Markets, the Internet and Morality (2003), by Sean Gabb

Markets, the Internet, and Morality
by Sean Gabb

Note: I was asked to write this in June 2002 for the Institute of Economic Affairs. I did so and heard no more until it was published in Economy and Virtue: A moral case for the market economy, Dennis O’Keeffe (ed), 2005. Since I was neither paid for the chapter, nor even sent a copy of the book – indeed, since I was not so much as asked to sign a release for for its publication – I see no reason to respect the IEA’s copyright. One reason I was so pleased by the appointment of Mark Littlewood as its Director in 2009 was the horror on all the faces of those who had spent years jollying me along with promises of a final pay off if I only turned out reams of corporatist propaganda first. At least in this piece, I don’t recall writing anything I disagreed with. Fortunately, most of the other – often gross – stuff I wrote for the IEA was fathered on some illiterate suit. If ever I have a biographer, he can lower my reputation by hunting this trash out and putting my name back on it. Bah!

The purpose of this essay is to explore the connections that exist – or are coming to exist – between the Internet and morality. I want to argue that the Internet, so far from tempting and enabling immorality, is in fact the greatest means that our age possesses of upholding morality as it should be rightly understood.

For some, I suspect, this will seem a peculiar assertion. The internet, we are often led to believe, is all about hacking, software and other copyright piracy, pornography, national socialist propaganda, bomb-making recipes, and just about everything else that people regard as bad. But it is an assertion that I believe can be defended.

Before doing so, however, let us turn to the preliminary issue of what the Internet is and how it developed.

What is the Internet?

Put simply, the Internet is a collection throughout the world of very powerful computers (“hosts”) connected to the telephone network. These in turn are connected to smaller computers (“users”) in homes, businesses, government offices, libraries and places of education. Electronic messages can be sent between these computers, travelling either directly from host to host or indirectly via any number of other hosts, depending on how congested the whole network happens to be. It is also possible to retrieve documents and other items that are stored on the hard disks of computers permanently connected to the internet.

It emerged in the late 1960s, overlooked by the rest of the world, as a means of moving large amounts of information within the American defence establishment. During the 1970s and 1980s, it grew rapidly but still unnoticed by all but those involved in its growth. By the 1980s, universities had become the main agents of expansion. They were joined by large companies and a number of privileged private users. In 1982, the number of hosts reached 200. By 1983, this had grown to 500. In 1984, it reached 1000, in 1986 5000, in 1987 10,000, by 1988 60,000, by 1989 100,000, and in 1991 600,000. Most of these were based in the United States, though perhaps ten per cent were in allied countries like Britain, Germany and Japan.

It was around this time that the American military abandoned the Internet as a primary means of communication. With the end of the Cold War and the improvement in other kinds of telecommunications, the internet as it had developed was no longer needed. By now, it was a much smaller version of what it is today – a collection of hosts and users spread around the world.

For a few years longer, though, its general use was retarded by a lack of computing power. Personal computers had been available since the late 1970s; but it was only in 1993, with the Pentium I processor, that they became capable of running Internet software that could be generally understood.

Then there was the speed of modem connections. As late as 1991, the standard speed was still only 2,600 bits per second, compared with the present standard of 56,000 bits per second, and the emerging broadband standard that is faster still. The meaning of this is that an electronic version of Human Action by Ludwig von Mises, 30 megabytes long, can today been downloaded from the Internet in about five minutes. Until very recently, the download would have taken days.

