Human capital, freedom, and flourishing

The past 200 years have seen an amazing rise in prosperity in countries whose institutions embody the Enlightenment ideas of political and economic freedom. John Locke argues that everyone has an equal natural right to their own person, life, and property, and that the pursuit of “true and solid happiness” is “the necessary foundation of liberty.”Footnote ¹ Similarly, Adam Smith calls for “allowing every man to pursue his own interest his own way, upon the liberal plan of equality, liberty and justice.”Footnote ² And thus we get the Declaration of Independence’s statement that “all men are created equal” and have “certain unalienable Rights,” including “Life, Liberty and the pursuit of Happiness.”

According to Deirdre McCloskey, this philosophy of freedom, justice, and equality before the law as well as the general public’s acceptance of business as an honorable activity are at the root of free markets and limited government, however imperfectly realized first in the West and then in many other countries.Footnote ³ These factors taken together ultimately explain why the long historical trend in real per capita income looks like a hockey stick: nearly straight for centuries at about $3 per day, then curving upward dramatically after 1800, raising real incomes more than twelvefold.Footnote ⁴ In turn, this prosperity and freedom explain, I will argue, why so many more people now are flourishing, by which I mean leading lives that are both happy and worthwhile, or virtuous. It is such lives that Aristotle regards as the highest good for an individual.Footnote ⁵ It is also such lives that Locke has in mind when he talks of “true and solid happiness” and what Adam Smith has in mind when he argues that the individual “naturally desires, not only to be loved … [but] to be that thing which is the natural and proper object of love” and praise.Footnote ⁶ For all these philosophers, the individual’s highest good, or flourishing, consists of “true happiness,” that is, happiness in a worthwhile or virtuous life.

This notion of flourishing as including both happiness and virtue is also used in much contemporary philosophy and positive psychology—where it is often called simply “happiness,” or “well-being,” or “the good life”—and is fairly widely shared in the culture.Footnote ⁷ So I will adopt this conception without trying to justify it, although I have done so in other work.Footnote ⁸ Those who think that flourishing is entirely a matter of happiness are free to think of virtue as only contingently related to the agent’s flourishing. My substantive point is that prosperity and freedom have led to more people developing their psychological, moral, and intellectual capital to lead happier and more virtuous lives. To paraphrase Heraclitus, there are many gods in liberal, free market societies.Footnote ⁹

I first argue that the prosperity and freedom created by our (relatively) free markets and (relatively) limited government has made people happier, and in the following section that they have made people more moral. This claim is often disputed, but the evidence for it seems to me to be incontrovertible. This is compatible with the fact that even in such societies there are periods when large swathes of people succumb to the lust for power; cultish devotion to a powerful individual; vengefulness; or hatred of other races, ethnicities, or religions. Indeed, U.S. society is going through such a period now in the mid-2020s. My point is simply that over the past two hundred years, there has been great improvement in our moral and intellectual powers. I then argue that prosperity and freedom have made more people more intellectually virtuous and wise. This is probably the most striking improvement in human life, but it is neglected in the literature on the benefits of prosperity and freedom as well as by those who look down on commerce. I conclude by arguing that moral and intellectual virtue contribute to both the agent’s flourishing and that of others.

A note on terminology is in order before I continue. In some works, “happiness” is sometimes used to designate a temporary feeling and sometimes to designate pleasure. But when we say that someone is a happy person, we typically mean that they have a deep and stable psychological disposition or tendency to have positive emotions and thoughts as well as to evaluate their life as satisfactory. This is also close to the way social scientists and psychologists who study happiness use the term, and it is how I will use the term.

Prosperity and freedom enable happier lives

There are many reasons why the prosperity created by free markets and limited government has contributed to happiness. One reason is that it has led to labor-saving inventions that make the task of survival less of a grind and leave us more time and energy to do something more than subsist. In 1870 the average United States worker worked sixty-three hours per week, while in 2017 just over thirty-two hours per week.Footnote ¹⁰ In a popular TED talk, Hans Rosling describes how the modern washing machine has freed women from the many hours it once took to haul water and firewood, heat the water, and do a week’s laundry.Footnote ¹¹ This is just one example among thousands of liberating innovations that have given people more scope than ever before to develop their human capital in economic enterprise, artistic creation, or scientific achievement.Footnote ¹² This greater opportunity for earning a living according to their talents and preferences enables more people to live in ways that they find fulfilling and meaningful.

We are also freer now in our political and personal lives. We can practice any religion we like, speak or write our minds, and criticize our governments. Without an officially endorsed religion, freedom of religion is especially well-protected in the United States, as is freedom of speech. Freedom of religion is also well-protected in liberal European societies that were ravaged by religious wars until the signing of the Peace of Westphalia in 1648. Importantly, freedom from religion, and even atheism, are also protected.

Personal freedom has grown steadily over the past 200 years. We can dress or cross-dress as we like and marry or not marry. Love and friendship are important sources of happiness, and we are now free to befriend or marry anyone we like, regardless of class or caste, or even of gender. Some actions, such as adultery, that were formerly punished by the state or the community with the “scarlet letter,” are now regarded as private matters in nearly all Western countries and even many Asian ones.

