It’s funny how some ideas you encounter early in life can stick inside your head regardless of where they came from. As a young child, I enjoyed reading fun horror stories aimed at children and teenagers. A book (I have long since forgotten the title or the author) had a scene that created an idea in my head ever since.
The book told the story of a vampire who lived in an old, abandoned house. One evening, a group of high school students break into the house (because…because?) and are trapped inside by vampires. He explains that he only needs to take one victim and let the rest of the group go. However, he insists that the teenagers have to decide for themselves who he will take. At one point, one of the teenagers volunteers to save his friends. The vampire declares that he is free to leave – he operates according to certain rules, and according to those rules, the volunteer has saved him.
Soon after, another teenage volunteer myself to the vampire, and she immediately accepts his offer. When she protests that the vampire finds herself contradicting the rules, he responds that it seems that way to her because she doesn’t understand what the rules are. He was under the mistaken impression that the rule was “anyone who volunteers will be released.” But the real rule was that acts of true self-sacrifice would set one free. Volunteering did not yield the same results as a cyclical act of self-preservation. To my young self, this was a fantastic twist in the story, and it created an idea in my young brain. If someone’s behavior seems inconsistent or contradictory to you, you probably don’t understand what’s animating their behavior in the first place. (If only a certain breed of behavioral economists on a mission to “purify” the “irrationally inconsistent” behavior of certain people read funny vampire stories in their childhood – that’s a rant for another day!)
I was reminded of all this when reading a comment by frequent commenter PhilH, in which he suggests that there is a conflict between the various metaphors economic liberals use to describe markets. On the one hand, classical liberals describe freedom in the market as “the freedom to do what you want”, but also describe the market itself as “an ‘invisible hand’ and a powerful force”. Is it a contradiction? How does the freedom of the market, the freedom to do what you want, combine with the belief that the market acts as an invisible hand that powerfully directs human behavior?
Whether this seems like a contradiction depends on what they mean when they talk about force. To economic and classical liberals, “force” is defined to describe actual (or plausibly threatened) violence. In contrast, the market adjusts its behavior in response to signals no Qualified as “force” or limitation on freedom. We do not deny that the market can deliver limitations on one’s behavior – which is why we often use terms like “budget constraint” or “constrained maximization”. But when we speak of the freedom to do as you please in the marketplace, it does not mean “the positive ability to achieve anything you desire, unhindered.” It simply means that you can do whatever is in your budget set, with a willing trading partner, and no one can use force to stop you (as defined above).
Suppose I want to import a custom Lamborghini. Unfortunately, I look at the cost of doing this, and look at my bank account, and notice a huge gap between the two. I ended up with no Lamborghini in this case.
Now imagine that my bank account was significantly larger, so there were no budget constraints preventing me from importing a Lamborghini. However, suppose a law is passed prohibiting such imports. Here too, I’m ending up without a Lamborghini.
In the first case, the invisible hand of the market is saying “If you try to get a Lamborghini, your business partner will refuse for lack of payment, so no Lamborghini for you!” In the second case, the state says “If you and a business partner voluntarily agree to exchange a Lamborghini, it will be confiscated and you will be fined/arrested/subject to legal sanctions, so no Lamborghini for you!” The outcome is the same in both cases, but economic liberals emphasize that there is an important difference between the two. And we should, given how different these situations are no Use the same word to describe them – to do so would be poor lexicography and only confuse our thinking. Hence only situations involving threat or violence or state sanction are called “force”.
A good description of this problem (and a clever response) can be found in Thomas Sowell’s book The vision of the anointed: Self-congratulation as a basis for social policy:
The cosmic perspective certainly extends beyond law. But, in whatever case it appears, its proponents are quick to point out that people didn’t really have “free choice” in what they did. So to Noam Chomsky, “freedom is an illusion and a mockery when the conditions for the exercise of free choice do not exist” – and these conditions do not exist for “someone who is forced to sell his labor power in order to survive” i.e. anyone who works. For survival. Any situational constraints or potential consequences hanging over people’s decisions do not “really” free their choices. But this idea of a free choice requires a finite universe. Only God can have a free choice – and only on the first day of creation, since he will be confronted on the second day by what he has already done on the first.
One can agree with Chomsky and agree with Sowell about freedom and constraint. But even if Chomsky and his fellow thinkers were right, the view of Sowell and economic liberals would be simply wrong – but not contradictory. Apparently the conflict rests on a misunderstanding of what is meant by the terms.
Kevin Corcoran is a Marine Corps veteran and a consultant in healthcare economics and analytics and holds a Bachelor of Science in Economics from George Mason University.