The World On-line

For want of any better alternative date, the world went on-line in March 1994, when the first version of Netscape was released. From now, the Internet seemed to explode. The statistics showing the number of new users do not really describe the impact of what has happened since. Politics, business, shopping, personal relationships – all have been transformed by the Internet. Millions of intense friendships have come into being between people who have never been less than a thousand miles distant from each other. Every large organisation has a web site, and an increasing number of smaller ones. Shopfronts and letterheads are being redesigned as business names are incorporated into web addresses. Newspapers must compete with Internet discussion lists and newsgroups as sources of information. Perhaps more significantly, the authorities in all countries are aghast at the opportunities for unregulated and often unknowable communication between people, and are hovering nervously between trying to censor the Internet and trying to use it to their own advantage. It took 50 years for the telephone to progress from an interesting toy to a standard means of communication. It took less than five years for the Internet to be taken up by almost everyone interested in communicating with the rest of the world. Many of us already have trouble recalling how we ever managed without it.

Now, what has all this to do with morality? How is it that people who log onto the Internet to buy airline tickets, or look at smutty pictures, or exchange complaints about the European Union or vivisection or the illiteracy of advertising copy writers or whatever – how is it that by running up our telephone bills and ignoring our loved ones we are advancing the cause of morality? There are three answers – one indirect, the other two very direct.

Imperfect Markets

First, there is the avoidance of market failure. For over a century, neoclassical economics has involved the analysis of allocative efficiency. This is a state that proceeds for a number of variously unrealistic assumptions about the world. One the one side, we have perfectly rational consumers. These are people who exactly understand what combination of goods and services will bring them the greatest possible satisfaction. They spend their incomes in a manner that equalises the satisfaction they obtain from their last pennyworth of everything they buy. On the other side, we have profit maximising firms operating in perfectly competitive markets. There are many buyers and sellers, so that no purchasing or production decision made by any one player is large enough to influence price. All products are similar enough for them to sell on price alone rather than any considerations of brand loyalty. All information regarding prices and technical possibilities is freely available to all players. There is easy entry into and exit from all markets. Goods, labour and capital are all freely mobile within and between markets.

Given these assumptions, the unaided forces of demand and supply will bring about the best possible use of available resources – “best possible” being defined as the satisfaction of consumer desires as expressed in the market place. All firms will tend toward producing at their lowest average cost – short term profits being competed away by entry of other firms into a market or by the copying by other firms already in a market of whatever means have been found of lowering average cost; short term losses being eliminated by the departure of weak firms from a market or by their copying of what allows other firms to break even. In such a world, a structure of production will emerge any departure from which will diminish the aggregate economic welfare of the society in which it exists.

Of course, the concept has limited application to the real world. Consumers do not behave in a perfectly rational manner. Not only do they fail to analyse their preferences – in itself, by the way, not a necessarily valid objection – but they are ignorant of all but a few alternative products and prices. Nor are there any perfectly competitive markets. Most are dominated by a few buyers or sellers. Because knowledge of alternatives is limited, most purchases are made according to brand loyalty, and alternative products even where superior do not easily make their way. New  production methods are routinely monopolised, either by keeping them secret or by patenting. Moreover, even if all the required information were made generally available, it would go out of date within seconds, as consumers changed their scales of preference and as new products or new production methods were discovered.

The value of the Internet is that it makes some of the assumptions of neoclassical economics more realistic. It does this by making information more cheaply and readily available. It is enabling both buyers and sellers to make themselves and their preferences known to a much larger part of at least the consumer goods market than has ever before been possible. Local monopolies and other imperfections that existed through ignorance or distance or inertia are being undermined as the world becomes a single market. This means a downward  homogenising of prices of all affected products.

Obviously, traditional companies are working hard on getting their web sites fitted out with all the latest facilities for demonstrating and selling their products. But there are more innovative and interesting approaches to e-commerce, and these may be among the successful business models of the future. Examples include the following:

