No Comment, Six Questions — September 8, 2011, 9:53 am

The Illusion of Free Markets: Six Questions for Bernard Harcourt

University of Chicago professor Bernard Harcourt is a student, but not a follower, of the Chicago School, an academic movement that has had a profound effect on America in the period since World War II, pushing the country aggressively toward an embrace of neoliberal ideas about economics and politics. In his latest book, The Illusion of Free Markets: Punishment and the Myth of Natural Order, Harcourt probes deeply into some of the contradictions inherent in the thought of the Chicago School, and exposes a striking historical parallel to its work. I put six questions to Harcourt about his new book:

1. Your book builds off an intriguing study of the eighteenth-century French PhysiocratsFrançois Quesnay, Pierre-Paul Le Mercier de la Rivière, and others — in which you suggest that their theories of economics closely parallel what we have come to think of as the Chicago School. What exactly are the parallels, and how did this idea come about?

bernard_coulisse_paris_2008_cropped

It’s the messianic belief in natural order in economics — in spontaneous order, as Friedrich von Hayek called it — or today in the efficiency of free markets, conjoined with a faith in strong government to deal with those who are outside the natural order — who are out-of-order, or disorderly. It’s the combination of those two paradoxical tenets — of government incompetence when it comes to regulating the economy and government competence when it comes to policing and punishing — that links these thinkers. Undoubtedly there were others before the Physiocrats who brought the idea of natural order into economics — Pierre de Boisguilbert, for instance, or the Scholastics with their notion of “just price.” But Quesnay and his disciples, especially Le Mercier, did so with a doggedness, obsession, and passion that would change the way people thought — a doggedness and obsession, I should add, that resembles the persistence of Hayek or Richard Epstein. It’s that maniacal, quasi-religious faith in natural orderliness or today market efficiency that ties these thinkers together.

For both the Physiocrats and the Chicago School, there is an orderly inside but also an outside — and for those outside, there is the iron fist of the state. The Physiocrats called for “legal despotism.” “The only object of man-made, positive law is to punish severely men whose passions are out-of-order,” Quesnay wrote in 1767. These two paradoxical tenets were joined together for the Physiocrats, and you can hear it well, again, in Quesnay: “All that is required for the prosperity of a nation is to allow men to freely cultivate the earth to the greatest possible success, and to preserve society from thieves and rogues [“des voleurs et des méchants”]. The first task is governed by self-interest; the second is ensured by civil government.” Looking back at Quesnay’s writings offers us a kind of recul— a French term for stepping back to see better — on how the idea of natural order would evolve into the invisible hand and laissez-faire, later into spontaneous order, and ultimately into a theory of free markets. By the same token, it lets us see better how the idea of legal despotism evolved into a theory of the state as “night watchman,” into Jeremy Bentham’s panopticon prison, and finally into Richard Posner’s argument that the “major function of criminal law in a capitalist society” is to prevent “market-bypassing.” To be sure, the language and rhetoric has metamorphosed over two centuries. But the logic — the structure of the argument — is the same.

Now, how it all came about, that’s a fascinating story that journeys through Hayek and natural law for the libertarians such as Richard Epstein, and through Bentham for the utilitarians and the pragmatists, such as Becker and Posner. They all came together thanks to the writings of my dear colleague Ronald Coase (who repeatedly scolds me that he was never part of the Chicago School). But to understand all this, I think I’ll refer you to the long chapter on the Chicago School in the book itself.

2. You suggest that members of the Chicago School, particularly Richard Posner, have drawn on the eighteenth-century Italian philosopher-statesman Cesare Beccaria in a way that falls short of fully understanding him. What did they miss?

They missed his economics! It’s not entirely surprising, given that Beccaria’s economic writings have been forgotten by history and never translated into English. But Beccaria was primarily an economist. Joseph Schumpeter referred to him as the “Italian Adam Smith” — but in importance only. His economics, as you will see, were radically different than Smith’s.

Beccaria was an adamant regulator, not just of proportional punishment, but of commerce and trade as well. The same year he published On Crimes and Punishments, he was computing algorithms for the optimal tariffs to augment the wealth of the prince. There was a perfect consistency in Beccaria’s thought that led him from his cameralist beliefs to a regulatory conception of criminal law, and that allowed him to see that markets are policed in the same way that we police the streets. He would teach his economics students about policing and finance in the same breath.

