Freedom,Markets and Moral Motivation: Towards a More Adequate Account of the Implicit Morality of the Market

Abstract

The market failures approach is amongst the most influential theories of business ethics. Its interest within the field is, in large part, a result of its rejection of moralism and any sort of applied ethics approach, favouring, in contrast, a focus on the institutionally embodied goal of economic activity, which it takes to be that of Pareto efficiency. From this articulation of the goal, or purpose, of markets, a set of efficiency imperatives are derived that are taken to comprise the implicit morality of the market. However, the market failures approach has not adequately explained the basis of market actors’ moral motivation, that is, the reasons individuals have to self-consciously adhere to moral norms governing market transactions. This failure, I argue, stems from its misspecification of the purpose of the market. After explaining this failure to address the problem of moral motivation, I argue that a distinctive mode of freedom understood as a form of self-authorship is better seen as the purpose of the market, a goal that actually animates individual market participants. I then argue that this notion of freedom is intrinsically linked to a conception of responsibility and that this notion of responsibility can be more adequately conceptualized as involving a set of market virtues focused on promoting mutually beneficial transactions. Thus, the link between freedom and responsibility, stemming from an individual’s need to legitimize their freedom in a market context, provides the basis for a self-conscious sense of moral motivation. As such, this approach better captures the implicit morality of the market while also addressing the problem of moral motivation.

Keywords

Business ethics culture freedom markets responsibility values virtue

Just as personal property can be bound up with one’s identity, for many people the ownership of productive property plays a profound role in the formation and maintenance of self-authored lives.

—John Tomasi (2012, p. 109)

The market failures approach (MFA), developed by Joseph Heath (2014b), is among the most influential theories of business ethics. Its appeals stem, in large part, from its rejection of moralism (Geuss, 2016) or any sort of applied ethics approach. Breaking with much previous work, the MFA does not first draw upon a particular ethical theory before explaining its implications for business practice. Rather it aims to articulate the implicit morality of the market. As Heath (2019, pp. 21–22) says, ‘The primary motivation for the development of the MFA was to make business ethics less of a wish list of things that we would like corporations to do and more of a philosophically informed reconstruction of the norms that are already implicit in the marketplace’. The advantage of this approach, so it seems, is that it thereby avoids imputing extravagant forms of moral motivation to ordinary business persons (Boatright, 1995). Instead, the MFA highlights a set of ‘efficiency imperatives’ (Heath, 2014b), or norms, taken to be latent within the practices constitutive of a market society and implied by the social function of markets, which is taken to be Pareto efficiency, seen as ‘a general prohibition on waste’ (Heath, 2014a, p. 10).

Markets, however, are somewhat peculiar institutions, in that they function as if by an ‘invisible hand’,¹ steering the actions of individuals towards a social goal that individual participants largely disavow. In other words, markets function as they do, in large part, because their participants need not and, in fact, typically do not adopt the societal purpose of the institution. As such, there is a gap between the form of motivation required by the MFA’s account of efficiency imperatives and the form of motivation presupposed by its account of the social context within which the efficiency imperatives are supposed to operate. This begs the question: Why might market actors choose to adopt the efficiency imperatives? In fact, the MFA’s focus on efficiency is myopic. Other values are institutionalized within markets besides efficiency. Most important for this issue is the value of a distinctive notion of freedom, that is, freedom as self-authorship (Tomasi, 2012). Markets facilitate self-authorship by enabling individuals to determine the minute details of their lives and even their identities. Self-authorship is also inherently linked with a notion of responsibility, of being able to bear one’s own burdens (Moller, 2018). In linking freedom and responsibility, self-authorship, as it were, fills the gap within the MFA, regarding the question of moral motivation.

Thus, in this article, I build upon the MFA, accepting its basic interpretative methodology of ‘immanent critique’ (Heath, 2014a, p. 19), but also challenge its claim that efficiency is the focal value implicit within the market. Instead, I argue that freedom is the implicit aim of the market. Accordingly, I explain how markets institutionalize a distinctive mode of freedom as self-authorship and how this notion of freedom provides a self-conscious basis for moral agency within a market context. In doing this, I highlight the absence of an adequate account of moral motivation within the MFA and spell out the link between the notion of freedom as self-authorship and a conception of responsibility in market transactions tied with the notion of mutual benefit (Bruni & Sugden, 2013). More specifically, because freedom requires a constitutive norm (Korsgaard, 2009), market actors have a reason to self-consciously adopt the efficiency imperatives, which serve as relevant norms in a market context. Moreover, the link between freedom and responsibility has both a historical and a theoretical basis. After drawing this out, I conclude by arguing that the implicit morality of the market is best seen as a set of virtues that are constitutive of freedom as self-authorship rather than a set of imperatives. The contribution of this article is, thus, twofold. Narrowly construed, it offers a critique of the MFA and provides an alternative conception of the implicit aim of the market, rooted in classical liberalism. Construed more broadly, the article highlights the essential role of freedom in explaining moral motivation in a market context, a conclusion that has broad implications for business ethics research.

