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MarketsAndPrisons - Bernard E. Harcourt, The illusion of Free Markets: Punishment and the Myth of Natural Order (Harvard, Harvard University Press, 2010).

Published online by Cambridge University Press:  10 February 2012

Debra Satz*
Affiliation:
Stanford University [dsatz@stanford.edu].

Abstract

Type
Book Reviews
Copyright
Copyright © A.E.S. 2011

Many people are attracted to the idea of a laissez faire economy, a market economy that is independent of government regulation and interference. Only such a laissez faire economy is held to be compatible with individual freedom. But the idea of such an economy is largely a myth – a never was, that is not, and that can never be. All modern economies are regulated and, in particular, capitalist economies depend on regulation and interference.

To see this we can begin by noting that, in all capitalist economies, there are rules governing ownership, of what can and cannot be property. Many forms of capitalist property cannot be understood as “natural” or independent of state action: think of the limited liability corporation, and the rules governing intellectual property and bankruptcy. One might reject these forms of property on the grounds that they are made by governments and are not natural, but it is hard to see how a vibrant capitalist economy could be sustained without some version of them. Consider, for example, the rules governing bankruptcy which discharge an insolvent debtor’s debts and thereby abrogate the "natural" property claims of creditors. These rules effectively abolished debt peonage. They made it possible for individuals to retain certain liberty rights over themselves even at the cost of the creditor. If capitalist markets are understood as vehicles for individual freedom, then they depend on government action to prevent contracts that would turn one person into a lifelong servant of another. A pure system of natural property rights with unrestricted freedom of contract contains inherent tendencies to revert to feudalism.

In the second place, in all market societies today, key features of the economy amount to departures from laissez faire. Consider, the state provision of public goods, such as roads, public health programs, and schools; centralized banking; regulation of the environment, food and drugs, auto safety, etc; and social insurance.

In The Illusion of the Free Market, Bernard Harcourt underscores both the ways that property rights are forms of coercion that always distribute freedoms between people (e.g., in my creditor and debtor example) and the ways that government regulation undergirds the workings of the American economy. These are very important points. Although others have made these points before, Harcourt illustrates them with a series of compelling and idiosyncratic examples, including the workings of the Chicago Board of Trade and a detailed discussion of eighteenth century grain regulations in France.

The novelty of Illusion rests not with these claims, but with a purported link between the idea of unregulated capitalist markets and the rise of the prison society. In addition to skewering the American myth of a free market economy, Harcourt points to America’s mass incarceration of its population. He argues that the two phenomena – an idea about free markets and a theory of legal despotism according to which the purpose of the state is to “police and punish” – go “hand in hand” (p. 151). Harcourt suggests that a belief in free markets as part of a natural order effectively is the flip side of a belief in government as a mechanism for punishing deviations from that order. But what exactly is the relationship between these two claims? In several places there is a suggestion of how these thoughts are connected: if markets are natural order, then redistribution is unnatural and is not a legitimate role for the state; if markets are natural order then it is “easier…to embrace criminalizing any and all forms of ‘disorder’” (p. 196).

Harcourt is careful to state that he is not making a causal claim. He writes that the idea of a natural order “makes possible” (p. 41) “facilitates” (p. 202), “enables” (p. 241) the idea of the punishment regime (p. 202).

But even if we take the thesis of the book as weaker than causation, I am not convinced that there is any necessary affinity between the ideology of free markets and the prison society. First, on the level of the relationship between ideas, there have been thinkers that have embraced the idea of a natural order governing property and economic relations who also rejected the idea that the purpose of government is simply to punish deviance outside that order. John Locke (who does not appear anywhere in this book) would be a case in point. Locke held that the natural laws governing property had an egalitarian element that the government was obliged to ensure (the so-called Lockean proviso). For Locke, natural order itself justified tax and transfer actions by government. Or to take another example, to the extent that Adam Smith believed in a natural order for the economy, then, as Harcourt himself notes, he certainly did not see the only function of government as punishing deviance but ascribed to government the important role of providing for public goods such as education. My point is that Harcourt’s claim partly depends on what we think the content of the natural order is. Quesnay, who is one focus of Harcourt’s book, held one idea of this order; but Locke and Smith held another. Interestingly, Hayek, who is discussed in terms of his belief in the market as a form of spontaneous order, also accepted a redistributive role for government to ensure that all had a satisfactory minimum.

Second, on the level of the relationship between these ideas and our current practices, I am worried about the dangers of over-generalizing. In an interesting chapter in the book, Harcourt acknowledges criticisms of his account that point to the diverse penal practices of other countries. The United States is an outlier in its rates of imprisonment: no other advanced capitalist economy comes close to us. In response, Harcourt suggests that European countries have a similar trajectory, but even if rates of imprisonment are rising everywhere, the gaps remain very significant and it is unclear whether ideas about markets have anything at all to do with the rising prison rates.

In his preface to The Ethics of Memory, Avishai Margalit draws a distinction between “e.g. philosophers and i.e. philosophers – illustrators and explicators”. As I read Harcourt’s book, it is a tour de force in a kind of e.g. thinking, full of striking examples that are often illuminating. But those who yearn for an i.e. style of argument, for sharp conceptual distinctions and causal inferences, will worry that the central thesis of the book is less than defended. Luckily, both types of thinkers will find plenty to engage with.