Another source of happiness is health and fitness, which prosperity has increased manyfold. The incidence of diseases that commonly killed even wealthy people in the past has declined dramatically everywhere. Smallpox, one of the deadliest infectious diseases, has been eradicated worldwide.Footnote ¹³ Life expectancy at every stage of life—infancy, childhood, adulthood, and old age—has increased in every country since 1880,Footnote ¹⁴ as has healthy life expectancy in most countries.Footnote ¹⁵ We already have drugs for slowing down Alzheimer’s disease, and we can realistically look forward to drugs for preventing it altogether. Medical researchers have recently discovered six “chemical cocktails” that “reverse cellular aging and rejuvenate human cells.”Footnote ¹⁶ We do not have to wait for miracle workers to enable the paralyzed to walk or the blind to see; scientists and technologists are enabling us to do so with the help of artificial intelligence.Footnote ¹⁷

Prosperity and freedom are the chief external conditions for happiness understood as a stable psychological disposition to have positive emotions, thoughts, and evaluations. It is possible for an individual to be unhappy due to depression or personal tragedy even in a prosperous and free society, but it is rare for an individual to be happy even in severe poverty and ill health.

The chief internal conditions of happiness are certain psychological skills, such as having realistic goals, taking disappointments in stride, being self-reflective, counting our blessings, having goodwill toward others, not harboring grudges and resentments, and being forgiving of slights. Much unhappiness is due to a lack of these skills, but a prosperous and free society gives more people the chance to acquire them. Although there have always been wise people and books to help people become happier, such as Marcus Aurelius’s Meditations, Epictetus’s Enchiridion, and Seneca’s On a Happy Life, now we also have talks, videos, meditation apps, university courses, blogs, articles both philosophical and popular, and hundreds of self-help books informed by the wisdom in these ancient texts as well as scientific psychology.Footnote ¹⁸

But are we happier than before? Perhaps freedom makes us more anxious. Perhaps prosperity makes us more dissatisfied because we cannot have it all. It is sometimes said that the Bhutanese are among the happiest people in the world, even though their per capita gross domestic product (GDP) is low and their opportunities scarce.Footnote ¹⁹ But what does social science tell us?

The World Values Survey asks respondents: “Taking all things together, would you say you are: very happy; quite happy; not very happy; not at all happy?” as well as: “All things considered, how satisfied are you with your life as a whole these days?”Footnote ²⁰ Another major survey, published in the World Happiness Report, is similar. It uses data gathered by Gallup from more than 150 countries and more than 98 percent of the world population over three years, using the Cantril self-anchoring scale.Footnote ²¹ Respondents are asked to imagine a ladder with ten steps, with ten representing the best possible life for them and zero the worst. They are then asked about their emotional well-being and their life satisfaction at present, and their expectation of their life satisfaction in the next five years.

Subjects’ self-reports are correlated with quality-of-life factors such as per capita income, the degree of trust and social support in the country, “healthy life expectancy, freedom to make life choices, generosity, and perceptions of corruption.” These self-reports are also correlated with “happy behavior,” such as smiling and laughing, and with evidence from friends and family. Those who are “thriving” report more happiness and interest in life, greater health, and less worry, anger, or stress than those who are moderately satisfied or worse.Footnote ²² These answers have “high test-retest correlations,” thus inviting confidence in the results.Footnote ²³ These results test both components of happiness: life satisfaction and a stable disposition to have positive feelings “taking all things together.”

For many years it was believed that societies did not get happier with increasing income, even though within societies people got happier as they got richer. This “Easterlin paradox,” as it is known, was explained by the thesis that happiness is affected by comparative income, not absolute income. But Betsey Stevenson and Justin Wolfers seem to have refuted the Easterlin paradox by analyzing a richer set of data from a greater number of countries. They find that, overall, richer countries are happier at all absolute income levels, and that happiness rises with the natural log of real GDP per capita.Footnote ²⁴

Year after year, the happiest countries are the wealthy countries with free markets and liberal values, including personal freedom, freedom of speech, rule of law, little corruption, and democratic institutions.Footnote ²⁵ These are the countries in which people trust each other and generally trust their governments. Five of the Nordic countries and Switzerland usually rank among the ten happiest countries, with Finland ranking first every year since 2017.Footnote ²⁶ The top twenty include Australia, New Zealand, Canada, the United States, Israel, and various European countries, although the United States has slipped to twenty-third in the 2024 World Happiness Report.Footnote ²⁷ In spite of its reputation, Bhutan scores low on happiness.

However, there are outliers. Latin American countries tend to score much higher on life satisfaction than their poverty and corruption would predict, perhaps to some extent because of close-knit families. And East Asian countries tend to score somewhat lower than their external conditions would predict.Footnote ²⁸ Part of the explanation for both unexpected results may lie in cultural attitudes toward life satisfaction.

I have claimed that flourishing requires happiness in a virtuous life. A virtuous but unhappy person is not flourishing, and neither is a happy but vicious person. But there is a common tendency to think that a happy person must have some virtues. An explanation for this intuition is that, by definition, happy people are not given to negative dispositions like resentment, envy, greed, jealousy, irritability, or rage, all of which are both vices and incompatible with happiness. So happy people are free of at least some vices, and some of them may well be honest, just, and so on toward their near and dear ones. At the same time, however, such people can be capable of cruelty and injustice toward thousands, often because they share their society’s prejudice against those thousands.