Moral Motivation and the MFA

The MFA has become a dominant perspective in business ethics, in large part because it seems to avoid any form of moralism, taking a realistic yet also critical stance towards the practice of business. As Raymond Geuss (2016, p. 26) says, ‘Moralism means, roughly speaking, a kind of moralized preaching and an associated assumption about the causal efficacy and cognitive significance of making moral judgments’. Even while noting Geuss’s (2016, p. 26) careful disclaimer that ‘one can … make moral judgments without thereby being committed to what I call “moralism,”’ it still would not be much of an exaggeration to suggest that a significant portion of research in business ethics could be described as a form of moralized preaching that exaggerates the efficacy or significance of moral judgements. This research often follows a familiar pattern. First, some ethical theory is identified and adopted. Next, this theory or elements drawn from it are applied to a business problem, where this often involves resolving a dilemma or making a judgement about a specific business practice, based upon insights gleaned from the theory in question. Finally, practical implications for managers are developed based upon the preceding analysis. A striking virtue of the MFA is its avoidance of this familiar pattern.

Instead, the MFA aims to provide a ‘philosophically informed reconstruction of the norms that are already implicit in the marketplace’ (Heath, 2019, p. 22). Ostensibly, this distinct methodology, which can be described as ‘immanent critique’ (Heath, 2014a, p. 19; see also Singer, 2019), allows the MFA to avoid moralism by appealing to moral judgements that are somehow implicitly endorsed by participants in the institutions of a market society. If this were the case, the MFA would, in doing this, explain the basis of moral motivation, that is, explain why participants may come to self-consciously endorse the efficiency imperatives. In fact, there is not one but rather two potentially distinct, albeit closely related, arguments in support of the MFA, neither of which effectively addresses the issue of moral motivation. In addition to immanent critique, Heath (2014c, 2014d) outlines, what he calls, a ‘minimally controversial contractualism’, which is an explicitly non-ideal contractualist defence of Pareto efficiency as a moral ideal, the indispensability of the price mechanism and the efficiency imperatives as the sole morality of the market. In the remainder of this section, I recount each of these arguments, while offering reasons for concluding that both fail to satisfactorily address the issue of moral motivation.

But before doing this, I briefly explain the notion of moral motivation that I will bring into focus. This notion of moral motivation can be seen by contrasting it with a related, but somewhat different, conception. This involves the general question, ‘Why be moral?’ In this case, the sense of this question is such that the answer is considered to involve an appeal to some non-moral factor taken to provide a sufficient reason for adhering to some given moral framework. This sort of exercise is misguided insofar as it merely changes the subject rather than actually addressing the issue of moral motivation (Prichard, 1912). Rather than this general question, my concern is with the relationship between specific conceptions of morality and the specific agents posited by the frameworks in question as potential adherents. The question is why agents such as this, situated in some specific set of practices and institutions, with some range of typical motivations and concerns, may come to see the moral framework in question as providing them with an adequate reason to endorse it or, rather, may come to view its prescriptions as providing them with reasons for action.

The MFA as an Immanent Critique

Heath (2014a, p. 19) says,

It seems to me that the central role of business ethics is to provide an ‘immanent critique’ of corporate conduct …. Its objective is not to bring in ‘outside’ moral considerations to condemn the latest outrage, but to clarify and to correct the self-understanding of participants in the market economy, who are being bombarded—both by the business press and a certain segment of the academy, who appear not to have recovered from the epiphany they experienced in their first-year economics class—by a seductive but ultimately false suggestion that the institutions of the market free them from all forms of moral constraint. To do so, it has no need to appeal to normative standards beyond those that are already implicit in the institutions of a market economy.

Here, Heath offers a clear statement of this method of immanent critique. In this process, he differentiates his approach from typical applied ethics approaches, whose reliance on external or ‘outside’ moral norms leads to the moralism condemned by Geuss. He also notes the interpretative and critical dimensions of his approach. In other words, immanent critique takes existing institutions and social practices as given and attempts to offer both a compelling statement of their point and purpose and constitutive norms and, in doing so, to clarify participants’ self-conceptions, thereby critiquing their misconceptions of the nature of their activities.

More recently, Heath (2020, p. 180) has described this approach as an explicative conception of moral theory, noting the influence of Robert Brandom (2000) and Charles Taylor (1992). In light of this background, we might describe this as a Hegelian approach, a fitting description insofar as a central aim of the explicative approach is to reverse the order of dependence between abstract moral theory and moral practice. Rather than viewing everyday moral judgement as implicitly derived from abstract moral principles, what Heath calls ‘the generative model’, it treats those moral theories—Kantianism, utilitarianism, Aristotelianism and so on—as abstractions embedded in shared practices and institutions and dependent upon a shared moral culture for their adequacy. According to this explicative model, ‘the formulation of abstract principles is what allows us to bring rational scrutiny to bear upon our practices, and thus allows us to deploy the critical resources that are already implicit in our system of conventional morality’ (Heath, 2020, pp. 180–181).

The MFA exemplifies this method, insofar as it aims to formulate abstract principles, not to disclose ‘some special realm, or else a peculiar metaphysical relation between our words and the world’, but rather, following Brandom’s (2000) lead, to enable us to say what it is that we are doing when we engage in economic exchange. More specifically, the efficiency imperatives understood in this way attempt to highlight the implicit patterns of practical inference that market actors reject, or do not endorse, that is, those practical inferences that lead to inefficient outcomes through the exploitation of market failures. This is what it means to say that the efficiency imperatives are normative standards implicit within market institutions. Here, the difficulties begin to surface. Markets are peculiar institutions. Their aim, if for the sake of argument, we take it to be Pareto efficiency, is explicitly posited as an unintentional, socially beneficial byproduct of market actors’ pursuit of self-interested economic objectives, that is, personal financial gain or preference satisfaction. As such, it is unclear in what way any given market actor actually endorses Pareto efficiency, even implicitly, as the intended outcome of their actions. Likewise, if it is implausible to think that market actors implicitly pursue Pareto efficiency, it is highly questionable to think that the efficiency imperatives serve to make explicit an implicit pattern of inferences rejected by market actors, that is, those that reduce efficiency by exploiting market failures.