Becker and Posner drew heavily on Beccaria’s punishment writings. In fact, Beccaria had articulated most of the important law-and-economics insights in the criminal area by 1764 (from marginal deterrence, to the trade-off between length and certainty of punishment, to the use of mathematical algorithms to solve criminal law questions). But they missed his cameralism and mercantilism, and as a result embraced an internal inconsistency: a strict, Beccarian regulatory framework for criminal law, but a hands-off approach to free-market exchange.

3. You’ve leveled sharp criticism at some of your most prominent colleagues in Hyde Park. How has this affected your relationship with them?

One of the most remarkable things about the University of Chicago is that we genuinely prize ideas and criticism. Hyde Park is truly extraordinary for the intensity of its life of the mind. We dish it out hard — harder than anywhere else I’ve been. But with that comes a certain mutual understanding and respect: we want to hear each other’s best criticism, and we value it.

I know for myself that my work has consistently sharpened in Hyde Park as I’ve had to respond to my colleagues’ criticisms — and let me tell you, they have been pointed. The presentation of my Chicago School chapter at the University of Chicago faculty workshop was at times explosive. But I value that tremendously and believe that Becker, Epstein, Posner, and others value it as well.

As for what they say about me among themselves, well, I’ve no idea! But frankly, that’s secondary. Getting it right matters more. Each year our entering class at the University of Chicago adopts a motto. My favorite one goes, “It’s all fine and good in practice, but how does it work in theory?” That’s by far the most important — getting it right, both in practice and in theory.

4. You show us that Le Mercier talked about limiting the role of government in the marketplace, yet when he was dispatched to govern Martinique he proved heavy-handed. Likewise you seem to think that libertarians, especially right libertarians, talk a good game about small government, but that if they got their hands on the rudder they might be harsh rulers. What’s your evidence for this proposition?

True-blooded right libertarians have never gotten their hands on the rudder in part because they eschew the kind of political compromise that’s required for electoral politics. Thinkers like Hayek, Ayn Rand, Robert Nozick, and for that matter Richard Epstein have had extraordinary intellectual influence, but have never been given the opportunity to steer the ship. To predict what would happen, you’d have to look at someone like Ronald Reagan, the rhetorical champion of small government — which would confirm my point. President Reagan was the great initiator of our national debt crisis. He tripled the debt, increasing it by $1.9 trillion, and set us on our present course of massive deficits. More to the point, he oversaw the prison buildup and the war on drugs. He and his attorney general, Edwin Meese, put us on the path to mass incarceration. Reagan spoke of limited government, but put into practice that paradoxical — and expensive — alchemy of purported privatization and the police state.

5. You associate neoliberal concepts with the staggering rise of the U.S. prison industry. Are you arguing that the move toward a privatized prison industry has unleashed market forces that drive an expanding business — as we saw recently when prison-services corporations were found to be behind lobbying efforts for harsh measures to incarcerate immigrants who are “out of status” — or do you have a different take on the issue?

My argument, as I’ve clarified over at Balkinization, is not that privatization or other neoliberal policies are responsible for mass incarceration (though they have undoubtedly contributed). In the book, I demonstrate instead how neoliberal ideas were born — and remain today — joined at the hip with the Big Brother state. The idea that the government is incompetent except when it comes to policing has facilitated the slide to mass incarceration. That mindset makes it difficult to pass economic regulation, but easy to multiply criminal offenses and increase the severity of punishment. Or, as Posner has written, to send only the poor to prison (the wealthy can be fined) and provide only “a bare-bones system” of indigent defense (anything more would be inefficient).

I focus on the role of ideas not to disparage the importance of policies like the war on drugs, truth-in-sentencing, or law-and-order politics, but to refocus attention on how theories shape our practices. That paradoxical way of thinking has facilitated penal excess, certainly during the past forty years of neoliberalism, but also when the penitentiary was born at the beginning of the nineteenth century — a period historians now refer to as “the Market Revolution.” Periods of strong belief in free-market ideals have gone hand in hand with the birth and escalation of the prison system.

