Free Market: The History of an Idea (with Jacob Soll)

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0:00:08.1 Trevor Burrus: Welcome to Free Thoughts, I’m Trevor Burrus. Joining me today is Jacob Soll, a professor of philosophy, history and accounting at the University of Southern California. His new book is Free Market: The History of an Idea. Welcome to Free Thoughts, Jacob.

0:00:21.9 Jacob Soll: Thanks, Trevor. Great to be here.

0:00:24.6 Trevor Burrus: The first question seems fairly obvious, and on some level, you could just say, “Read the book.” But what is a free market?

0:00:31.6 Jacob Soll: Well, there are a whole bunch of ideas of free market, and that’s one of the reason I wrote the book, ’cause everyone seems to have their own interpretation. There’s one major interpretation that’s the idea of general equilibrium that free markets are just supply and demand simply left alone, and nothing else. But there are other concepts of free market, and there have been for hundreds of years. So, for Adam Smith, a free market was a market in which you had a moral society with stoically trained agrarian leaders who would help people, or merchants for that matter, make the right decision, often to invest back, not only into agriculture, but into their own nation. So I mean I could go on. There are all these different conditions, but I think it’s really interesting, that’s why I wrote the book, that so many people from Adam Smith to other well-​known people had sort of these conditional ideas. And that’s really until we get to the 20th century and we just have this pure supply and demand, general equilibrium definition.

0:01:48.3 Trevor Burrus: What about the term itself? I’ve read, particularly, a lot of Adam Smith. I have a philosophy background, and I view him as a philosopher which you discuss in the book, but the term, free market, itself… And you don’t see it used in the way of like a totem it’s used today, is you kinda say that free-​market economist. Of course Adam Smith would not have said the words, “I am a free market economist.” much less economist or a free market of that. So the words itself, are they fairly recent and vintage?

0:02:21.7 Jacob Soll: My sense is that they emerged in 19th century Imperial Britain with the Manchester men, and that they start calling themselves free marketeers. At least in the literature that’s the first time I see it used like that. The first time that one really sees it used in English because we can sort of debate when people start really using the term free market, because French is the other language of economics, there’s also Italian too, so we can argue about who uses the term and when. But the first time we see it in the titles of books in English is in the 1620s, and those books have given historians a lot to sort of chew on. There’s one by Edward Misselden and there’s another by Thomas Mun and those books have always confused historians because both of those figures say we need free market by the state. And they’re pretty clear about what they mean, that we need free markets, but we’re gonna need state support. That might mean military support, but it also might mean protectionist laws in order to get industry on its footing so that it can compete, because Britain is not a competitive place in the 17th century. It’s on its way, but it’s not there yet.

0:03:48.4 Trevor Burrus: A recurring theme in your book, which is something that comes up a lot in critics of free market thinking, is some sort of idea that there’s no such thing as a free market. For those who would like these things to be completely organic, there’s often a very organic backdrop to the way free market thinkers describe the kind of process of human beings engaging almost like an ecosystem, and that we could just do that and things would be okay whether we hit general equilibrium or not, and we don’t need anything else. But very, very few people who are free market advocates are anarchists. They understand that they’re… I live in the world where I know anarchists and I talk to them and I have interviewed them on this show. There are real advocates of state listeners out there, especially in my world, but very, very few people from Milton Friedman to Friedrich Hayek to even Ludwig von Mises who are actual anarchists who would say the free market doesn’t require anything, it doesn’t require any laws or any state intervention whatsoever. And that that would be somewhat of a straw man of what free market advocates actually say.

