The ‘free market’ is a fever dream and Adam Smith wasn’t in it

One concept that comes up a lot on the Rhodes Center Podcast: the idea of the 'free market’.

The idea, as you might know it, begins with John Locke, is fashioned fully by Adam Smith, and is delivered to us gift-wrapped (after some delays) by the likes of Hayek and Friedman in the mid 20th century.

But as our guest on this episode explains, the idea of the free market is hardly so straightforward. Jacob Soll is a professor of philosophy, history, and accounting at the University of Southern California, and in his book “Free Market: The History of an Idea,” he begins way back in ancient Rome, stops in 17th-century France with Louis XIV’s minister Jean-Baptiste Colbert, and, on the way to the present, barely mentions Adam Smith at all. 

No matter what you think of when you hear the words ‘free market’, Jacob's incredibly informative – and highly readable – history will make you see the concept in a whole new light. 

Learn more about and purchase Jacob’s Book “Free Market: The History of an Idea”

Learn more about the Watson Institute’s other podcasts 


[JAZZ MUSIC] MARK BLYTH: From the Rhodes Center for International Finance and Economics at Brown University, this is the Rhodes Center Podcast. I'm the director of the Rhodes Center and your host Mark Blyth. One concept that comes up a lot in my conversations on this podcast is the idea of the free market. As our guest in this episode explains the idea of the free market has never been quite as straightforward as many of its advocates or its critics think.

JACOB SOLL: They don't believe that the standard idea of a free market has ever existed. I believe it's something we're always being promised we'll get to if we do certain things. And so it's a dream. It's been a dream for a really, really long time.

MARK BLYTH: Jacob Soll is a professor of philosophy, history, and accounting at the University of Southern California. His new book is called Free Market-- The History of an Idea. In the story that you know, that idea begins with John Locke, as fashioned fully by Adam Smith, and is delivered to us gift-wrapped after a few delays by the likes of Hayek and Friedman in the mid-20th century.

But that's not Jacob's story, not at all. His story begins in Rome and barely mentions Smith. His story features folks like French minister Colbert, reviled today as a so-called mercantilist, who becomes the critical builder of markets and whose state-led form of development has had a far bigger impact on how the world actually works than Smith, according to Jacob, ever really did. No matter what you think when you hear the words "free market," Jacob's incredibly informative and highly readable history will make you see the concept in a whole new light. Here's my conversation with Jacob.


Hello, Jacob.

JACOB SOLL: Hey, Mark.

MARK BLYTH: It's good to be here with you.

JACOB SOLL: It's good to be with you too. Thank you.

MARK BLYTH: Excellent. So let's talk about this book. Anyone who's interested in this topic goes through a kind of standard education, either sort of in classes or on self-learned. And it usually starts with the Glorious Revolution. England is always the protagonist. America's strangely absent. France is the bad guy. There's a pantheon of liberal greats, and that's sort of the standard story.

And what I was really surprised by when I picked up your book is it basically starts with the Romans, and then it goes through the late medieval to early modern period. There's tons of Italians. There's tons of French. And it turns out the real hero in this-- and I don't mean in a character sense. I mean as in somebody who makes the world what it is-- is actually the legacy of Colbert. It's not the legacy of Smith. That's a big head for everybody. So why Romans? Why did you start there?

JACOB SOLL: Well, actually, I start there because of Smith. Smith is a professor of moral philosophy, and moral philosophy is basically studying the stoics. And the person that puts the stoics together and makes them into the curriculum for the Romans is Cicero. And so both Hume and Smith are bathed in Ciceronianism. They talk it. They quote him all the time. Of course, Smith doesn't use footnotes, but you can hear Cicero in everything he says. There are other stoics as well.

Basically, Cicero has a theory of exchange, of moral exchange, that of two senators, who are great landowners, exchange things in a disinterested way. It will keep the economy going. It will work with nature and the natural process of the seasons. And the Roman Republic and its class system and its constitution will go on forever, producing the bounty that it has produced.

MARK BLYTH: Is that a kind of self-regulating market claim?

JACOB SOLL: That sounds a lot like a self-regulating market based on moral behavior.

MARK BLYTH: Ah, so take us for a walk. Once the Romans drop out of the picture, where does it go next? How does it pop up in medieval times?