This concern points to a larger issue. The relevant question concerns the sort of interpretative standards that are adequate to describe something as an implicit norm or objective of some social practice. Taylor (1992), for example, in Sources of the Self, traverses hundreds of pages to defend, in an account that remains controversial, his notion of modern subjectivity. Yet Heath (2014a), after recounting a few basic tenets of economic theory, concludes that somehow market actors are implicitly committed to Pareto efficiency as the ultimate objective of their economic activities. This hasty conclusion seems to not only misinterpret economic theory, which merely explains the outcome of a set of market transactions given appropriate conditions, assuming that participants are self-interested utility maximizers with monotonic preferences for financial gain, rather than posits this outcome as an objective of participants. But it also represents a potentially insidious form of moralism. More specifically, where the MFA appears to eschew ‘“outside” moral considerations’ (Heath, 2014a, p. 19) in favour of a realistic take drawn from economic theory, it tacitly smuggles in external moral notions that are more at home in welfare economics than in business practice.

The question of interpretative standards is obviously very large and complicated and, thus, is not something that I can adequately address here. But I can briefly suggest one criterion that I think is imminently plausible: No account of a practice’s implicit aim is adequate to underwrite implicit norms if the posited aim in question is merely the unintended byproduct of participants’ actions. While this criterion needs to be supplemented with others, it provides an initial reference point for thinking about the shortcomings of the MFA, specifically its failure to provide an adequate account of moral motivation. Insofar as Pareto efficiency is an aim explicitly endorsed by welfare economists rather than one that is implicitly endorsed by economic actors, the MFA provides no insight into why the latter would have a reason to view the efficiency imperatives as providing them with sufficient reasons for action. In fact, if we take economic theory as our guide, we have every reason to think that economic actors would scoff at the efficiency imperatives as merely a form of ‘moralized preaching’ (Geuss, 2016, p. 26). Below, I argue that a distinct notion of freedom provides a more plausible account of the implicit aim of markets, but before doing this, I briefly address the contractual justification for the MFA.

The MFA as a Minimally Controversial Contractualism

I noted above that Heath offers two distinct arguments in support of the MFA. This point should be clarified. These two arguments are distinct in that one can engage in immanent critique, even defending the main lines of the MFA without appealing to any form of contractualism. Having said this, it is clear that for Heath (2014c, p. 148; 2014d), this ‘minimally controversial contractualism’ is intended to be an explication, in the sense noted above (Heath, 2020, p. 180), of the implicit morality of the market. My concern is again with the issue of moral motivation, so I will not consider all of the implications of Heath’s (2014d) account or all of the questions that it raises.

The best way to appreciate Heath’s (2014d, p. 175) claims is to follow him in viewing the MFA as an ‘ethics of the third best’, behind Rawls (1999), who provides an ethics of the second-best, and G. A. Cohen, who offers a first-best framework. Where Cohen is engaged in ‘pure’ ideal theory, Rawls, Heath says, ‘is developing a set of principles of justice that are, in part, a response to the human frailties that make certain first-best theories unworkable, or unsuitable as candidates for a theory of justice’ (2014d, p. 180). The move from Cohen’s (2009) camping trip, where equality is the rule, to a Rawlsian framework, where the difference principle, or something like it, balances efficiency against equality, is motivated by an appeal to facts of psychology concerning the limited human capacity for altruism. In other words, this shift involves the realization that slightly relaxing the norm of equality can lead to substantial efficiency gains. Heath (2014d) appeals to further implementation problems to motivate the move from a second-best framework, like that of Rawls, to the MFA, where equality is further muted in favour of the efficiency gains provided by the market. Specifically, Heath (2014d) argues that efforts to implement a second-best prioritarian scheme are likely to lead to increasing demands for information about participants’ utility functions in order to devise incentive schemes that increase efficiency while preserving the desired level of equality. Consider, for example, the information that would be necessary to implement the difference principle as a norm governing business practice. What level of incentives would be necessary to motivate individuals to work just hard enough to increase their own share of wealth only to the extent that it is beneficial to the least well-off?

Heath (2014d, p. 185) argues that the ‘efficiency gains might be so great, in other words, that the campers are willing to surrender control over the distributive consequences, only intervening in cases where the departure from equality becomes sufficiently egregious’. This would mean the introduction of a third-best framework ‘requiring a set of normative principles that constitutes a weakening of prioritarianism’ (Heath, 2014d, p. 185). The MFA is one such third-best framework, where prioritarian principles are weakened in the limited sphere of the market, allowing for greater efficiency gains than would be possible given a second-best framework. Here, questions arise. First, while the move from Cohen’s (2009) egalitarian camping trip to a prioritarian framework, like Rawls’s (1999) difference principle, seems necessary since the former is likely to be unworkable on a larger scale, the shift from a second-best to a third-best framework, such as the MFA, where efficiency is given substantially more weight than equality, seems to be more like an optional shift in values rather than a necessary concession to human nature.

