Chelsea Follett: Joining me today on the Human Progress podcast is Walker Wright, the manager of academic programs at the American Enterprise Institute and an adjunct faculty member at Brigham Young University, Idaho, where he teaches international business. Walker’s writing spans economics, politics, and religion, with academic work appearing in peer-reviewed journals such as Economic Affairs and many others. And he joins the podcast today to discuss his forthcoming book, ‘In Trade We Trust: How Commerce Makes Us More Social,’ which will be published by Bloomsbury Academic. How are you doing?
Walker Wright: I’m doing very well, Chelsea. Thanks for having me on. How are you?
Chelsea Follett: I’m doing all right. I’m excited for this conversation. This book has such an interesting concept, a thesis. What inspired you to write this book?
Walker Wright: So the origins of the book go back actually several years. Back in 2018, I published a paper in Economic Affairs, a very brief paper, kind of covering the same terrain, the same ground, but it was only 10 pages. I know I’d only scratched the surface. And the paper actually came out right before I was going back to grad school. And so when I went to do my second master’s, I ended up making this my master’s thesis, the focus of it. So I spent a couple of years researching that. I published another paper based on the same material a couple of years later. And it’s just stayed with me all of these years and I’ve wanted to delve into it more and more. But what ultimately inspired it was, and I can talk a little bit about this later, but for me, the economic arguments when it comes to markets have generally been won in the profession, but the moral argument hasn’t so much. And others have written on this, obviously Deirdre McCloskey, probably most famously, Jenny Choi and Virgil Storr, and various others. But even if people admit that markets lead to greater growth and prosperity and so forth, it’s usually like, “Okay, yeah, you win, but aren’t we losing our souls when we do all this type of stuff?” And we’re not. Just empirically speaking, we’re not. And I get the concern, I really do. And it’s a perfectly legitimate concern, but it’s something that people shouldn’t be concerned about, at least based on the data that we have so far. So I just wanted to get that out there and really show them how much data there actually is, because I don’t think people realize how robust it is. It’s because it’s scattered across so many different disciplines and so many different journals. And I think even scholars a lot of times don’t realize how much scholarship has been written on this. So I wanted to kind of synthesize it and make a robust argument for the moral characters of markets.
Chelsea Follett: So let’s walk through the book and all of the arguments that you make in it. The introduction is about how commercial society is also pro-social society. What do you mean by commercial society and by pro-social society? And how are those connected?
Walker Wright: Sure. So commercial society, I’m riffing off of Adam Smith. I quote from him quite a bit throughout the book, but also here in the introduction. And the way that he talks about commercial society is very much connected to his notion of division of labor. And so it’s really the interdependence of labor in the things that we do. He describes, and I’m paraphrasing obviously, but a commercial society is one in which most people are merchants of some sort, are middlemen of some sort, and how interconnected we are in these commercial endeavors. And so that’s what a commercial society is. And I try to use some other proxies for it on what exactly commerce is. We can talk about that here in a little bit. But that’s in gist what a commercial society is. And pro-social, I came to that term originally as I was writing it. I was thinking… I even used it earlier, the language of morality, that markets are moral. And I believe that, but when you talk about morality, you get, I mean, there’s different philosophical schools. It’s like, “Well, do you mean virtue ethics? Do you mean deontology? Do you mean utilitarianism?” What is really moral? And these are big metaphysical questions. And I didn’t want… One, that’s a different book, and two, I didn’t want people getting bogged down in that. And so what was I really getting at? I meant that we behave in a pro-social way. We have pro-social attitudes, pro-social behaviors in a variety of ways. And this connected with Adam Smith’s idea that we are these social creatures, that we have these sympathies. It goes back to Aristotelian notions of being a political animal, religious aspects of connection being an important way that we treat each other. And so I really wanted to get into this kind of, what kind of beings are we? We’re these social creatures, and markets are outgrowths of that. And they actually nurture this social aspect of our being and of our character. And it allows us to lean into those kind of better angels of our nature, rather than the more aggressive and more selfish tendencies. Even though those still exist, we’re steered away from those through these cooperative efforts known as markets.
Chelsea Follett: It’s so different from the narrative you usually hear. You then, in your first chapter, start discussing the building blocks of a commercial society before you really get into your arguments. What are those building blocks?
Walker Wright: So when it comes to this, these were the proxies I was talking about. It’s like, “Well, okay, sure, division of labor, sure, cooperative endeavors,” but what does that exactly look like? And so for me, as I go through, I think some of the best proxies are things like the Economic Freedom of the World Index that’s produced by the Fraser Institute. Or you have similar ones like the Index of Economic Freedom from the Heritage Foundation, used to be also with the Wall Street Journal, I believe. But these are great ways to kind of understand the building blocks. And just to use the Economic Freedom of the World Index, there’s five major categories in which they define economic freedom. So you have the size of government, so you’re looking at government spending, taxation, things like that. The security of private property rights and also the fairness of the legal system, the rule of law, basically. You want impartial judges, you want contract enforcement, things like that. How sound the currency is, how sound the money is, so inflation basically is what it’s looking at. Openness to trade, what are the trade barriers between countries, tariffs and so forth? And then finally, regulation, regulation on business, on credit, on labor. And there’s other things that could be used, but that’s a major one that I use throughout just because I think it’s so comprehensive and that we have a lot of good data on that. And so when it comes to understanding what commerce actually is, I think of it in terms of like, what are these structures that allow more market interactions to actually happen? When there’s fewer barriers to these interactions, you’re going to get more of them. So it’s a good way of kind of acting as a proxy for market interaction. But I also try to point out that a commercial society, a market society, can take various shapes and sizes. So those are five indicators, for example. But you might have a particular country that has a larger government but freer trade.
