white - accepting the invisible hand; market-based approaches to social-economic problems (2010)

ACCEPTING THE INVISIBLE HAND
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PERSPECTIVES FROM SOCIAL ECONOMICS
Series Editor:
Mark D. White, Professor in the Department of Political Science, Econom-
ics, and Philosophy at the College of Staten Island/CUNY.
The Perspect ives from Social Economics series incorporates an explicit et hical
component into contemporary economic discussion of important policy and
social issues, drawing on the approaches used by social economists around
the world. It also allows social economists to develop their own frameworks
and paradigms by exploring the philosophy and methodology of social eco-
nomics in relation to orthodox and other heterodox approaches to econom-
ics. By furthering these goals, this series will expose a wider readership to the
scholarship produced by social economists, and thereby promote the more
inclusive viewpoints, especially as they concern ethical analyses of economic
issues and methods.
Accepting the Invisible Hand: Market-Based Approaches to Social-Economic
Problems
Edited by Mark D. White
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10.1057/9780230114319 - Accepting the Invisible Hand, Edited by Mark D. White
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Accepting the Invisible Hand
Market-Based Approaches to
Social-Economic Problems
Edited by
Mark D. White
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10.1057/9780230114319 - Accepting the Invisible Hand, Edited by Mark D. White
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ACCEPTING THE INVISIBLE HAND
Copyright © Mark D. White, 2010.
All rights reserved.
First published in 2010 by
PALGRAVE MACMILLAN®
in the United States—a division of St. Martin’s Press LLC,
175 Fifth Avenue, New York, NY 10010.
Where this book is distributed in the UK, Europe and the rest of the world,
this is by Palgrave Macmillan, a division of Macmillan Publishers Limited,
registered in England, company number 785998, of Houndmills,
Basingstoke, Hampshire RG21 6XS.
Palgrave Macmillan is the global academic imprint of the above companies
and has companies and representatives throughout the world.
Palgrave® and Macmillan® are registered trademarks in the United States,
the United Kingdom, Europe and other countries.
ISBN: 978 – 0 –230–10249–1
Library of Congress Cataloging-in-Publication Data
Accepting the invisible hand : market-based approaches to social-
economic problems / edited by Mark D. White.
p. cm.
Includes bibliographical references and index.
ISBN 978–0–230–10249–1
1. Free enterprise—Moral and ethical aspects. 2. Social policy—Moral
and ethical aspects. 3. Social problems. I. White, Mark D., 1971–
HB95.A25 2010
174—dc22 2010015501
A catalogue record of the book is available from the British Library.
Design by Newgen Imaging Systems (P) Ltd., Chennai, India.

First edition: November 2010
10 9 8 7 6 5 4 3 2 1
Printed in the United States of America.
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Dedicated to the memory of
Daniel C. Kramer (1934–2010),
an exemplary scholar, colleague, mentor, and friend.
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Contents
Preface and Acknowledgments ix
Mark D. White
Notes on the Contributors xiii
1 Markets and Dignity: The Essential Link
(With an Application to Health Care) 1
Mark D. White
2 Markets, Discovery, and Social Problems 23
John Meadowcroft
3 Economic Freedom and Global Poverty 43
James D. Gwartney and Joseph S. Connors
4 Don’t Let the Best Be the Enemy of the Good:
A Stoic Defense of the Market 69
Jennifer A. Baker
5 Ethics in the Mayan Marketplace 87

Benjamin Blevins, Guadalupe Ramirez, and
Jonathan B. Wight
6 Philanthropy and the Invisible Hand:
Hayek, Boulding, and Beyond 111
Robert F. Garnett, Jr.
7 Life in the Market Is Good for You 139
Deirdre Nansen McCloskey
8 Doing the Right Things: The Private Sector Response to
Hurricane Katrina as a Case Study in the Bourgeois Virtues 169
Steven Horwitz
Index 191
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Preface and Acknowledgments
Mark D. White
Markets are hard to appreciate.
—Gary Becker
In an interview in The Wall Street Journal in early 2010, Gary
Becker, professor at the University of Chicago, fellow at the Hoover
Institution, and Nobel laureate in economics, explained how people
tend to have distrust of markets, despite the tremendous increases in
standards of living enabled by them:
People tend to impute good motives to government. And if you
assume that government officials are well meaning, then you also tend
to assume that government officials always act on behalf of the greater
good. People understand that entrepreneurs and investors by contrast