As such, Heath’s ‘minimally controversial contractualism’ amounts to little more than the claim that if contracting parties are willing to trade off equality for great gains in efficiency, they should adopt principles of justice that reflect these preferences. This is, perhaps, minimally controversial. But in a further tendentious move, Heath (2014d, p. 200) argues that ‘our willingness to accept the market as the central organizing institution in the economy requires a willingness to accept a huge number of violations of these everyday moral principles (in order to get the compensating benefits of the proper operation of the price system)’. But, for several reasons, this conclusion does not follow. First, it is not clear that the efficiency imperatives are actually more efficient than more robust moral norms. Stakeholder theorists (Barney, 2018; Mahoney, 2012; Stoelhorst, 2021; and also Maitland, 1997; Moore, 2012, p. 380), for example, have offered several reasons why this may not be the case, that is, reasons why more robust moral commitments may have an important role in the market. Second, there is another option that has not been considered, where we accept market institutions but expect them to be tempered by robust ethical norms. This seems to be the view held by at least a substantial number of persons in many capitalist societies. In other words, from the mere fact that we favour market institutions, it does not follow that we must endorse a third-best framework. This is especially the case if we realize that the incentive schemes used to implement second-best frameworks and, more generally, prioritarian norms, are likely to differ in the extent to which they impede efficiency. Here again, Heath seems to assume that from the mere fact that society members favour (or participate in?) markets, it follows that their implicit aim is Pareto efficiency even where this conflicts with norms of equality, but this need not be the case. Granting that individuals pursue efficiency at all, they may pursue a more limited conception of efficiency that is further tempered by a concern for equality.

Before shifting to an alternative account of the implicit aim of the market, I want to briefly note one more difficulty facing Heath’s ‘minimally controversial contractualism’, a problem more directly linked with the issue of moral motivation. When confronting his two principles of justice with a rival utilitarian account, Rawls (1999, pp. 153–160) introduces the notion of the ‘strains of commitment’. As Rawls (1974, p. 652) explains further, in a contractualist context involving the choice of principles of justice, ‘no one is permitted to agree to a principle if they have reason to doubt that they will be able to honor the consequences of its consistent application’. According to Rawls, the problem for utilitarianism concerns the fact that the worst outcome may be so bad as to be unacceptable, making it impossible to think that one will have a reason to remain committed to one’s choice of utilitarianism as the principle of justice if one ends up in the worst-off position. This commitment problem, Rawls argues, speaks against adopting utilitarianism as a society’s principle of justice. It should be noted that this is fundamentally a problem of moral motivation, concerning the reasons that someone may or may not have to continue to endorse a moral framework.

A closely related problem faces the choice of the MFA when considered from a contractualist perspective.² As a third-best framework, it involves an intentional limitation of the extent to which adequate principles of justice are implemented, specifically to attain greater efficiency gains. In doing this, the choice of a third-best framework, like the MFA, may limit the access of some, potentially a substantial portion of the population, to the social bases of self-respect, including adequate financial resources and equality of opportunity, stemming from differential access to education and social networks. Similarly, this choice of a third-best framework subjects participants to live within unjust institutions, promising to socialize them accordingly (see Rawls, 1975). As a result, contracting parties agreeing to a third-best framework have little reason to think that they will remain committed even to third-best principles of justice, that is, to the efficiency imperatives. First, contracting parties have every reason to think that the claims of persons deprived of the social bases of self-respect will be dismissed or will go unrecognized. As such, the claims of such persons that some market transaction, or a set of transactions, will harm them as a result of ensuing negative externalities is likely to be brushed aside, as has arguably occurred regarding the impact of climate change on developing nations. More generally, there is every reason to think that persons who gain an advantage as a result of the adoption of a third-best framework, like the MFA, will dismiss the legitimate claims of persons who are significantly disadvantaged as a result of this framework, insofar as the latter have been deprived of the social bases of self-respect. This problem is further compounded by the fact that the choice of a third-best framework is a choice to be socialized within substantially unjust institutions. Because of this socialization, contracting parties have little reason to think that they will view even third-best principles of justice as providing them with reasons for action, after they are implemented, since parties’ preferences are likely to shift as a result of their socialization within unjust institutions, leading them to focus excessively on financial gain. This is especially the case given the fact that some persons who might appeal to third-best principles of justice, for example, by claiming to have been harmed as a third party to some market transaction, are likely, as a result of having been deprived of the social bases of self-respect, to refrain from even voicing their legitimate claims.

As such, the choice of a third-best framework like the MFA faces problems stemming from the strains of commitment, making it impossible to understand why contracting parties will remain committed to third-best principles of justice, such as the efficiency imperatives. In other words, the MFA fails to explain the basis of its adherents’ moral motivation, that is, fails to explain how or why adherents may come to view the efficiency imperatives as providing them with reasons for action. In the remainder of this article, I turn to an alternative account of the implicit aim of the market, which better accounts for participants’ moral motivation.

Freedom as the Implicit Aim of the Market

The MFA’s failure to address the problem of moral motivations suggests the need for an alternative perspective regarding the purpose of markets and the role of morality in a market society. If Smith’s (2003) account of the invisible hand might be seen as laying the foundations for the MFA (or rather a false appropriation of Smith’s metaphor (see Hühn & Dierksmeier, 2016)), highlighting the central role of Pareto efficiency within a market society, Hegel (2008) might be read as providing a compelling alternative perspective. Hegel, like Smith, was impressed by the way the market turned self-seeking behaviour towards a social end, that of the general welfare. But he was even more impressed by the role of the market in institutionalizing a distinctive form of freedom, whereby one could give scope to one’s particularity and be recognized by others for doing so. Smith, of course, recognized the potentially liberating function of markets, whereby arbitrary feudal restrictions were removed (Schmidtz, 2016), but Hegel gave freedom a central role in his account of the purpose of markets in the, then burgeoning, market society.

