Most issues in economics raise parallel moral concerns. Should we have a social safety net, or does this merely decrease the incentive to work and increase the incentive to fall into the net? Should the public be taxed to provide "public services," or does this coercively impinge on the value of private property itself? Should monetary policy be used to drive up rates of employment in the short run, or does this approach risk setting off inflation in the long run? In each case, the violability or inviolability of private property, the meaning and application of justice, and the morality of adhering to strict standards of individual liberty are at issue as much as questions of economic efficiency are.
In dealing with all of these issues, economists have been as influenced by moral traditions as they have been by non-normative arguments. Hume contributed to the theory of the balance of payments but also to the idea of what constitutes the public good. Adam Smith celebrated the invisible hand of markets but also investigated the moral basis of civil society. In the pre-Smithian intellectual history of economics, the leading economic thinkers were scholastic theologians known as well among Church historians as historians of economic thought (1). More recently, the works of John Rawls and Robert Nozick have occasioned much debate in public-choice economics and welfare economics. And all this occurs despite the official status of economic science as being value-free. (2)
What about antitrust laws? Are moral assumptions woven into the fabric of economic analysis--and resulting public policy rules--of what constitutes a monopoly or not? Conservative thinkers have generally made monopoly and antitrust an exception to a preferred general rule against interfering with market relations. In the debates between libertarians and conservatives in American ideological circles in the early 1960s, the validity of the state's antitrust power was always a sore spot. The followers of Ludwig von Mises and F. A. Hayek argued for the laissez-faire position, while the conservatives, grouped around Russell Kirk, favored more economic intervention, particularly the power of the state to break up industrial concentrations. (3) Russell Kirk's own high school economics text makes the case for the free market in nearly every conceivable area save one: the supposed existence of market-generated monopolies, which he labels as dehumanizing. Yet none of these moralistic critiques of industrial concentration deal with economics as such. These critiques have been undertaken at the same level as the anti-monopoly instincts of public opinion, which has usually backed trust busting. These traditions of thought have drawn on a negative response to "bigness" as such, because bigness is associated with power, which is in turn associated with exploitation, a term with a great deal of moral content.
But what is and is not exploitation? One answer is that when a firm, by virtue of its market power, can charge a price that is exorbitantly high and thereby reap "unjust" profits, it has exploited the consumer. But that answer still begs the question: How can we know for sure when a price is exorbitantly high? What is an unjust profit, in an economic sense? Of course, a single supplier can charge a higher price for its valued products in absence of rivalrous competition or close substitutes (for example, monopolistic cable television providers); it is simply a matter of supply and demand. However, the striking empirical fact is that most of the examples given for monopolistic exploitation are not usually market created, but rather, state created, e.g., true monopolies such as the post office, the public schools, utilities providers, and the like. (4) It is only state-connected enterprises that can truly set a price for their services and restrict all substitutes. (5)
The mere presence of a single seller does not imply the presence of exploitation, much less the need for regulatory action, or else consumers would never benefit when a business first provides a product or service. …