Walker Wright: And so these market societies, commercial societies can take different shapes and forms but still fall within the umbrella of a commercial society. And one of the things I like to talk about is Sweden’s not socialist. Often people will say, “Oh, the Nordic countries are great examples of socialism or central planning,” or some such nonsense. And that’s just not the case. You even had the Prime Minister from Denmark years back, I think it was now it’s like a decade ago, but where he came out and he’s like, “Look, I know there’s people using us as examples of socialism. We’re not socialism. We’re a market-oriented society.” And these are places that have, yes, they have large welfare states, yes, they have higher taxation perhaps than most, but their corporate taxes are usually pretty low. Their openness to trade is often higher than say the United States. And so, and regulations in different ways. Sweden doesn’t have a minimum wage, though their unions help bargain. So there’s different ways to go about this, but you still have this general sense of freedom when it comes to exchange, even if you might have a large welfare state. And so I try to point out that… I’m trying to anticipate people where they might say, “Oh, gotcha, you didn’t think about this country.” It’s like, I did. And these are some of the most economically free countries on the planet. And to look at them and say this is central planning or this isn’t a commercial society, it’s just not correct. But it should also help those who perhaps are a little uncomfortable with welfare states still see these countries as brothers and sisters in a sense of a kind of liberal economic project. And so it’s to kind of help people come together to understand that commercial society is a little bit broader than perhaps we might often think.
Chelsea Follett: I do feel the need, after hearing Heritage’s index cited, to also plug Cato’s Human Freedom Index, which covers both economic freedom and personal freedom. And so it’s more comprehensive, although obviously economic freedom is what’s relevant when you’re studying commercial society primarily. Which brings us to your next argument. So you’ve defined what a commercial society is. Then you say that commerce makes us rich. How does it do that?
Walker Wright: So yes, the point of this chapter was… I mentioned earlier that I think the economic arguments when it comes to markets has… It’s been won as far as I’m concerned. Like, there’s… Unfortunately, as I started writing all this, we’ve seen the popular turn against markets. But at least when it comes to the actual profession of economics, there’s not a real debate over should we have capitalism or socialism. Capitalism won. It just did. And you can look at any economic textbook from anyone on the political spectrum. If you’ve got like Paul Krugman on the left or Tyler Cowen, he’s not on the right, but more libertarian aspect of it, they’re still taking an overarching market framework for granted. They’re looking at it and saying… Like, no one’s sitting there going, “You know what? We really need to nationalize the means of production.” It’s still private property. It’s still, yeah, markets better allocate resources in general. Some might focus more on market failures than others, and others might focus on government failure more than others, but it’s still a market framework. And I don’t think a lot of people realize that. At the popular level, we still act like it’s the mid-20th century and we’re fighting over communism versus capitalism.
Walker Wright: The profession is very much market-oriented in many ways. I cite a relatively new survey results on surveys of economists. Take free trade, for example. It’s like 95% of economists are like, “Yeah, free trade leads to greater economic growth.” This isn’t a thing that’s really disputed, and I wanted people to understand this. But the ways that this works, why it does what it does, and there’s a variety of ways on this, it’s not so much an Econ 101 lesson, but I do point out things like private property. That’s the defining core tenet of a capitalist society. It’s the private ownership of the means of production. Well, why is that important? Well, when people can expect to have their actual property, when they’re not scared that the state’s gonna come in and take it from them, they’re able to invest, they’re able to take risks, they take care of their property. And that allows for a kind of growth in wealth from the use of private property. But also when people exchange, innovation takes place, comparative advantage takes place. A good way of putting it is private property, if you want to build wealth, you still have to take into consideration the needs and wants of other people. And so you seek ways to serve others, and that becomes not only a pursuit of service, but a pursuit of profit so that you can also benefit. And so through these systems of protecting private property, of exchanging, of innovating, and so forth, you begin to create wealth. And this wealth is not concentrated at the top like a lot of people say. Yes, people get rich, there are Jeff Bezoses, but what you see is a rising tide. People will say that, “Oh no, that doesn’t happen. A rising tide doesn’t actually lift all boats.” Except that it does. We have a robust literature showing that economic growth leads to people being lifted out of poverty.
Walker Wright: You see those at the lower ends of the income brackets also making gains along with the rich. There might be uneven gains at times, but everyone is being lifted up. And the two best examples that I go to, Lant Pritchett, who’s a very famous development economist, he had a great working paper several years ago where he said that the two major things that lead to the decline in poverty or lift people out of poverty is economic growth and migration. So, basically being able to move where there’s a more productive economy. And so creating economic growth, if you want to permanently lift people out of poverty, you need these structures that allow for growth to actually happen. And what the Fraser Institute has also shown, they show this in basically every report that they do each year, is they’ll look at, say, income inequality, and they’ll look at free countries to non-free countries. And basically the share of the poorest 10% in virtually all countries is more or less the same. It’s 2 to 3%. In other words, the share doesn’t really change. The inequality is about the same. But when you look at the actual take-home income of the poorest 10%, you’re looking at a drastic difference between the freest countries and the least free countries, something like, I believe it’s like eight times or something of that of those in the least free countries. And so this matters, if you care about poverty, you should care about economic growth and economic freedom, and these kinds of institutional structures allow for that. And so I really just wanted to put it in there and say, “Look, I’m not gonna touch on this anymore. As far as I’m concerned, the arguments have been settled. Go read an Econ textbook. I’m gonna move on to something else, but I felt like I really had to touch on it.”
Chelsea Follett: It’s incredible that even though there is such a consensus on this point among scholars, you do have, among people generally, you have so much infatuation still with the opposite idea, this idea that commercial society is bad. And you see it on both, well, the left with people like Mamdani and the right with this rising tide of populist economics. It’s almost like all of this evidence that we have on the economic outcomes is not enough to convince people, which is why I think additional arguments like the ones that you make in this book are so important. So let’s get into those. Are commercial societies more trusting and trustworthy?