  • Auctions – via, eBay, Yahoo and hundreds of sites specializing in everything from collector coins to industrial supplies. On-line auctions may be the most successful and efficient new marketplace on the Internet. They have been taken up enthusiastically by both buyers and seller. Ebay has signed up over 10 million people, and other action sites have also grown raidly in the past few years.
  • “Name Your Price” Actions – via, Microsoft Expedia, among others. Here, buyers say how much they will pay for goods or services. Sellers can choose whether or not to offer at those prices. This is particularly useful for selling otherwise unwanted airline tickets and hotel bookings. Attempts are being made to sell cars and groceries as well.
  • Group Buying – via,, among others. Here, groups of people looking for the same product come together from all over the world, and negotiate group deals with suppliers, often at a substantial discount. There is nothing new in this. Trade unions have been negotiating group deals for their members in insurance and other products. What makes this different is that people are able to come together in temporary combinations that exist for the sole purpose of getting the sort of discount that was once available only to large organisations.
  • Buyer-driven Market Places – via,,,, among others. These fora exist to let buyers advertise what goods or services they want, and then to let sellers compete to supply them.
  • Product Reviewers – via CNET,, Productopia,, among others. These give shoppers product recommendations and reviews so they can make wise buying decisions.

The Morality of Markets

 It may be asked what all this has to do with morality. How does the ability to find the cheapest second hand Ford Mondeo in the world make us better people? The answer is that if morality is  to mean anything, it must involve choice. Suppose, for example, I am forced at gunpoint to feed the starving. I may relieve hunger, but have not performed a moral act. Equally, if I give poisoned bread to a hungry person, and due to some constitutional oddity he is nourished by it, I have not performed a moral act. The morality of an act lies not purely in the act itself, but also in the intention behind it. We must not simply do good, but must want to do good. An absence of any intention or the presence of a malevolent intention both rob any act of its moral value. To say otherwise leads us to absurdity. It would mean calling the rain a moral force if it put out a fire, or accusing spiders of personal immorality if they made cobwebs in places that were hard to clean.

From this it follows that the most moral social order is one that enables the fullest possible scope for freedom of choice. A social order that minimised or abolished this capacity might compel any number of convenient acts, and put down any number of inconvenient, but not one of them would have any moral significance. Give us, on the other hand, a society in which compulsion was minimised, and though it might contain fewer convenient acts, it would be immeasurably more moral. Given freedom from the criminal law, a man might not be faithful to his wife, but if he does choose to be faithful, his choice becomes moral. For the same reason, people might choose to refrain from lying, or from personal cowardice, or from idleness, or from spiteful gossip. So long as there is no compulsion used, these are moral choices. Introduce compulsion, and we are straight into the world of praising the paving stone that refrains from tripping us over because others have laid it properly on the road.

Now, freedom of choice is inseparable from the institution of private property. We can see this most clearly in the case of charity. As Margaret Thatcher once observed, when the Samaritan paused to save the man who had fallen among thieves, he had more than kind words to offer. He had wine and oil to pour into the wounds, and money to pay at the inn for a bed and other care.  Before we can give, we must have. If we have not, we cannot give. If we take from others, or from a common stock, we give at best of whatever time is needed to take what others have produced.

We see this also in other moral acts, where an individual feels required by conscience to act against the settled opinion of society. The English campaigners who put down slavery were regarded at first as trouble makers. If all goods had been held in common and allocated according to the votes of the majority, or the will of a ruling elite, there is no doubt that those campaigners would have been forced back into conformity by the prospect, however distant, of starvation. It was because they had property, or were funded by others with property, that they had the practical freedom to do what they felt was right.

Private property, therefore, is what enables the free choice from which morality proceeds. Let us further accept the claim – generally accepted by economists and politicians – that market systems generate more wealth as they become more efficient, and we have the indirect moral implications of the Internet. So far as it improves the working of markets, reducing friction within them and bringing them even a little closer to the ideal of allocative efficiency, it is a force for good. Whoever, then, uses the Internet to buy a home delivery pizza, or to make a free international telephone call is not merely saving money, but really is also helping to make the world a more moral place.