0:05:02.7 Jacob Soll: Right, they get… Some of those guys get pretty close by saying any state investment, any tax, for example, means state ownership, which I think is hard to defend because there have always been taxes and they don’t always mean state ownership. They don’t always actually make… They can determine certain decisions you make, but they also might not. So they advocated states, but they were really suspicious of them. I tend to think that especially figures like Hayek were traumatised, this is my theory because I’ve read his works over and over again, traumatised by communism and Nazism and seeing what the horrific things that a state could do. And so I felt that they had a kind of paranoid over-​reaction to the state, which was understandable, given where they were coming from. And some people have been really upset by me saying this, but I think it’s a fair thing to talk about. But… Sure, I do think a free market exists, I think that when you have money and you go out and you spend it and you’re not told how to spend it completely, I don’t know, I feel generally pretty free. I don’t like people… For example, I don’t like people telling me, and I don’t even know I should say this, that I can and cannot buy Foie gras. Alright, that makes me completely nuts. I also…

0:06:38.4 Trevor Burrus: You are in California, so there might be a mob outside your house soon enough.

0:06:42.4 Jacob Soll: Well, actually, in a recent dinner I ordered Foie gras and somebody got mad at me, but I was just like, “Look, I grew up in France, and in France, the geese and the ducks, if they’re brought up nicely, they run to you and they like being [0:07:02.5] ____ stuffed.” So yeah, you could be against industrial farms, I think you should protest industrial chickens and beef, ’cause that’s where you’re seeing a lot more suffering and pigs, there’s not that much duck suffering going on, I don’t… So this banning of Foie gras seems really nuts to me. If you’re gonna sort of do some measure of suffering and have this moral law, those things seem really crazy to me and infuriate me. Right? And I know that everyone has different things that they get infuriated about in those cases, and I think that’s also really interesting. I’m a Foie gras freedom defender.

0:07:33.9 Trevor Burrus: They get infuriated about how… And this is like a subtext in your book. They often get infuriated at how people use their money if freedom is allowed, and many regulations and laws that come in are to stop people from using their money in certain ways where freedom would be, whether that’s drug prohibition, prostitution prohibition, or other types of maybe less draconian regulations that say you can’t buy child labor goods or you can’t buy something that is not based in free or fair trade, because they don’t like the outcomes of that, so that itself could arguably not be a free market.

0:08:12.8 Jacob Soll: Right, so I think my one argument here is that it’s really complicated, and one of the things I don’t like is this simplistic blanket term, “Well, I’m a free marketeer,” or “that’s not free market,” or “what we just need is to get the state out of it.” I just hear that all the time, I’m like, “Okay, you’re gonna have to explain to me really what this means in all of its complexities.” because let’s just say that that’s a fully legitimate idea, but given we’ve had thousands of years of western history, we have all this growth of institutions and traditions, what does that mean, realistically? And that’s kind of my argument that ideally… Again, I don’t want states messing with me, but then again, I shouldn’t be a hypocrite, my dad came from a background with no money, it was state schools that got him to where he was, where he is, and state funding. He’s a medical researcher that allowed him to achieve what he did. I don’t know that… I think these are really hard questions, so that… I think what I’m trying to do it with the book is to prod people to think about them, some have taken it as a complete insult to free market thought. I feel like having spent eight years of this in two years where I worked 18 hours a day, I would have hoped that readers could see the respect that I paid by the effort.

0:09:39.3 Trevor Burrus: Oh, absolutely. I can see people in my world thinking this book is overly critical or just some sort of send up of free market thought, but it’s interesting because many of the people in this world, and I will be the first to admit, if you’re in the world of libertarianism, which I am fully in that world in a variety of ways, you will see people make distinctions between, say, Friedman and Mises, that to no one outside of that world really makes sense. It’s like how, if you’re not a communist, Trotskyites vs Leninists, is not really something that really matters. Together they’re both communists, and I find this consistently for people who criticize around the outside of the world that I’m in, which is Friedman and Mises that… I’m not sure if you’re familiar with the famous story of the Mont Pelerin Society meeting in I think 1952 was the first one, and they had Mises, Friedman and Hayek sitting around talking about something like public roads, and I believe it was Mises although a listener may correct me on this, it was Mises who stood up and called them both socialists and walked out the door.

