The “free market” is perhaps the most familiar of economic bywords. Since at least the Great Depression, the term has been a staple of the nation’s political discourse, used both to praise and to criticize policy. An economic philosophy intertwined with a number of powerful political ideologiesJacob Soll – Free Market, The History of an Idea
Free markets and how we think about them are reflective of our broader polarized society. A recent book explores the history of the topic – one that has been polarized for centuries. In Free Market, The History of an Idea, author Jacob Soll studies the long history of free market thought. We learn that our conception of Adam Smith is not accurate, and the raging debates between laissez-faire and government intervention date back at least to the writings of first-century philosopher Marcus Tullius Cicero. Early thinkers did not believe greed was good, but felt society needed to find a way to harness commercial self-interest in ways that elevated the common good.
Two distinct views of a free market are articulated in the book:
Point of view 1: important role of the state. For most of the very long history of market philosophy, foundational economic thinkers saw the state as an essential element in creating the conditions under which free and fair exchange could take place.
Point of view 2: Self-regulating markets. In the twentieth century, as some economists became increasingly convinced of the market’s capacity to regulate itself, they sought to define free markets as the absence of anything but the most minimal role for government.
The book then tells the stories of history. How did philosophers, economists, and other thinkers of the past view this critical topic? A key issue was determining the best path to wealth production and human advancement, with some believing the path was through agriculture and others through the exchange of goods.
Hamilton insisted that the government of a nation in its infancy had to focus on developing industry over agriculture. While necessary for life, agriculture was not the basis of wealth creation as the physiocrats, Hume, and Smith had claimed. Indeed, Hamilton felt strongly that this idea had to be publicly challenged and made clear that it was the industrial “cotton mill,” not farming, that had been responsible for Britain’s “immense progress.”Jacob Soll – Free Market, The History of an Idea
As the debates raged, working-class living conditions worsened, driving many to believe that only new radical political movements could adequately represent the interests of the working class. In this was born the governance models and political movements of the early 20th century. After a cold war and the rise of authoritarian models like China, the debate rages on. The book concludes with a thought that broadly captures the challenge of this era: adaptability. “Free market thought will need to be much more adaptable and sophisticated than it has been since World War II if we are to see our way clear of the daunting obstacles that humanity now faces.”
With that in mind, I have moved on to my next book, The Age of Resilience by Jeremy Rifkin. I will report on that book when done. In the meantime, this free-market book provides a very good look at economic history. I highly recommend it and have added to my library.