Walker Wright: Yes. So trust has been… There’s a very robust literature on trust and its relationship to things like economic growth. And this takes a couple different avenues. And the two main ones that I look at is there’s kind of survey-based studies and then there’s experimental studies, things that are done in the laboratory or perhaps you have more of a natural experiment that takes place. And what you find with the survey-based studies is various surveys go out and they ask people, “How can you trust strangers? How trusting are you of other people?” And the surveys take different forms. But what you generally find is that in more economically free countries, people are more trusting of strangers, of people who are different from them. And there’s a really interesting way that this has been done. Jenny Choi and Virgil Storr, who I mentioned earlier at the Mercatus Center, have some interesting data on this where they look at social distance. What they mean by that is we have close friends, we have families, and generally those are people that everyone trusts. We all have family dynamics, so maybe you don’t trust your family as much, but in general, it’s those closest to you you trust more. This is very natural. We all do it. And then you kind of move out a little bit. It’s like, well, what about your neighbors, the people next door, or the people you work with, or the people you go to church with, or whatever? People in your neighborhood, not necessarily your neighbor, but in your community writ large, if you will. But then it just kind of goes out and out and out until they’re just total strangers. And this is what they mean by social distance.
Walker Wright: Now, in all societies, whether it’s market-oriented or not, you see this change for everyone. The family or whatever, most trusted; strangers, not trusted as much. But that decline in trust is a lot slower in market societies. In other words, those in market-oriented societies, those in economically free countries, tend to trust strangers far more than those who are in non-market societies. And you find this in a variety of different ways popping up in the survey results. In general, you just see this strong correlation, and some have argued that there’s a causal aspect of it because you see when countries make market reforms even, that the trust starts to go up. And so it’s still hard to figure out which… Chicken-and-egg situation, which one comes first. But to me, that’s not super important because to me, it’s just a virtuous cycle. You need trust for markets to operate. Markets solidify that trust, and they just kind of build off of each other. Now, there has been some criticism of the survey-based material. In fact, Alex Nowrasteh at the Cato Institute has written a great paper about this, kind of taking it to task. He mentions it… He talks about it a little bit in his book with Ben Powell as well. But basically, one of the criticisms he makes, which I think is awesome, is people are actually in practice far more trusting than they put down, perhaps in a survey. So behaviorally, they’ll end up actually being far more trusting than they might say they are, which I think is really interesting. And you find that actually popping up in experiments as well, various lab experiments.
Walker Wright: And what has been argued by some of those that have done these laboratory experiments is that markets train us on who to trust and also train us to be trustworthy. In general, what you find in a lot of these different studies and these different experiments is that if you allow people to be able to cheat or do something similar, that… And this almost seems obvious, but it’s always nice to have data. But when someone cheats you, you’re kind of like, “I don’t really want to deal with them anymore.” You don’t treat them well, you don’t send them the tokens that you might have in the experiment, and you might end up actually treating strangers better than those who have cheated you before. And so what this does, though, is it helps you realize the kinds of behaviors that are acceptable in these types of things. And markets run on reputations. And so this idea that, “Well, I can just cheat my way to the top,” you might be successful for a little bit, you might make some profit here and there cheating people, but eventually it catches up to you. Reputation matters, and people don’t want to deal with people who cheat them out of their money. You find this in the lab and you find this in real life. And so yeah, a market society is one that is built on trust and continually builds trust. It doesn’t just require social capital, it produces it.
Chelsea Follett: Incredible. So there’s a bunch of evidence that commercial societies may be more trusting, more trustworthy. But that’s not all. You also say that commercial societies are more honest. Tell me about that.
Walker Wright: Yes. So a lot of these types of virtues, behaviors, attitudes, there’s a lot of overlap between them. Trust and honesty go together and whatnot, but I tried to separate them as much as possible based on the kind of literature that we had. But when it comes to honesty, what I used as a proxy is corruption is a really good example of this. Rent-seeking of a sort, basically bribes at the top or rigging the game in some sense, which is a huge thing that we hear today, that the system is rigged against you, against the ordinary person, it’s in favor of the rich or the connected or whatnot. And so it’s worth exploring to whether or not a capitalist society, a market society, is it true? Is it far more corrupt? Does it run on corruption? Market competition, for example, well, isn’t that very cutthroat? So you’re gonna cut corners and cheat people out of their money and so forth. But generally what you find is that when it comes to economic freedom and market societies, using these different corruption perception index, for example, which basically looks at the opinions of government people, of business people and so forth, and their perception of corruption, you find that those levels of corruption are far lower in economically free countries compared to those that are not. You also see bribes go down in these countries. You see fewer black markets in these countries.
Walker Wright: But this isn’t just a top-level type thing. This isn’t just at… Perhaps you see less corruption in politics, if you will. This trickles down into the culture as well as to how ordinary people behave. There’s a really interesting experiment that was done where it looked at people in Germany where they took them and played a kind of dice-rolling game or whatnot with them. And they compared East Germans and West Germans and basically looked at how long some had lived under communism. And they found that the longer exposure to communism, there was a greater tendency to cheat compared to those who had not. And you find this in general also as countries make transitions from being a communist country into market-oriented society, you see corruption start to go down, you see trust start to go up and so forth. There might be some growing pains because in general what communism and other corrupt centralized economies do is they actually kind of require people to work around the system in order to get the things that they need. This isn’t… Generally, it’s not really a… It’s not because people are deficient per se. It’s just that these are the incentives that they’re facing. One North Korean defector described North Korea as a bribe-dependent economy. And it’s like that’s what they had to do to get by. And that’s often what you find. But that carries over. And when you’re trained to have to bribe and lie and go around things, well, then you tend to just act dishonestly in many ways. This is why you also find in various surveys that more justification for dishonest behavior like not paying the public fare for transport or whatnot, where people will justify it far more in non-market societies versus market societies. And so it goes along with the trust aspect of in order to create value for others and in order to be successful in a market society, you have to be honest with people. The lies catch up with you in a sense. And doing that in business and doing that in our transactions teaches us to do that on a regular basis with normal people. And so the trust and the honesty aspect go hand in hand. If it was a dishonest society, the trust would be low as well. But that’s how commerce trains us to be more honest in general.