6. In the latest rounds of discussion about raising the federal debt ceiling there was a remarkable resistance to accepting the costs that flow from simultaneously waging three wars and increasing defense spending, even as Republicans chanted a small-government, if not a no-government, mantra. Doesn’t this point to an inherently untenable contradiction in Chicago School thought, at least as it is interpreted by political leaders?

harcourt_illusion_of_free_markets_cover

Yes, you see where I’m headed! In another book, I will need to extend the analysis to national security — the other domain where big government is perceived as inherently legitimate and competent. I’ve been tracking defense spending over at Balkinization, and it is staggering. Defense represents about 20 percent of the federal budget and 50 percent of the discretionary portion of the budget. The United States is spending more on defense than we’ve spent since World War II, and now accounts for 50 percent of the world’s military expenditures. Defense spending is one of our largest stimulus programs, yet it is never discussed in those terms. That’s the product of that paradoxical opposition between natural economic order and government competence in the realm of security. Prisons and armies, domestic tranquility and national security — you are right, sadly, the two play a similar role in American public discourse.

Share
Single Page

More from Scott Horton:

Conversation August 5, 2016, 12:08 pm

Lincoln’s Party

Sidney Blumenthal on the origins of the Republican Party, the fallout from Clinton’s emails, and his new biography of Abraham Lincoln

Conversation March 30, 2016, 3:44 pm

Burn Pits

Joseph Hickman discusses his new book, The Burn Pits, which tells the story of thousands of U.S. soldiers who, after returning from Iraq and Afghanistan, have developed rare cancers and respiratory diseases.

Context, No Comment August 28, 2015, 12:16 pm

Beltway Secrecy

In five easy lessons

Get access to 167 years of
Harper’s for only $45.99

United States Canada

CATEGORIES

THE CURRENT ISSUE

June 2018

The Last Best Place

= Subscribers only.
Sign in here.
Subscribe here.

The Sound of Madness

= Subscribers only.
Sign in here.
Subscribe here.

Looking for Calley

= Subscribers only.
Sign in here.
Subscribe here.

Comforting Myths

= Subscribers only.
Sign in here.
Subscribe here.

The Wizard of Q

= Subscribers only.
Sign in here.
Subscribe here.

Punching the Clock

view Table Content

FEATURED ON HARPERS.ORG

Article
Combat High·

= Subscribers only.
Sign in here.
Subscribe here.

Afew months before the United States invaded Iraq, in 2003, Donald Rumsfeld, the defense secretary at the time, was asked on a radio show how long the war would take. “Five days or five weeks or five months,” he replied. “It certainly isn’t going to last any longer than that.” When George W. Bush departed the White House more than five years later, there were nearly 136,000 US soldiers stationed in the country. 

The number of troops has fallen since then, but Bush’s successors have failed to withdraw the United States from the region. Barack Obama campaigned on ending the wars in Iraq and Afghanistan, only to send hundreds of troops into Syria. For years Donald Trump described America’s efforts in Afghanistan as “a waste” and said that soldiers were being led “to slaughter,” but in 2017 he announced that he would deploy as many as 4,000 more troops to the country. “Decisions are much different when you sit behind the desk of the Oval Office,” he explained. Every president, it seems, eventually learns to embrace our perpetual war.

With the Trump Administration’s attacks on affordable health care, immigration, environmental regulation, and civil rights now in full swing, criticism of America’s military engagements has all but disappeared from the national conversation. Why hasn’t the United States been able—or willing—to end these conflicts? Who has benefited from them? Is victory still possible—and, if so, is it anywhere in sight?

In March, Harper’s Magazine convened a panel of former soldiers at the United States Military Academy at West Point, New York. The participants, almost all of whom saw combat in Iraq or Afghanistan, were asked to reflect on the country’s involvement in the Middle East. This Forum is based on that panel, which was held before an audience of cadets and officers, and on a private discussion that followed.

Illustration (detail) by John Ritter
Article
Comforting Myths·

= Subscribers only.
Sign in here.
Subscribe here.

Before he died, my father reminded me that when I was four and he asked what I wanted to be when I grew up, I said I wanted to be a writer. Of course, what I meant by “writer” then was a writer of Superman comics. In part I was infatuated with the practically invulnerable Man of Steel, his blue eyes and his spit curl. I wanted both to be him and to marry him—to be his Robin, so to speak. But more importantly, I wanted to write his story, the adventures of the man who fought for truth, justice, and the American Way—if only I could figure out what the fuck the American Way was.