just try to make money, not act on behalf of the greater good. And
they have trouble seeing how this pursuit of profits can lift the general
standard of living. The idea is too counterintuitive. So we’re always up
against a kind of in-built suspicion of markets. There’s always a temp-
tation to believe that markets succeed by looting the unfortunate.
1
It is the purpose of this book to help show that markets indeed do
not succeed at the expense of others—that commerce is rarely a zero-
sum game—and that markets not only serve to increase wealth and
standards of living, but can also be effective means of helping alleviate
social problems, as well as enhancing human life in ways deeper and
more meaningful than material satisfaction (important though that
is, especially in developing countries).
The contributors to this book are drawn from a wide variety of
fields and specializations, and each provides a unique perspective on
the social benefits of the market. All of the chapters in this book
focus on positive arguments for markets, eschewing well-known criti-
cisms of the efficiency, efficacy, or ethics of state intervention in the
economy. Readers who are looking for those arguments can easily
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x
PREFACE AND ACKNOWLEDGMENTS
find them elsewhere—possibly even written by some of the present
contributors—but the chapters in this book argue the case for mar-
kets, not the case against government.
In my chapter, for instance, I argue that the most essential feature
of markets is not their capacity for wealth creation or efficiency, but
rather that they embody respect of the dignity of persons as described

by the philosopher Immanuel Kant. I then apply this analysis to the
case of health care, arguing that rather than representing an inap-
propriate use of the market, the intimately personal choices that are
made in the realm of health care necessitate a market setting in which
they can be made by patients themselves. Along similar lines, John
Meadowcroft argues that market-based solutions to social problems
are preferable to political ones because they are more responsive to
the diversity of individual preferences, and he uses the examples of
smoking regulations and education to illustrate his point.
James Gwartney and Joseph Connors provide theoretical argu-
ments and evidence, based on World Bank poverty rates and the
Economic Freedom of the World index, that economic freedom,
including a strong reliance of markets, not only increases wealth in
countries around the globe but also lowers their poverty rates, coun-
tering the frequent charge that the spread of free markets benefits the
wealthy at the expense of the poor. Jennifer Baker provides a philo-
sophical complement to Gwartney and Connors’ chapter, suggest-
ing that Stoic ethics, with its bilevel account of value, can recognize
the good that the market does in generating widespread affluence,
while at the same time calling attention to its possible faults in terms
of issues such as unequal distribution and access. She argues that
the Stoic account can also help us ethically consolidate our market-
oriented behavior (which usually makes up much of our day-to-day
lives) with our moral responsibilities and duties to others. Citing the
economic and moral insights of Adam Smith (who was influenced by
Stoic thought), Benjamin Blevins, Guadalupe Ramirez, and Jonathan
B. Wight examine the ethics surrounding market behavior in Mayan
culture, arguing that without understanding the history and culture
of different regions of the world, the impact of aid from abroad will
be radically diminished, if not self-defeating. They also describe the

Highland Support Project, which has provided much-needed assis-
tance to the Mayan areas in Guatemala by respecting and building on
existing cultural practices to help enhance markets on the Mayans’
terms, not according to standard Western conceptions.
Robert Garnett brings the thought of Friedrich von Hayek and
Kenneth Boulding together with that of Adam Smith to explain why
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xi
PREFACE AND ACKNOWLEDGMENTS
charity and commerce have been separated for so long in economic
discussion, and why they must be brought together to grasp the full
scale and scope of meaningful economic activity. Deirdre McCloskey,
one of the most prominent exponents of Adam Smith’s moral phi-
losophy and the virtues of commerce, explains in her unique way that
market activity is not only honorable and virtuous work, but is often
also affirming and satisfying—if you do it right. And finally, in the
spirit of McCloskey’s book The Bourgeois Virtues, Steven Horwitz
provides real-world examples of private firms acting charitably toward
both their communities and their employees, focusing on the efforts
of firms such as Wal-Mart during the tragic events and aftermath of
Hurricane Katrina. Cynics may argue that these companies engaged
in charitable works simply for the publicity, but Horwitz effectively
answers this charge, providing ample evidence from numerous inter-
views and other sources to support his argument.
Together, I feel the chapters in this book make a strong case for
the use of markets to enhance the material and ethical aspects of
society: helping deal with problems such as poverty and natural disas-
ters, contributing to the provision of services such as health care and