JACOB SOLL: Well, first, it's really interesting because Cicero and the stoics talk about controlling desire. And one of the most important classic pagan philosophers to persist in Christianity is not only Aristotle, but more so Cicero. Cicero never goes away. One. Should never forget that he is a martyr for the Republic. He gives his life for the Republic. That's right before Jesus Christ, so he's a sort of martyr model, a moral martyr model. So he can fit into Christianity really, really well.

But the Christians don't want exchange to be based on landowners exchanging for a secular-- or not a secular, but for a republican city. They want people to exchange their gold and their desire for salvation. So suddenly, this idea of a self-perpetuating market becomes a Christian idea, that desire, if you give it up or if you give up money, you will receive literally the treasure from heaven like a merchant will receive treasures and profits, and the fathers of the church used that language.

Then you have this long Christian struggle over markets, wealth, and salvation. And some of the first market thinkers are not people looking for profits. They're Franciscans looking to fulfill a vow of poverty.

MARK BLYTH: That's actually a super fascinating part of the book. They go to great lengths to try and be poor. And the other Christian sects kind of pick them off and make fun of them, right?

JACOB SOLL: Well, obviously, Dominicans are really rich, and the church is very rich. The church is the state. It's an incredibly rich institution. And the Franciscans show up in the twelve-hundreds as a force, and they don't want to have any possessions. They can't have anything. In fact, they write endless treatises about their coats and smocks. And the idea is that they can't actually own a coat except for utilitarian self-protection. They even believe that there's a whole economy of repairing the smock.

So, for example, if they own a book, they need to prove that the book is for theology and not for ownership's sake. Otherwise, they commit mortal sin, and they go to hell. So the stakes are huge in not having wealth. So they need to figure out what wealth is, and so they start looking into market processes.

MARK BLYTH: So how do they make that link? How do they make that bridge? Because, of course, wealth is the end result of market processes. How does that save you from wealth?

JACOB SOLL: The idea is they have to understand what everything is worth. And so what they get interested in is how value is created. So they come up with very clear ideas about risk, skill-- so they say, look, these merchants are adding value to things because they have skill. They've taken risk. They've invested capital. Other things lose value due to depreciation. But that's in the Bible-- depreciation rotting things. These guys go a lot further. They want to actually know what everything's worth at every moment so they don't make any errors.

MARK BLYTH: Ah, so they can maintain, if you will their, neutral value.

JACOB SOLL: Or their, right, zero value.

MARK BLYTH: Zero value in the whole thing. All right, so the church is caught up in these internal commotions. The Italians pop up, not just because of the wealth of the cities/states of the time, but because they actually have big factories hundreds of years before Smith discovers a medieval tin shed filled with people making pins. How do they find this free market story?

JACOB SOLL: Well, they're the first people to really talk about markets. It's people who are either Florentines or involved with Florence, but also Siena-- you have Lorenzetti's frescoes of good and bad government. And actually, the frescoes show functioning markets. And they show that you have stores and rich people if you have good government. If you don't, you have poverty and plague.

And what they say that's really interesting for the first time is that merchants can be good people. Cicero thinks that they're bad. And, of course, who do they quote to say this? Cicero. So they twist Cicero around. People like Benedetto Cotrugli, who's actually Croatian-- but he's working for a Florentine company and trying to get Florentine business. So he writes this book of the merchant, which is a really amazing book.

But there are other Florentines as well saying, look, what we do-- we merchants are good people. We have skill. We make money. And this money supports the Republic and the public good. And Cicero says, that's the summum bonum. That's the best thing you can do. Instead of being paupers, you have to understand that the medieval church called business people or merchants paupers. The poorest people in the world are the people who are trying to make money. What else could be less Christian and sad than that, right? Necessary but sad.

They turn that all around with a very secular vision, saying, actually, we're really positive. We make markets work, but we also do something else. We run governments. And they all come from guilds. Remember that Smith says guilds are the worst thing in the world, except that's where capitalism comes from. It comes from all the guilds. If you go to Florence and see the Duomo or the Palazzo Vecchio, it's covered with all the signs of the guilds who pay for the government. And they're very aware that they're paying for government.