Artwork by Mahmood Sabzi
Article
The Sound of Madness·

= Subscribers only.
Sign in here.
Subscribe here.

Sarah was four years old when her spirit guide first appeared. One day, she woke up from a nap and saw him there beside her bed. He was short, with longish curly hair, like a cherub made of light. She couldn’t see his feet. They played a board game—she remembers pushing the pieces around—and then he melted away.

After that, he came and went like any child’s imaginary friend. Sarah often sensed his presence when strange things happened—when forces of light and darkness took shape in the air around her or when photographs rippled as though shimmering in the heat. Sometimes Sarah had thoughts in her head that she knew were not her own. She would say things that upset her parents. “Cut it out,” her mother would warn. “This is what they put people in psychiatric hospitals for.”

Painting (detail) by Carlo Zinelli
Article
Looking for Calley·

= Subscribers only.
Sign in here.
Subscribe here.

In the fall of 1969, I was a freelance journalist working out of a small, cheap office I had rented on the eighth floor of the National Press Building in downtown Washington. A few doors down was a young Ralph Nader, also a loner, whose exposé of the safety failures in American automobiles had changed the industry. There was nothing in those days quite like a quick lunch at the downstairs coffee shop with Ralph. Once, he grabbed a spoonful of my tuna-fish salad, flattened it out on a plate, and pointed out small pieces of paper and even tinier pieces of mouse shit in it. He was marvelous, if a bit hard to digest.

The tip came on Wednesday, October 22. The caller was Geoffrey Cowan, a young lawyer new to town who had worked on the ­McCarthy campaign and had been writing critically about the Vietnam War for the Village Voice. There was a story he wanted me to know about. The Army, he told me, was in the process of court-martialing a GI at Fort Benning, in Georgia, for the killing of seventy-five civilians in South Vietnam. Cowan did not have to spell out why such a story, if true, was important, but he refused to discuss the source for his information.

Photograph © Bettmann/Getty Images
Article
The Last Best Place·

= Subscribers only.
Sign in here.
Subscribe here.

The family was informed they would be moving to a place called Montana. Jaber Abdullah had never heard of it, but a Google search revealed that it was mountainous. Up to that point, he and his wife, Heba, had thought they’d be moving from Turkey to Newark, New Jersey. The prospect of crime there concerned Heba, as she and Jaber had two young sons: Jan, a petulant two-year-old, and Ivan, a newborn. 

Montana sounded like the countryside. That, Heba thought, could be good. She’d grown up in Damascus, Syria, where jasmine hung from the walls and people sold dates in the great markets. These days, you checked the sky for mortar rounds like you checked for rain, but she still had little desire to move to the United States. Basel, Jaber’s brother, a twenty-two-year-old with a cool, quiet demeanor, merely shrugged.

Illustration (detail) by Danijel Žeželj

Average amount Microsoft spends each month assisting people who need to change their passwords:

$2,000,000

Chimpanzees who join new groups with inferior nut-cracking techniques will abandon their superior techniques in order to fit in.

Trump leaves the Iran nuclear deal, Ebola breaks out in the Democratic Republic of Congo, and scientists claim that Pluto is still a planet.

Subscribe to the Weekly Review newsletter. Don’t worry, we won’t sell your email address!

HARPER’S FINEST

Report — From the June 2013 issue

How to Make Your Own AR-15

= Subscribers only.
Sign in here.
Subscribe here.

By

"Gun owners have long been the hypochondriacs of American politics. Over the past twenty years, the gun-rights movement has won just about every battle it has fought; states have passed at least a hundred laws loosening gun restrictions since President Obama took office. Yet the National Rifle Association has continued to insist that government confiscation of privately owned firearms is nigh. The NRA’s alarmism helped maintain an active membership, but the strategy was risky: sooner or later, gun guys might have realized that they’d been had. Then came the shootings at a movie theater in Aurora, Colorado, and at Sandy Hook Elementary School in Newtown, Connecticut, followed swiftly by the nightmare the NRA had been promising for decades: a dedicated push at every level of government for new gun laws. The gun-rights movement was now that most insufferable of species: a hypochondriac taken suddenly, seriously ill."

Subscribe Today