Jacob Soll’s account of economic history casts Friedman and Hayek as fantasists
By Barton Swaim. He reviews the book Free Market: The History of an Idea by Jacob Soll. Excerpts:
"Why does a scholar in 2022 feel he has to expend so much energy on disparaging free-market economists of the last century? Look around—the American political system isn’t exactly dominated by laissez-faire dogma. Hayek and Friedman made their reputations by debunking the central tenets of Keynesianism, and yet Keynesianism now reigns supreme. The preponderance of the Democratic Party now favors assorted forms of social democracy, half the Republican Party wants the government to play a larger role in economic life, and hardly anyone in Washington raises principled objections to colossal debt-financed spending bills or the latest expansion of welfare-state largess. The bailouts of 2008 and ’09 were bipartisan.
Our world, let us say, is not the consequence of undue deference to Friedrich Hayek and Milton Friedman.
Here Mr. Soll plays a rhetorical game I must reluctantly call disingenuous. Consider this sentence: “The simple fact is that [Friedman’s] ideal free-market vision for America never came to pass,” he writes. Never came to pass? That’s a clever way to sidestep the obvious reality that the preponderance of U.S. policy makers rejected Friedman’s “ideal free-market vision” and that our current spate of economic pathologies are therefore not the outgrowth of free-market philosophy."
"he has to pretend that the free marketeers have basically run the show for the past 70 years. Friedman’s “orthodox free-market discourse still prevails in the boardrooms of most leading corporations,” he writes. The word “discourse” may save the statement from outright falsehood, but the next sentence’s claim—that “Friedman’s orthodoxy remains the credo of the US Chamber of Commerce”—is both untrue and, in a way, magnificent."
"Mr. Soll examines Sir Thomas Smith’s “A Discourse on the Common Weal of This Realm,” for example, a pamphlet published in 1549 to protest Parliament’s appropriation of common agricultural land. Smith, Mr. Soll tells us, argued that “the state must help and even ‘force’ urban industry to develop with ‘rewardes’ and with the ‘paine’ of regulation.” But the word “paine” in that work refers to the governmental enclosures themselves, not to governmental coercion in the cause of economic development, and there is nothing about the state using “force” on urban industry.
In fact, in the passage Mr. Soll cites to support his claim that Smith advocated governmental coercion, the “Discourse” contends that the government ought to “let [farmers] haue more proffitt by [the plough] then they haue, and libertie to sell it at all times, and to all places, as frely as men maie doe theire other things.” Mr. Soll’s source says the opposite of what he asserts it says.
The book’s hero is Jean-Baptiste Colbert (1619-83), chief adviser to Louis XIV, the Sun King. Colbert is mainly remembered as the progenitor of mercantilism, the theory that the pathway to economic vitality lies in ensuring through protectionism that exports exceed imports, but Mr. Soll argues, with some apparent justification, that Colbert’s true legacy is as Europe’s first important proponent of nationwide industrial policy. The French monarchy, Colbert realized, had powers to centralize industry that England, its wealthier enemy, lacked. Accordingly he set about subsidizing companies, incentivizing foreign engineers to immigrate and build canals, supporting the ship-building sector, and so on. Did it work? “Statistics show” that it did, according to Mr. Soll, but his own analysis leaves me in some doubt. “Colbert’s economic projects were not all explosively successful,” he concedes, “and English growth was far superior. Still, if England led in coal, metal, cotton, and ship production, France led in the powerful industries Colbert developed, from the all-important wool industry to canvas, lace and Lyonnais silks.” I’m no specialist in economic history, but that sounds to me like Colbert’s industrial strategy was a bust—England in the 1670s and ’80s became an economic powerhouse and war machine while France got really good at making silk and lace.
Mr. Soll seems to love robust industrial policy except when he doesn’t. In his caricature of “The Road to Serfdom,” Hayek’s 1944 argument that incremental deprivations of economic liberty would lead eventually to tyranny and totalitarianism, Mr. Soll notes that “Hayek chose to forget that Hitler could neither have taken nor held power without the concerted support of German capitalists, who saw fascism as an attractive answer to trade unions, communism, and even social democracy.” For “capitalists,” read: corporate recipients of subsidies and official favoritism."
"Fair-minded critics of Hayek, of which Mr. Soll is not one, might reasonably point out that the great Austrian economist’s strictures on central planning, for all their brilliance, leave no room for any overarching metaphysics or morality. In a 1966 essay, for example, he contended that it is “meaningless to describe the manner in which the market distributes the good things of this world among particular people as just or unjust. . . . No test or criteria have been found or can be found by which such rules of ‘social justice’ can be assessed” because such rules “would have to be determined by the arbitrary will of the holders of power.”"
"Mr. Soll, meanwhile, albeit without intending it, reminds us why we are so ill-advised to allow a class of imperious planners to redistribute wealth and rearrange economies. He exhibits no misgivings about Colbert’s “brilliant and ruthless chief of police” cracking down on the “illegal circulation of foreign printed cloth.” He praises the 20th-century British leftist Joan Robinson, allowing only that she “remains an enigma” for her support of Mao Zedong’s murderous Cultural Revolution. Most astonishing of all, Mr. Soll refers to the French Revolution as “that great state intervention against an abusive, archaic society.” Given the choice between free-market philosophy bereft of the transcendent and centralizers armed with the guillotine, I’ll take the free market—every time."
Jerry Z. Muller on Soll & Adam Smith
See also this review in The NY Times by Justin Fox: How We’ve Come to Genuflect to the ‘Free Market’: Jacob Soll’s ambitious history takes us from Cicero to Milton Friedman, but is hobbled by questionable assertions.
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