This last might invite the response that cruelty and injustice are always accompanied by unpleasant emotions, and thus unhappiness. But there are two reasons why this is not always the case. One is that some cruel people actually enjoy being cruel and remain unbothered by their injustice due to self-deception about their victims’ humanity. Another is that those who do not enjoy being cruel can remove themselves from the cruelty by hiring minions to mistreat their victims. By doing this, many a slaveholder or monarch, beloved by his friends and family, can stay convinced of his own rectitude and be happy.

To the extent that someone is virtuous, however, his sense of rectitude must be based on actual rectitude. And life in an open society—a free market, liberal society with freedom of speech—makes it easier to be virtuous than life in a society in which the idea of equality and dignity for all is suppressed or never heard. In this regard it is worth noting that although slavery was practiced all over the world, it is only in the West that it was questioned as early as the eighteenth century.Footnote ²⁹

Prosperity and freedom enable more morally virtuous lives

What exactly is virtue? Some of the literature on markets and virtue claims to use Aristotle’s conception of virtue.Footnote ³⁰ But moral virtue as Aristotle understands it is a tall order, requiring not only characteristically doing the right thing for the right reason, but also doing it in the right spirit, that is, wholeheartedly rather than reluctantly, and doing it in all domains of our lives.Footnote ³¹ On this conception of virtue, if you are a virtuous parent, you will be a virtuous colleague, friend, neighbor, politician, and so on. Aristotle believes this because he thinks that virtue requires practical wisdom, that is, wisdom about life as a whole, and that if you have practical wisdom, you will have all the virtues in your life as a whole.Footnote ³² But as many philosophers and psychologists argue, no one is practically wise and virtuous across the board, that is, in every domain and all stages of their lives.Footnote ³³ In some domains of our lives, we may be genuinely virtuous, in some principled but not virtuous, and in some not even principled. Sometimes we do the right thing for the right reasons, and sometimes only because we know the truth will out. The same is true of intellectual virtue. No one is intellectually virtuous in every domain, although one reason here is that no one has the time or the intellectual capacity—or even the curiosity—to acquire knowledge in every field.

There are many reasons for moral inconsistency: Our moral education is inconsistent, our peers are morally inconsistent, unusual situations can throw us, and prisoner’s dilemmas can pit our long-term material interest against our interest in moral action. There is also just plain old flawed human nature, with its fears, capacity for self-deception, desire for short-term gains, and tendency toward conformism, intolerance, tribalism, vengefulness, and domination. So when I talk of morally virtuous people, I have in mind people who typically do the right thing for the right reason, even if not wholeheartedly, as Aristotle’s conception requires.

Virtue is important for the individual’s flourishing because her honesty and trustworthiness contribute to her happiness by making her a good friend, colleague, and business partner. A similar case can be made for integrity, justice, generosity, and courage. In addition, these virtues benefit the individual by their very nature: they feel good. To the extent that she is virtuous, an individual lacks reason for regret or shame, and is unafraid to be transparent about her character, which in itself is a form of freedom.

A society in which more people are typically virtuous is a society in which more people can trust each other and, thereby, cooperate and prosper. A free market liberal society encourages these virtues by rewarding those who have them with success. Such a society thus both requires and encourages these virtues.

Some critics, however, argue that market societies depend upon and encourage vice. In Why Not Socialism? Gerald Cohen echoes Karl Marx and Thomas Carlyle when he argues that although it produces goods effectively, “the market is intrinsically repugnant” because it “recruits low-grade motives,” namely, “greed and fear,” and because it “produces undesirable effects, including significant unjust inequality.”Footnote ³⁴ Although he acknowledges that in markets we benefit our trading partners, Cohen thinks that we do so for the wrong reasons. He writes that Adam Smith “propounded a wholly instrumental justification of market motivation.” Market motives stand condemned by an ethic of noninstrumental “communal reciprocity” under which we do not serve “only in order to be served,” but rather for the sake of others. Seeing our potential trading partners “as possible sources of enrichment” and our competitors as threats are “horrible ways of seeing other people.” Every market is a “system of predation.” Cohen even compares feudalism favorably to capitalism on the grounds that “feudal civilization” had the “grace to condemn greed,” whereas “capitalism celebrates it.”Footnote ³⁵

However, Cohen has a simplistic notion of human motivation and confuses rational self-interest with greed, that is, unprincipled pursuit of self-interest. Smith notes commonsensically that the baker sells us bread out of self-interest because he does it to earn a living.Footnote ³⁶ This is his primary motive in setting up his business. But this does not imply that benevolence—the desire for his customers’ pleasure and well-being—plays no role in the baker’s baking or selling. If he is a normal human being, he has goodwill toward others, especially his customers, and wants the trade to be mutually beneficial. This interpretation is supported by Smith’s view of human motivation in The Theory of Moral Sentiments, which Cohen ignores. Smith makes it clear in The Theory of Moral Sentiments that “[m]an naturally desires, not only to be loved, but to be … the natural and proper object of love,” that is, “to be worthy of love.”Footnote ³⁷ In other words, Smith thinks that it is part of human nature to want to be good and benevolence is part of being good. Smith does not exclude people who engage in commerce from this view of human nature.