Chelsea Follett: Now all of these virtues that you describe of commercial societies are of course related. How trusting they are, how trustworthy they are, how honest they are. But you also devote a chapter to how people in commercial societies are more fair. So tell me about that.
Walker Wright: Sure. So fairness, another word that could be used as well. So there’s fairness, you could think of it as impartiality, you could think of it as a term that’s used as universalism. You treat people universally the same. And I also throw in there that there’s a bit of generosity as well when it comes to that. Now how does this manifest? Well, a big institutional way that people often think of fairness is democracies. They’ll say democratic government is fair, everyone gets a vote and so forth, they have personal rights and all of that. And some have argued that capitalism or markets tend to undermine democracies. It undermines the fair systems. But this also isn’t the case. In fact, there was just a recent study by Alex Tabarrok and Vincent Geloso that just came out where they found this interdependence between democracies and economic freedom. And this is generally what you find. And in fact, some economists have even argued that, a, they use the term contract-intensive economy, but basically a market-oriented society is foundational to these kind of democratic norms. And you do find this, that as economic freedom goes down, democracy tends to decline. But also economic freedom in a number of studies tends to have a much stronger effect on personal rights, on human rights and so forth, meaning that you could have, say, a democratic society or democratic government, but if the economic freedom is low, the likelihood that you’re gonna have the kind of personal freedoms and rights mentioned in, like, the Human Development Index, you’re probably not gonna have those, or they’re not gonna be as robust.
Walker Wright: So economic freedom tends to lay the foundation for these political institutions that also protect rights and also give other kinds of freedoms. So they go hand in hand. They’re not a substitute for one another. But this also, like, like the honesty, like the trust, it also trickles down into the way that we just treat people on a regular basis. Remember, there’s one study, I believe it’s in Greenland. I could be misremembering, but I believe it was in Greenland, where they looked at different villagers and they had them do a kind of experiment to where you had the option to cheat someone in the experiment or you could choose not to, and kind of one of those public fund experiments. But basically they found that those who had more market contact treated all the participants the same. Like, there wasn’t really any distinction between the different participants. They treated everyone the same. Those who had less market contact, they treated their fellow villagers differently than those outside of their village. In other words, they’re more willing to cheat the non-villagers than their villagers. But there’s more impartiality among those with greater market contact. You also see this in some of the work of Joseph Henrich and others where they’ve gone to, like, agrarian societies, like hunter-gatherer societies, and played things like the ultimatum game, where that basically in a nutshell is you have a giver and a receiver. The giver can choose to split a particular sum. They could split it 50/50, they might split it 99 to 1. And if the receiver says, “Yeah, I’ll take that,” then you both go home with it. But if the receiver says, “No, I don’t want that. That’s unfair,” then nobody gets it. And what they found is those with more market contact left more on the table in these games.
Walker Wright: And the arguments that were made… The explanations for it at least, were this market contact allows you to see others as beneficial. It makes you treat people better. You also see others as non-threatening, as opportunities, as people worth valuing, whereas a lot of the times it’s opportunistic when you don’t have these market contact. You see outsiders as outsiders and someone to be exploited. But it’s also… So there’s the giver aspect, but even on the receiving end, those with less market societies, those living in non-market societies were more willing to take unfair splits. They’re just kind of like, “Well, that’s the hand I was dealt.” And so even as a receiver, it creates this sense of, like, “That’s not fair.” There’s a greater sense of fairness and a greater sense of proportionality that should be happening. It just changes our mindset in this way. And so this impartiality is very interesting because this leads into some of these other, maybe the next thing on tolerance and so forth. But the idea of treating everyone the same is an important aspect of a liberal society, of a free society. And economic freedom teaches us to do that. You have to be impartial towards your customers. You have to be impartial towards these people if you want to be successful. You can’t just be playing favorites all the time.
Chelsea Follett: Fascinating. So basically it reduces your bias in favor of your in-group and against your out-group, which does bring us to some of your subsequent points. Let’s talk about the state of gender relations in commercial society. Is it true, as you write, that there are fewer battles of the sexes in a commercial society?
Walker Wright: Yes. So I wanted to highlight this one in particular as a really big example of the fairness aspect, and mainly because gender and sex is probably one of the biggest distinguishers of us as people. But the thing is, those of the opposite sex are still considered part of the in-group. It’s not as if it’s a men and women, it’s an only men group and an only women group. Like, no, we’re still part of the same in-group, yet we’re biologically very different. And yet you have these distinct ways in which the sexes have been treated even within the in-group, largely because of reproduction and the way that that works and so forth. One number of scholars pointed out that there’s a reason that countries are often represented as a personified woman, because women are the ones who continue to produce the in-group in a sense. That’s why they’re done that way. But it becomes this thing of where, “Oh, so we have to protect the women.” And a lot of the times that protection, which may be well-intended, sometimes not, ends up being a kind of control. Which is unfortunate, that’s where it backfires, where it’s like, “Oh, well, the husband has to give the permission,” or, “The father has to give the permission,” or so forth. And so you see this kind of patriarchal structure throughout virtually most of human history and in many ways throughout the world today.