The Morality of Non-Economic Choice

Continuing this theme brings us to our second point. The Internet does not just enable choice, but is fundamentally about choice. There are people who complain about the large amounts of pornography available on the Internet, and how this is beyond the jurisdiction of any purely national set of laws. Let us assume for the sake of argument that looking at pornography is somehow immoral – an assumption that, for the record, I reject. Granting this, which is the more moral response – to pass laws that somehow make pornography unobtainable? or to leave it to rational adults to decide for themselves what they will look at?

In the light of what I have already said, my answer should be clear. Morality lies in having the freedom to do wrong, but in then choosing to do what is right. Indeed, it is arguably a more moral act to make pornography available over the Internet, thereby giving people the ability to choose  not to look at it, than to call for laws to deny that ability. The same considerations apply to material on the Internet that nowadays raises rather stronger objections than portrayals of adult sexuality. I think particularly of incitements to racial hatred and arguments in favour of holocaust revision, among much else.

Forcing Morality in the Public Sphere

The third point is that the Internet allows us to apply pressure to public figures to compel them to behave in what is regarded as a more moral fashion. The pressure I am here discussing is not the positive legal force that the moral authoritarians want to apply when they talk about making people good. What I mean is the negative force of public disapproval. We all have the right not to be harmed in our lives, liberty and property without due process of law – and then only on grounds that an educated, dispassionate observer would think just and reasonable. But no one has the right to make people employ him, or rent him property, or to buy from him, or sell to him, or vote for him, or believe him. Undoubtedly, if these things are lost through the refusal of others to associate with him, a man loses perhaps as greatly and suffers perhaps as bitterly as if he had been thrown into prison. But in the one case, he has suffered a positive assault on his rights – however justified that may be in the circumstances – whereas in the other, he is simply passed over consistently in favour of others, and by people who are exercising a peaceful dominion over their own lives, liberty and property.

It might be argued here that moral autonomy and freedom are slightly different things. Freedom in the liberal sense exists when there is no force or fraud used to influence action, whereas moral autonomy can be reduced by the disapproval of others. But to explore this argument to its source requires a leap into the dark and labyrinthine question of freedom of the will. In order to be free, does choice need to made in the total absence of any external constraint, even those that do not involve force or fraud? Or is it enough that these positive constraints should be absent? Or does moral action proceed largely if not wholly from a desire for the approval of others? I will not comment. I will only say that it is regrettable when public disapproval is strong enough and fierce enough to stop private individuals from doing things that do not cause harm to others as reasonably defined. This being said, I suspect that complaints about the supposed tyranny of public opinion are exaggerated. Let people be free to act in private, or let there be a wide range of alternative employments and a diversity of neighbourhoods, and this tyranny is moderated where not prevented. Its real victims are those who have, for whatever reason, put themselves into the public domain. And these are – whatever the argument over the meaning of moral autonomy – the  proper victims.

Let us suppose, for example, that a businessman takes care to have himself portrayed as a decent person, but is really giving support to some policy that is in the highest degree injurious, and in exchange for monetary favours and social recognition. Or let us suppose that a politician gives what seems a definite promise to advance the public good, but has, through verbal trickery or a simple disregard for the truth, decided to do the opposite once he has gathered in the votes. Or suppose a newspaper owner makes a display of his regard for the truth, but is really using his position to spread lies or disinformation.

These people are behaving immorally. To some extent, it may reduce their moral autonomy if they find that immoral behaviour is open to discovery and punishment. But their status rests on the approval of others; and they have deliberately set out to obtain this status and then to retain it on fraudulent grounds. To discover their behaviour and punish them for it is different in nature from sacking a shop assistant because he is not orthodox in his opinions on demographic change. When they make claims to public approval, the grounds on which they claim approval become matters of legitimate public concern. And the Internet is useful here for such claims to be investigated and for such concern to be expressed.

The Media Reborn

The established media, I regret to say, no longer perform this function. The Internet, however, does promise to take it over. It promises a return to freedom of speech on matters of public importance. It means freedom for public opinion to be reborn as it used to exist before about 1910. Since then in England, the media has at least distorted the news. Instead of reflecting what people are really thinking, and reporting what the politicians are really doing, it has created a world close enough in appearances to the real one not to cause scandal, but in which nearly all the substance has been replaced. It does this by a subtle yet effective framing of arguments, by turns of phrase, by terminology.