Nor is commerce motivated entirely by the desire to make a living. According to the hugely successful founder of Whole Foods, John Mackey, practically all the “hundreds” of entrepreneurs he has known started their businesses because they “had some kind of dream or vision they wanted to realize.”Footnote ³⁸ Cohen’s sweeping criticism of market actors as greedy is no more justified than would be the similar criticism of academics that they write and publish only because they desire fame and higher salaries, not because they have any interest in the truth.

Cohen’s second criticism of markets—that it requires us to see our competitors as threats and live in fear of them—is also no more justified than would be the similar criticism of academics that they see their competitors for jobs, research grants, and awards as threats, and thus live in fear of them. Indeed, because competition and fear of loss is found in practically every area of life—sports, music, art, and even sometimes love—Cohen’s criticism that the market encourages “horrible ways of seeing other people,” and that it is a “system of predation,” could be made about most of human life.

Other critics have charged that market societies encourage the general habit of evaluating things and people purely in terms of their usefulness instead of their intrinsic value.Footnote ³⁹ Such instrumental motivations, these critics argue, threaten to undermine relationships of love and friendship, which require an appreciation of each other’s intrinsic value. The greater the extent of the market, the greater the danger that instrumental motivations will crowd out intrinsic motivations. A friend will become merely a source of support, a tree merely a source of lumber, and art merely an economic investment. Hence, the greater the extent of the market, the smaller the scope for virtue. For all these reasons, critics argue, markets must be kept in their place by government or replaced by socialism. In short, critics disparage markets and place their trust in government and politics—or at least, in the politicians and politics of their own party.

I argue at length elsewhere against these criticisms, so I will merely summarize my argument here. Free market societies create the preconditions for friendship across class and caste lines because market exchanges typically relate us as equals. Buyers and sellers do not stand in a relationship of superior and inferior.Footnote ⁴⁰ This contrasts with relations based on hierarchy in ancient and feudal societies or on class and caste in many contemporary societies where free markets and the liberal idea of equal rights are either nonexistent or have only a tenuous hold. Moreover, social media inventions like WhatsApp and Facebook enable long-distance friends and families to keep their relationships alive. Of course, there are friendships just for utility in market societies. But there always have been such friendships, as evidenced by ancient, medieval, and Renaissance literature.Footnote ⁴¹

People in market societies are also much better than people in authoritarian or poor societies at protecting and enjoying nature, as seen by the existence of private conservation societies, such as the Nature Conservancy or the Property and Environment Research Center. Whereas for some wealthy people art may be primarily an investment, this is by no means true for the vast majority of people, including many wealthy people. Nor is this instrumental attitude toward art, to the extent that it exists, new. At one time it was common for patrons of art to buy statues merely to show off their wealth and status.

A problem shared by Cohen and other critics is that they fail to see that market activities and relationships are not sui generis. They are akin to activities and relationships in other spheres of life that involve reciprocity, such as friendship, and those that involve competition, such as sports or politics. Another problem is that these critics fail to provide any evidence of a society that is better on their own terms, that is, a society that exhibits less instrumentality and more noninstrumental “communal reciprocity” than the market society they live in.

Cohen does offer a fictional picture of a camping trip that is supposed to be a model for his ideal society. On this camping trip, everyone shares everything, including the amount of enjoyment.Footnote ⁴² So if someone on the trip does not enjoy nature as much as the others, the others “make up” for it by doing unpleasant tasks like cleaning up. (But what would Cohen say if they enjoyed even that?) If this is a model for the ideal society, it is highly unrealistic and rather unattractive.Footnote ⁴³ In real life, people with a reduced capacity for enjoying life do not expect others to “make up” for it by reducing their own enjoyments, as though an equally glum society is better than an unequally cheerful one.

In contrast to the critics, many philosophers and economists have adduced empirical evidence to show that people in liberal market societies are more moral than people in nonmarket societies. This does not mean that such societies have banished greed or any of the other vices. It just means that the vices are not as widespread or as extreme as in politically or economically oppressive societies. Empirical evidence shows that markets promote virtues such as openness and tolerance, fairness, trust and trustworthiness, justice, and generosity.Footnote ⁴⁴ The boldest claim comes from McCloskey, who argues that market societies promote the four pagan virtues (prudence, temperance, courage, and justice) and the three Christian virtues (faith, hope, and love).Footnote ⁴⁵ Competitive markets demand prudent and temperate behavior from workers and managers, cooperation between trading partners requires justice, and entrepreneurship requires courage. Repeated dealing and even the successful functioning of corporate offices depend upon love in the form of trust, solidarity, and caring relationships.

