What Good Markets Are Good For - Towards a Moral Justification of FreeMarkets in Europe

In recent years, new insights have emerged about the morality of the free market and market behavior. New literature has made two general points: 1. The free market is desirable, not primarily for efficiency but on moral grounds. 2. A moral defense of free markets has moral implications for the way market parties should operate.

In short, the free market requires the practice of moral virtues and thus contributes to human flourishing. These insights challenge an overriding assumption in economic theory and education: markets are at odds with morality and virtues. Stemming from the 18-century author Madeville, who stated that the “public benefits” of markets are based on “private vices,” this thesis lies at the heart of the homo economicus paradigm.

This paradigm – that self-interest alone motivates human beings – informs economics curricula and the dominant narrative about the success of Western free-market economies. This research project sets out to critically assess these insights, to add theoretical and empirical substance to them, and to integrate them into a new counter-narrative about free markets, morality, and human flourishing. The guiding hypothesis is that free-market societies flourish because the key market actors (states, businesses and individuals) respect morality and virtue. Drawing on various disciplines (economics, theology, philosophy, and social psychology), our research targets four different audiences: the academic community, professionals working in market-related positions, high school and university students of economics, and the general educated public concerned about the development of economics in light of recent financial crises.

We aim to deliver two types of outputs: 1. Research from different disciplinary backgrounds testing the hypothesis that free markets have an inherent morality. 2. A dissemination program intended to engage the business community, educational institutions, politics, and the general public that shifts the nature of debate about free markets and morality. Through this project, we aim to have a lasting impact on new generations and the standard curricula for economics.