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There’s No Such Thing as a Free Market

The long and sordid history of an economic fantasy
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Free Market: The History of an Idea by Jacob Soll. Basic Books, 336 pages.

In 1753, Adam Smith was a moral philosopher specializing in Stoicism, teaching at the University of Glasgow. After publishing his first book, Smith became a minor intellectual celebrity. His friend David Hume helped him leverage his fame into a cushy job tutoring the son of a wealthy English duke while traveling with the boy across Europe. In France, Smith met a group of thinkers who profoundly affected his thinking and led him to the central ideas of his most famous work, The Wealth of Nations.

These thinkers were called the physiocrats. They theorized that agriculture was the foundation of any stable society, a reaction to France’s current economic development. The country was on the cusp of industrialization, and the French government, in an attempt to catch up to more developed countries like England, had forcibly directed investment to industry and the country’s infrastructure. The physiocrats hated all this. They thought that the land, and by extension, the elite class who owned it, should be the priority for state protection—not the grubby merchants and industrialists with their grimy factories. They were a cult of nature and defenders of the feudal organization of an agrarian society.

The government, in other words, needed to liberate and defend this allegedly natural order with a strong hand.

Smith concurred. The physiocratic system, he said, “with all its imperfections is, perhaps, the nearest approximation to the truth that has yet been published upon the subject of political economy.” As a scholar of ancient Rome and Stoic philosophy, he believed that cultivation of virtue through civic action was the path to riches, and Smith thought that the landed aristocracy was the sole group capable of possessing this virtue. Well-educated, inculcated with similar values, and familiar with each other’s moral code, the trust this landed elite had in each other bound them together. And trust was, in Smith’s mind, a prerequisite for smoothly running trade. Merchants and corporations were unnatural, debased, and could not be trusted.

The swaying rhythm of the growth and harvest of crops synchronized trade—with certain constraints. “To maintain what was seen as nature’s equilibrium of constant production,” Jacob Soll writes of Smith in his new history of free market ideology Free Market, “landowners had to dominate government, in order to make sure farming was untaxed and unregulated.” The government, in other words, needed to liberate and defend this allegedly natural order with a strong hand, by, say, protecting commerce along England’s imperial trade routes. This is the basis of Adam Smith’s ideas of free markets: the landed aristocracy, free to do whatever they want and completely in control of the state, will create wealth for all, because they are such good people.

More than two hundred years later, Smith’s elitist agricultural vision is dead, but the notion of the free market lives on in a totally different, totally extreme, and totally mangled version of his ideas. Smith was writing in defense of colonialism, slavery, empire, and farming. Today’s free market zealots, from Milton Friedman to Peter Thiel, praise innovators, industrialists, technologists, and financiers, who are said to create wealth out of nothing but vaporous dreams and have no obligation to anyone but themselves. This is a radical and speculative vision of freedom that purports to hold the coercive powers of the government at bay. But as Jacob Soll sets out to show in his book, throughout the long history of free market thought, the idea of free markets has been very different from our modern conception of them. “It is hardly surprising that modern free market thinkers rarely, if ever, mention that Smith was an admirer of the Roman senatorial oligarchy,” or the fact that he “was himself a government bureaucrat,” Soll writes.

So how did free market thought go from a theory of benevolent economic domination to today’s supposedly anti-authoritarian defense of business? Soll looks for answers by tracing the history of the idea in Europe from Cicero through thinkers like Saint Augustine, Franciscan monks, John Locke, Hume, Smith, and up to the present. He argues that today’s ideas of the free market are an aberration, but he also makes clear what today’s free market proponents share with Smith, and what we might do about them.


Soll begins his history with Cicero, a politician and philosopher in the decaying days of the Roman republic. Cicero was a senator from the equestrian class just below the ruling elite that controlled the Roman empire. In a time of creeping authoritarianism, he was a striver who desperately wanted to defend the nobility and function of the elite landowners. He wrote that when the “best men” rule in “moderation,” the “citizens enjoy the greatest happiness.” Moderation has never been the hallmark of the ruling classes, but sure, why not put all our hopes in them?