There are several forms of evidence for the claim that markets have improved us morally. One is observations by people at the midnight of feudalism and the dawn of market society. In a classic survey, Albert O. Hirschman reports that many European authors in the eighteenth century remarked that markets had civilized the public’s manners and moral attitudes.Footnote ⁴⁶ Montesquieu thus says in 1748: “Commerce cures destructive prejudices, and … polishes and softens barbaric ways as we can see every day.” And Condorcet says in 1795: “[T]he spirit of commerce and industry” are “enemies of the violence and turmoil which cause wealth to flee.” In 1791, Thomas Paine praises commerce as “a pacific system” that curbs belligerence because it makes “[n]ations, as well as individuals, useful to each other.” “Through commerce,” says Samuel Ricard in 1781, “man learns to deliberate, to be honest, to acquire manners, to be prudent and reserved in both talk and action. Sensing the necessity to be wise and honest in order to succeed, he flees vice.”Footnote ⁴⁷

Such observations are supported in current literature by economic experiments and surveys in different kinds of societies. To compare the effects of living in a market society with the effects of living in preindustrial societies in Africa, Latin America, and Asia, Herbert Gintis and co-authors visited “three foraging societies, six that practice slash-and-burn horticulture, four nomadic herding groups, and three sedentary, small-scale agriculturalist societies.”Footnote ⁴⁸ They conducted standard experimental games involving pairwise interaction between anonymous players (ultimatum, public goods, and trust games) to test the hypothesis that “the more frequently people experience market transactions, the more they will also experience abstract sharing principles concerning behaviors toward strangers.” The games elicited behavior ranging from fair sharing (cooperation) to selfishness (defection). The society whose members exhibited “the lowest cooperation rates in public-good games,” the Matsigenka of the Peruvian Amazon, is a society with a highly autarkic economy that exhibits “little cooperation, exchange, or sharing beyond the family unit.” Gintis later summarized the study’s findings: “[W]e measured the degree of market exposure and cooperation in production for each society, and we found that the ones that regularly engage in market exchange with larger surrounding groups have more pronounced fairness motivations. The notion that the market economy makes people greedy, selfish, and amoral is simply fallacious.”Footnote ⁴⁹

In another cross-cultural study, Benedikt Herrmann and colleagues conducted a public good game with students in Western market societies and students in more traditional or authoritarian societies. The most cooperative behaviors came from the first group, and the least from the second group.Footnote ⁵⁰

Experiments done by economists with students from former Communist countries and from Western countries confirm this positive picture of market societies.Footnote ⁵¹ They show that people from market societies are more cooperative and more honest than people from these nonmarket societies. Numerous surveys conducted with two such groups of students confirm this result. For example, Rober Lupton and colleagues asked the same questions of undergraduate business students at Wyzaza Szkola Biznesu in Poland and at Colorado State University.Footnote ⁵² A remarkable 81.8 percent of the Polish students said that they had seen a student cheat in a class that semester, whereas only 5.6 percent of the American students said the same. None of this is surprising. When you grow up in a corrupt system where dishonesty is the price of survival or freedom from prison, you get used to acting dishonestly whenever it serves your purposes.

Surveys also reveal that people in more market-oriented countries experience less corruption, are less willing to justify various forms of cheating (fare evasion on public transport, property theft, bribery) or violence (corporal punishment, domestic abuse), express less racial or other demographic prejudice, and less gender bias.Footnote ⁵³ In positive terms, the very freedom of liberal market societies requires us to have more virtue and practical wisdom than top-down societies. There is no politburo, fuhrer, military commander, overlord, or supreme leader to tell us how to earn a living, what to say and think, how to dress, or where to worship or not worship. In a free society, precisely because we have so many choices, we have to reflect on how to lead our lives and take responsibility for our mistakes. To succeed at work, we have to be trusted; and to be trustworthy, we have to be honest and capable. We also have to be temperate and not chase after every gewgaw. In a free society we have to interact as equals with innumerable people who are unlike us: the handyman whose accent we have trouble understanding, the retail salesperson of a different color or religion, the foreign student in the classroom. Getting along requires us to act justly, without prejudice, and with generosity in our interpretations of the ways of people unlike us. And the best way to ensure that we do these things is to have a just and generous character.

By contrast, in dictatorships some groups are officially favored and some disfavored, and fear of punishment by the authorities leads those who are favored to stay silent about the treatment of the disfavored or even share the official attitude toward them. Thus, some Chinese people deny, even in the face of first-hand accounts, that the government is sending Uyghurs to “re-education” camps and committing cultural genocide against them.Footnote ⁵⁴ The Russian government under Vladimir Putin has revived the Stalinist practice of encouraging people to denounce anyone who utters an “unpatriotic” sentiment.Footnote ⁵⁵ Whatever the moral shortcomings of people in open societies, they are surpassed by people in closed societies. In the latter, when governments steal from the people and deceive them, the people respond by cheating when and where they can. The cynicism fostered by Soviet-bloc command economies is expressed in the well-known saying, “They pretend to pay us, and we pretend to work.”

Extreme poverty itself provides fertile ground for vice because the struggle for survival makes it tempting for people to do whatever it takes to survive. In her account of life in a Mumbai slum, based on four years of daily observations and conversations with the slum-dwellers, journalist Katherine Boo writes that it is “blisteringly hard” to be good in such circumstances, because they undercut many people’s “innate capacity” for goodness.Footnote ⁵⁶ Whereas virtue requires them to be honest and just, success in extreme poverty requires them to lie and cheat.