But they have this idea-- and this is where Machiavelli comes in, always so remarkably visionary-- Machiavelli comes in and says, look, all these merchants are necessary, but the state has to be richer than any single merchant. Otherwise, we have an oligarchy or a dictatorship. And, of course, that's what had happened under the Medici, or his nemesi.

MARK BLYTH: So right there, you've got an appeal to free markets. You've also got a warning that unless the state is strong enough to regulate those markets, you will end up with oligarchy or worse.


MARK BLYTH: German ordoliberalism doesn't really seem not far off, even though it's about 600 years away. I can see why you're building this much longer story as to where this comes from. So where you really make, I would say, a controversial contribution, though, it's to really invert the relationship that we commonly have in our heads between France and the UK and between the figures of Colbert and Smith. So let's go right into this, right? I'll give you the stereotype of Colbert. You tell me why it's all bollocks, right?

So Colbert is this finance guy. The French, they try and tax-farm everyone to death. They're constantly at war. This guy comes in and tries to build a big state. He has one or two successes, but, ultimately, it's porcelain and fabrics. Who cares? And then, really, what happens is the British have both the technological, industrial, scientific, and literary revolutions all at once, and they then take off. But that's part in part because of the Glorious Revolution, which France doesn't have. France's revolution comes a hundred years later, and it's actually retrograde. So what new is there to say?


MARK BLYTH: Was that a fair stereotype of your summary?

JACOB SOLL: I mean, right, that's an Anglo-Saxon fantasy--


JACOB SOLL: --to put it politely.


JACOB SOLL: No. First of all, Colbert arrives in the 17th century. He's a trained accountant. France is the biggest, potentially richest, country in Europe. It also is a place with one of the biggest scientific establishments in Europe and a monarchy which is remarkably weak but has this great potential.

Louis XIV calls him in, and he believes that this taxation system is terrible. What he tries to do is bring good accounting into the state. Efficiency, fair taxation-- he always writes about that. But he's seen as this father of mercantilism, a word that's really made up in the nineteen-thirties. Smith says a mercantile system-- that means government run by businessmen.

Colbert is a former businessman, but he's working for a monarchy. He's got to raise funds. So he tries to reorganize the government, but he doesn't believe in wealth hoarding. He doesn't believe that gold is just the simple road to riches as the claim that mercantilists believe that it's just bullion hoarding. This is not actually what he believes.

He believes that manufacturing will create extensive, expanding wealth, and so will imperial seaborne trade. So he tries to create a system not unlike the English and the Dutch have created, I would say, 25 or 30 years earlier, where they have created shipping, businesses that are really successful, and manufacturing hubs.

Colbert looks at them and says, wow, they had the state heavily involved. Just a couple of decades before the navigation laws, the Dutch are super protectionist. They're doing all these things. He studies them, and he says, what France needs to do is what the Dutch and the English did, but we need to do it faster because we're in terrible condition. And they're literally-- he says that the Dutch are emptying out parts of France because the French can't compete, literally destroying industry and literally taking over parts of France economically.

So what does he think needs to be done? He thinks that there needs to be what we would call now a developmental economy. The state has to build ports. It has to build communication networks of roads and canals. It has to systematize weights and measures and currency. It has to get better accounting and tax collection. And it has to support these manufacturing and shipping industries.

This is literally a bigger-scale model of what the Dutch and the English are doing, done with a centralized state, absolutely, and done faster under enormous pressure. How does he do it? He relies hugely on this scientific establishment, which is in France. France has an Academy of Sciences. It's inviting foreign scholars in. It is actually super, super advanced in creating engineering technologies.

And, in fact, it becomes, through its textile mills in Herault, which he builds up, a huge menace to the wool industry in England, which, by the way, is the biggest industry-- this is not some small thing, textiles. It is the thing. And then there's also shipping. So those are the two things that the English rely upon.

Colbert goes after them. France is bigger. And, by the way, France's economy is going to be bigger than the English economy until the mid-18th century. This terrifies the English. Defoe, [? D'Avignon-- ?] all these people are terrified of the threat of the superior French economy that Colbert builds.

Now, France has a totally defective political system. Colbert dies in '83. Many of his reforms are pushed back. But what he does do sets the state for France being the second economy in the world. He basically boils down and does a quicker version of the English development model.