It seems paranoid to say this in a country where no laws exist against propagating any point of view, but the issues are presented by the British media in ways that often prevent their being intelligently discussed. Part of this, no doubt, proceeds from the nature of those who tend to seek employment in the media. Part of it, though, is the effect of a centralised media the owners of which have been co-opted into the Establishment.

The Internet is changing this. The West is moving perceptibly into an age of zero censorship. We are not there yet – not even in America, where the revolution is most advanced. But it is plain where we are heading. The intricate web of laws and informal pressures that governs expression in even the freest countries is being broken through. If we want to publish unorthodox opinions, we no longer need to negotiate with editors, hoping at best for a letter to be published or to be laughed at even while allowed on to a current affairs programme. If we want to read such opinions, we no longer need to hunt down obscure little pamphlets and newsletters. It is increasingly irrelevant whether the media barons are offered bribes or threatened with prison: their ability to manipulate what we read or see or hear is withering almost by the day. If still only in small amounts, everything is now available on the Internet, and can be accessed as easily as looking for a Chinese takeaway in the Yellow Pages. And every day, more pages are created on the World Wide Web, and more data flows through the newsgroups and the web logs.

We are increasingly in a position to know what is happening, and to make our opinions about this directly available to millions of other people. So far as this promotes the cause of truth, and prevents those who seek our trust from abusing it, we are moving not just into an age where pornography and hate are freely available, but – I repeat – into a better and a more moral world.

The Propagation of Immorality

As said, the Internet is not just about advancing the cause of truth and justice. It also enables the propagation of falsehood and of dangerous information. One can find bomb making instructions on the Internet, and instructions on how to harass and destroy individuals, and outrageously false claims about persons or commercial products. A high and rising proportion of e-mails are unsolicited advertisements. There are web sites that encourage male homosexuals to behave in ways that maximise their chance of catching AIDS – on the alleged grounds that the risk heightens the excitement of the sexual act. There is much else on the Internet to be deplored.

Nevertheless, all this is to be accepted. If there are breaches of the civil or criminal law, by all means let there be proceedings against them – though the means of enforcement are presently weak. Otherwise, there is nothing to be done. Anyone who believes that freedom is a sufficient cause of goodness is mistaken and will soon be very disappointed. But, as said, freedom is a necessary cause. It does not make people good. It simply enables them to be good. In a perfect world, there would be no evil. In the real world, good and evil often come so inextricably linked  that the latter cannot be suppressed without also suppressing the former.

And while the Internet is undoubtedly an astonishing new medium, it is only another medium. Every evil spread via the Internet has for many centuries now been also spread via the printing press. In 1988, for example, I found books in the Bromley Public Library describing all the steps required to make high explosive and to convert air guns to firearms. It does make a difference when all information is just a few clicks of a mouse from anyone who desires to have it. But such information has always been available to those who really wanted to find it.

The Wisdom of the Ages

What I have written may read as an uneasy combination of technological utopianism and semi-scholastic moralising. Perhaps, then, I should close with a quotation from someone who always knew exactly what he wanted to say and how to say it well. In his Areopagitica of 1644, John Milton argued thus for the cause of morality and unlicensed printing:

[W]hat wisdome can there by to choose, what continence to forbeare without the knowledge of evill? He that can apprehend and consider vice with all her baits and seeming pleasures, and yet abstain, and yet distinguish, and yet prefer that which is truly better, he is the true wayfaring Christian. I cannot praise a fugitive and cloister’d vertue, unexercis’d and unbreath’d, that never sallies out and sees her adversary, but slinks out of the race, where that immortal garland is to be run for not without much heat and dust.

© 2002 – 2017, seangabb.

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