Guest Column | Gregory Brazeal
We asked Brazeal to dive deeper into his latest publication and share the importance of his research, and this is what he had to say.
The idea starts with a very simple observation: our markets are based on legal rules. It’s so obvious, who could disagree? But when you think about it further, the idea conflicts with the way most people talk about economic issues. As I show in the article, even a lot of well-respected economists, historians and political scientists, on the right and the left, write in ways that seem oblivious to the constitutive role of law in our markets.
The clearest illustration of this is the way economic debates in the United States are often framed in terms of a choice between “government” and “the market.” “There’s an economic problem – should the government act? Or should we rely on the market?” And the general assumption has been that conservatives favor “the free market,” while progressives favor “government regulation.”
But if markets are constituted by legal rules, and legal rules are created and enforced by the government, then there really is no choice between “government” and “the market.” That’s the basic point of the article. The general opposition between “government” and “the market” makes no sense. Our markets are creatures of the government. Even a laissez-faire market depends for its existence on government rules, like the rules of property that define who owns what, and what they can do with what they own.
In my experience, once you move from the premise that markets are based on legal rules to the observation that the opposition between “government” and “the market” makes no sense, you start to encounter resistance. To many people, it’s self-evident that “the government” is one thing, and “the market” is another, separate thing. Maybe someone pictures a market as made up of private transactions between individuals, and in this picture, the state is invisible. But it’s not clear how to reconcile this picture with the fact that the rules of the market are created, applied and enforced by the state. The picture becomes even less clear once you consider that some of the most significant actors in our markets are corporations, which only exist through state laws.
And if you go further and note that there is no single thing called “the free market,” because markets can take many forms, you may encounter even more resistance. In my experience, the first year of law school makes it pretty clear to most students that there is no uncontroversial set of market rules that can simply be pulled out of thin air. The market rules that exist are the result of a long history of political conflict and political choices that could have been made differently. But in our public economic debates, both advocates and critics of markets tend to talk as though “the market” is a single, fixed thing.
So, that’s what most of the article is about. It argues that our public economic debates are usually carried out on the basis of a distinction between “government” and “the market” that seems like common sense but doesn’t really make sense. And it proposes a different way of talking. Instead of framing everything in terms of an illusory choice between “government” and “the market,” we could just discuss what we think the economic rules should be. Rather than getting bogged down in endless, nonsensical debates about whether we should be on the side of “government” or of “the market,” or equally interminable disputes over outmoded labels like “socialism” and “capitalism,” we could simply focus our attention on trying to decide, democratically, which rules will best realize our freedom as we define it.
Sometimes we might choose one or another market arrangement. Other times we might choose one or another non-market arrangement, as most businesses do in their internal management. Or we might choose a hybrid arrangement, as in the case of “public options.” But in each case, we’ll still be choosing government rules.
Again, none of this is new. Legal scholars and institutionalist economists have been trying to draw attention to the constitutive role of the state in markets for over a century. Popular writers like Dean Baker and Robert Reich have written books about it. Within legal academia, the Law and Political Economy movement has been drawing renewed attention to the legal construction of markets for several years now.
But the idea never seems to break through to the wider public. Even progressives who emphasize that government plays an essential role in the economy through spending on infrastructure and other public goods will often, in the next breath, use phrases like “government intervention in the market,” as though the market somehow exists on its own, apart from the government, until the government interferes through “regulation.” I think this kind of language should seem just as puzzling to us as someone saying, “keep your government hands off my Medicare.”
In part my article is simply one more attempt to make the legal institutionalist view of markets accessible to more people. I thought it could be useful to synthesize a lot of the existing materials into a single, relatively non-technical article, freely available online, that someone could consult if they’re encountering the idea for the first time.
Finally, I also wanted to respond to skeptics who think that none of this matters. In the third part of the article, I try to respond to the objection: “Who cares if we talk about economic policy in a way that doesn’t make sense? What difference does that make?” My response is that debating economic policy in terms of a choice between “government” and “the market” contributes to the harmful illusion that current market outcomes are somehow natural. There’s a long history in the United States of viewing wealth and poverty simply as “just deserts” for individual initiative. In recent years, this myth may have become less widely accepted. But it wasn’t so long ago that a leading economist in the Democratic party told a reporter: “One of the reasons that inequality has probably gone up in our society is that people are being treated closer to the way that they’re supposed to be treated.”
If we stopped talking about “government intervention in the market” and instead recognized that our markets are legally constructed from the ground up, inequality could no longer be defended as the natural result of some people working harder than others and getting what they deserve. We would have to recognize that in any market, including even an idealized laissez-faire market, the government is always, in a sense, “picking winners and losers.” And once we accept that our inequality results in part from politically chosen market rules, it would be easier to imagine not only redesigning our markets, but also having a more general conversation about the justice of the economic rules that govern our lives.
In any case, I felt like it was a good moment to write something like this. So many political and economic assumptions that seemed settled for most of my lifetime have come unsettled in the last few years. Maybe the way we talk about economic policy can change as well.
Brazeal is a former Judge Advocate in the Army Reserve and has a book forthcoming from Lever Press about narratives of criminality in fiction about the Iraq War. His article, “Markets as Legal Constructions,” is available on the University of Cincinnati Law Review website.
