Promoting "Free Markets" on the Washington Post Opinion Pages

Jeff Bezos

Today's New York Times website contained an article entitled "Bezos Orders Washington Post Opinion Section to Embrace 'Personal Liberties and Free Markets'. All opinion pieces will now advocate this point of view and the paper will not be permitted to publish opposing viewpoints. In response to this, the Post's opinion editor, David Shipley, resigned.

This move to overt one-sided propaganda echoes the editorial position of Rupert Murdoch's Wall Street Journal whose "informal tagline" is reportedly 'Free markets, free people'.

Aside from being a useful reminder of the downsides of oligarchic/plutocratic rule, this news could also be useful in prompting people to ask themselves: what does the phrase 'free markets' actually mean?

Despite being in common every day use, the term 'free markets' rarely appears in an economics textbook, and when it does, it is used uncritically in the everyday sense. This is unfortunate, because by not discussing properly authors omit a chance to say something illuminating about the nature of markets and the role of the public sector in organizing and regulating them.

Our Microeconomics Anti-Textbook (p.77) quotes Cambridge economist Ha-Joon Chang's 2010 book, 23 Things They Don't Tell You About Capitalism, on this topic: 

‘The free market doesn’t exist. Every market has some rules and boundaries that restrict freedom of choice. A market looks free only because we so unconditionally accept its underlying restrictions that we fail to see them.’ By failing to emphasize this fundamental point, the texts leave the way open for people to fall victim to arguments that removing certain regulations will restore the “free market” or that introducing certain regulations will be an unwarranted departure from the “free market”. Chang (p.10) writes: ‘Recognizing that the boundaries of the market are ambiguous and cannot be determined in an objective way lets us realize that economics is not a science like physics or chemistry, but a political exercise.’

Climate Change – still a matter of scientific disagreement?!

 

In the new 2024 edition of his Principles of Microeconomics, Gregory Mankiw explains "Why Economists Disagree". One reason: "Differences in Scientific Judgements". Fair enough. But his non-economic example of a scientific disagreement is bizarre.

He writes: "climatologists have debated whether the earth is experiencing global warming and, if so, why. Science is an ongoing search to understand the world around us. It is not surprising that as the search continues, scientists sometimes disagree about the direction in which truth lies" (my emphasis).

No, there is not a debate among climatologists about whether the earth is experiencing global warming. Global warming is a fact which even those who made a living denying it have had to acknowledge, while they move on to other ways of stalling action to lessen it. 

And no, there is no debate about why global warming is occurring. The basic science has been known since the late 19th century.

So why is this rubbish in his text? (It was in the previous edition as well, and likely in many earlier ones.)

If Mankiw wanted a reasonable example related to climate change, he could explain the debate around 'climate sensitivity' – how much global warming could be expected if carbon dioxide concentrations were twice their preindustrial level. this value is critical in determining where and how fast temperatures in the earth system are headed.

The Macroeconomics Anti-Textbook: Interview with Tony Myatt

 Tony Myatt was recently interviewed by Henry Levinson-Gower on the subject of his new book, The Macroeconomics Anti-Textbook. This is one of The Mint Interviews, part of a broader project to promote pluralism in economics.

The book has been available in Kindle form for a couple of months and is available in print in the UK and, as of today, in the US. It will be available in Canada in mid January.

 

Mankiw's Principles of Microeconomics:

Chapter-by-chapter commentaries

As part of the World Economics Association's Textbook Commentaries Project, I've started writing a series of commentaries, one on each chapter of the most recent US edition of Mankiw's micro principles text. The first eight chapters are currently posted with more to follow. Their goal is to provide students with some assistance in thinking critically about the text if they find it assigned to them.

Not surprisingly, the themes from The Microeconomics Anti-Textbook come in handy here, but there are also specific things to be said about the rhetoric and the content of this particular book. One thing that has surprised me is the lack of accuracy here and there – things that should have been weeded out of a book in its ninth edition by an author with no lack of resources for research assistance and accuracy checking. The Commentaries have to stick to important themes, rather than take up space and the reader's patience with what might appear to be nitpicking, but here's an example.

Many economics graduate students will be familiar with Ronald Coase's famous 1974 essay "The Lighthouse in Economics". He examines the way in which the lighthouse has sometimes been portrayed in economists' writings as a pure public good without actually looking into the institutional detail of how lighthouses operated. (Reminder: a pure public good is a good where many can benefit from it without reducing the benefits received by others, while no one can be compelled to pay for the good - the use of the light in this case . This leads to the conclusion that public financing of the good would likely be necessary to try to have the correct amount of it.) 

Mankiw includes a Case Study section, clearly inspired by Coase's essay, entitled "Are lighthouses a public good?" Writing of 19th century England, Mankiw says: “Instead of trying to charge ship captains for the service, however, the owner of the lighthouse charged the owner of the nearby port. If the port owner did not pay, the lighthouse owner turned off the light, and ships avoided that port.” Mankiw gives no source for this, but it bears no resemblance to anything in Coase' exhaustive description of the British lighthouse system. 

Coase explained that in England in the 19th century, the “role of the government was limited to the establishment and enforcement of property rights in the lighthouse. The charges were collected at the ports by agents for the lighthouses”. At the ports, not from the ports. Lighthouse owners did not turn off their lights as part of a negotiating process with shipowners or anyone else. “In Britain. no negotiation has been required to determine individual charges and no lighthouse keeper has ever turned off the light for this purpose” (Coase, The Firm, The Market, And The Law, University of Chicago Press, 1988, p. 212).

RH

 

The Macroeconomics Anti-Textbook: out this fall

The publication of the long-awaited companion volume has been announced on the website of Bloomsbury Publishing! Updates will follow here.

RH