Markets Don't Work Without Individual Rights
Together, trade and rights make human flourishing possible.
From time to time, I’ll advocate for markets in the general sense and for specific forms of exchange. I want to be clear about what I mean; when I talk about markets, I’m referring to a system where people can exchange with each other and where those people are guaranteed certain rights. Those two components must both be present; together, they constitute the greatest force for progress that we know of, alone, they’re useless.
Let’s look at how certain rights1 support people’s ability to exchange:
Property Rights: This one is pretty straightforward, you need exclusive control of something (e.g. your own labor) in order to exchange it. If I want to sell apples to someone, there has to be some sense in which that’s my independent choice to make (or not make).
Right to Life: It’s obvious that killing is wrong, but a prohibition on murder and torture also prevents extortion. These crimes are used to force people to do things they otherwise wouldn’t, taking away people’s free choice in a market.
Self Defense: To prevent extortion, people need a right to defend themselves and their property.
Prohibition of Slavery: Slavery is another form of extortion which involves the control of someones labor, often under the threat of force. It’s wrong on it’s own terms, and takes away peoples freedom to exchange their labor how they see fit.
Freedom of Movement: Limiting where people can move limits who they can exchange with. A masseuse can’t do their job if they’re in solitary confinement.
Freedom of Association: As with freedom of movement, people need to be able to associate freely with others in order to freely exchange. A lawyer who is prohibited from associating with the accused cannot defend them in trial.
Freedom of Expression: Speech and other forms of expression are critical for sharing information about an individual or product. If nobody was allowed to write a bad review on Amazon, people would have a hard time finding good products and there would less competition between businesses. Information asymmetries are detrimental to efficient markets, and strong freedom of expression can help alleviate them.
The fact that these rights support exchange is a key reason that they are so beneficial to human welfare. To illustrate this, imagine what markets would look like in the absence of some of these rights.
Without a right to life, things would deteriorate pretty quickly. It wouldn’t be long before someone takes all of your stuff under the threat of force. Eventually, all possessions would accrue to the person commanding the largest army, which is essentially a dictatorship.
Without freedoms of movement, association, or expression, the government could destroy any market with a handful of restrictions. Imagine a state that banned the discussion of apples, prevented people from associating with apple farmers, and prevented apple farmers from leaving their property; apples simply wouldn’t get sold.
Without property rights, its unclear how exchange could even exist. What right do you have to sell something you don’t own? Why invest in anything that could be taken from you at any point?
Without individual rights, markets collapse into terrible and oppressive regimes. But what do individual rights become without markets? If we could somehow guarantee various rights while magically preventing trade, many of those rights would lose their value.
For instance, in a world with property rights but without exchange, you can have only the things you made yourself. While it’s entirely possible to live off your own production, you would be consigned to the life of a hunter-gatherer at best. Without exchange, the abundance and experiences of the modern world are unavailable to you. Property rights only aid human flourishing in the context of trade.
Other rights have clear value in a world without exchange, but their value is severely diminished. What’s the value of freedom of movement if you have to walk everywhere, and once you arrive, the only thing you can do is forage? Your movement is free, but without technology, you live in a cage set by your biology.
Perhaps the more general point is that the prosperity created by trade enhances the value of rights. When you can fly around the world, freedom of movement is essential, when you have access to the internet, your freedom of expression becomes more valuable, and better health due to modern medicine means that your life is more valuable to protect.
The fact that rights are critical to the function of a market is often overlooked. Most people are alienated by markets, and have the vague sense that they somehow erode individual rights. But rights and markets are far more intertwined than most people think; markets give rights more purpose, and rights make markets possible.
Together, trade and rights make human flourishing possible, in fact, markets even increase cooperation and trust. Our policy should reflect this, choosing laws that support free and fair exchange while recognizing that rights are enhanced by the abundance that commerce creates.
A legal system with contract protections, torts, and criminal law is also important for markets, but here I focus on rights since this point is less obvious to people.
Great point here. The purpose of markets is to tease out the signal from the noise, not just in the economy.
As the saying goes, garbage in, garbage out. If we cannot ensure that the data going into the market is solid, the output of that market will be suboptimal.
I think you have inspired a new essay for Risk and Progress here.
What happens when your right to property over your apples extends to a monopoly on food production capacity and therefore interferes with my ability to exercise my right to life? Aren't we all constantly under the threat of force or starvation, and therefore unable to consent to the free exchange of our labor, since our alternative is death?