Of course, even amid plenty some people are willing to steal to amass even more riches. The multi-billion-dollar fraud committed by Sam Bankman-Fried as head of the FTX crypto exchange, while posing as an “effective altruist,” is a recent example. But avarice is not a new vice. In every age, there have been powerful people who have been willing to steal or tax to expand their holdings and wealth. Kings and princes went to war to loot other countries and came back covered with glory if they succeeded. Now, we deplore such people.

The widespread ideas of freedom and equality before the law in market societies are based on and promote the idea that all human beings have intrinsic worth. So, it is no surprise that, as Gintis points out, “movements for religious and lifestyle tolerance, gender equality, and democracy have flourished and triumphed in societies governed by market exchange, and nowhere else.”Footnote ⁵⁷ Such movements can start in authoritarian, nonmarket societies, but they rarely triumph. Think of the withering of the Arab Spring, the arrest of Aung San Suu Kyi after her landslide election in Myanmar and the reimposition of the military dictatorship, the restoration of an Islamic theocracy in Afghanistan after U.S. withdrawal, and the massacre at Tiananmen Square after communist China’s partial freeing of its economy encouraged young people to demand political freedom and respect for human rights.

Authoritarian societies encourage the powerful to treat those without power, especially the very poor, with contempt. The Arab Spring started when a poor vendor in authoritarian and poverty-stricken Tunisia set himself on fire because he had spent twenty-three years being robbed, beaten, and humiliated by the police, and finally he could not take it anymore. His mother later said, “When he set fire to himself it wasn’t about his scales being confiscated. It was about his dignity. Dignity before bread. Mohamed’s first concern was his dignity.”Footnote ⁵⁸

People in market societies tend to have a deeper sense of justice and concern for others because prosperity frees people from their own concerns to attend to others. Thus, we have numerous voluntary organizations to help lift people out of poverty or to treat the sick, both at home and abroad, including The Red Cross, Seva Foundation, Doctors Without Borders, and others. We also have numerous societies that fight for people’s rights, such as Amnesty International and Human Rights Watch. The Institute for Justice fights for the economic rights of small entrepreneurs against entry barriers created by state or city governments in cahoots with established businesses. There are also organizations to help innocent victims of criminal injustice, such as the Innocence Project, or to make the U.S. criminal justice system more “fair, effective, transparent and humane” through journalism, such as The Marshall Project.Footnote ⁵⁹ Those who work for these organizations have not only a sense of justice and concern for the unfortunate, but also courage and creativity to surmount the daily obstacles they encounter from their governments. This is a far cry from people in premodern times gathering in the public square to witness hangings or the burning of “witches” for sheer entertainment.

We cannot adduce experimental evidence on feudal societies, but we can get a good idea of their shortcomings from the Southern United States under slavery. As in feudal societies, so in the Southern United States, private productive property was not widely held, because a large share of the population was unfree. In the 1860 Census, more than half of the populations of South Carolina and Mississippi were enslaved, as were more than 40 percent in four other states, and 25 percent or more in five other states.Footnote ⁶⁰ Like serfs under feudalism, slaves were tied to their masters and could not look for work elsewhere. And as in feudalism, the relationship of the unfree worker to the master was one of complete servility. Indeed, serfs in feudal societies and slaves in the South were regarded more as natural resources than as human beings with rights. To top it all off, even though the slave-based economy was more productive from 1840 to 1860 than the Northern economy,Footnote ⁶¹ non-slaveholding free people in the South were poorer than their counterparts in the North. When Frederick Douglass first escaped to the North, he was surprised to find that “people looked more able, stronger, healthier, and happier than those of Maryland.”Footnote ⁶² Indeed, slavery made the country as a whole poorer.Footnote ⁶³

The chief victims of slavery were, of course, the slaves. But slavery also corrupted slave society morally and intellectually. Although there were only 393,967 slaveowners out of a free population of 8,289,782 in the slave states,Footnote ⁶⁴ nearly all white residents there supported slavery. The existence of a supposedly inferior people was a point of pride for much of the white population.

Slavery also fostered political repression. When the anti-slavery movement in the North gained ground, Southern states started censoring what southerners could read and write and what schools and colleges could teach.Footnote ⁶⁵ Just as slavery deprived the enslaved of intellectual and moral development and political freedom, it also deprived whites of intellectual and moral development and political freedom.

The laws in slave states thwarted the will of its more humane residents. Slaveowners who wanted to free their slaves or improve their lot by teaching them how to read and write were legally blocked. These laws were written and enforced by slave-owning lawmakers and judges themselves. Behind the laws and slave-catching patrols, slavery was protected by the self-deception, or at least ignorance, of slaveowners and other whites that they belonged to a superior race.