education, and enhancing standards of living and inner fulfillment.
Following Becker’s lament, I hope that this book will make markets a
bit easier to appreciate (and perhaps a bit harder to denigrate).
My debts regarding this book are few in number but inestimable in
size. First and foremost, I thank Laurie Harting at Palgrave Macmillan
for helping me launch the Perspectives from Social Economics series and
suggesting that I edit the first book myself. Thanks go also to Laura
Lancaster at Palgrave, editorial assistant extraordinaire, who made my
job so much easier. Finally, I thank each and every one of my con-
tributors, who made my job so very enjoyable and gratifying, and to
whom I attribute any success and acclaim this book may garner.
Note
1. Peter Robinson, “ ‘Basically an Optimist’—Still: The Weekend Inter-
view with Gary Becker.” The Wall Street Journal, March 27–28,
2010, A13.
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Contributors
Jennifer A. Baker received a BA (philosophy and political theory)
from Brown University in 1995 and a PhD (philosophy) from the
University of Arizona in 2003. She is an assistant professor at the
College of Charleston and has also taught at Duke and UNC-Chapel
Hill. Her research is focused on the usefulness of the traditional
accounts of virtue ethics for solving impasses in psychology, ethics,
political, and economic theory.
Benjamin Blevins is the founder and executive director of the

Highland Support Project (HSP) of Guatemala. HSP is a 501(c)(3)
organization based in Richmond, Virginia, which serves the Mayan
communities of Guatemala through transformational development
projects. It also offers service-learning trips to North Americans in
its mission to foster meaningful exchange and understanding across
the Americas. Ben is a graduate of the University of R ichmond, where
he has been a frequent lecturer; his current work focuses on devel-
oping agency in marginalized communities through empowerment
programs and market access.
Joseph S. Connors is a doctoral candidate and BB&T dissertation
fellow at Florida State University. His dissertation research is on the
role of institutions in helping to reduce poverty in developing coun-
tries. His areas of specialization are development economics, applied
econometrics, and financial and monetary economics. Before begin-
ning his graduate studies, he worked for nine years as an electrical
engineer in the San Francisco Bay Area.
Robert F. Garnett, Jr. is Associate Professor of Economics at Texas
Christian University, United States. His current work focuses on the
virtues of pluralism in economic inquiry and economics education,
and the philanthropic dimensions of commercial societies. He is the
editor (with Erik Olsen and Martha Starr) of Economic Pluralism
(Routledge, 2009).
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CONTRIBUTORS
xiv
James D. Gwartney holds the Gus A. Stavros Eminent Scholar
Chair at Florida State University, where he directs the Stavros
Center for the Advancement of Free Enterprise and Economic

Education. He is the coauthor of Economics: Private and Public
Choice (Cengage South-Western Press, 2010), a widely used prin-
ciples of economics text that is now in its thirteenth edition. He
is also the coauthor of the annual report, Economic Freedom of the
World, which provides information on the consistency of institu-
tions and policies with economic freedom for 141 countries. His
publications have appeared in scholarly journals, including the
American Economic Review, Journal of Political Economy, Southern
Economic Journal, and Journal of Institutional and Theoretical
Economics. During 1999–2000, he served as chief economist of the
Joint Economic Committee of the U.S. Congress. He is a past pres-
ident of the Southern Economic Association and the Association
of Private Enterprise Education. His PhD in economics is from the
University of Washington.
Steven Horwitz is Charles A. Dana Professor of Economics at
St. Lawrence University in Canton, New York. He is the author of
two books, Microfoundations and Macroeconomics: An Austrian
Perspective (Routledge, 2000) and Monetary Evolution, Free Banking,
and Economic Order (Westview, 1992), and has written extensively
on Austrian economics, Hayekian political economy, monetary the-
ory and history, and the economics and social theory of gender and
the family. His work has been published in professional journals such
as History of Political Economy, Southern Economic Journal, and The
Cambridge Journal of Economics. He has also published public policy
on the private response to Hurricane Katrina for the Mercatus Center,
where he is an Affiliated Senior Scholar.
Deirdre Nansen McCloskey teaches economics, history, English lit-
erature, and communications at the University of Illinois at Chicago.
An internationally known economic historian and rhetorician of sci-
ence, she has written fifteen books and several hundred articles on