Walker Wright: And so I wanted to look at that aspect of how, even within an in-group, does fairness increase amongst its members of the opposite sex? And you do find this. And the reason this is is because economic freedom loosens the kind of hold that men typically would have on their household economies. Generally, children and women could be in some sense thought of as property because they’re assets to the household economy, cogs in the machine, that type of deal. I don’t want to say that that’s how necessarily everyone… Men, that’s the only way that they thought of people, but legally and so forth, that’s how they were seen. Once you start to place more economic activity outside of the home, when it’s no longer, “Oh, it’s me and my farm and the kids and the wife and I are farming,” but, “I’m going to the factory,” well, that makes things different. Women can go outside the home to earn their own money. Children at times were going outside the home to earn money for that. And what that does is it disrupts the control that men would often have over all the property. Women begin to be able to bring in their own income. It provides a door for which them to be able to escape, if necessary, a bad situation, a bad marriage. A lot of the times women, because they didn’t have any legal standing or didn’t have legal control over their own property or money or whatnot, they stick around because where are they gonna go?
Walker Wright: But when you make it possible for them to have property rights, when you make it possible for them to go earn their own income and so forth, then that changes the dynamic quite a bit. And you see this increase in economic freedom, you see a kind of equalization across the genders in a variety of ways. You see it with income, you see it with literacy, you see it with education. There’s delay in childbearing, and I don’t mean that necessarily in the kind of, “Oh, the fertility rates are dropping” type way. I mean this more in the sense of they’re not getting married at like 15. They’re being able to get married at a later date, like 21 or whatever in many of these countries, and have children at that time rather than being teen brides and teen mothers. And it just provides a lot more opportunities for them. It also puts them in the public square far more. They’re not confined to the household anymore. And when they are seen in the public square being competent, making decisions, things like that, that changes the perspective that people have, even perhaps subconsciously. And this is what you begin to see. You see as economic freedom goes up, you see it correlated with greater rights for women, economic rights, political rights, social rights. And this is true even, this is kind of a controversial thing, but you think about sweatshops. That’s often a thing that people want to shut down in other countries. It exploits children, it exploits women. Well, in many of these cases, sweatshops are the ways that women are starting to gain greater rights and greater economic independence in their home countries. You’ll see examples of where a garment factory, for example, in like, say, Bangladesh, and there’s a study on this, when it opens up, you see greater rights for women. The rights for women begin to increase as these shops pop up. And so to me, that’s a great example of fairness in practice, especially for those even just within the in-group. Economic freedom matters. If you care about women’s rights, you should care about economic freedom as well.
Chelsea Follett: Which brings us to these other forms of tolerance that you also discuss. So women are treated better in a commercial society. What about more broadly? Are people more tolerant generally in a commercial society?
Walker Wright: Yeah, that’s another thing. We’ve talked about kind of impartiality. Like I said, a lot of overlap between these things. But I start off this particular chapter with two examples just because I think they’re great. One is a story from the documentary The Last Dance with Michael Jordan. And Michael Jordan got into some hot water, I think in like 1990 or whenever it was, when there was a senate race. And the incumbent had a history of racism, and there was the chance that his competitor would be, I believe, the first African-American senator in North Carolina. And there was a big push for him to use his position as Michael Jordan of the Chicago Bulls to promote this. And he was kind of like, “No, I’m good.” He sent… I think he sent a campaign contribution because his mom liked the guy, but he was like, “No, I’m not getting involved in that.” And some people asked him later, “Well, how come? Why don’t you want to do that?” And apparently he said, which I think is hilarious, “Well, Republicans buy sneakers, too.” Which a lot of people were just like, “Wow, you’re choosing your own wealth over justice,” and so forth. But he says in the documentary that… He’s like, “I never thought of myself as a politician or an activist.” He’s like, “I’m a basketball player.” And in a sense, he wanted that experience to be the same for everybody. He wasn’t there to be a politician. He just wanted to dunk and wanted everyone to enjoy it, whether they’re Democrats or Republicans or whatever. And that’s just an anecdote, but I use that as a way to open. And then I also use the example of Jackie Robinson, where Branch Rickey, the owner of the Dodgers at the time, he pretty much was just like, “Well, I think we can make more money by bringing in Black talent.” And that was kind of the goal. There were some other moral aspects going on with him as well, but that was a big driver. He wanted to make money, and he was successful at it. And you find that these more competitive leagues were more likely to integrate than those who were less competitive.
Walker Wright: And those are, once again, two anecdotes, but I think they lay the ground of kind of… Well, why would commerce lead to more tolerance? Well, when you cut yourself off from a whole subset of the population because of their race, because of their ethnicity, because of their religion or whatever, you don’t want to do business with them, you’re gonna miss out. You’re gonna miss out on customers, you’re gonna miss out on talent. There’s a whole host of things. You’re gonna be less productive. Discrimination, this goes back to Gary Becker’s work on this. Discrimination has costs. And some might decide that it’s worth the cost, but generally it’s gonna hit you in your pocketbook at some point. And so you do see that as economic freedom goes up, tolerance goes up, and tolerance in a variety of ways. Racial tolerance goes up, tolerance towards homosexuals goes up, but tolerance towards groups or ideas that you may not like. Tolerance towards atheists has gone up. In a very religious country, that matters. Tolerance towards even communists goes up where you’re not gonna shout them down, per se, even though that might be an unpopular position, and so forth.
Walker Wright: So these different ideas, ethnicities, religions, races, it becomes… People are far more willing to be neighbors with them. That’s one thing that shows up in the surveys. They’re totally fine with that, versus those in non-market societies where that… Their discrimination is kind of fed, in a sense. It’s less costly to be discriminatory in a non-market society. And you find this in different ways, too. Antisemitism is a particularly potent kind of prejudice. That has a somewhat mixed relationship with economic freedom. Some aspects of it, like open trade, for example, tends to somewhat increase antisemitism. I was a little taken back by that, and I think the authors were as well. But other aspects of economic freedom, such as rule of law, property rights, and so forth, tends to decrease it. And part of the reason that you see this kind of weird relationship between antisemitism and economic freedom is because of the weird relationship that Judaism and Jews in particular have had with… Historically, they’ve been connected to capitalism, to merchants, to things like that in a really gross and racist way, which is why you often see antisemitism in non-market societies, but also kind of anti-capitalist regions of a country, kind of go hand in hand ’cause there’s usually this sense of… Marx put it this way, he basically saw capitalism as the judaizing of the nations, that Jewishness was being spread. Really gross stuff. But you also see this even with… In Nazi Germany, this is that’s probably the greatest example of where you see the Aryanization of businesses and so forth that was being used to dehumanize and further disenfranchise Jews within Germany.