In this section, I follow Hegel (2008) and, more recently, John Tomasi (2012), in articulating the ideal of freedom that is embedded within the market society, which the latter refers to as self-authorship. Following this, I briefly recount Christine Korsgaard’s (2009) Kantian argument against particularist willing, arguing that this provides a theoretical basis for linking self-authorship with a self-conscious commitment to an implicit morality constituting the market as a sphere of freedom. After noting the impossibility of viewing the implicit morality of the market in Kantian terms, I then briefly recount the historical connection between markets, freedom and responsibility (Anderson, 2017), arguing that the implicit morality of the market is a matter of bearing one’s own burdens by engaging in mutually beneficial transactions (Moller, 2018). I conclude by noting that this morality is best understood as a set of virtues (Bruni & Sugden, 2013) rather than a set of efficiency imperatives. Thus, I offer an alternative account of the purpose and implicit morality of the market, whereby participants can be understood to self-consciously embrace the virtues of the market in their efforts to realize freedom through market transactions.

Of course, a critic may level similar objections to the Hegelian account outlined here, namely that it has mischaracterized the implicit aim of the market. Two responses can be offered. First, it satisfies the criterion introduced above, concerning the need for knowledge of the market’s implicit aim on the part of market actors, since freedom rather than efficiency is very often directly pursued by market actors (Tomasi, 2012). Second, while the MFA offers no explanation for the rise of markets or the reasons why societies came to embrace them, the historical account outlined below could be developed at much greater length, providing a more satisfying account of the implicit morality of the market and a more developed justification for giving freedom as self-authorship a central place.

Freedom as Self-authorship

Hegel (2008, p. 196) argues that the modern market society is distinct because in it ‘subjective particularity is upheld by the objective order in conformity with it and is at the same time allowed its rights’, such that ‘it becomes the animating principle of the entire civil society, of the development alike of thoughtful activity, merit, and dignity’. The Philosophy of Right is complex and controversial, but we need not follow it in all its detail to appreciate Hegel’s point that the market society is distinct because it gives subjective freedom explicit acknowledgement, effectively allowing individuals to choose not only their place in society but essentially their identity, who they will become by embracing the processes of socialization characterizing their chosen station. As Hegel (2008, p. 195) says further, while an individual’s role in society ‘is one on which natural capacity, birth, and other circumstances have their influence, … the essential and final determining factors are subjective opinion and one’s particular arbitrary will, which win in this sphere their right, their merit, and their dignity’. In other words, market society, Hegel argues, formally embodies a distinctive form of freedom, whereby the individual’s objective role and identity in society are determined by their own subjective opinions and preferences, their own sense of what matters to them, what they think is valuable or worth doing.

More recently, John Tomasi (2012) has highlighted a similar notion of freedom in his account of justice in a market society, which he calls freedom as self-authorship. Tomasi follows Rawls (2001, p. 18) in viewing this type of freedom as the ability to formulate a life plan. It is the ‘capacity to realistically assess the options before them and, in light of that assessment, to set standards for a life of a sort that each deems worth living’ (Tomasi, 2012, p. 40), but he breaks with him in viewing economic liberty as constitutive of this type of freedom. As he says succinctly, ‘Many ordinary people—middle-class parents, single moms, entry-level workers—become who they are, and express who they hope to be, by the personal choices they make regarding work, saving, and spending’ (Tomasi, 2012, p. xi). The freedom of occupational choice gives one the ability to determine who one will be, what sort of concerns will matter during daily life and even whether work will be a meaningful endeavour or a means to do something else that one finds valuable. Something similar is the case for the choice to engage in an entrepreneurial endeavour. As Tomasi (2012, p. 78) says about this, ‘Sometimes the identity-casting relationships people have to productive property are conspicuously material: as with the way a farmer identifies himself with his field, or the owner of a small business identifies with her shop and its customers and employees (for example, Amy of Amy’s Pup-in-the-Tub)’. Likewise, the ability to save and plan for one’s retirement allows one to concretely express the value one places on the future vis-à-vis the present or, by contrast, to ignore savings and express one’s commitment to spontaneity rather than prudence. In other words, ‘Questions about long-term financial planning require that people think seriously about the relation between the person that each is at that moment to the person one will become many years in the future’ (Tomasi, 2012, p. 79). Something similar is the case concerning consumption and spending. The choice to make a thoughtful purchase or buy something on a whim gives one the ability to concretely express oneself and one’s sense of value. Likewise, the choice of particular products allows one to express one’s personal style (see Taylor, 2016, p. 38) or lack thereof. Consider, in this regard, how many consumers approach the choice of a particular item of clothing or car. In all these ways, markets provide a unique scope for self-authorship, allowing one to determine the concrete details of one’s life in a manner that is distinct from other forms of freedom, that is, religious liberty or political freedom.