topics ranging from mathematical models of medieval agriculture
to the poetics and economics of magical beliefs. Her recent books
include Bourgeois Virtues: Ethics for an Age of Commerce (2006), The
Cult of Statistical Significance: How the Standard Error Costs Jobs,
Justice, and Lives (with Stephen Ziliak, 2008), and Bourgeois Dignity:
Why Economics Can’t Explain the Modern World (2010). Educated at
Harvard, she taught for twelve years at the University of Chicago in
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CONTRIBUTORS
xv
its best years of scientific creativity, and then for nineteen years at the
University of Iowa.
John Meadowcroft is Lecturer in Public Policy at King’s College
London. He is the author of The Ethics of the Market (Palgrave,
2005), which won an Intercollegiate Studies Institute Templeton
Enterprise Award, coauthor with Mark Pennington of Rescuing
Social Capital from Social Democracy (Institute of Economic Affairs,
2007), which won the Arthur Seldon CBE Award for Excellence, and
editor of Prohibitions (Institute of Economic Affairs, 2008). Since
2004 he has been a deputy editor and book review editor of the jour-
nal EconomicAffairs. He is also series editor of the twenty-volume
Major Conservative and Libertarian Thinkers series published by
Continuum in 2009 and 2010.
Guadalupe Ramirez is the founder of the Highland Women’s
Association (AMA), and owner and manager of AlterNatives, a fair
trade marketing enterprise. Her current work focuses on providing
indigenous people access to skills and resources needed to succeed
in exporting to global markets. AMA is a nonprofit organization

based in Quetzaltenango, Guatemala, and serves the Mayan commu-
nities of Guatemala through transformational development projects.
Guadalupe is a frequent lecturer on women’s issues in development
and Mayan cosmo-vision.
Mark D. White is Professor in the Department of Political Science,
Economics, and Philosophy at the College of Staten Island/CUNY,
where he teaches courses in economics, philosophy, and law. He w rites
and blogs regularly on these topics, and is the author of Kantian
Ethics and Economics: Autonomy, Dignity and Character (Stanford,
2011) and editor of The Thief of Time: Philosophical Essays on
Procrastination (with Chrisoula Andreou; Oxford, 2010), Theoretical
Foundations of Law and Economics (Cambridge, 2009), and Ethics
and Economics: New Perspectives (with Irene van Staveren; Routledge,
2009), among others. He is the series editor of “Perspectives from
Social Economics” from Palgrave Macmillan, of which this book is
the inaugural volume.
Jonathan B. Wight is Professor of Economics and International
Studies in the Robins School of Business at the University of
Richmond. Recent research focuses on the intersection of economics
and ethics. His academic novel Saving Adam Smith: A Tale of Wealth,
Transformation, and Virtue (2002) explores the moral foundations
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CONTRIBUTORS
xvi
of capitalism through the eyes of Adam Smith. In 2007 he published
Teaching the Ethical Foundations of Economics (with John Morton), a
set of ten lessons on ethics for economics classrooms. Recent research
focuses on Adam Smith’s understanding of instincts as a foundation