Walker Wright: And so in general, while there’s a little bit of a mixed thing with that, overall you still find the relationship between economic freedom and antisemitism is a negative one. Antisemitism tends to go down with greater economic freedom. But then if you go over to other parts of the world, for example in India, you’re seeing the caste system start to kind of decline since the market reforms in the 1990s. People are more willing to do things with Dalits who were considered untouchables at one point. Dalits are starting to say that they don’t feel as discriminated against compared to pre-reform days and so forth. So you just see this overall kind of rise in tolerance with the rise of a market society and with the rise of economic freedom.
Chelsea Follett: Now, when you claim that commercial societies are more moral or less racist, invariably someone is going to, of course, respond that in the history of capitalism, there was a long period of time when human beings could be bought and sold, in the case of the United States, based on race, right? And you anticipate this criticism. You have an entire chapter on what about slavery. So tell me, what about slavery?
Walker Wright: Yes. So, and it’s a totally legitimate concern. I mean, it was the slave trade. So it’s just kind of like, well, they were trading slaves, so obviously this fits with the capitalist system. I try to point out that people like Adam Smith made both moral and economic arguments against slavery, basically just from an economic standpoint, argued that slavery was comparatively inefficient to free labor, in a sense. And what I try to point out is beyond the moral arguments against slavery, if you take the notion of like, well, what is slavery? It is probably the most restrictive form of labor market regulation there is. You’re depriving a subset of the population, a subset of human capital, all of the rights that other people have. You are restricting them to a certain plot of land or to a certain task. You’re saying you can’t go anywhere else. They can’t go and use their talents anywhere else. And so this becomes less productive overall over time. And there’s a variety of studies that have shown this, that where you have slavery or where you used to have slavery even, that those areas tend to lag behind those that either got rid of it quicker or used a more free labor system and so forth. The North and the South is a good example. You see differences even today. But when it comes to the idea of like, but it was still a trade, so how can you argue that capitalism or markets actually make us more moral and more tolerant towards people? I think it’s important to point out that slavery was also a political institution, meaning that… It’s a political economy, meaning that it was heavily regulated by the government. The government is taking away the rights of these people. The government is saying, “Oh, you can do this,” and propping up this kind of institution.
Walker Wright: Phil Magness in particular has pointed out that this was a heavily subsidized kind of mercantilist system that was going on in the United States. And a lot of the times people will point to the South and say, “Oh, they were small government, states’ rights people,” but they had no problem wielding the federal power for the Fugitive Slave Act. Part of the reasons that some of the seceding states, the reasons they gave, one of them was the failure of the government to really enforce the Fugitive Slave Act. Many of them saw the election of Lincoln as, “Oh, we’re no longer gonna have the privileges that we’ve had,” basically the rent-seeking privileges that we’ve had of where the government’s gonna help us enforce these things and the government and therefore the taxpayer is gonna bear the costs of this institution. In other words, it wasn’t very competitive. It was very much propped up by the government, which I think is important to realize. It’s not like it was just a free market of labor or whatnot that slavery is competing with. It was very much propped up and subsidized by the government.
Walker Wright: And I use a few different examples from history. Frederick Douglass makes a point when he was enslaved that one of his first owners, he describes her as being incredibly kind and nice when he first came under her ownership, in a sense. She’d never owned a slave before and he just had nothing but great things to say about her, but that over time she just became worse and worse and treated him worse and worse. He said the husband was always bad, but that she basically became worse over time. But recognizing that slavery was propped up by the government is one aspect. But you also look at the pro-slavery advocates, people like George Fitzhugh, people like Thomas Carlyle and others, where they themselves recognize that the commercial society of Adam Smith is antithetical to a slave society. They see laissez-faire as undermining a slave society, as being completely antagonistic to it. And in fact, people like Fitzhugh name Smith and they said that, “Oh yeah, Smith and Ricardo and Say, all that stuff should be thrown into the fire,” because for them it was just… They knew that it was an emancipatory project and they hated it. They didn’t like that.
Walker Wright: And you even see this within newspapers of the time right before the Civil War when Lincoln was trying to do these kind of gradual emancipation legislation, going to the border states and saying, “Hey, well, we don’t have to release them all, but we’ll do this gradually. We’ll pay…” Trying to find a way to avoid the war. Various newspapers were like, “Oh, this is just trying to put Blacks on equal standing.” There is a recognition that if this wasn’t enforced, that equality was going to emerge. They understood that implication, and that is why they didn’t like it, or at least it was one of the reasons they didn’t like it. And I think that recognition matters, this idea that, well, if you don’t have slavery, if you don’t enforce slavery, if you let people have a free labor market and you have these rights and so forth, that people might end up treating them the same as anyone else. Well, that matters because they’re absolutely right. And this is why after the Civil War, when you ran into Reconstruction, why you had so many states still trying to keep blacks in their place. You had the Black Codes throughout various Southern states that, just ridiculous things of labor restrictions, ridiculous contract enforcements where they had to sign really long contracts and they couldn’t go and look for another job. They could be fined. People who helped them could be fined. Vagabond laws where it’s like, “Oh, you don’t have a home. Well, then you’re gonna be arrested.” Just all sorts of things that were targeted at newly freed blacks. And it was a way to try to keep their status down.