MARK BLYTH: So how come the English never wrote down nor realized nor fessed up to the fact that they too were a kind of developmental state? How did that history get wiped out of England? Because we know the Dutch did it, and we know that the English went after the Dutch, right? This was what the Navigation Acts were all about--

JACOB SOLL: Absolutely.

MARK BLYTH: --right? And that was pure state power--

JACOB SOLL: That's right.

MARK BLYTH: --right? In fact, you could almost call that, if it ever existed, a mercantilist project in the sense that it was zero-sum Dutch against the English, and that was the way that they phrased it, right? Well, maybe not, right?

JACOB SOLL: It wasn't zero sum. They really talked about it in more realistic terms of parts of markets and--

MARK BLYTH: Parts of markets.

JACOB SOLL: --local markets. They were smart.

MARK BLYTH: All right.

JACOB SOLL: I mean--

MARK BLYTH: OK. So let's allow that, right? But why did we end up with this sort homespun story about Adam Smith in a pin factory as being sort of what happened in England?

JACOB SOLL: Well, the English never thought that. I mean, please read some Defoe. Read all the discussions around opening markets as opposed to tariffs in the beginning of the 18th century. I mean, there's just endless amounts of writing. The people that win are saying, look, we can't compete with the French on an open market. We just can't do it. Their numbers are bigger, and actually what they're producing is superior or in greater quantities. It will simply wipe out our market. And if the wool market's gone, the whole English economy collapses.

They're very much aware of this, and they're aware of the French superiority in fashion, in wine, and in certain industries, too. Nobody thinks in Seventeen Sixty that England is absolutely superior. You do get William Petty-- this is the one-- he basically goes into Ireland and steals huge chunks of it. That's how he gets rich.

MARK BLYTH: Those are called national accounting.

JACOB SOLL: Right, well, political arithmetic, he's actually doing to pillage. It's a pretty interesting story. The one thing that he figures out is that when you create a national balance sheet-- and lots of people are thinking about national wealth in terms of balance sheets at this point-- is individual productivity. And he understands that English people are more productive per capita than the French. He's probably right about that.

And that's for a whole bunch of reasons. Some have claimed that it's because the English were more moral or virtuous than others. It's probably because of the way their economy had evolved over a longer period of time. They just had advantages that they had built up over time.

That myth does not exist in the mid-18th century. It doesn't even really exist under Smith. The Americans, people like Hamilton, are reading Jacques Necker and reading-- by the way, Hamilton says he wants to be the new Colbert when he's building the American state. He doesn't talk about Smith. In fact, please read his project on manufacturers. It is a direct response to The Wealth of Nations. He basically knocks down every one of Smith's theories. The idea that agriculture will make you rich, the idea that open markets can work for developing nations like early America-- he knocks it all down.

MARK BLYTH: And America has the highest rate of tariffs for the whole of the 19th century. But again, this is this other fascinating thing, right? So I'm suggesting that the British, in a sense, deliberately or accidentally forgot their own history. Maybe Defoe knew it, right? But then there's a forgetting period, right?

The Americans are a completely protectionist society, relying on the frontier and internal expansion of the whole the 19th century, right? And they then completely forget this story as well. That's not part of it. I mean, no one's heard of Henry Clay. No one has any idea who this guy is.

JACOB SOLL: Henry Clay continues Hamilton's policies, calling it the American system, which is a system of tariffs and small subsidies for infant industry, which is how America gets on its feet. America is not a free-market nation. In the 19th century, Britain hails itself literally as a free-market nation. It becomes its identity.

Now, are there free markets within England? Yes. Are there international free markets? The English keep pushing for them, but England has this very special trick up its sleeve. France has some of this trick too. It's called a global empire. It's an empire run on coercion and gunboats. It's not that friendly. It's based on pillaging.

We calculate that, over 140 years, Britain extracted around $44 trillion from India alone. That's just the colony of India. You have to think about how much money that is. Thanks for the railroads, right? So even the free marketeers who say they are against empire still are for maintaining the empire against uprisings. Theoretically, they're against it, just like Smith is theoretically against slavery, but is he really against slavery? Are these guys really against empire? Not when push comes to shove, not necessarily.

