Abstract

Economics celebrates an ideal of interaction free from all constraint, an ideal found in the perfectly competitive market, where equilibrium and optimality coincide. Morality can then be thought of as arising from market failure; the perfect market itself operates as a morally free zone, because the only behaviour it makes possible excludes those features of natural interaction that prevent individuals, each acting to maximize his own utility, from achieving optimality. We examine the conditions for market success—individual factor endowments, free individual activity, private goods, mutual unconcern, and the absence of all externalities—showing that these extend the freedom of the solitary individual to the context of interaction, and exclude all free‐riding, parasitism, and any form of partiality. But we note that the initial factor endowment of each person, taken as a given in market interaction, is itself subject to rational and moral scrutiny. The chapter concludes with a discussion of utilitarian and Marxist objections to the market, both of which we reject.