Q&A on "The Illusion of Free Markets" with Bernard Harcourt discussion

What is the relationship between neoliberalism and punishment? I've just posted my lengthy take on this question over at Balkinization, but would love to discuss this more...

I have not read your book, but I have read what you have said about it at Balkinization, and I found it interesting and worth reading. With regard to your latest blog, I have one complaint: your use of liberal and neoliberal, while clear in the context you provide, do not conform to the popular meanings of those terms in current political discussion. In fact what you call liberal is more characteristic of those who call themselves conservatives politically-pro free market and pro punitive criminal laws. So-called liberal Democrats, on the other hand, such as Obama, are more pro business regulation, and open to alternative forms of punishment. Academically it may be good to try to be precise and consistent with historical usage, but it may also detract from the political impact of what you have to say.

Gary wrote: "your use of liberal and neoliberal, while clear in the context you provide, do not conform to the popular meanings of those terms in current political discussion..."

You are right, Gary, the terminology is somewhat confusing. The term "liberal" has several different meanings. Here are at least three:

Liberal versus conservative: this is perhaps the most common usage of the term "liberal" (and the one you refer to). On this dimension, liberals tend to be Democrats and there are shades of liberalism among Democrats.

Liberal versus illiberal: this is more of a political theory notion that often, but not by any means always, overlaps with the first meaning of liberal. Here we think of thinkers like John Stuart Mill or HLA Hart who favored limits on government intervention except where there is harm to an individual or to society. In the political theory tradition, the use of the term "liberal political theory" goes further back of course to John Locke. The important notion here is liberty.

Economic liberalism versus mercantilism: this is the contrast between Adam Smith (on some readings) and more interventionist economic policies of planning and redistribution. This is the meaning of liberal that then gets contrasted, later, to socialism, say, in the work of Hayek.

Now, it is the third meaning of liberalism and its current iteration, neoliberalism, that I use in this work and that others, such as David Harvey and everyone who uses the term neoliberalism, has in their mind. This is the meaning of liberalism that is associated with the debate over "Neoliberalism."

To be clear then: Neoliberalism is a new form of economic liberalism. It is, for instance, the Chicago School of Economics. It argues for free markets and privatization.

It is indeed unfortunate that there is confusion over these terms; but I hope this helps clarify any confusion.

Is this some kind of joke? There is nothing liberal or neo-liberal about the Chicago School of Economics. For some odd reason you are labeling neo-classical economics as neo-liberal. Are Milton Friedman and Friedrick Hayek neo-liberals?

Your highlighting the correlation between neoliberalism (particulary the example of Reagan) and encarceration is indeed interesting, but I wonder if the speculation of causation is going a bit to far. The fact is that politicians by their very nature are power freaks. They will latch on to any trend and use it to further their own interests. It has often baffled me that the blatant hypocrisy of any professional politician supporting Tea Party policies is not addressed by their followers.

But in any case, the dividing line between neo-liberalism and anarcho-capitalism deserves our attention. If free markets require a minimal set of ground rules (laws against fraud, for example), then what is the optimal set? Of course, perhaps David Friedman will prove that there is no minimal set and we can do away with government entirely. Wouldn't that be nice?

I am reading Oligarchy, by Jeffrey Winters. It was recommended by someone, I forget who, on Balkinization- maybe you. In any case his analysis of the role of oligarchs in the development of governing structures is directly apropos to the contrast between the ability of oligarchs to evade punishment, and the use of punishment to control the masses. His perspective blows away the idea that this contrast is something new or unusual. It has been the status quo for thousands of years, and is not likely to change.

@Boat

neoliberalism (ˌniːəʊˈlɪbərəˌlɪzəm, -ˈlɪbrəˌlɪzəm)

— n
a modern politico-economic theory favouring free trade, privatization, minimal government intervention in business, reduced public expenditure on social services, etc

I find myself sympathetic to your arguments, but how do you address the following distinction?

Government is competent to regulate criminal behavior, because most citizens of average intelligence are capable of recognizing common crimes. The facts are typically time and space limited. A young child, for example, can recognize that a burglary has taken place by watching a surveillance video.

By contrast, government is incompetent to regulate most economic behavior, because the relevant facts are exceedingly complex. Assuming rational behavior by participants with perfect knowledge, economists can theorize about the effect of price upon demand or other such things. But the real world economy results from both rational and irrational decisions made by participants who rarely have anything close to perfect knowledge. Relevant factors often span time and space.

Most police, lawyers, judges, and jurors are capable of understanding the vast majority of criminal cases and are capable, at least in theory, of delivering justice. On the other hand, government regulators, even the wisest of them, are incapable of making competent judgments about economic matters.

I agree with entirely with your view of ‘free markets’. For years I have been trying to convince my students that there is no supernatural Free Market or invisible hand. I had only studied the laisser-faire classical economists; your connection with the physiocrats is very revealing.

However, I do think that you are a bit hard on Jeremy Bentham. Bentham and the Utilitarians were in the forefront advocating prison reform and reform of the laws, especially to greatly reduce the large number of crimes for which the death penalty could be imposed. His panopticon scheme was designed to greatly improve prison conditions from those that existed at the beginning of the 19th C. Moreover, his panopticon scheme involved rehabilitation, training of prisoners in useful trades. True, a big argument that he used was that the scheme could be self-financing; I would suggest that he was trying to make a case with the classical economists obsessed with reducing government expenditures as non productive. Thus, he was trying to make his reforms palatable to such people. In the context of the time, Bentham was trying to reduce the harshness and brutality in the state’s handling of crime and punishment.

In response to gooddoogles,given that markets are in fact regulated, and always have been, who else is going to regulate them other than the government? The issue is not degree of expertise, which can be bought--by governments as well as corporations. It is one of who is doing the regulation, and for what ends. Here the government is especially qualified. Legislators do not need to be concerned with the arcane details of the regulations, but they do need to set the overall ethical and legal parameters. No one else can do this.