Walker Wright: And this eventually evolved into the Jim Crow laws as well, where… The point is all of these are government enforcements. Robert Higgs has pointed out that competition in the market, Blacks became competitive in the market, their incomes began to grow and so forth. But if personal prejudice had been enough, people just wouldn’t have dealt with them. They just wouldn’t have paid them. They wouldn’t have wanted them to be customers or work with them. But the fact that people were like, “Okay, yeah, sure, I’ll hire you. Okay, fine, we’ll deal with you. We’ll sell you this, that, or the other,” that others started to step in and say, “We don’t like that. We want to legislate that you can’t do these things.” And so it was always a constant intervention into the market that would disrupt the competitiveness of newly freed Blacks. And this kind of history, I think, matters. Does it explain everything? I mean, of course there are still personal prejudices and whatnot, but I don’t think people realize just how much the government was intervening into the market and making these arbitrary legislations that made Blacks less competitive and basically made it less costly to be discriminatory towards them. And you find this in all epochs, from slavery to Reconstruction to Jim Crow, until we really get up to the civil rights movement and even some of the things that are still on the books today that many are trying to get off the books, that might undermine competitiveness and so forth and might be unfairly targeting. But I think that’s important to understand because if you think of it as being a free market when it wasn’t, then you’re gonna misinterpret and you’re gonna come up with something like the 1619 Project where you say, “Oh, this was the engine… Slavery was the engine behind America’s economic growth,” and it just wasn’t. And it wasn’t a free market. It was a heavily subsidized institution and government-enforced institution. And that’s something that people should remember when they think about the history of Blacks in the United States.
Chelsea Follett: Obviously, history of slavery is very much intertwined with violence. But moving on to another form of violence, do commercial societies fight other countries less? And do commercial societies also, as you say, fight themselves less?
Walker Wright: Yes. So, in fact, there’s the Fraser Institute’s most recent annual report on Economic Freedom of the World. I have a chapter in there where I talk about both of these things, where I kind of go through some of this literature. But yeah, in general, what we find is international trade tends to lead to fewer wars… Fewer international wars, so between-country wars. But it also reduces the chance of internal conflict, of civil conflict. And the logic behind this is pretty straightforward. It’s just if your customers are in another country or your supply chain runs through another country, bombing it into oblivion is probably not the best thing. When a country produces goods and services that you like and you have trade agreements with them, well, in a sense they become partners of some sort. They eventually kind of become friends, and you’re less likely to fight your friends.
Walker Wright: And so, lower tariffs tend to mean fewer wars. This goes back to something that Bastiat said. He’s usually somewhat misquoted as, “If goods don’t cross borders, then troops will.” He said something similar to that, but he basically said that trade barriers create isolation, and isolation leads to hatred, and hatred leads to war. It’s very Yoda-like, fear leads to anger, anger leads to hate, hate leads to suffering. It’s a very similar thing with trade barriers, eventually leading to full-scale war. But you also see it not just with civil wars, but even things like coups. You’re less likely to experience coups in societies that are more market-oriented, that have more open trade. And you’re also less likely to see ethnic and religious conflicts as well. There’s a really interesting study that looked at, I believe it was South Asia, between Muslims and Hindus, where they looked at different ports and how open they had been to trade over the centuries. And they just found that it was significant… In those ports that had far more open trade, they had significantly reduced religious conflicts and really conflicts of any kind. But this is a very robust literature. And there tends to be two… Particularly in international relations scholarship, there tends to be two major ways of thinking about this. Usually there’s something called the democratic peace, which is basically democracies are less likely to fight one another. And then there’s something that’s been growing over the last couple of decades, which is the capitalist peace, which is capitalist countries and trading countries are less likely to fight one another. And it seems to be that over time, the way the literature is going, it seems like the capitalist peace is starting to take over. I think some might dispute that, but that literature has grown very robust over the last couple of decades. At the very, very least, and we shouldn’t think of these things as competing, but at the very, very least, the liberal peace, as it’s sometimes called, includes economic interdependence. That is a core tenet of it, which I think is great because we should think of economic liberalism as part of the broader project of liberalism along with something like democracy. But yeah, you’re less likely to find all types of those wars, both between countries and within countries, less likely to happen when you have more trade and more economic freedom.
Chelsea Follett: You also claim that fewer citizens are killed in commercial societies. Tell me about that.
Walker Wright: Yes. So the other form of violence that I talk about is twofold. And one is what could basically be called government-on-citizen violence, genocide of some sort. You find that centralized economies, less economically free countries, are far more likely to kill their own citizens, to violate their human rights, to kill, to disappear, to torture, to do all those types of things. In general… I remember there’s a study, I might be butchering the title, but I believe it was like “Lessons Learned from the Holocaust” or “Are There Any Lessons Learned from the Holocaust?” And one of the things that they found is that the more a country is open to trade, the less likely you are to experience something like a Holocaust, something like a government-led genocide. And for me, this is important. People often will talk about like, “Oh, the government’s coming after us and we gotta make a militia” or something like that, and that’s why the Second Amendment is so important and so forth. And that may all be true, but it’s one of those things where I’m like, we have policies that can really restrain the government, and one of those things is economic freedom.
Walker Wright: When you don’t centralize all the power, when you don’t centralize all the means of getting all the resources and whatnot, it’s a lot harder to go after your citizens, to have the means to be able to do that. Yeah, so centralized economies, you just centralize the power, you make it easier for people to attack their own citizens, and you just find less of that in economically free countries. But even when it comes to citizen-on-citizen violence, not just government-on-citizen violence, but citizen-on-citizen violence, you find that violent crimes, all things being equal, of course. People will point to the United States and other Western countries and so forth, we’re talking all things being equal, you do find a relationship between economic freedom and homicides and violent crimes. And the more economic freedom, you tend to see homicides go down, violent crimes tend to go down. And one interesting aspect of this, and one thing that I try to cover in it, is I mentioned before with the honesty aspect that more government regulations in the economy, more restriction of the economy, tends to create more black markets. So black markets, though, as we well know, tend to be very violent. Not always, but think of, say, the drug market, drug cartels, and so forth. And it’s like, why are they so violent? Well, one of the reasons at least is there’s no protection of property rights because those things are illegal. And so when you have to protect your own property and enforce your own property, well, you’re gonna do that in a way that tends to be rather violent. You don’t have a third party protecting your property of cocaine or whatever it is.
