ȃȀȁ Partʺʺ: Politics and Philosophyusing that information to affect prices appropriately. But just what justifies
the big profit of Samuelson’s slightly early speculator?
If we agree that his windfall is unjustified, we agree with fuller knowl-
edge of the situation—after all, we ourselvesthought it up—than people in
a comparable real-world situation would possess before hindsight became
available. Anyway, what do we morally disapprove of in such a case? We
probably would feel revulsion at profiting through somehow delaying the
availability of information to others. Obstructing the transfer of informa-
tion is the opposite of productive.
Someone who is in the business of bearing risks, however, hoping to
profit on average over time from his superior instincts and decisiveness,
is rendering a public service. If on occasion he is alert enough or even
just lucky enough to receive profitable information early, well, that is part
of the game. We could hardly expect speculators to operate if they had
to stand their losses from bad luck themselves but were never allowed to
keep the fruits of good luck.
Differences in knowledge of prices enter into the question, faced by
Kirzner (e.g.,ȀȈȇȈ, p.Ȁǿȃ), whether transactions made in ignorance of
the full potential values of the things exchanged are nevertheless truly
voluntary. Robert Nozick (ȀȈȆȃ) linked the moral legitimacy of holdings
of property to their acquisition in voluntary transactions. Suppose—my
example, not Kirzner’s—that an art dealer sees the great value of an
old painting brought to him by its uninformed owner. Is the dealer
morally justified in exploiting its owner’s ignorance by buying the painting
cheap?
Possibly he is, provided he had made it clear that he was a sharp trader
greedy even for questionable gains. Ordinarily, though, or so I understand,
art dealers at least tacitly represent themselves as experts combining the
roles of brokers, dealers on their own account, and de facto advisers; and
they want to deserve a long-run reputation for honorable dealing in all
these professional capacities. Ordinarily, then, the dealer has some fidu-
ciary obligation to a novice who comes to him possibly for a business deal
but also partly for advice. More generally, it may be in a business firm’s
own long-run interest to lean over backwards in being honest, telling not
just the truth but the whole relevant truth. Ļe just price is not an entirely
nonsensical notion. (Kirzner is indeed aware, e.g.,ȀȈȆȈ, p.ȁǿȈ, of notions
of honor, fiduciary responsibility, and just price.)
Similar issues arise about the moral legitimacy of stock-market profits
deriving from inside information. Much depends on the details, including