Cicero rejected the idea that self-interest motivated economic life. He believed that the quest for virtue among those in charge prevented them from exploiting others or perverting markets. For him, Soll writes, “good morals . . . drove a healthy market, allowing ethical people to make exchanges in confidence. Trust was a mechanism that freed trade.” Cicero had a profound, almost touching, yet doomed faith in the goodness of the ruling class. In the end, Marc Antony, a general, proved him wrong, ordering his beheading.

Cicero, as many after him would do, likened free trade to a force of nature. In his time, Soll notes, Rome’s well established, well-defended trade routes that crisscrossed the Mediterranean seemed permanent and everlasting. “Imperial shipping routes . . . had given the impression that free movement of goods was part of the natural order of things,” he writes. But when the Roman empire began to crumble, Cicero’s notions about this “natural” order had to be reconsidered in a harsher light. His belated realization has a contemporary parallel: international trade deals and other forces of globalization long gave people the same feeling, right up until the pandemic fractured the supply chains they’d learned to take for granted.

After Cicero, thinkers continued to debate what animated trade, what produced wealth, and how to achieve prosperity. Many rejected Cicero’s notions of civic virtue. Saint Augustine, the early Christian philosopher, suggested that wealth was God’s gift to humanity and that the hunt for it was divine (bonus if you donated some of it to the church). He believed that people would choose to be non-materialistic of their own free will, and over time Christian morality replaced Stoic philosophy as the moral constraint on trade.

Another major shift in free market thinking arrived as industry began to crest on Europe’s horizon, threatening to displace agriculture as the economic engine of society. This process unfolded dramatically in France. In the seventeenth century, Jean-Baptiste Colbert, a state planner with authoritarian tendencies—he served as Comptroller-General of Finances under Louis XIV—mercilessly trashed agricultural supremacy and set out to modernize the country. He tossed away internal tariffs and standardized industries to promote trade, such as in fabric production, where the central government regulated the size, name, and quality of products. Colbert also built canals to move goods and subsidized tapestry and glass works. Soll suggests this type of centralized, state-led development anticipated the similar rise of modern-day China.

Adam Smith was intrigued by Colbert, but also appalled. While many of Colbert’s initiatives were successful, King Louis XIV still held extraordinary power. He could, and did, quickly dispense with economic development in favor of paranoid wars. Smith and the physiocrats thought that if landowners ruled a country instead of a monarch, war would be less appealing because the landowners would want to keep trade open as much as possible. This was similar to the erroneous Thomas Friedman hypothesis of the mid-1990s that “No two countries that both have a McDonald’s have ever fought a war against each other.” It also goes to show that free markets are often not seen in purely economic terms: their theorists have imagined them as total governing philosophies. Soll highlights how often economic thought is, at its base, political thought about how to maintain or achieve peace (although peace for whom? remains the unresolved question).

Smith called Colbert’s system mercantilism, and it spoke to a question that was at the core of free market thinking for hundreds of years: Should merchants or land-owners rule society? But there were dissenters to this idea. Proto-populist arguments put forth by thinkers like Jean-Jacques Rousseau suggested economic production could be maintained by the public, rejecting the previous binary. Unlike Cicero and Smith, Rousseau dismissed the idea that private virtue could work in the service of public good.


The rise of ideas about popular government seems to be the moment that free market thinking ran off the rails, becoming a reaction to ideas about social democracy and populism. Differing levels of state-controlled commerce (like central banking and bureaucratic regulation), coupled with expanded suffrage and modes of republican government, opened the operations of business to the whims of the public—not to mention that Marxist notions of state socialism were also proliferating. By the late nineteenth century, economic theorists like Alfred Marshall at Cambridge, inspired by the invention of Newtonian physics, created mathematical theories of why free markets were best, radically altering the philosophical and political questions that had previously dominated the field. These theories did not comport with the fact that monopolistic merchants in unregulated markets were swallowing economies on both sides of the Atlantic. “It was as if Cambridge were cut off from the rest of the world,” Soll writes. Yet Marshall’s classical theories would define economic orthodoxy for generations. The field of economics has never been a slave to reality.

