The marriage of markets and morals

This review of Michael Novak’s book Free Persons and the Common Good was originally printed in CIS Policy in 1990. It is not on line and it may be of interest to a wider audience than the happy few, including the world’s greatest Treasurer, who used to subscribe to Policy in those days.

One of the most exciting insights of modern liberal scholarship concerns the mutual dependence of morals and markets [to save Nicholas Gruen from choking on his Weet-Bix I will mention Adam Smith as an earlier proponent of this view]. This is emphasised by Herbert Giersch in The Ethics of Economic Freedom (CIS, 1989) and by F A Hayek in The Fatal Conceit (1988). Michael Novak is also working on this theme and his latest book has been hailed as signalling ‘a new era in classical liberal scholarship’ because it merges the Aristotelian/Thomist idea of the common good with individualism and the theory of unplanned order from the Austrian school. It also draws attention to the fact that the Constitution and other factors in the American experience provided fertile soil to promote both civic virtues and material progress.

The author claims that this book is written for general readers to alert them to ‘a new task’ that he launched in recently-completed trilogy, namely, The Spirit of Democratic Capitalism, Freedom with Justice and Will it Liberate? Questions about Liberation Theology (1986). The task is to encourage Catholics to learn what classical liberals have to teach them about the benefits of markets and to urge economic rationalists to appreciate the importance of cultural and moral traditions.

Novak, as a builder of bridges, calls for an integration of the worthwhile elements of the Catholic, conservative and liberal traditions, inspired by the modest, non-utopian urge to make the world a little better whenever we have the chance to do so. This program calls for market liberals and conservatives to join in the campaign for limited government, deregulation and free trade, while in the moral and cultural arena they would combine to resist the tendencies to irrationalism and moral relativism that are rampant in the arts and the soft social sciences.

Unfortunately, Novak’s general reader may have some problems with his rather tortuous line of argument. Indeed, he admits that the argument is not an easy one because there is no other work to follow. Perhaps he should not seek a general readership but instead aim separate messages at three particular groups, namely conservative anti-capitalist Catholics like Santamaria (since deceased), other Catholics who are being seduced by Marxist liberation theology, and left liberals in general who need to be reminded of the secular benefits of democratic capitalism. Novak’s links with Catholicism may enable him to carry the message of the market order to those Latin American countries where, as de Soto has pointed out, the moral and cultural foundations of democratic capitalism are almost completely lacking.

The bridge-building that Novak wants to achieve between rival and apparently incompatible traditions forces him to take seriously many arguments that are somewhat dated. For example, he detects a rising tide of interest in the ‘common good’ expressed by communitarian critics of classical liberalism such as Sandel and Bellah from the left and Nisbet and Berger from the conservative side.

The more stimulating parts of the book come in Chapter 3 ‘Order Unplanned’ and Chapter 4 ‘Beyond Economics, Beyond Politics’. These follow a somewhat laboured examination of the history of the concept of the common good in Catholic teaching (Chapter 1) and an account of the wisdom of the founding fathers of the American Constitution in Chapter 2. The second chapter falls uneasily between a full explanation of topics that he has purseud at length elsewhere and the taut summary of his 1989 Commentary article ‘Boredom, Virtue and Democratic Capitalism’.

His account of the common good draws inspiration from the work of Mises and Hayek, and its blend of individualism and institutionalism is entirely convincing. The notion that there is anything identifiable as the common (collectivist) good is regarded as a nonsense in liberal circles but the kind of common good that Novak identifies is not of the collectivist variety. It is a framework of institutions and traditions that maximises the opportunities for all individuals to enjoy liberty, peace and prosperity. In other words, the common good is promoted by the extended order of morals and markets, provided that the markets and the more consciously designed principles of the legal and political order are in good shape.

Novak emphasises the need to work on the institutions and traditions of the extended order, and those of the state itself, in a critical and reformist spirit. This provides a corrective to the more conservative leanings of the later Hayek [and the later Gray as well]. He reminds us that our institutions are constantly evolving and so we are faced with a challenge, a promise and a responsibility. The challenge is to join the eternal task of critical appraisal and piecemeal reform, the promise is the hope of unending progress and the responsibility is to maintain those institutions and traditions that have continuing value. For Novak the eternal verities are essentially religious in nature thought there are plenty of secular examples (respect for the truth, charity, courage).

There has been an unfortunate division of labour with regard to the challenge and the responsibility. Liberals of the classical and left-leaning kind have tended to take on the tasks of change while conservatives have shouldered the responsibility for maintenance. And the hope of progress, which has provided so much inspiration for liberals of all kinds, has been corrupted by theories of inevitability, which undermined personal responsibility, and by utopian fantasies which have prompted appalling episodes of fanaticism. Conservatism for its part has been debilitated by elements of obscuratism which Hayek identified in his essay ‘Why I am not a conservative’.

Novak may not have much to teach people who understand that markets and morals stand or fall together. However, he provides an example of a man who worked his way to this insight by critical thinking after a left-leaning education. Perhaps he can carry the message to those Catholics and left-liberals who have so far been almost entirely impervious to the ideas of economic liberalism.

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