I overheard someone talking about something called “free market economics” and it made me think of the two levels at which that phrase may relate to anti-democracy bad economics in the conservative style, so I thought I might discuss that this week. I may have suggested before I have a particular interest in what I call “level problems,” where the same idea, concern, issue can arise in two or more places or levels of some broader theory. Seems always to create great potential for confusion and conflict.
One level at which the phrase “free market economics” may relate to bad economics in the conservative style is that a “free market" is not a thing in neoclassical welfare economics, it’s undefined in that theory, so if one implies otherwise, well, that’s bad economics. What is a “free market,” I wonder. A “perfectly competitive” market with the particular unreal conditions specified in neoclassical welfare economics? Any old market structure? A market with so-called “market failures?” A monopoly? Oligopoly? Who knows? Who cares? Bad economics.
I suppose I should say, as “free” may seem to convey normative or ethical content, it’s not my intention right now to object to any ethical theory that claims some particular instance of a market laudable because “free” under some definition. Only, it’s not economics. And as always with what I call bad economics, “bad” is not meant to imply normative content I might not evaluate particularly highly myself, but a lack of clarity, sincerity, a failure to lay out one’s normative or ethical case for evaluation and debate in an honest way. So a “free market economics” that doesn't pretend to be neoclassical welfare economics, that includes an ethical theory defining the sense of “free” being invoked, helps readers evaluate it normatively, relates it to some or all real market structures, is not “bad,” per se. In my experience, that sort of honest explication of some sort of unusual economics / ethics blend called “free market economics” is rare. What seems much more common are underhanded attempts to imply such a theory can be derived from neoclassical welfare economics.
However, there is another level at which bad economics in the conservative style meets “free market economics,” and that is at a rather more advanced level, when one mentally replaces “free” with “perfectly competitive” and confines oneself to neoclassical welfare economics. Bad economics in the conservative style at that second level involves a misunderstanding of the normative limitations of neoclassical welfare economics, the ethical half-theory structure, and the relation of reality to the Fairy Land of Economic Theory. This is the level of bad economics in the conservative style one tends to hear from those with a modicum of training in economics, and sometimes from those with quite a lot of training.
Conflation between the two levels creates a great deal of confusion and conflict. Those with some knowledge of economics may assume bad economics in the conservative style refers only to lower level issues associated with simplistic “free market economics” and be dismissive or take umbrage at the notion they’re engaging in such nonsense themselves. Indeed, their tendency will be to confront bad economics by trying to explain issues endogenous to neoclassical welfare economics, confining themselves to explaining what the theory says. But that only works for the lower level sort of bad economics, not the higher sort. Addressing higher level bad economics in the conservative style involves a broader context, an assessment of the normative argument in neoclassical welfare economics and how it relates to reality, the limitations of “utility,” the role of exogenous ethics, etc.
“Free market economics” can be bad economics in the conservative style in two entirely different ways, corresponding to the two levels at which bad economics in the conservative style can go off the rails. Don't get them twisted. They can both cause confusion and conflict.
