‘Free Market’ Book Misstates the History of Free Market Thought

Free Market: The History of an Idea, by Jacob Soll, Basic Books, 336 pages, $32

Free Market tries to trace the history of free market thought from Cicero to Milton Friedman, with discussions of St. Thomas Aquinas, Machiavelli, John Locke, Richard Cantillon, Jean-Baptiste Colbert, Adam Smith, and many others. The terrain covered is vast, and it would take a scholar of unusual expertise and extraordinary care to guide us safely through.

Jacob Soll, alas, is not that scholar. Soll, a professor of philosophy, history, and accounting at the University of Southern California, falls well short of his goal, partly due to the unavoidable difficulty of the task and partly due to his overriding commitment to an untenable historical thesis.

Soll begins by stating his agenda. Unlike modern economists such as Milton Friedman, who allegedly define the free market as “the absence of any and all government activity in economic affairs,” Soll “accepts the state as embedded in the market and vice versa.” This vision, for Soll, is best exemplified by the ideas of Jean-Baptiste Colbert, who served as France’s first minister of state under King Louis XIV. Soll claims Colbert has been unjustly maligned as a misguided mercantilist. Much of the book is spent trying to vindicate Colbertism, arguing that the mainline of economic thought either erred in rejecting it or tacitly embraced its key principles.

For instance, Soll paints Adam Smith as a closet Colbertist who “sought protectionism and empire to aid internal development and to keep investment capital within the nation.” Smith, according to Soll, “enthusiastically supported both colonial conquest and slavery” and adhered to the physiocratic view that “farm labor was the source of all wealth.”

None of these claims is anywhere close to correct. Smith was a harsh critic of slavery and empire. While Smith extensively discusses the physiocratic view that agriculture is the only source of wealth, he rejects this claim in the clearest possible terms. Soll supports his idiosyncratic interpretation by citing Smith’s reconstruction of his opponents’ position and attributing that position to Smith himself. This is not a subtle error.

Similarly striking mistakes run throughout the rest of the book. Soll quotes Milton Friedman, for example, as writing in Capitalism and Freedom that “all bad things come from government.” But no such claim appears on the page Soll cites—or, indeed, on any other page of the book. Soll appears simply to have made it up. Elsewhere, F.A. Hayek is said to have “painted Smith as a thinker opposed to all government intervention who focused on economic efficiency.” But the passages cited in Soll’s footnotes say no such thing. That would be a grotesque mischaracterization of Smith. And Hayek, whatever one might think of his politics, was hardly prone to this kind of gross oversimplification.

But Soll doesn’t seem to have read much Hayek. He claims Hayek played a leading role in “creating the Chicago school of free market thought,” yet Hayek was a methodological Austrian whose approach to economics was in many respects diametrically opposite that of the Chicago school. Another passage describes Hayek’s Road to Serfdom as a “declaration of total libertarian faith in individuals…and in the absolute dangers of any and all government involvement in the economy.” Yet that book endorses a great deal of government involvement in the economy, including combating externalities, preventing monopolies, fostering macroeconomic stability, and providing a guaranteed minimum income for all. There’s a good deal of logical space between opposition to centralized planning of the economy and “total libertarian faith in individuals,” but Soll’s reading appears blind to distinctions of this sort.

The pattern here is difficult to miss. Soll’s study is driven by the thesis that what most people would call free market thinking is silly and misguided. To support that thesis, he either entirely ignores major free market thinkers (he never mentions Frédéric Bastiat or Jean-Baptiste Say, let alone Frank Knight or Israel Kirzner) or badly mischaracterizes them. Libertarians like Friedman, Hayek, and Ludwig von Mises seem to be in the book only for the purpose of caricature. Extreme quotations are extracted from their context (or, with the aforementioned Friedman “quote,” simply invented out of thin air) to serve as Soll’s foil, without any serious attempt to understand these thinkers on their own terms.

That’s too bad, because actual intellectual engagement with these thinkers would have provided a wealth of material relevant to Soll’s thesis. For example, it would have been helpful to explore the differences between “neoliberal” figures such as Milton Friedman or Wilhelm Röpke and more hardcore libertarians such as Herbert Spencer or Murray Rothbard. As scholars such as Quinn Slobodian have argued, there is a good case to be made that neoliberals have supported the use of state power to expand and “encase” markets. For libertarians, by contrast, respect for individual rights is a moral bedrock and violating those rights cannot be justified simply because doing so would be good for “the market.” A fuller exploration of the tensions between these two approaches would have been illuminating.

Likewise, an appreciation of the consumer’s key role in free market thought would have put Soll and his readers in a better position to evaluate Colbertism. For Soll, Colbert’s protectionist reforms were a success because they “expanded manufacturing and set the basis for long-term growth.” But nobody really doubts that protectionism is good (at least in the short term) for the producers it protects. The problem, as free market thinkers from Bastiat to Mises have emphasized, is that protectionism is bad for consumers. Soll quotes Adam Smith as noting that “consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.” But he makes no attempt to engage seriously with this idea, or to provide a rigorous defense of the alternative.

I am not the first reviewer to take Soll to task for what can only be described as egregiously sloppy scholarship; writers in several venues, including The New York Times and The Wall Street Journal, have pointed to errors in the book. Unfortunately, rather than owning up to his mistakes, Soll has chosen to write his critics off as “agenda-driven journalists and commentators” while claiming that the “vociferousness of the attacks” on his book reflects “the current crisis of free market thought.”

These critiques are not rooted in politics. They are rooted in fundamental norms of good scholarship. Writing an intellectual history means taking care to accurately characterize the views of the people you are writing about, even when you disagree with them. Criticism itself is fine, but you are supposed to make every effort to get your targets’ views right before you criticize them. When a scholar fails to do this, it is the responsibility of the scholarly community to hold him accountable. And it is the responsibility of the scholar whose work has been criticized to take that criticism seriously rather than dismiss it as ideological subterfuge.

Source link: https://reason.com/2023/09/16/markets-misunderstood/




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