I have been arguing that we are morally better, not that we are as good as we can and ought to be. Our more-or-less liberal, more-or-less free market societies are not free of serious moral, political, or intellectual flaws. For example, although we do not hang people without trial or burn witches, the United States has a harsh criminal justice system with often faulty forensic methods, unjust trials, and overincarceration.Footnote ⁶⁶ On the brighter side, the United States has the Innocence Project and the Marshall Fund. Again, the United States does not have feudalism’s oppressive guild system, but many U.S. states have occupational licensing that denies freedom of entrepreneurship to many. On the brighter side, the United States has the Institute for Justice to fight for such freedom. In many Western and East Asian free market societies, governments behave like the monarchs of yore, by giving subsidies, grants, and exclusive privileges to their favorites. The fault here lies as much with businesses that lobby for these favors as with the politicians who support them. On the brighter side, many free market think tanks and economists argue against this practice, and we have several outstanding examples of successful businesses that eschew all government help: Whole Foods and BB&T Bank in our own time, and James J. Hill of the Great Northern Railroad and Cornelius Vanderbilt in the nineteenth century.Footnote ⁶⁷

It might be objected that this charge of injustice against businesspeople and politicians is itself unfair because it rests on a theory of political economy and ethics that, like most people, many entrepreneurs and politicians evidently do not share, namely, the theory that the state has no business picking winners and losers in the economy. However, an action or policy can be unjust even if the agents or much of society believe otherwise. After all, at one time conquest over other nations was considered a fine thing, and kings who established their dominion far and wide, such as Alexander of Macedon, bringing death and destruction to untold thousands, were called “Great.” So even if many businesses and politicians do not think that privileging some over others is wrong, the fact that government is supposed to be impartial shows that they are wrong and they can and should know that.

To put things in perspective, the vices I have just described are not limited to businesspeople and politicians. They can be found in different forms in all walks of life and in every kind of society. What differs from one type of society to another is the extent and degree of vice. All I have claimed is that freedom and prosperity have made us better than we used to be. No society can completely eliminate the flaws inherent in human nature, such as the distressing tendency to obey authority and even want to be ruled by an authoritarian,Footnote ⁶⁸ and worse, the distressing tendency to be authoritarian. Equally distressing is the tendency to be tribalistic, our sentiments presumably shaped by millennia of living in hunter-gatherer bands.Footnote ⁶⁹ Fortunately, just as no society can completely eliminate human flaws, no society, no matter how wicked, can completely eliminate the common tendency to lead a morally decent, even heroic, life in difficult circumstances, as the examples of Hong Kong’s Jimmy Lai, the Soviet Union’s Andrei Sakharov, Russia’s Andrei Navalny, and many others show.Footnote ⁷⁰

However, practically no one is a paragon of virtue. The phronimos , the practically wise and virtuous person of Aristotle’s ideal, may not exist. Indeed, even Aristotle can give only one example of such a person: Pericles. Smith is clear that no one can reach the moral ideal, although the “wise and virtuous man” aspires to reach it.Footnote ⁷¹ For this and other reasons, no one can attain perfect flourishing either.

Prosperity and freedom enable more intellectual virtue

I have argued that liberal, free market societies enable people to be more morally virtuous than other societies. They also enable them to be more intellectually virtuous. I define intellectual virtue here as the disposition to pursue knowledge in the right way and for the right end. In “the right way” means honestly and courageously, and for “the right end” means for one’s own good and/or the good of others, human or animal.Footnote ⁷² So, some moral virtue is built into my conception of intellectual virtue. However, a person can possess great intellectual virtue while lacking great moral virtue. An example is the Nobel prize-winning chemist Fritz Haber who, along with Carl Bosch, created the Haber–Bosch process for synthesizing ammonia for food production, thus benefiting nearly half the world’s population, but who also invented chemical warfare in World War I.Footnote ⁷³

Our curiosity about and pursuit of the truth about the cosmos, the earth and its animals and plants, the human body and brain, and health and illness has led to an exponential growth of knowledge about these things in the past 100 years. So has our knowledge of technology and our ability to build new kinds of machines and buildings. Our inventiveness and quest for knowledge, and the use of this inventiveness and knowledge to improve human or animal life, are among the most worthwhile activities and the greatest sources of happiness open to us. In short, the pursuit and use of this knowledge is a crucial part of human flourishing.

According to Aristotle, even more important than such pursuit and use is the pleasure of contemplating scientific and philosophical knowledge. Indeed, he thinks that this is the most important component of flourishing. Most of us would disagree that such pleasure is more important than the pleasure of discovery or invention or, for that matter, of love and friendship. But what matters for my purposes is that, contrary to Aristotle, who looks down on traders and craftspeople, a liberal, free market society enables more people than ever before to exercise contemplation or theōria . Or so I will try to show.

Aristotle argues, commonsensically enough, that for human beings to flourish, they must have enough material goods as well as friends and family in a well-governed polis of peaceful and cooperative individuals. More importantly, they must have moral virtue. But to have the pinnacle of flourishing, they must have the intellectual virtue of theōria , contemplation of philosophical and scientific truth. Theōria , he states, is “the most divine element in us,” “higher even than inquiry into the truth,” which gives us intellectual wisdom, or sophia. Footnote ⁷⁴ Theōria , according to Aristotle, offers the “purest” and most enduring pleasure.Footnote ⁷⁵ But what exactly is theōria?

