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In defence of free markets

November 5th, 2011

A Catholic legal scholar and a left-leaning philosopher both criticise the harsh anti-market rhetoric prevalent on both the right and the left. They warn about the destructive consequences of state intervention into private property and contracts.

We criticize speculation, but we also expect banks to offer high interest rates on our savings. So we expect them to speculate,” – says Ákos Szalai in an interview to Magyar Kurír, the “semi-official site of the  Hungarian Catholic Bishop’s Conference”. Ákos Szalai is professor of law at Pázmány Péter Catholic University and a member of several pro-market think tanks and Catholic research institutions.

Szalai believes that the free market should not be regarded as inherently immoral. On the contrary, “the free market is not the terrain of egoism, but of cooperation and free contractual relationships.” Private contracts and free exchange necessarily involve speculation. Farmers selling future crops and wage earners investing their savings both speculate, Szalai remarks. Speculation serves risk taking or minimizing possible losses, so there is nothing unethical in capitalism. Szalai also notes that their optimism and belief in Providence make Catholics natural risk takers.

Although there is no such a thing as a completely free market, the state should not directly interfere with private contracts, as otherwise public trust will be impaired and social cooperation will become impossible, Szalai argues. He adds that the Catholic Church itself has long fought for its autonomy, against the all-pervasive influence of  state interference in the private sphere, including in family and business relations.

Anti-bank and anti-capitalist rhetoric is practised not only by the Prime Minister and the governing party, but also on the left” – philosopher Ferenc L. Lendvai contends in Galamus.

Lendvai finds both right- and left-wing populism highly controversial, since both suggest that Hungarians struggling to service their debts are the victims of bankers, and forget that “no one was forced to take out a foreign currency loan.”

Nor do they take into account the fact that drowning borrowers can only be saved with public money, that is by increasing public debt and thus the likelihood of sovereign default.

The only thing populists (and their public) care about is to safeguard welfare benefits and salaries. Anti-capitalists – both ‘Occupy Wall Street’ and the Hungarian right – are willing to appropriate the savings of the better off minority, which reminds Lendvai of the practices of both Bolsheviks and Nazis. “If successful, these movements would … take us back not to the Middle Ages [when interest and fees on loans were banned], but to the Stone Age,” Lendvai concludes.

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