ARE CAPITALISTIC MARKETS LEGITIMATE?

Two conceptions of moral legitimacy

Socialism, understood as the rejection of markets based on private property in favor of comprehensive centralized economic planning, is no longer a serious political option. If the core of capitalism is the organization of the economy primarily through market competition based on private property, then capitalism has certainly defeated socialism. Markets have been accepted—and central planning abandoned—throughout most of the Third World and in most of the formerly Communist states. In the advanced industrial states of the West, Labor and “democratic socialist” parties have rejected socialism, by deregulating markets and privatizing industries, utilities, and transport. The U.K. Labour Parry's 1945 manifesto declared the party to be a “Socialist Party, and proud of it. Its ultimate aim is the establishment of the Socialist Commonwealth of Great Britain.” Today the Labour Party insists that markets are a given.

So, have capitalism and markets triumphed? Are we all capitalists now, insofar as we all believe that capitalistic markets are a legitimate economic arrangement? The answer depends on what we mean by “legitimate.” We can distinguish two ways—instrumentally and intrinsically—in which legitimacy can be understood.

On the instrumentalist view, markets are morally legitimate insofar as they are efficient means of producing desirable goods. Markets are morally desirable because, quite literally, they deliver the goods. It is this instrumental understanding of the legitimacy of markets that has become almost commonplace today.