The macro perspective of the MFA glosses over this function of the market, that is, its role in giving individuals space to engage in self-authorship, concretely expressing their sense of worth in the minute details of their lives and the large patterns that provide structure and a sense of identity. If, with Heath (2014a, p. 19), we agree that the aim of business ethics is ‘to clarify and to correct the self-understanding of participants in the market economy’, then self-authorship should be our central focus. Unlike welfare economists, market actors generally have little or no concern for Pareto efficiency. Freedom, by contrast, is plausibly seen as market actors’ central concern, the animating purpose that structures their choices and actions. I go to the market, for example, not merely to get food to eat but to get food that I want. I choose a job not only to maintain myself but to do so in a way that expresses my priorities, for this or that type of work, for work as a means or work as an end, and so on. If we take freedom as self-authorship as the purpose of the market, at least as a purpose that actually motivates participants, then the key question, from this point of view, is that of the relationship between freedom as self-authorship and morality. In other words, what is the ‘implicit morality of the market’ if we view the purpose of the market as the concrete realization of freedom as self-authorship? To anticipate my conclusion, I take these notions to be linked such that self-authorship is inherently tied to a notion of responsibility, a matter of refusing ‘to shift our burdens onto others’ (Moller, 2018, p. 1). If this is the case, then it is possible to explain the moral motivation of market actors in terms of their pursuit of freedom.

Against Particularistic Willing

Kant famously argued for an intrinsic connection between freedom and morality, saying, ‘freedom, though it is not a property of the will according to natural laws, is not lawless because of that at all, but must rather be a causality according to immutable laws, but of a special kind; for otherwise a free will would be an absurdity’ (Kant, 2012, p. 56). Christine Korsgaard’s restatement of this Kantian position sheds light on the relationship between freedom as self-authorship and the implicit morality of the market. Korsgaard (2009, p. 72) describes this as ‘the argument against particularistic willing’. There are several facets of this argument that I cannot address, but, in its essentials, the argument states that to act freely, the agent must be able to distinguish herself and her will from the impulses that she experiences. She must be able to recognize her decision to act upon some motivational impulse as a decision to adhere to a principle, follow a rule, or act for a reason. Barring this, the agent with a particularistic will would ‘wholly identify’ with the desire or impulse behind her actions, but this effectively ‘eradicates the distinction between a person and the incentives on which he acts’ (Korsgaard, 2009, pp. 75–76). The upshot of this argument is that freedom requires a commitment to a universal principle; absent this, it is impossible to distinguish between an action that is freely chosen and a mere reflexive response to one’s environment. In terms of freedom within the market, this means that market actors must be able to view their actions as chosen according to a valid rule, principle or reason for action. As Korsgaard (2009, p. 76) says, ‘If you do not, you are not determining yourself to perform an action, and then you are not willing’.

On its own, this argument does not clarify the nature of the principle, rule or reason that must govern action if it is to be freely chosen. More specifically, why can’t egoism serve as the relevant principle? On the one hand, egoism seems to offer a type of rule that provides a criterion to distinguish between momentary whims and actions that the agent takes to be justified by valid reasons. I, for example, may refuse some contractual agreement to which I am strongly motivated, perhaps because I want affection and approval from my potential partner, or because I recognize that it is a bad business decision. On the other hand, persons exhibiting consistent egoism are far from exemplars of freedom. Egoism quite clearly involves an arbitrary privileging of one type of reason for action—those involving purely self-related benefits—at the expense of equally valid reasons, that is, those involving benefits to other persons (Bloomfield, 2014), where no distinguishing factor can be given as to why reasons of the first type are privileged over reasons of the second type. In this case, particularistic willing rears its head as the foundation for all of the egoist’s particular choices. Consider in this regard, the example of Donald Trump. Because of his consistent egoism, and the harm that this frequently causes, it is often hard to even understand him as an agent rather than someone driven by a pathological impulse over which he has little control.³ This sort of example will not convince everyone, in part because his motives may be interpreted differently by persons at different ends of the political spectrum. But it suggests that the arbitrary drive underlying egoism may put in question the plausibility of viewing a consistent egoist as a free agent. For how could someone who ignores such a wide range of valid reasons—that is, any that do not privilege the egoist—be driven by anything other than pathological factors?

At the opposite extreme is the view that the principle that governs free agency is simply the categorical imperative itself, where this involves a demand for consistency in action. The adequacy of this principle is a huge topic that I cannot address at length here. However, there are a number of reasons to think that the categorical imperative, on its own, lacks sufficient content to govern agency within a market context. First, maxims that seem perfectly acceptable may be ruled out. Consider the following maxim: ‘When competing in a market, never lower price so as to avoid signaling lower quality’. This maxim is not universalizable: if every producer adopted it, market competition would break down. It even seems to lead to a contradiction in conception insofar as the notion of market competition includes the idea of being appropriately responsive to shifts in demand. Second, other maxims, which are clearly wrong, seem to pass the test of consistency. For example, the maxim ‘never cheat a customer except when it is extremely unlikely to be discovered’ appears to avoid the problems associated with other related maxims, like the famous lying promise. If this maxim was universally adopted (as it arguably is in many places) markets would be less efficient, as more resources would be wasted, verifying the quality and quantity of goods and services exchanged, but still functioning.

