THE MARKET IS NOT NEUTRAL

Economics, Rules, and the Common Good

The market is an extraordinary instrument of freedom, exchange, and wealth creation, but it does not 

operate in a vacuum: its rules help shape society and the relationships between people.

The real question, therefore, is not whether to choose between markets and rules, but which limits are necessary to ensure that the economy remains at the service of the human person and the common good.

By Henry Migliore

The term “market” is often understood in two ways: as a physical place where transactions take place or, in more theoretical terms, as an abstract setting where supply and demand meet.

Yet if the market is simply a platform that makes transactions possible, why is it so often described—in newspaper articles, everyday conversations, and television debates—as an independent force that enables or prevents certain actions? Why are even some government social policies said to depend on it?

Let us take a step back and consider where the concept of the market comes from and what it represents, both for those who participate in it and for those who, although merely observers, are nevertheless affected by it.

Essentially, the market is a place where exchanges, purchases, sales, and other complex transactions can take place, allowing human interaction to be organized.

After all, in societies where each individual produces only a limited range of goods or services, people need a way to obtain everything else they require. The market, as an instrument, appears to provide the answer.

It is an extraordinary organizational mechanism that not only manages but also encourages specialization, production, and human interaction. It is a system that tends towards efficiency and creates the conditions for an economy of abundance.

Yet the market is not only about efficiency; it is also associated with freedom.

Market transactions take place between free individuals who exercise their will by engaging in the commercial activities that best suit their needs.

In a certain sense, the market is also, at least formally, a place without discrimination. Exchanges generally depend not on the personal characteristics of the seller, but on the quantity and quality of the product. Similarly, from the buyer's perspective, what matters is purchasing power rather than personal characteristics.

In any case, the market possesses something almost magical: it manages to combine the pursuit of private interests—whether the accumulation of wealth or simply obtaining what one needs—with an improvement in collective well-being, since it tends to generate abundance.

For precisely this reason, some argue that the market should be allowed to operate freely, without rules or restrictions, because only in this way can maximum efficiency and prosperity be achieved.

However, the much-praised market does not always function as expected. At times, it produces serious negative externalities which, in the most severe cases, can even lead to what economists call market failures.

Let us begin with a practical example: education.

Historically, the education market has rarely succeeded in maximizing the number of students able to attend school, even among those of school age who would have wished or been able to do so.

This is because education is expensive, and relatively few people can afford the necessary costs.

To address this problem, the state typically intervenes, assuming almost all the costs through the organization and financing of public education.

But this is not the only situation in which the market fails to improve the human condition.

There are numerous circumstances in which it produces negative consequences for society as a whole.

Another example of market failure is the emergence of monopolies: situations in which there is only one seller and many buyers.

In such cases, prices tend to rise because there are no competitors, with the result that many consumers are unable to meet their needs adequately.

Yet the market is much more than efficiency, freedom, or a simple mechanism for distributing goods and resources.

It possesses an inherent capacity to shape society and the way society perceives itself. This, in turn, influences how we ultimately see ourselves.

The idea may seem abstract, but depending on how it is regulated, the market can effectively determine the kind of society that emerges through everyday practices and relationships.

This influence is particularly evident in markets where the risk of harmful consequences is especially high.

One example is the labour market.

Consider child labour.

In Italy, we know that this area is subject to strict regulation, both to prevent the exploitation of minors and to guarantee their right to education.

These protections are the result of deliberate choices based on shared moral principles and a clear understanding of social justice.

Now imagine a society in which child labour were not regulated.

It is relatively easy to conclude that, in the absence of restrictions, a family experiencing serious financial difficulties might be inclined—or might even feel compelled—to send children who are too young into employment.

Consequently, child labour could become common practice in that society, negatively shaping habits and human relationships.

What solutions, then, should we consider?

Today's debate tends to become polarized between advocates of the free market and those who favour a highly regulated market.

As is often the case, however, the most promising approach appears to lie in avoiding both extremes.

On the one hand, turning a blind eye and leaving the market entirely to itself would lead us towards a fundamentally unjust society.

On the other hand, constraining the market through an excessive number of rules imposed from above could create inefficiencies and rigidity.

The best solution would therefore seem to be establishing a limited number of clear but firm rules, while placing human beings at the centre.

In this way, the market would operate in the interests of society rather than society being made to serve the market. It would become a common good rather than a common harm.

It is therefore necessary to establish boundaries, because a market left entirely to itself will continually tend to relativize and assign a monetary value to everything.

The only effective safeguard is to adopt a few simple but essential limitations: in other words, to recognize that certain rights are inviolable and must be protected from the risk of being reduced to mere economic transactions.

In conclusion, we should rethink markets in order to transform society and, at the same time, rethink society in order to create markets that genuinely contribute to a better humanity.