With the moral basis for free markets gone, twentieth century economic thinkers like Milton Friedman and Friedrich Hayek could selectively read Adam Smith’s work and turn him from a starched moral philosopher into a Hoover Institution-approved libertarian economist. The neoliberal ideology that Friedman and Hayek espoused gripped the Western imagination, but it was always more of an aspirational philosophy than an effective playbook for creating a free society: Hayek in particular advocated for extreme free markets during a time of rapid mid-century economic transformation led by strong states. Road to Serfdom, his most famous book, Soll writes, “stands out for its total lack of engagement with the realities of the postwar growth period and its fanatical vision of the state as a force of evil.”

Much of neoliberal theory suggested it was an antidote to totalitarianism and proclaimed that the state was incapable of directing economic growth, creating an opposition between state action and free markets that, according to Soll’s thousand-year history of European economic thought, had not really existed. Nonetheless, the neoliberal trash-talking of state actions ramped up during the Reagan administration and continued almost unimpeded until the financial crash in 2008—all while government spending increased, and corporations took huge tax breaks, bailouts, and other legal protections. Even libertarian defenders of the free market faith, like the Koch family, rushed into industries with the highest level of government subsidies and protections, like paper and oil. The reality, Soll argues, is that we never saw the radically unregulated markets that we were told work so well.


Despite the distortion of free market thought from its philosophical origins, in practice, much has stayed the same from feudal England. While divorced on the surface from Smith’s theory, neoliberalism did maintain the idea that, as Soll puts it, “wealth-producing people should have a special status in society.” Smith argued for the supremacy of agriculture; today’s free market proponents fought for, and won, the supremacy of business. It’s a very limited vision of freedom, one that always seems to be propped up by an empire, whether it be Roman, English, or American. Wealth, and the coercive power of a vast military and legal apparatus, are what keep trade running smoothly. So it’s no surprise that as each of these three global empires waned, faith in the power of the free market dimmed with it.

To avoid getting stuck in the muck of our oligarchy’s reality-warping argument, a better approach would be to abandon the label altogether.

Today, Soll argues, we are in an “essentially abusive relationship with free market thought.” We constantly look to it to provide better products, lower prices, and wide-spread wealth: feats it never achieves. The state, like it or not, remains crucial to the operation of economic life. And so long as it is dominated by business interests, it does little to help those at the bottom. The question is not whether the state is intrinsically good or bad, but who the state is prioritizing in its economic program.

Soll suggests we need to re-embed democracy and government in the economy. While this sounds good, it’s more important to stress that the operations of business, commerce, and finance need to become much less important. Economic growth is not always good and can be, in fact, quite harmful. In terms of reform, making economic life more democratic, by, say, nationalizing finance and creating citizen-led committees to decide on which industries receive federal subsidies would be a start. But we have to stop looking to business and industry to create a peaceful society; the amount of wealth or even the quantity of jobs produced by commercial interests is not a gauge of success without considering how that wealth is distributed, or the health of the country at large. The United States is one of the wealthiest societies of all time, and yet some eleven million children here live in poverty. Gross domestic product, average wealth: these are delusional, almost completely useless metrics.

Ultimately, though, this book is not about policy, it’s about an idea. And the more I read it, the more I felt that Soll’s history wasn’t owning up to the fact that the phrase “free market” obscures much more than it clarifies. Free Market, while quite thorough, makes no argument for why we should even use this phrase anymore. To avoid getting stuck in the muck of our oligarchy’s reality-warping argument, a better approach would be to abandon the label altogether and reckon with what we really have: a state government captured by business interests that shape society so that businesses and their owners benefit first. It’s freedom for commerce, and chains for everyone else.

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