Markets are systems of exchange in which people with money or commodities to sell voluntarily trade these for other items which they prefer to have. Most economic transactions in advanced societies are of this kind, and any attempt to replace markets wholesale with a different form of economic coordination seems destined to fail. But questions about the ethics of markets are still of considerable practical concern, for two reasons at least. First, we need to make collective decisions about the proper scope of markets: are there goods and services which in principle should not be distributed and exchanged through market mechanisms – medical care, for instance? Second, markets work within a framework of property rights which sets the terms on which people can exchange with one another, and this too is subject to collective decision: for instance, should a person’s labour be regarded as a commodity like any other, to be bought and sold on whatever terms the parties can agree, or does labour carry special rights that set limits to these terms? Are employees morally entitled to a share of the profits of the companies they work in, to take a concrete issue?
To guide such decisions, we need to apply general ethical principles to market transactions. First, are markets justified on grounds of efficiency, as is often claimed? What criterion of efficiency is being used when such claims are made? Second, can we regard the outcome of market exchanges as just, or, at the other extreme, should we see them as necessarily exploitative? Third, do market exchanges necessarily alienate people from one another and destroy their sense of community? These are very different questions, but an overall assessment of market ethics needs to address each of them, and perhaps others besides.
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