Michael Novak: The Free Market and Morality

The American Enterprise Institute scholar answers the Big Question "Does the free market corrode moral character?"
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Novak: Michael Novak, the Jewett Chair at the American Enterprise Institute, Washington D.C. Question: Does the free markets erode moral character? Novak: It’s a two-sided answer I want to give. No, commerce does not corrupt morals; on the contrary, it strengthens morals better than the alternatives. In Eastern Europe, people have discovered and then shift from socialism that a more creative and dynamic economy requires more of them, requires more sacrifice, more initiative, more foresight, harder work. It makes higher moral demands and they demand more respect for law. This is the sort of things the founders anticipated and wrote about – commerce as a couple of other values, it’s intimately linked to law. It can’t function. You can’t send trading ships across the world, to the far side of the world without contracts ready to be of service, too big an expense. Commerce and law go together. Commerce also tends to strengthen patience, the ability to live with small gains. Britain in the 19th century had on average about 1.5% growth a year and that was the first breakthrough in progress and what we call modern progress, economic progress. And daily wages and daily welfare increased by something like 1600% in the course of that hundred years. The downside is, what Lincoln called, Abraham Lincoln called “the silent artillery of time.” What early generation sacrificed for and have vision for and worked for, and they worked too hard to enjoy much of it, their children try to emulate, but their grandchildren wanted to get away from. Hear a different music on the wind and prefer not to work so hard, prefer not so strict a life, not so demanding a life, prefer a more enjoyable, freer life. And there comes in the wake of all that very quickly a kind of decadence in society, a decline in foresight, willingness to work, concern about the future rather than the present. And, that’s what Daniel Bell calls the cultural contradictions of capitalism. Its very success makes young people take it all for granted and be willing to throw it away. Question: Do you think the economic crisis will worsen? Walzer: If this is localized, as I say it’s a very small proportion, trouble is it’s mixed in and derivatives and other bundling effects of sort of too bright, that is, traders and Wall Street who were much too bright for their own good and for the good of the country, and now it’s very hard to locate where those bad mortgages are. They’re bundled in with other things. That’s the noxious way. If this may pass very quickly, it’s a terrific investment opportunity. I don’t know when the bottom will be reached. But, on the way down and as far down as we have come, it’s… it’s amazing the values that are available if people have any cash. Question: Can free markets help prevent war? Novak: The great danger that we face we learn was that international form of terrorism, non-state… not identified with the state but linked to states that is to say we didn’t have a clear enemy to face. There wasn’t any one place to threaten as we had done in mutual assured destruction in the getting through the long, difficult Cold War period. And one reason for that is there are an enormous number of young males in Arab societies particularly and in Muslim societies around the world who have no place to go for jobs even if they have education, as many of the bombers of September 11, 2001 had Master’s Degrees and other degrees. They weren’t underprivileged at all, but there were so few opportunities for them. Therefore, it seem to me early on that the best thing that could happen is if somewhere in the Middle East, the most unsettled part of the world, with an enormous amount of suffering over the last 50 years, almost everybody there living under the most, well, not the most extreme, but under extreme forms of tyranny from religious police as well as security police and the secret police would be if somehow in that part of the world the movement got started toward more commercial republics. Those countries have always been good in commerce, but getting commerce free from the state, undirected by the state or the theocracy, and getting the processes of democratic institutions, and above all, the protection of rights going could result in societies with much more to offer to their young people, creative things to do, not a destructive revolution bent on tearing down other societies. So, that seem to me to be the really creative direction to take and there’s a good chance this may come off in Iraq, there’s a chance it may not, but it was an opportunity. I argue right from the very beginning that maybe there was 40% chance of succeeding, but 40% was too high a possibility to waste. We had to get the momentum going in a different direction in that part of the world. Question: Michael Novak on Forthcoming Works Novak: Well, I would like to write a memoir if I could, an intellectual memoir if you will, a bit more of ideas than of a biography, although I have such wonderful memories of bicycling in Italy and many other things like that that are fond to relive. But, I’d like to put together a set of… I have a couple of essays on the idea of social justice which I think is terribly misunderstood concept also by theologians and I would like to put together a short book, I hope, just expounding on the misunderstandings. I’d like to write on that, you know, there are a number, I’ve had a novel about the Johnstown Flood. I’d like to finish and to reflect the world that my grandparents came when they came to this country 1889 with this horrible flood killed a lot more people than Katrina in a town of 28,000. It’s an incredible story and maybe that’s where I get this sort of pessimism and it’s in the background of my optimism, but the destruction of the flood and if you grew up in a city which is totally destroyed and rebuilt itself and destroyed again and rebuilt itself, you sort of get used to the flow of things, I think. You don’t want to let yourself get too optimistic ever, and on the other hand, there’s never ever any reason to despair.