As Terence H. Irwin explains, theōria is akin to attending to something or examining it attentively and seeing the answer.Footnote ⁷⁶ For example, knowledge of the Pythagorean theorem is part of sophia, but it is only when we contemplate it ( theōrein ), as we might contemplate someone’s face, that we exercise theōria . Contemplation is primarily an intellectual activity, but it contains the idea of a vision of something marvelous. Aristotle likens it to the experience of the divine that people are said to have had at festivals,Footnote ⁷⁷ and indeed, the traditional notion of theōria is a visual experience of the divine.Footnote ⁷⁸ For Aristotle, the focal object of theōria is something eternal, unchanging, and divine: the Unmoved Mover, which is the ultimate cause and explanation of the cosmic order.Footnote ⁷⁹ But this is not its only object.

The natural philosopher (scientist) takes pleasure in contemplating the organization of animal bodies, and the mathematician takes pleasure in contemplating the objects of mathematics. On this last point, we have several mathematicians’ testimonies that make the idea of theōria more intuitive. In “A Mathematician’s Apology,” Godfrey H. Hardy states that “[t]he mathematician’s patterns, like the painter’s or the poet’s must be beautiful; the ideas like the colours or the words, must fit together in a harmonious way. Beauty is the first test: there is no permanent place in the world for ugly mathematics.” He also says that the work of Pierre de Fermat, James Clerk Maxwell, and Albert Einstein “has permanent aesthetic value” and “is eternal because the best of it may, like the best literature, continue to cause intense emotional satisfaction to thousands of people after thousands of years.”Footnote ⁸⁰ Along the same lines, Bertrand Russell states in “The Study of Mathematics”: “Mathematics, rightly viewed, possesses not only truth, but supreme beauty—a beauty cold and austere … yet sublimely pure, and capable of stern perfection such as only the greatest art can show.”Footnote ⁸¹

Here, we have abstract knowledge concretized into an object of perception. It stands to reason that those who understand advanced mathematics, or the ultimate explanation of the cosmic order, or the organization of an animal’s body, even if they are not mathematicians, philosophers, or scientists, can also contemplate these objects and, as Aristotle notes, have the same “pleasures marvelous for their purity and their enduringness.”Footnote ⁸² Indeed, Matthew Walker makes a compelling case that Aristotle has the resources to admit that it is possible for people in many walks of life—medicine, art, sports—to lead a contemplative life if they make time for contemplation.Footnote ⁸³

Unfortunately, Aristotle denies that laborers, artisans, and tradesmen can lead such a life, or even a life of moral virtue, because their lives are “ignoble and inimical to excellence.”Footnote ⁸⁴ Even though most Athenian males were literate in his time, he claims that productive activities debase the bodies of laborers and the minds of tradesmen.Footnote ⁸⁵ Evidently, Aristotle never met a virtuous laborer or trader.Footnote ⁸⁶

In our time, however, we have a famous counterexample. Eric Hoffer, longshoreman and author of The True Believer and many more books and unpublished writings, exemplified both moral and intellectual virtue.Footnote ⁸⁷ There are undoubtedly many other such examples. Remarkably, the modern marketplace is now awash with inventions that make it possible for ordinary people, including laborers, artisans, and businesspeople, to study philosophy as well as science, mathematics, poetry, and other disciplines. Free podcasts made possible by twenty-eight universities in collaboration with Apple enable people to study these subjects while working with their hands or driving their trucks. When Baxter Wood, former stonecutter and now truck driver, discovered philosophy courses on Apple’s iTunes, he says he felt like he had “discovered the Fountain of Youth.”Footnote ⁸⁸

But we can go further. It is not just that the market has brought philosophy, science, and poetry within reach of people busy trying to earn a living. Thanks to the “productive” arts and sciences of technology and engineering, the market has exploded with innovations that are themselves worthy objects of contemplation. The very idea of the computer, cell phone, or tablet on which you can load hundreds of books is awe-inspiring. Steve Jobs’s creativity made them as beautiful as functional. Jobs insisted that the inside be as beautiful as the outside, even though no one would see the inside, except in the iMac with the translucent casing.Footnote ⁸⁹ One of Jobs’s dedicated fans writes about the iPad: “Calling it a piece of machinery is … like calling Michelangelo’s David a hunk of stone.”Footnote ⁹⁰

Science and technology are making one of the oldest dreams of humankind come true: flying to the moon. We do not have to wait for a magic carpet to do this; numerous businesses will soon make it a reality.Footnote ⁹¹ As I write this on February 22, 2024, the lunar lander Odysseus, launched by Intuitive Machines, has just landed on the moon. It is an awe-inspiring achievement worthy of contemplation.

To say that we can contemplate these marvels of scientific knowledge and technology sounds as though I am stretching Aristotle’s concept. But Aristotle himself stretches it when he talks about contemplating one’s virtuous friends and suggests that philosophers of human affairs can contemplate the nature of the good city.Footnote ⁹² In light of this, it seems legitimate to say that those who understand the workings of a beautiful piece of technology can contemplate its nature. The particular manifestations may change, but the idea is eternal. Similarly, it seems legitimate to say that those who understand the workings of the free market can contemplate the beauty of its spontaneous order and the price system that brings it about.