Kantians have often replied to these types of concerns by highlighting the importance of social practices. Barbara Herman (1993), for example, argues that to apply the categorical imperative properly, moral agents need to learn rules of moral salience that are given in specific social contexts. Norman Bowie (2017, p. 11), focusing specifically on business as a rule-bound practice, says,

We can use Kant’s first formulation of the categorical imperative to show that whenever someone, including someone in business, agrees to follow the rules for cooperative behavior and then violates those rules for personal gain, such a violation is morally wrong. A maxim that permitted universal violation of the rules is self-defeating. A universally violated rule is not a rule.

This type of response, with its appeal to the rules constitutive of specific social practices, offers a plausible way of salvaging the categorical imperative but at the expense of giving it less relevance. What seems more important for moral evaluation are the particular rules of moral salience within specific social practices. Thus, as in Bowie’s (2017, p. 11) account, it is essential to understand ‘the rules for cooperative behavior’ in market contexts in order to evaluate participants’ actions. But these rules are obviously not provided by the categorical imperative in any of its formulations. As such, a more plausible approach is to consider the particular mode of freedom made available within market society within its historical context in order to identify the moral contours implicit in this notion of freedom. Doing this provides insights into the relationship between freedom as self-authorship and the implicit morality of the market, where this is a matter of taking responsibility for one’s burdens and refusing to impose them on others (Moller, 2018).

Freedom and the Legitimation of Self-interest

Elizabeth Anderson (2017, p. 8) has recently argued that, historically, ‘support for free trade formed an essential part of a larger program of liberating individuals from interlocking hierarchies of domination and subordination’. Thus, the distinctive mode of freedom made available within markets, what Tomasi (2012) refers to as self-authorship, originally developed as a response to the hierarchical social relations characterizing the pre-modern, feudal society. As Anderson (2017, p. 8) says further, critics of these social structures ‘saw in free markets some essential institutional components of a free society of equals, based on their proliferation of opportunities for individuals to lead lives characterized by personal independence from the domination of others’. Feudalism is a complex phenomenon (Brenner, 1990), and an extended analysis of its key social structures is not possible here, but I will briefly note two stylized facts about this society that shed light upon the relationships between freedom and responsibility in a market context.

The first is the broad phenomenon of serfdom, where the serf was a tenant of the lord, performing agricultural labour and paying in kind for his tenement. Speaking of the evolution of serfdom, the noted Medieval historian Marc Bloch (2014, p. 171) says,

This servile homage … was hereditary. It was marked by all manner of obligations considered to be of a rather low order. Above all, it allowed no choice on the part of the dependent, and so was regarded as the opposite of what was then called ‘freedom’. It was, in fact, serfdom, into which most of those of inferior status who commended themselves descended imperceptibly, in spite of the ‘free’ character which had marked their original submission in a period when social classifications were based on different principles.

In other words, this widespread social structure, involving a personal attachment between a serf and a lord that held property, over time became a ‘hereditary restriction on the individual’s liberty of action’ (Bloch, 2014, p. 171). In return for protection and use of land, serfs inherited an obligation to perform agricultural labour with no liberty or opportunity to seek better arrangements. And because payment was typically in kind, involving agricultural service, there was no opportunity to engage in an enterprising activity, for example, to seek out a better price in more distant markets (Schmidtz & Brennan, 2011).

Even this brief consideration of feudalism illustrates the link between the freedom of the market and a distinct notion of responsibility. The rise of markets, and the freedoms they brought, gave individuals the ability to take responsibility for themselves, rejecting the paternalistic arrangements of serfdom. Doing this involved making two types of claims. The first is that the serf can better provide for himself through his own enterprising activity than can his lord through paternalistic arrangements. The second is that in rejecting feudal social structures and taking responsibility for himself, the individual is not harming society, or better, in doing this, he is actually benefitting society. In this context, the notion of the ‘invisible hand’ (Hühn & Dierksmeier, 2016), or of markets as working towards mutual benefit (Otteson, 2019), is not merely an explanation of how society functions so much as a discourse of legitimation, a way for individuals to legitimize the pursuit of their own economic self-interest.

In other words, freedom and responsibility are linked insofar as markets enable individuals to legitimize their freedom to pursue financial gain in terms of the benefits that this pursuit bestows on society. Even in a relatively unsophisticated form, this type of legitimation involves an appeal to a notion of Pareto efficiency, a claim to benefit some while harming none. Thus, within this historical context, something like the efficiency imperatives can be understood as providing the principle or norm needed to govern the notion of freedom as self-authorship, distinguishing liberty from license and overcoming the threat of particularist willing (Korsgaard, 2009). Freedom in a market context is, thus, the pursuit of financial gain, one’s own self-interest, in a way that generally benefits society and avoids harm (Otteson, 2019).

A second stylized fact about pre-modern society is the pervasive role of guilds. Guilds were voluntary associations that regulated trade, often involving members of a range of related professions, facilitated mutual assistance and, generally, allowed for ongoing communal bonds between members (Rosser, 2015). Despite some differences, guilds generally involved anti-competitive practices (Ogilvie, 2019), guaranteeing standards of quality while protecting members from competition and benefitting local elites. Again, it is not possible to consider these structures in depth here, but it is important to note that the rejection of guilds involves the same form of legitimation. More specifically, for a tradesman or professional to reject the role of guilds in regulating the economic activity, he must make two claims. The first is that guilds are unnecessary to protect his interests since he can do this through his own enterprising activity. The second is that guilds are unnecessary to protect societal interests, since, in pursuing his own financial interests, he will benefit society by providing high-quality goods and services, while avoiding harm to others. Again, in this context, where the pervasive role of guilds is rejected, something like the efficiency imperatives functions as principles or norms, self-consciously governing the individual’s sense of freedom through the forms of legitimation that they are able to give for their actions.