MARK BLYTH: So let's go farther, then. Not only are they sort of embedded in nefarious colonial extraction whilst talking about the benefits of free trade. We seem to get-- according to you, we get Smith wildly wrong, right? I'm going to put it in short form. You expand on it.

This guy is essentially a huckster. This guy is essentially the 21st-- these are, I should say, the 18th-century equivalent of somebody who's in the ideas industry, as Dan Drezner wrote about a few years ago. He makes his living getting grants from giant oligarchical landowners, who basically allow him to do the things that he wants to do. And he writes very flattering books that never implicate them in anything. They are incredibly vague and say lots of contradictory things.

JACOB SOLL: Absolutely.

MARK BLYTH: Now, we have this version. Like, hang on a minute. That's the guy who discovered not just the division of labor. It's also the theory of accumulation. It's also industrialism. Doesn't he do all that sort of stuff? And you're like, nah, sorry, doesn't happen.

JACOB SOLL: Smith's a hedger. You have to think of Smith as a professor who's on the make with some big donors. And he works for the donors. He actually lives in the donor's house, the Earl of Buccleuch, who's really one of the richest, most powerful men in all of Britain. These people run the Parliament. They're trying to cleanse their lands of peasants and crofters so that they can put lambs or sheep and these high-return cattle. So they're kind of land-owning, oligarchical, agricultural entrepreneurs.

And if you read Smith, that is what the system that he is talking about. Do businessmen exist? Yes. Does manufacturing exist? Sure. But they can never produce wealth on their own. According to him, all wealth comes from agricultural labor, and all industry is dependent on agricultural production, which we know is just not true. That's not how it works.

Smith hedges on everything. He complains about politicians while talking about the ideal legislator. He talks about the necessity for businessmen while saying they're extremely dangerous, untrustworthy, and monopolizing and that they should never be in government ever. Businessmen should never be in government.

Companies are dangerous too. Why? Because the people he works for are individuals. So he likes this idea of this individual good person. But he also uses the word "we" in The Theory of Moral Sentiments, and I don't know if he uses it in the same way in The Wealth of Nations. It's very easy to boil down who "we" is. We are the landowners and the professors and the people who support them and live off them and the universities that are educating their children.

Smith's filled with contradictions. I would also argue, please look closely at his ideas of slavery, which he claims is immoral, inefficient, but "perpetuall" with two Ls. That means you can never get rid of it. This is the age of abolition. Major English and Scottish people are making speeches in the Parliament about abolition. Not so Smith. He's working for people who make money from slavery. Smith says it's bad, but we can't get rid of it. There's a whole narrative of hedging and writing about these things in the 18th century.

One last thing-- you have to understand that when Smith says wealth can only be created by agriculture, there is a huge and long tradition of people desperately arguing that agriculture will not create enough wealth. It will not create stable wealth or growth that you need for a modern commercial society.

All these other authors who you've never heard of but are in my book are calling for this, most notably, Alexander Hamilton. And so Hamilton is the heir of a long tradition of market thinkers who don't believe that agriculture is the path to wealth Smith is what we might call a medieval economist, or a sort of neo-feudalist. This is not the father of capitalist thinking.


JACOB SOLL: It's just not.


JACOB SOLL: It's just not.

MARK BLYTH: No, right. So Britain forgets its own developmental tradition that Colbert draws on to do France.

JACOB SOLL: That's right.

MARK BLYTH: Colbert's boss screws it up because he's a war-mongering idiot, and France gets held back a bit. But let's jump forward about to the eighteen-sixties. England hasn't stormed ahead, as the standard narrative would have it, but it's still a very big, powerful place. France, less so. One of the interpretations of the Cobden-Chevalier Treaty was that it was essentially locking France into dependency status. We'll do the manufacturing. We'll do the advanced stuff. You just give us the wine, and then your elites can live comfortably. Is that a fair assessment as to what the relationship between Britain and France by about Eighteen Fifty, Eighteen Sixty?

JACOB SOLL: No, France is a super industrialized country, always with problems, which somehow we're more apt to talk about. Britain also has problems. I mean, there's a reason that the Labor Party gets invented. There's a reason there are constant workers' uprisings. There's a reason that Charles Dickens sits down and tries to save the world by talking about how dysfunctional the British economy is.