Walker Wright: And so you end up having to build up your own little armies, you end up having to take on competition in these very violent means. And so these kinds of regulations, when you push these markets underground, well, they tend to get violent as a means of protecting their property. Now, does that answer the question about how, say, drugs should be regulated or not? Not necessarily, but it’s something to keep in mind that as you push things underground, well, you no longer have the third-party enforcement. And this is something that Steven Pinker pointed out in his book on violence, where one aspect that has led to the decline in violence is the kind of outsourcing that contract enforcement to a third party, to a court system, to the rule of law, which is one of the tenets of economic freedom. Black markets, they don’t have that. And so when you create black markets through regulations, you can expect probably a spike in violence within those markets as well. And so when we think about all these different forms of violence, from international wars to civil wars to government genocides and homicides and violent crime, economic freedom touches all aspects of these. And in all cases, you find a decline in all these various forms of violence when there’s greater economic freedom. You might occasionally have a couple mixed results here and there, but the overwhelming evidence is that all of these decline as economic freedom goes up.
Chelsea Follett: This is all just so fascinating, and it is an uplifting story that one doesn’t usually hear about market economies or commercial societies, as you call them. Do you have any concluding thoughts?
Walker Wright: So yeah, as you said, this is… To me, it’s an uplifting thing. It’s a story that doesn’t get told very often, and it’s often disputed. There’s a lot of emotion behind the way people feel about these things. I can almost hear the guffaws now for anyone who might be listening, they’re just like, “Yeah, that’s ridiculous.” But it is just so robustly demonstrated in the empirical literature. And to me, that’s incredible to think that we have ways of, well, man, how can we treat each other better? How can we not be so violent? It’s like, well, you could try buying and selling from one another. You could try focusing on your customers. You could try creating value for others. Because here’s the thing, when you engage in commerce, you are trying to create value for someone else, and they try to create value for you. That’s what exchange does. But not only is value created between that exchange, but over time, you begin to value that person themselves. It may take time. You may not like them at first, but over time you’re like, “Okay, they’re not that bad,” or whatnot. Or, “At least they do this thing.” That’s a low bar, but that’s better than the alternative. And sometimes people will come at me with that where they’ll say, “Well, this is very utilitarian. Is this really true friendship?” And I point out towards the end of my book, Aristotle had three major categories of friendship. And he starts off with kind of a lower friendship of utility, where it’s like, well, they’re useful to you in one way or another. Then it goes to a friendship of pleasure, you perhaps enjoy their company to some degree. And then there’s a friendship of excellence. And this is a virtuous friendship where you want the absolute best for one another. Character is important in this regard, and this is like top-tier friendship.
Walker Wright: And people are often saying, “Well, commerce doesn’t create top-tier friendship.” Well, maybe not at first, but it does create a lot of lower-tier friendships, a lot of utility friendships, a lot of pleasure friendships, ’cause… I mean, you make friends with people you work with as well. And those friendships matter. They may be incomplete in some sense, but they matter. And it’s better than having enemies. And it grows the circle of friendships that you can possibly have. You’re coming into contact with people that you maybe never would have come in contact with, that you may never have even considered wanting to come into contact with. But now you can consider them as like, “Okay, yeah, they’re fine.” And that “they’re fine” can turn into a better friendship. And I’ll take a lot of kind of lower-tier friendships that are far more expanded than a handful of really great friendships and a bunch of enemies. And that’s what commerce really does throughout the world.
Walker Wright: And this is part of, I mentioned before, part of the bigger project of liberalism, which has been kind of under attack as of late from both the right and the left. And there’s this sense that liberalism kind of creates, Patrick Deneen called it a mono-anticulture, which I get. I get where he’s coming from. But for me, that actually misses the point. What liberalism does is it creates little pockets of, one could argue, little pockets of illiberalism, meaning that I come to work, there’s certain rules and expectations that I have to abide by. It’s not just a free-for-all or anything. But what it does is it creates what’s been called a liberal archipelago, little islands of illiberalism floating in a sea of liberalism. And they’re all competing but cooperating and compromising with one another. And this allows us to realize how much we need each other as we become interdependent economically and through commerce. We begin to serve one another a lot more, and we begin to value each other a lot more and the kinds of different gifts and talents that we all have. And that’s important. That’s a step in the right direction. Whatever your end goal of what a good person, what a good life is, I think that’s pushing in the right direction. It’s not gonna save your soul per se, but it’s gonna make you a tad bit better and teach you to behave a little bit better and have some attitudes that are perhaps a little bit better. And I think that’s a great thing. We can complete those behaviors and attitudes perhaps in our own orthodoxies of some sort, but this is a good general way to make mean people a little nicer. In politics, which is usually the way people want to do it, there’s also a robust social science literature showing that that is not the way to go. Political participation tends to make us, to quote Jason Brennan at Georgetown, “It makes us mean and dumb.” I won’t go into that in depth, but in general, yeah, the more political tribalism you participate in, yeah, you treat people pretty poorly. It’s not the case with commerce. And so maybe we should flip the way that we think about those things and say yay to commerce and a little less to politics.
Chelsea Follett: Thank you so much for this conversation, Walker, for joining me. The book, again, is ‘In Trade We Trust.’ Please check it out once it is published and look up Walker’s other writings as well. They are all very illuminating.
Walker Wright: Well, thank you so much for having me. Appreciate it.