In Peggy Noonan’s latest weekly column in the Wall Street Journal, she quotes theologian Michael Novak’s encomiums to capitalism. The quotes reminded me of an event I spoke at some years ago.

The Intercollegiate Studies Institute had sponsored the event in San Jose and the audience was about 200 mainly conservative college students. A few of the students were libertarians. Among the speakers were Michael Novak, David Friedman, and I. (I know “I’ rather than “me” sounds weird, but when you’ve taken sentence diagramming in a high school English class, it’s hard to forget the lessons.) If I recall correctly, the order of the speeches was Friedman, Henderson, and Novak. I laid out various reasons markets are so good–they cause monopolies, if not supported by government, to break down, they make people pay for discriminating on racial grounds, and they give even the poorest of us wealth than kings would not have dreamt of–think cell phones and penicillin. I usually get a good response from this talk even when I speak to what are now called “liberals.” But the response was only slightly more than polite. In the Q&A, the first question was hostile in tone. I can’t remember what the content was, but I dug deep and gave an answer. Then another hostile question. Then a friendly question. Then my turn ended.

Next up was Michael Novak, whose speech contained thoughts and sentiments about the goodness of free markets that were similar to some of the thoughts Ms. Noonan quotes from him in her piece. I agreed with pretty much all of them as did, I think, David Friedman. Novak got a much stronger ovation than I had. In the Q&A, one questioner asked if he saw any limits on free markets. Novak said yes. He said he wouldn’t want to see a market for integrity, a market for honesty. He got a loud positive ovation for that answer.

At lunch, David Friedman, Michael Novak, and I spoke to each other. Novak and I exchanged compliments on each other’s speech and he asked me if I knew why they hadn’t been very enthusiastic about my speech. I admitted that I had wondered. “It’s because you don’t believe in God,” he said. “How would they know that?”, I asked, “I didn’t say a word about God.” “That’s how they knew,” he answered. I got it.

Then David Friedman said to Novak (these are my words but they express the gist of Friedman’s remarks):

I think you should reconsider your view on the market for integrity. We do have a market for integrity and that’s one reason markets work so well. When you hire someone and you’re choosing between two people of equal productivity, wouldn’t you be willing to pay more for someone who you think has more integrity?

Novak admitted he would.