Are Markets Moral?: A Talk with UVA Economics Professor Kenneth Elzinga

At the end of January, UVA’s Kenneth Elzinga delivered a lecture titled “Are Markets Moral?” hosted by the Blue Ridge Center and the Economics Club.

“The number of people in this room who don’t know who Kenneth Elzinga is is vanishingly small,” spoke Gerard Alexander, the Blue Ridge Center’s President, who introduced the professor of economics. Many first encounter Elzinga in his gargantuan Principles of Microeconomics class, an introductory economics course that brings in 500 students every fall semester, and has taught thousands of students since he began teaching at UVA in 1967. Beyond that, Elzinga’s specialty in the field is antitrust economics, and has held a significant role in the rulings of three antitrust cases before the Supreme Court.

Elzinga opened his lecture regarding the question at hand, observing the different components that one would have to break down in order to tackle the heart of the issue, whether it be the quality and substance of markets (i.e. the allocation of resources) that make markets morally questionable, or whether there is something inherent to the behaviors that are incentivized by market structures that make the institution morally questionable. 

Rather than addressing the “portmanteau” nature of the question, Elzinga offered to retell a story when one of his students came into his office inquiring about career options. In a dilemma not dissimilar to many, the student noted that she wanted to take her degree to work in a nonprofit, where she would “help people” as opposed to working at her family business, where she would choose to “make money” out of her degree instead. As Elzinga noted, “making money and helping people were very different to her,” and the prospect of making money and helping others appeared as antithetical “as an environmental activist who had a job cutting down redwood trees”. Elzgina took the story as an opportunity to emphasize a fundamental element of market institutions. Quoting the fabled Adam Smith, Elzinga utters one of Smith’s famous quotes that “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest”. Indeed, Elzinga notes that the prospect of helping others is not mutually exclusive to the prospect of making money. Rather, the act of specializing goods and services allows for gains in trade that allow for the mutual benefit of each party: the producer and the consumer. As Elzinga remarks, his student might have helped more people if she ran her business at a profit by providing an essential service for her community.

Elzinga’s position, coming from the perspective of an economist, should surprise no one. Indeed, at the length of his lecture, his remarks more or less fell in line with the quotes from The Wealth of Nations that he brought to share. He noted that countries that embraced market institutions are generally better-off, as the distribution incentivized by markets has curbed absolute poverty, food scarcity, and general quality of life. In a similar vein, he noted that markets and gains from trade are inherently positive sums, and, so long as those that are engaged in the market are “symmetrically informed”, then there should not be a significant reason to suggest that markets could be immoral.

In regards to the perspective of economists and the humanities was where Elzinga’s regards stood out the most. “In literature, there is a long history of bias against markets,” Elzinga noted. The professor made a special remark toward economics students in particular:

It can feel lonely [to be an economics student]. Your professors, your students, they don’t like markets. They don’t like international trade. They actually associate Adam Smith and the invisible hand with the protection of greed and selfishness. And you can’t talk a mile of it.

Elzinga returned to the benefits of trade once again, where he noted that some in the humanities see the world as a “zero-sum game.” Here, Elzinga notes again that, prior to capitalist modes of production, the default state of living was largely “grinding, hopeless, poverty”, and there’s optimism to be had in markets for the long strides in human progress and development that have been made in fostering rigorous market institutions in spite of the pessimism towards the current state of economic affairs.

What should then be the outlook of economists, and of individuals more broadly, towards economics? Elzinga offered that, while a “solid training” in economics might make you a pessimist, a “realist” or even an optimist, it should absolutely not make you a “utopianist,” quoting the Nobel Laureate James Buchanan, “Economics is the art of putting parameters on our utopias.” Indeed, Elzinga argued that, while the humanities may be drawn to Rousseau and “the natural goodness of man,” it is the economists that are drawn to the “fall of Adam,” and the absence of prosperity rather than its abundance.

Closing his lecture, Elzinga asserted that, economics, like any discipline, is not above criticism, but to criticize markets for being immoral is “just a step too far,” arguing that the flaws of markets, the “false gods” of greed and avarice, are endemic to the human condition rather than a feature of any particular economic system. He ended his remarks on a good note, recalling the Biblical story of the good Samaritan:

A good Samaritan to my mind is not just someone with a heart of gold, but somebody with the resources. Somebody who didn’t just have the love for those resources, but with the love to share them with others.