for survival and group success. Jonathan is helping to launch a major
in Philosophy, Politics, Economics, and Law at the University of
Richmond.
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Chapter 1
Markets and Dignity: The Essential Link
(With an Application to Health Care)
Mark D. White
As most economists will tell you, markets, under ideal conditions
of perfect competition, maximize the allocative and productive effi-
ciency of the economy. Those ideal conditions are familiar to intro-
ductory economics students, and include large numbers of buyers and
sellers, perfect information about the prices and terms sellers offer,
homogeneous products, and no barriers to entry (or exit). If any of
these conditions do not hold, then efficiency is compromised, and
government intervention (such as price regulation and antitrust mea-
sures) is often recommended in order to bring the outcomes of the
imperfect competition closer to the ideal of perfect competition.
The efficacy and ethics of government intervention in the econ-
omy has been thoroughly discussed and criticized elsewhere; in this
chapter, my plan is to focus on the view of the market that leads to
calls for intervention in the first place. The standard economic view of
markets treats them as mechanisms for generating efficiency, and to
the extent that they fail at this purpose, their exclusive use in allocat-
ing resources is no longer justified. Rather, I argue that the purpose
of markets is much broader than most economists maintain, and that
this purpose is embodied in markets themselves, so by def inition they
cannot fail at it unless the government intervenes and disrupts the

operation of the market.
Put another way, I argue that the market does not have a purpose
external to its nature, and it is not an instrument for achieving some
other goal or end such as efficiency or wealth. Instead, the market
is constitutive of an end, or an essential part of it. And that end is
dignity—or, to be more precise, ensuring respect for the dignity of
persons by allowing them the maximal freedom to pursue their own
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MARK D. WHITE
2
ends, consistent with the equivalent freedom of all other persons to
do the same. Some readers will no doubt recognize the influence of
Immanuel Kant’s moral and political theory here; indeed I will begin
this chapter with a brief summary of the relevant parts of Kant’s
thought, before I explain its implications for the role of the market
within it. I will f inish with an application of this approach to the topic
of health care, and explain why the need to respect dignity makes
markets more essential in the area of health care than perhaps any
other part of the economy.
Kant on Autonomy and Dignity
As a moral philosopher, Kant is best known for his emphasis on duty
and its derivation from the categorical imperative, his version of the
moral law.
1
But these are just the formal details of an ethical theory
that is ultimately based on dignity, which each and every person pos-
sesses by virtue of her rationality. Specifically, Kant maintained that
rational persons have the ability to set laws to themselves and then

follow them, to the exclusion of any unendorsed influence from either
external forces (such as authority or social pressure) or internal forces
(such as desires and inclinations). Kant called this capacity autonomy,
and his usage of the term bears some similarity with more common
political and psychological senses of the term that mean self-rule.
2

But while most such understandings of autonomy emphasize inde-
pendence of choice from external coercion (such as in the sense of
national sovereignty), Kant’s sense of autonomy also implies self-mas-
tery: a person can reflect upon and either endorse or overcome her
desires and preferences. This does not imply, of course, that desires
and preferences are presumed to be bad or immoral, but rather that
they should never be acted upon without adequate reflection and
endorsement in light of the moral law. In other words, one should
always decide whether to indulge desires, as opposed to automatically
or habitually doing so. There is no issue with trivial decisions (as Kant
acknowledged
3
), but in any morally loaded choice situation, the pull
of inclination must be checked by the requirements of duty, which
themselves are motivated by the recognition of the autonomy of all
rational persons (including the actor herself).
From this capacity for autonomous choice, Kant derives the dignity
of all rational persons, an “unconditional and incomparable worth.”
4

He contrasted persons and “things”: things have a price and can be
exchanged for one another, while persons possess a dignity above
price. He wrote, “whatever has a price can be replaced by something

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MARKETS AND DIGNITY
3
else as its equivalent . . . whatever is above all price, and therefore
admits of no equivalent, has a dignity.”
5
The value of things is con-
tingent on their usefulness, but persons possess an intrinsic worth,
by virtue of which they are to be treated as “ends-in-themselves,” not
to be used simply as means, but always at the same time as ends (to
paraphrase one of the formulae of the categorical imperative).
6
In one
of his most eloquent and inspiring passages, Kant summarizes the
source and meaning of dignity, while asserting the equal respect that
dignity demands from all persons for all persons:
a human being regarded as a person, that is, as the subject of a morally
practical reason, is exalted above any price; for as a person he is not to
valued as merely a means to the ends of others or even to his own ends,
but as an end in himself, that is, he possesses a dignity (an absolute
inner worth) by which he exacts respect for himself from all other ratio-
nal beings in the world. He can measure himself with every other being
of this kind and value himself on a footing of equality with them.
7
This respect for persons is reflected in the duties that Kant derives
from the categorical imperative, which are usually broken into two
types, perfect and imperfect. Perfect duties, which are usually nega-
tive duties prohibiting certain actions such as theft, murder, or deceit,