By the way, you also get people like Balzac, and later, Zola, writing the same books in France. These and then Germany coming later are the two industrial nations. No, what happens is large French manufacturing firms start realizing they can't compete with the British and that they're just going to get wiped out. And so the Cobden-Chevalier Treaty is not advantageous to big money in France.

Whether that shows France as being inferior to Britain-- surely, on certain levels it was. But if you look at actual French wealth throughout the 19th century, it's a really rich country. I mean, it's also industrially highly advanced, not as advanced as Britain. But by the end of the 19th century, France is inventing cars. France is inventing cinema. France is at the forefront of so many things. This is why people are mad at France. It's also a huge imperial power. It's more advanced than America. The Americans are scared of French products, right?

This mythology doesn't exist so much in France. And it doesn't exist so much on the continent, and it doesn't exist so much in Germany. It exists in the Anglo-Saxon world. So we live in a bubble, I think, that came from the British Empire, and then from American hegemony. And the fact is we've written a story that supports a certain narrative of how we got rich, which just isn't the story at all. It just happens to back up lots of people's interests or certain interests.

But how did America actually get rich? Well, protectionism, tariffs. Sure, how did France get rich? Why is France, by the way, today, still so rich? Why is the richest man in the world today French? His name is Bernard Arnault. Not the friendliest character. It's not Elon Musk, actually. France still has some of the biggest companies in the world. Is it hurting? Sure, but it's still really rich. Why? If it was such a failure, why is it right now probably richer than Britain? It seems to be doing a lot better.

MARK BLYTH: It never really failed, but there's always this persistent idea that it failed and that Britain, in some sense, succeeded. And, of course, if you look at it now-- I mean, let's not even mention Brexit or anything like this. But you've got an economy in the UK that is basically mired in very bad governance, a huge sort of rent seeking, a collapse in real wages, the whole lot. Not really-- France's problem is, should we extend the retirement age? Because, honestly, if we do the right accounting, we can fix it.

JACOB SOLL: Well, France also is way behind Britain in science and patents and all these other things. That's actually France's Achilles heel. It's technologically becoming a second-world state. And Britain, by the way, isn't, but without Europe, it's in very big trouble. I think a lot of this also has to do with World War II.

I think it has to do-- all of these economic fights are really set up after the Great Depression and World War II. There's a huge reaction, first of all, to FDR. That's so much of what people are angry about economically is FDR creating Social Security, FDR bringing the state more into the economy. And then France collaborates.


So it's not really--

MARK BLYTH: But as they all do-- I mean, this is kind of the "Bretton Woods golden era for labor," quote unquote.

JACOB SOLL: Well, sure, but the French don't really win the war, right? And it's Britain and America that have to hold hands and do it, and that's a good thing that they did. But the narratives of the 20th century get written after the war. And that's a lot of where this economic stuff comes from, especially in America with the Austrian school and others.

MARK BLYTH: So there's definitely, if you will, the material interest in telling a particular story because it protects, if you will, the wealth and property rights of those who are telling the story. But if I think about my friends and colleagues in economics, who have been through graduate education or whatever, they actually don't spend a lot of time reading Smith or any of that stuff. They just jumped straight into math class.


MARK BLYTH: Right? And it's a series of applied models, and this is how it works, and all the rest of it. It's very distant from that. But at the same time, the importance of the idea of the free market is still absolutely central to both economic science, economic governance, economic policy. Can we ever really escape the free market?

I mean, in a sense, what you're trying to do is to give us a where it really came from, what it really is about, how its different contours and struggles have been shaped over time. In a sense, there is no, there, there, it's a dream, as you say, right? But we keep trying to go for it. Why do we keep trying to go for it?

JACOB SOLL: Well, first of all, it's really seductive, this idea-- and this goes back to religion-- that if you just find the right set of ingredients, if you channel your desire the right way everything, will work itself out. You don't need governments. There will be this utopia, right? And that's what Brad DeLong has talked about, the slouching towards utopia. We're not getting to a utopia.

The one thing we're not going to escape, I believe, are markets. And so the people that I talk about in this book are market thinkers. They believe they're talking about free markets. They just believe that government will have a big role in them. I don't know really good examples of wealth creation without government involvement of some point.

