Ethics in the Free Market

In following the discussions on websites such as TechDirt and The Technology Liberation Front and even the Washington Post and the New York Times, I have been surprised at how many people seem to accept the premise that companies are entitled to do whatever they need to do in order to make a profit. If that means making misleading statements to the consumer, that is OK. After all, they assert, it is the consumers obligation to figure out if they are being defrauded.

I find the premise that a company can do whatever it wants to make a profit fundamentally flawed. After all, if a company can do whatever it wants to make a profit, can't the consumer also justify that he or she is not obligated to pay for products in order to save money? I doubt that any one of us would like to live in a state of anarchy. In theory, we live in a civilized society. That means that both the consumer and the company have to operate on some sort of level playing field.

Larry Kudlow recently had a very good discussion on ethics and the free market system. Larry is a major proponent of a minimally regulated free market. Recently, as a response to the bursting of our financial bubble, he has become increasingly more adamant on the need for ethical behavior. Here is the CNBC video clip: Market's Malaise. The video clip is 16 minutes long.

While the discussion is ostensibly on the obligation of Apple to disclose the state of Steve Jobs health, the discussion that is germane to this post begins just after the 12th minute. In the last few minutes Kudlow calls for our leaders to start being honest and referred to Adam Smith's "The Theory of Moral Sentiments". Larry's summary words: "Free market capitalism works with a moral and ethical center" (more or less accurate).