come from not treating others merely as means to our own ends.
Imperfect duties, on the other hand, are normally positive duties that
come from the emphasis on treating persons always as ends, and are
more open-ended in their requirements, impelling us to adopt certain
attitudes (like benef icence) that will result in appropriate actions when
possible. Perfect duties are sometimes referred to as strict, because
they admit little latitude in their execution, while imperfect duties
are often called wide, because they allow significant latitude in their
performance, both in the interests of other duties as well as in the
satisfaction of the agent’s own interests.
8
At bottom, the entire superstructure of duties and the categorical
imperative is built on the foundation of autonomy and dignity. Perfect
and imperfect duties can also be derived from the universalization
procedures of the categorical imperative, but I regard this as overly
formalistic and less intuitive as a moral explanation.
9
Framing these
duties in terms of respect for dignity, the humanistic nature of Kant’s
moral theory is revealed, along with the potential that lies within
every person to realize her own ends and be the person she wants to
be, while at the same time requiring that that person respect the fact
that every other person is endowed with the same capacities. This is
also where reciprocity enters into Kant’s system in a very significant
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MARK D. WHITE
4
way: since everyone possesses autonomy and therefore an intrinsic

dignity, each of us has a responsibility to acknowledge the dignity of
every other person and, when possible, take their well-being into con-
sideration as well. This reciprocity is best illustrated in Kant’s ideal
“kingdom of ends,” a utopian state of the world in which all persons
can pursue their own ends, consistent with all others doing the same,
by following the moral law, including both the perfect and imperfect
duties derived from it.
10
Autonomy can be interpreted positively as a capacity, but also nor-
matively as a required goal: Each human being has the responsibility
to achieve her potential, implied by her autonomy and general duties
of self-respect. One of Kant’s imperfect duties to oneself is to develop
one’s talents, but the point is much broader than that. As philoso-
pher Thomas Hill puts it, Kant maintained “that all have autonomy,
that this implies commitment to certain rational constraints, and that
some live up to these commitments while others do not.”
11
But to
realize our potential as implied and required by our autonomy, natu-
rally we need to interact with other people, not just socially, but sim-
ply to acquire the goods and services we need to conduct our lives and
achieve our goals.
It is through the market that we achieve this second purpose of
sociality, and in a way that not only allows us to fulfill our goals but
also respects the dignity of the other participants in the market, by
not using them simply as a means but always at the same time treating
them as ends. This is done, not necessarily by direct acts of benef-
icence, but by simply allowing other persons to achieve their own
goals, in their own ways, at the same time, recalling Adam Smith’s
famous statement that “it is not from the benevolence of the butcher,

the brewer, or the baker, that we expect our dinner, but from their
regard to their own interest.”
12
Of course, the same goes for these
merchants’ customers, who also seek their own self-interest (and that
of their families, as with the merchants), but in a way that allows
mutual satisfaction and improvement, in an environment of respect.
13

In that way, the market is part and parcel of all persons realizing their
autonomy and respecting each other’s dignity.
Markets, Choice, and Respect
Individuals
We express our autonomy in the real world through choice, by offering
(or accepting an offer) to exchange something we own for something
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MARKETS AND DIGNITY
5
we want more. For example, every morning I exchange some of my
“wealth” (such that it is) for coffee, and the coffee vendor exchanges
his hearty brew (such that it is!) for my money. Each of us is making
use of our resources to acquire something of more value, understood
in individually subjective terms. Of course, we are also using each
other for our own ends; I am using him to satisfy my java craving, and
he is using me to help support his livelihood. However, the important
thing is that we are not merely using each other as means to our ends,
but we are also treating each other as ends-in-ourselves. This can be
understood in a very minimalist way—I do not give him counterfeit