Stated simply, freedom is the crucial lynchpin self-consciously linking the individual-level economic activity with a societal-level notion of Pareto efficiency, insofar as an individual may claim legitimacy for their economic freedom in terms of its promotion of efficiency. As such, it is the distinctive mode of freedom made available within markets, involving self-authorship, rather than simply Pareto efficiency that is the fundamental purpose of markets, the object that animates individual participants. And it is this aim that provides the basis for an implicit morality of the market that can be embraced self-consciously, an ethics of freedom.⁴

Concluding Postscript: Towards an Ethics of Freedom

As I have argued, markets provide the social context for a distinct mode of freedom, what Tomasi (2012) refers to as self-authorship. This is the freedom to structure one’s life and determine its minute details as one sees best, to express one’s priorities concerning risk and the value of the future, to embody these attitudes concretely in one’s choices and even to determine one’s identity through the choice of a job, a path of vocational training or profession and the purchase of specific consumer goods that enable one to express oneself as one sees fit. This mode of freedom is distinct from others, that is, political freedoms or freedom of religion, in that it directly shapes the structure and minute details of one’s daily life, giving one the ability to author one’s life in a far-reaching manner. This aim is not something distinct from the pursuit of financial objectives, rather self-authorship structures and is given expression by the pattern of one’s choices to attain and use financial resources. Thus, if anything can be identified as the aim of the market, it is freedom as self-authorship. This is the aim that self-consciously animates economic actors as they seek to give concrete expression to their sense of worth or conception of the good.

Self-authorship is not only a mode of freedom but also a distinct mode of legitimation, a way of justifying one’s freedom. Markets also make this mode of justification possible, allowing one to explain why it is good and right that one is free insofar as one’s pursuit of economic objectives leads, as well, to beneficial outcomes for oneself and others (Otteson, 2019). This focus on mutual benefit as a mode of justification for economic agency highlights the direct connection between freedom as self-authorship and an ‘implicit morality of the market’. For, to pursue freedom in this way, claiming a right to independence from paternalistic social structures, one must be able to justify one’s actions in terms of both one’s benefits to society and one’s avoidance of harm to third parties, appealing here to one’s conscientious observance of norms that ensure something like Pareto efficiency.

I have highlighted the central place of freedom within markets because of the MFA’s failure to address the problem of moral motivation. As I have argued, on its own, Pareto efficiency is not the goal that economic actors pursue in their actions. It is, instead, only in terms of their self-conscious pursuit of freedom—whereby individual economic actors seek to author their lives—that we can appreciate the way that norms associated with Pareto efficiency come to shape an individual’s actions. As such the MFA has misstated the purpose of economic activity, at least as it actually animates individual economic actors.

What difference does the account that I have developed here make to business ethics? That is, why does it matter if we take freedom to be the fundamental aim of the market? Fundamentally, my arguments should shift the focus of the debate. In misspecifying the purpose of the market, the MFA has ignored the economic actor. Instead of focusing on identifying a set of rules that actors are somehow implicitly committed to, rules that are much too complex to be applied effectively in real-world conditions (Moriarty, 2020), we should start to think about the processes through which economic actors gain a self-conscious appreciation of modes of acting that lead to Pareto efficient outcomes (see Bernacchio, 2019). In other words, if we take the problem of moral motivation seriously, the key question is: How do economic actors come to have the dispositions and character traits needed to act in ways that enhance efficiency through their pursuit of freedom? That is, how do ordinary individuals come to see their freedom, as it is expressed in the market, as tied to the well-being of others? This set of problems points to the potential intersection between some of the concerns that have been central within virtue ethics (Moore, 2005; Solomon, 1993) and those typical of the MFA.

In other words, my arguments highlight the need to move away from thinking about efficiency imperatives, norms that are stated abstractly and are very likely to be viewed as impediments to freedom, and to begin thinking about the set of virtues that enhance freedom and lead to mutually beneficial outcomes, by aligning individuals’ motivations, affective dispositions and ethical commitments⁵ (see Baxley, 2010; Schiller, 2016; Snow, 2010, p. 15). Some attention has been devoted to market virtues (Bruni & Sugden, 2013), but more work is needed to understand how they may speak to the key problems highlighted by the MFA. Likewise, this shift of focus would go some way towards addressing concerns involving the ‘strains of commitment’ (Rawls, 1974, 1999). Finally, focusing on the virtues of freedom and mutual benefit, and the processes through which they are inculcated within organizations and markets, would also mitigate the dangers of moralism (Geuss, 2016), dangers to which the MFA is not immune.

Footnotes

Acknowledgements

I am very grateful for insightful editorial guidance from Matthias Hühn and Marcel Meyer, as well as helpful comments from two anonymous reviewers. I would also like to thank Alan Morrison, Rita Mota and the Oxford University Centre for Corporate Reputation for inviting me to participate in the R:ETRO Symposium held in the summer of 2022, where a version of this article was presented. I am also grateful to Florian Wettstein, who commented on the article, and several participants who provided further comments. I would also like to thank Matthew Caulfield for helpful comments about the MFA. The usual disclaimer applies.

Declaration of Conflicting Interests

The author declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

The author received no financial support for the research, authorship and/or publication of this article.

Notes

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