Normative foundations of competitive markets and their relevance to democracy

Abstract

AbstractThe economic theory of competitive markets is widely accepted as a theoretical framework for the construction of real-world global markets. Most influentially, this is apparent in the commonly accepted ideal of global free trade, with WTO as its primary proponent. The virtue of efficiency related to competitive markets is also often deemed politically neutral or, at least, unworthy of too-critical consideration. This paper argues against this contention. The theoretical axioms behind competitive markets assume a normatively and politically saturated core: self-interested agents (individuals, households and firms) who 1) are attached to consequential rationality, 2) must bypass various moral commitments and 3) are committed to specific interpretations of the concepts of freedom and justice. I will argue that attachment to these notions downplays democratic decision-making. As there is no genuine room for so-called procedural decision-making, the prospects for political innovation will be narrowed. For example, those kinds of interpretations of the concepts of freedom and justice that do not fit within the ideal of competitive markets are precluded from politically feasible options. I will argue that taking note of deliberative rationality and democracy would alleviate this problem.