money or flee with my coffee without paying, and he does not take
my money and run or give me three-week-old rancid swill. Even bet-
ter, we are not rude to each other, and may even exchange pleasantries
or offer to help with some spilled coffee or dropped money.
However, even absent this positive interaction, we are engaging in
honest, open commerce that serves both of our interests—whatever
they may be—and doing so together. Without the coffee vendor, I
would suffer headaches (and my colleagues would suffer me); without
my money, the coffee vendor would be marginally less successful in
his trade. Through the market we not only acquire the goods and
services we need and want, but we do so in an atmosphere of respect,
free of coercion and deceit, while indirectly promoting the end of all
persons through entering into mutually beneficial transactions. In
other words, the market allows for the maximum freedom of choice
consistent with all doing the same (similar to Kant’s kingdom of ends,
but in a more limited way—more on this later).
In what ways can this picture go wrong; how can persons fail to
respect the dignity of others? The two main ways is which this can
happen, which we mentioned earlier, are coercion and deceit, both of
which use persons merely as means without at the same time treating
them as ends. One way this requirement can be formulated is that to
treat someone as an end, that person has to be able to assent to your
end. As Kant wrote:
[T]he man whom I want to use for my own purposes by such a prom-
ise cannot possibly concur with my way of acting toward him and hence
cannot himself hold the end of this action. T h i s . . . b e c o m e s e v e n c l e a r e r
when instances of attacks on the freedom and property of others are
considered. For then it becomes clear that a transgressor of the rights
of men intends to make use of the persons of others merely as a means,
without taking into consideration that, as rational beings, they should

always be esteemed at the same time as ends, i.e., be esteemed only
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MARK D. WHITE
6
as beings who must themselves be able to hold the very same action as an
end.
14
That person does not necessarily have to agree with, or endorse, the
other person’s end, but she has to have a chance to agree or disagree
with it. She does not have this chance if the other person’s end is hid-
den (in cases of deceit) or the chance to assent was denied altogether
(in cases of coercion). For example, if my goal is to get free coffee
from my vendor, and I plan to do it by either stealing the coffee forc-
ibly or paying in counterfeit money, the vendor cannot possibly agree
or disagree with my end, because either he is not aware of it (in the
case in which I deceive him with false bills) or I never gave him a
chance (in the case in which I steal the coffee outright). If he knew
of my end, of course, he would not agree with it—I can certainly ask
him for free coffee, to which he would probably reply “no”—but I
would fail to respect his dignity if I bypassed requesting his consent
entirely and instead simply lied or stole from him.
In a world of perfectly moral persons, or in cases of transactions
between friends (or at least familiar strangers), coercion and deceit
would not be problematic, for most everyone would treat each other
with respect based on duty, courtesy, or care. But many if not most mar-
ket transactions are between fairly anonymous strangers who may feel
no particular affinity for each other (or even downright hostility, such
in areas rife with racial or ethnic tensions). Also, we cannot assume all

persons are paragons of virtue, normal fallible human beings that all of
us are (your author perhaps more than most!). For these cases, we need
laws to protect against coercion and fraud; in most modern societies,
coercion is a crime, and fraud is a tort (private wrong). Of course, such
legal protection is only as good as the enforcement measures behind
it, but one can hope that not all market participants need the threat of
legal sanction to avoid theft and dishonest dealings.
15
Nonetheless, as
most market advocates recognize, to be effective in any sense, markets
must operate within a system of justice that protects essential rights of
property and person.
16
Given these legal protections against fraud and
deceit (to the extent they are necessary), however, the market serves to
promote mutually voluntary transactions that serve all parties’ interests
simultaneously—and respectfully.
Institutions
Coercion and deceit are not problems only with individual actors;
they can also be features of economic institutions and systems as a
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MARKETS AND DIGNITY
7
whole. Any system of economic organization that is not based on
free, voluntary exchange involves some degree of coercion (besides
state coercion designed to prevent private coercion, as endorsed by
Kant).
17