Yes, there can be way too much. Yes, there are terribly run state industries that should be privatized. Other ones, like water in France, maybe it shouldn't have been privatized.

By the way, almost all of these questions are very contextual. They go into a national cultural basis. You can't generalize, but the beauty of the free market is it's supposed to apply to everyone equally, and it's just supposed to work. Obviously, I believe that an orthodox free market doesn't exist and usually-- and this is what many people saw-- usually benefits those with a competitive or comparative advantage, right?

So if you're already dominating a market, you want that market to be free. If you can compete really well and benefit from free markets, sure, having open trade with Europe is a really good idea. I believe in that. However, both of our major aircraft and military industries are completely subsidized. Or let's just take agriculture in America, which is subsidized beyond belief-- American dairy farmers, American grain.

I don't know about free markets because I haven't really seen them in the ideal sense. I do know about market freedoms and what Colbert called liberty of commerce. So I believe in free societies. I don't like governments bothering me too much in what I do. But I don't believe that we can have markets without government involvement.

Do I believe that America can compete in the chip market without the government? I haven't seen that happen so far, and I believe it's strategically necessary. Will the government totally succeed? No. There'll be lots of failures, but there are lots of failures in private industry too and lots of corruption there as well and waste. These are super hard questions. I'm not coming up with a single answer, but I do not think that the single answer is the idea that we're going to reach a self-correcting utopia.

MARK BLYTH: In closing, I want to bring in a book that we've never spoken about, which is an obvious counterpoint to your own, which is Hirschman's The Passions and the Interests. And there's two arguments in that book. There's this moment in the 17th century, where, essentially, the laws of celestial mechanics become the template for everything. We must find this everywhere, and you talk about that in the book. And then the second one is this idea of the doux commerce, this gentling effects of commerce, that the more we trade with each other, the more we'll become like each other. The more civilized we'll become, et cetera, et cetera.

And the first one is sort of techno scientist that can-- basically destroys any notion that the market is social. The second one is essentially a kind of-- I can see why Smith gets dragged into that argument because it's very aristocratic to a certain extent, right? The Hirschman thesis, if you want to call it that, was the only other take we had on this of any heft. How does it relate to your own take?

JACOB SOLL: Well, I mean, I'm rewriting Hirschman. I buy Hirschman, but Hirschman wasn't a historian. So he didn't see that it wasn't the 17th century that invented this. It goes way, way, way, way back. And Hirschman didn't seem to understand the history, first of all, of war and colonialism-- we have not had doux commerce. We have had wonderful peace within the United States. Comparably, Europe has not been so at peace.

So, first of all, I believe, yes, it's good to trade with each other, and it can bring peace. It's kind of worked in China, but it doesn't seem to be working now, hasn't worked with colonial ventures. And let's be honest, Central Europe's been trading with each other. I don't know. The Ukraine and Russia were trading with each other. I see that as a possibility and a real thing-- I've written an article about this in Politico-- but I don't see it as some kind of automatic function at all. In fact, you can easily fall into a war with one of your trading partners.

So that's a wonderful promise. It's a wonderful dream. Sometimes it works, but very often, it doesn't, although it definitely is a good idea. The idea is, rather than to fight, to trade. I believe, sure, that's a good idea, but I don't believe it always works, and I don't believe it's a philosophy that we can depend on as an automatic mechanism.

MARK BLYTH: And I think the latter half of the 20th century vis-a-vis China and the US suggests exactly that. Jacob has an amazing book that goes all the way from basically Roman ethics to the 21st century. It was great to bring you here to Brown, and I hope that many people listen to the podcast and buy the book.

JACOB SOLL: Thank you so much, Mark. Great pleasure.


MARK BLYTH: This episode was produced by Dan Richards and Lella Wirth. I'm Mark Blyth. You can listen to more conversations like this by subscribing to the Rhodes Center Podcast wherever you listen to podcasts. We'll be back soon with another episode of the Rhodes Center Podcast. Thanks.


About the Podcast

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The Rhodes Center Podcast with Mark Blyth
A podcast from the Rhodes Center, hosted by political economist Mark Blyth.

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Mark Blyth

Host, Rhodes Center Podcast