Content area
Full Text
This essay argues that Kant's philosophy provides a justification for free markets. The myths about Kant are that he was a recluse, knew nothing about business, and that his epistemology divorced reason from reality, while his primary interest was metaphysics. Yet Kant's categorical imperative demands obedience even in the face of uncertainty about the external world. Adam Smith described this principle as the inward testimony of an impartial observer. Smith and Kant put individual decisions at the center of morality, but agreed that people have a tendency to make morally inferior choices. Those who propose to regulate the economy are as troubled by this tendency as those they regulate. The self-sacrifice prescription is economically, psychologically, and morally unstable. In recommending market competition, Smith was unconsciously applying a Kantian formula. Market decisions are individual decisions. Individuals prefer to do business with those they trust: this is an incentive to honesty. A morality that depends upon incentives is imperfect but superior to a morality imposed by force.
DE-MYTHOLOGIZING KANT
The market economy is commonly defended on the grounds that it has brought liberty and a high standard of living to more people than any other economic system (Friedman 1980: 11). This resort to the calculus of hedonism is grounded upon observable results rather than moral principle, and challenges Harold Laski's (1940) famous complaint that the American economy worked in practice but not in theory. The argument has nevertheless an uncomfortably ex post facto ring to it. Like every defense on the grounds of identifiable consequences, it is threatened by Immanuel Kant's observation that: "For perhaps everything that has happened in the course of nature and on empirical grounds inevitably had to happen, nevertheless ought not to have happened" (1998: 542). This essay suggests that the principles of Kant's philosophy provide a justification for free markets. Kant's system is most in favor of capitalism at precisely the point where it comes closest to the New Testament.
Much of the common knowledge about Kant raises obstacles to understanding his philosophy. Foremost among these is the myth that Kant was a recluse. He was, in fact, gregarious and social. He was somewhat averse to spending time with pompous academics, but he loved to talk with military officers. His...