Of course, compromises must be made, such as in the case
of taxation; even a state of minimal scale and scope must be funded
somehow. Governments pass laws that limit sales of certain goods and
services and regulate qualities of others, laws that trade off respect for
individual dignity and choice for the sake of the public good (such
as safety), a familiar controversy. Here, I will focus on a more direct
offense to dignity: the manipulation of a person’s own choices regard-
ing how she chooses to spend her resources and interact in the mar-
ket, not for the public benefit but for “her own good.”
The most pernicious example of this manipulation is what is some-
times referred to as “libertarian paternalism,” as detailed by legal
scholar Cass Sunstein and economist Richard Thaler in their popu-
lar book Nudge and numerous articles in law reviews and economics
journals.
18
Based on behavioral economics research that purports to
show systematic biases and cognitive dysfunctions in human decision-
making,
19
Sunstein and Thaler conclude not only that persons make
choices that are not in their true interests, but that regulators and
policymakers know these true interests and in those interests should
“nudge” persons into making better choices toward them: “We argue
for self-conscious efforts, by private and public institutions, to steer
people’s choices in directions that will improve the choosers’ own
welfare.”
20
These nudges include apparently benign choice manipula-
tions as restructuring options and choosing default options, designed
with persons’ faulty decision-making capacities in mind to help them

make the “right” choices. For example, they recommend that new
employees be automatically enrolled in 401(k) programs with the
option to withdraw, rather than not be automatically enrolled but
with the option to do so, since most persons are too lazy to actively
choose a nondefault option.
21
Despite its subtlety—and, in another way, because of it—such
manipulation is offensive to dignity and autonomy, for several rea-
sons. One, it treats the persons who are manipulated as less than
full persons. As with any paternalistic regulation, it treats the ratio-
nal person as a child, unable to make decisions in her best interests
without the help of the regulator. It is one thing to tax tobacco or
alcohol; to be sure, these are paternalistic regulations (although they
have other justifications also), but at least they are explicit and overt.
But libertarian paternalism is inherently deceptive; it is intended to
be too subtle to detect, and to play on our cognitive dysfunctions to
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MARK D. WHITE
8
achieve the goal of the regulation. As Edward Glaeser notes, “per-
suasion lies at the heart of much of soft [libertarian] paternalism, and
it is not obvious that we want governments to become more adept
at persuading voters or for governments to invest in infrastructure
that will support persuasion.”
22
In this way, it treats rational agents
like broken machines, which by implication are unaware of their own
interests and actions, and must simply be “adjusted” to reach the

desired end.
This leads us to the other way in which such regulation fails to
respect the dignity of persons: that it presumes to know persons’
“true interests.” In the 401(k) case, the designers of the default choice
presume to “know” that the employees’ true interests lie in saving for
retirement; as Sunstein and Thaler write,
if employers think (correctly, we believe) that most employees would
prefer to join the 401(k) plan if they took the time to think about
it . . . then by choosing automatic enrollment, they are acting paternal-
istically by our definition of the term . . . steer[ing] employees’ choices
in directions that will, in the view of employers, promote employees’
welfare.
23
Never mind that the employee may have a multitude of reasons to
put off saving for retirement, such as saving for a down payment on
a house, sending money home to her parents, or indulging a costly
gambling habit (her alternative use for the funds needs not be noble,
of course). True, she may be too lazy to enroll in a 401(k) when she
really wants to, and she may just as well be too lazy to choose not to
enroll when she has a very good reason not to enroll. But regulators
do not consider this, having decided for themselves what is in per-
sons’ real interests and manipulating the choice situation to get them
to make the “right” choices. It is pure hubris for the choice manipu-
lator to assume that he or she “knows” what an agent’s true interest
is, and then using that assumption to “guide” her to it and resigning
in smug satisfaction when suddenly, thanks to the policymaker, she
achieves her “true goal” by making the choice she was manipulated
into making.
24
Real human beings have innumerable interests, including base

desires and enlightened tastes for material goods and wealth, health,
personal fulfillment, the well-being of family and friends, societal
justice (of all kinds), and more. This plurality of desires, goals, and
concerns is further augmented by recognizing that one of the core
interests of persons is in choice or autonomy itself, and a person will
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10.1057/9780230114319 - Accepting the Invisible Hand, Edited by Mark D. White
Copyright material from www.palgraveconnect.com - licensed to ETH Zuerich - PalgraveConnect - 2011-04-15