commercial society at large by 1) discouraging new enterprises from opening in the first place and 2) further encouraging the idea that using the state to threaten and loot is a morally worthy kind of behavior.

Gregg is at pains to describe the values that are especially pronounced in a commercial society. For one thing, we have in the commercial society a realistic appraisal of human nature, and a recognition that while human beings can in certain contexts be other-regarding, large-scale social cooperation is impossible without additional incentives. Self-interest is both morally acceptable and natural to man, and it is a happy feature of commercial societies that people are best able to pursue their self-interest when they provide goods and services that most please their fellow men. Gregg also pursues a useful discussion of the controversy among moral philosophers surrounding the pursuit of self-interest, and well-chosen quotations from de Tocqueville provide valuable food for thought for traditionalists who have disparaged the market as amoral or even immoral for this reason. The commercial society’s realism is only one of its virtues, of course. Such a society can function only within a framework of freedom, since commercial activity is impossible without a panoply of liberties. And there is still more: in addition to the commercial society’s stimulus of entrepreneurship and human creativity, Gregg cites practical wisdom, trust, civility and restraint, and peace and tolerance as additional features that characterize commercial society. The farther we drift from the principles of such a society and the more we permit state action to interfere with or supplant private action, the farther from these virtues do we stray.

Having established the foundations of commercial society and examined the legal principles on which it depends, Gregg, true to his subtitle, proceeds to the challenges that such societies currently face. One is what he calls “the temptation of politics,” by which he means the inclination to look to the state rather than to the voluntary or market sector. The more we do so, the more we weaken the foundations of a system whose social and moral benefits Gregg has spent the first half of his book describing.

Welfare functions, for instance, are best left to local and/or private organizations. “If the state assumes the prime responsibility for helping those in need, it is little wonder that the philanthropic impulse with commercial society begins to diminish. A vicious circle is created insofar as the waning of the philanthropic instinct effectively necessitates increased spending on the state’s part and therefore increased taxation, which in turn further reduces incentives to create wealth.” When the functions of civil society are usurped by the state, non-state organizations that once served those functions atrophy and die. The character of that society changes accordingly, and not in ways that should please us.

The idea of equality can also undermine the commercial order. In one sense, commercial society is all about equality: individuals interact and exchange with each other on the basis of equality of rights, and in the absence of legally granted special privilege. But those who call for greater equality in our day typically have something rather different and more militantly egalitarian in mind. The pursuit of economic equality, Gregg argues, provides governments “a license to engage in endless wealth redistribution as it pursues a goal that can never be realized: the perfect redistributionist equilibrium.”

One reason that that goal can never be reached is that every subsequent transaction disturbs it—as in Robert Nozick’s example involving basketball fans, each of whom freely gives twenty-five cents to Wilt Chamberlain to watch him play. By doing so, they dramatically enrich that one person. (What would the redistributors have us do there, have Wilt return everyone’s money in order to restore the initial equality of resources?) The state, which operates parasitically on the market (even if Gregg might not put things quite that way), having been empowered to carry out an impossible task, then continues in the name of egalitarianism to increase its power over civil society. Moreover, the administration of state-organized redistribution “requires the creation and maintenance of large and complex bureaucracies, a process that generates its own costs, thereby reducing the available resources and thus necessitating more taxation.”

Thankfully for Gregg he has no plans to run for political office, for his chapter on democracy would surely be waved menacingly before the public at every opportunity. As with the rest of his arguments he has much more to say than we can properly analyze here, but he follows F. A. Hayek, who once noted that “unlimited democracy is bound to become egalitarian.” “Democracy,” Gregg writes, “tends to encourage a fixation with creating total equality because it requires everyone to relate to each other through the medium of democratic equality and encourages us first to ignore and then to dislike and seek to reduce all the differences that tend to contradict this equality, particularly wealth disparities.” (H. L. Mencken was more biting: government, he said, is “a broker in pillage, and every election is sort of an advance auction sale of stolen goods.”)

Gregg has a great deal more to say about these subjects and many others as well, and I fear I have not done justice to what is a mature, extended case for the moral attributes and benefits of the free society, and an argument that is likely to appeal even to conservatives who might otherwise be skeptical of the classical liberal tradition. The author’s discussion of corporatism and its descendants is likewise a useful corrective to those conservatives who seek a “third way” between socialism and the market. Gregg’s elegant prose, with which I could find scarcely a quibble, is scholarly almost to a fault, in the sense that truly exciting ideas are communicated in a tone that can be unnecessarily bland. Still, The Commercial Society is an important and its own way even beautiful book. By avoiding polemics, Gregg manages to describe the market order in such a way that, even if its opponents are not persuaded (for no single book could do that), they may at least appreciate how those of us who support the commercial society can find it both intellectually and morally satisfying. That is no small feat, and Gregg deserves respect and congratulations for achieving it.

Thomas E. Woods, Jr. (http://www.ThomasEWoods.com) is the author, most recently, of 33 Questions About American History You’re Not Supposed to Ask, and won first place in the 2006 Templeton Enterprise Awards for The Church and the Market: A Catholic Defense of the Free Economy.

Posted: December 24, 2007

A spirit of innovation is generally the result of a selfish temper and confined views. People will not look forward to posterity who never look backward to their ancestors.

Edmund Burke, Reflections on the Revolution in France

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