A market based economy is an amazing system to behold. It is capable of taking inputs that are often available at irregular intervals and converts them into outputs that are dependably available all year round. And it does this generally at an affordable price for a majority of consumers. It is no wonder that economists generally love the market mechanism and view it with a wonder which sometimes approaches awe.
Is it a moral system? Economists by and large view interventions into the market as distortions that prevent an optimal allocation of resources. Taking this argument to its logical conclusion implies that society should not attempt to intervene in any manner for any good or service. No society past or present has been willing to do this. doing this implies that services like prostitution and goods like drugs be allowed free operation. The market system as a system makes absolutely no value judgement on any activity. Instead different societies make their individual value judgements on different goods and services on offer. Inevitably these value judgements distort the free operation of the market and thereby prevent an optimal allocation of resources.
There is also a large grey area where it is not clear if there should be an intervention in the free operation of the market. Most financial services for example tend to fall into such an area. The problem is that many if not most financial products have now become so complex that understanding them is essentially beyond the grasp of any reasonably educated, reasonably intelligent person. This is where moral values come into play. Should such products be peddled to persons who will be unable to understand what they are getting into? Keep in mind that one of the assumptions behind economist's model of the free market is equality (or at least parity) of information between the buyer and the seller. In turn, equality (or parity) of information implies an equal (or roughly similar) understanding of what the information means. However such an assumption is not necessary for a market economy to work. Remember that the market system by itself makes no value judgements. No good, service, action, information etc. is inherently right or wrong, good or bad from the system's point of view. Such judgements have to be imposed by the people who live within the particular economic structure. So should complex financial products be sold to people who have no idea what they are buying? The system by itself will not prevent anyone from doing so. The classic defense of such actions is that no one is forcing people to buy such products as well. This is true enough but this argument simply highlights the amoral nature of a market based system.
So markets are amoral. They make no value judgements. Neither do they by themselves impose any. This is what makes a market based system so seductive and at the same time so dangerous.
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