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Free Market: The History Of An Idea – Jacob Soll  

by Venky

(Image Credit: http://www.netgalley.com)

The inextricably linked duo of “Free Market” and “The Invisible Hand”, are, arguably,  solid contenders, for two of the most misinterpreted, miscomprehended, misapplied and mismanaged phrases in the lexicon of economics and political philosophy. Professor of Philosophy, History and Accounting at the University of Southern California, Jacob Soll, in his upcoming work “Free Market: The History of An Idea” makes a bold attempt to set the record straight by weaving a fascinating chronology of the events birthing the notion of free markets. The case of characters aiding Soll in his endeavour make up for an electric and eclectic mix. Franciscan monks, Roman Statesmen, English monarchs, French philosophers and Italian guild participants all joust and jostle with and against one another as they provide incremental shape to an idea that has held the imagination of an entire globe in literal thrall.

Free Markets’ begins with a rousing chapter on the thoughts and proclamations of Cicero, the renowned Roman statesman. Cicero was of the unshakeable belief that if men of privilege and stature focused on agriculture, and in the process, exchanged goods in a moralistic and righteous fashion, the markets would need no intervention and would function like clockwork thereby leading to a prosperous republic. The influence of Cicero’s works on Adam Smith, the pioneer of the “Invisible Hand” theory is unmissable.

Two centuries after Cicero was decapitated under the orders of Mark Antony and his head (along with his hands) nailed on the Rostra in the Forum Romanum, the free market theory was provided an eschatological twist, courtesy Saint Augustine. Bringing a distinctly Christian appeal to his economic thoughts, Saint Augustine decreed that there was a ‘higher power’ that regulated all wealth. All that was required for people transacting with one another was to ‘enter’ God’s system and fulfill the necessary exchange. God’s grace would take over the rest. The Franciscan monk Peter John Olivi foretold the law of diminishing marginal utility by proposing that increased access to and consumption of a good would lead to the product diminishing in value.

Soll’s book is a wonderful tapestry whose warp and woof is splendidly and contentedly discernible. The reader traipses along the less trodden path from the medieval to modern, but without the accompanying botherations of either fatigue or frustration. While Soll traces the journey of the free market idea by referring to the works of a plethora of lambent and ignominious personalities, the reader cannot but notice his undisguised admiration for Jean Baptiste Colbert, the Prime Minister of the eccentric Sun King of France, Louis XIV. Colbert’s philosophies and practices formed the precursor for the introduction of the field of development economics. Colbert’s State would assist commerce and industry attain a competitive edge. He was firm in his belief that for business to function unhindered, the internal market of France needed to be freed, and the necessary infrastructure constructed. Colbert’s unparalleled vision led to the establishment of industries such as the Gobelins tapestry works and the Saint- Gobain glassworks. Colbert also anticipated the now ubiquitous and sprawling Special Economic Zones by welcoming investors into France, luring them with state pay and even enticing them with the prospects of monopolies to commence new industries and introduce novel technologies.

Colbert’s works were published in his memoirs titled ‘Commercial Code.’ Co-authored with Jacques Savary, a trade expert, this stellar publication earned Colbert a relief portrait along with 23 of the great law givers in the gallery of the US House of Representatives. Colbert now shares rarefied space with the likes of Justinian, Lycurgus and Thomas Jefferson.

Before ending with an almost jeremiad of sorts that has at its epicentre, marauding free market mavens of the likes of Friedrich Hayek and Milton Friedman, Soll also gives his readers a sneak peek into the works of lesser known economists such as Pierre le Pesant, sieur de Boisguilbert, and Jean Domat.  Boisguilbert wedged the theory of pacifism into the machinery of free market by contending that conflicts created famines, eviscerated agriculture, exacerbated taxes, before undermining trade.

An economist guild titled the free market physiocrats, led by the fire brand French economist Francois Quesnay virulently railed against the advancement of industry by advocating the cause of agriculture. Quesnay, whose thoughts were echoed later on by a host of other economists such as Thomas Malthus, David Ricardo and Adam Smith himself (with some variations) was a rabid agrarian advocate. Labelling merchants “idiots” and terming industry itself as “sterile”, Quesnay attempted to upend the wisdom of Colbert by proposing taxes on traders and exemptions from all levies for the farming community. Quesnay termed all nonagricultural products “destructive” and classified manufactured goods as falling under the ambit of a “sterile class”. Wholeheartedly concurring with the philosophy of Quesnay, Adam Smith opined that wealth stemmed from agriculture and the basis of any industrial wealth production was agricultural surplus.

Soll ends his book with a plea to exercise a great degree of common sense while furthering the cause of free markets. There is a need for private enterprises to work in tandem with the Government for the furtherance of any economy. Most industries would need state support in the form of government contracts, as was the case with Apple and Microsoft initially and social welfare programmes, the classic example of which being Amazon’s early use of the US Postal service and McDonald’s reliance on Medicaid.

Abhorring jargon and staying away from avoidable ‘econspeak’, “Free Market” is a compelling read for the expert and rustic alike

(Free Market: The History of an Idea by Jacob Soll is published by Basic Books and will be available for sale beginning 6th September 2022. Thank you Net Galley for the Advance Reviewer Copy).

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