0:10:49.2 Trevor Burrus: And because of the fact that they supported public roads or something like this, that many people in my world think that Friedman is not free market enough, and many people in that world thought he was definitely not a doctrinaire of free market, and definitely people think that Hayek wasn’t free market enough, so within this world, the criticisms of free market thinkers are very much along the lines that you’re talking about. Especially coming from the Austrian school, who would very much agree that like the Chicago School and the general equilibrium model are not very useful and are oversold, and this idea that freedom can happen if you don’t look at how much the state has intervened in subsidies and public schools and military intervention and all these things, then you’re not really promoting freedom. So there’s a lot there that I think listeners here would appreciate in your book, especially, we’re going back to the history too.

0:11:42.4 Jacob Soll: I just want people to think about it. As a historian, that’s the thing is that I see these super structures that exist. Again, the military for me is one that I can’t get over because it’s basically a Socialist institution, you get your food, your housing, your healthcare, you get education afterwards, you keep getting healthcare. I’m for that, in fact, I’m for more benefits for vets, but there are benefits, right? It’s not the old fashion army where you were picked up off the street, let’s say the Russian army, where you’re getting conscripted by force and then dumped off wherever. That’s the 18th century army. That’s… You want a free army, well, I don’t know how free that is, but it’s not a socialistic army like the one we have. I just want people to think about the nuances and the things that really are around us, I guess my conclusion there is, why don’t we have a conversation from the point of where we actually are and where we can get to with free market thought from there.

0:12:42.5 Jacob Soll: I guess that’s my answer to modern question, besides just going through the history to show over and over again that there are conditions, there are different definitions, and that there are also some funny backgrounds and really interesting things. And interesting origins to free market thought that people have just simply not looked at. And that startles me by the way, I mean. I couldn’t believe that no one saw the Cicero connection. It’s the biggest connection there is. It’s everywhere.

0:13:11.7 Trevor Burrus: Yeah, that’s my next question. Why start with Cicero?

0:13:15.3 Jacob Soll: I mean, Smith… It’s really fair to start with Smith and say, “Look, this is the person that everyone says is the great free market thinker.” He’s not the first by any means, but he’s the most important. I think that’s funny because he had a very particular idea of free markets that… I mean, would not look libertarian at all. In fact, he was this sort of oligarchic agrarian liberal arts professor and a tax collector who really liked lock-​in state institutions. So you have to think about that and then think about his context. But he was above all a moral philosopher. And what that meant in his context in the 18th century, is that you were just bathed in Ciceronian stoicism. You can read Smith. And if you read a lot of Cicero… I’m looking up at my stack of Cicero books, which by the way, I love. I mean, I just love reading Cicero. It’s so useful. And once you’ve read enough Cicero, and you find yourself just reading him because there’s so much to get out of Cicero. And it’s good to read him in context too, which I try and do in the book. You start seeing passages in Smith that are just taken from Cicero. Smith was not a foot-​noter.

0:14:29.0 Jacob Soll: Okay? Which makes him hard because he doesn’t tell you where he’s getting his lines from or his specific ideas. But one of the things we know is he’s repeating Ciceronian maxims over and over again. So I thought, “Okay, if this is the big guy let me just sort of start looking backwards.” If Smith is this foundational figure of free market thought, he’s a Ciceronian. So let me just look at his use of Cicero and let’s just start moving backwards with free market thought and Cicero. And when I did that, the book came together. And that’s… I guess that’s sort of historical method is you take someone from their time and you look at their sources and you sort move backwards in a genealogical origin story. Right? And everywhere I looked, I found Cicero. Everyone who was a free market thinker. And there were open free market thinkers from the late 17th century onwards in France. All of them were using Ciceronian thought. A mixture of Christianity and Ciceronian thought, or of deism and Ciceronian thought. And then I started going even further back into the Middle Ages, and Cicero is still there, in the Renaissance too. Every time you had someone talking about markets and how they should work morally and well and often on their own via this kind of moral framework it was through Cicero.

0:15:53.5 Jacob Soll: And then when you read Cicero he explains very clearly how a market of exchange should ideally work between friends of equal standing, senators who love and respect each other, and first exchange ideas freely. And that’s the first definition. I didn’t go enough into that in my book, and I regret that. About how the exchange of ideas, free ideas or the free exchange of ideas, was really a basis of free market thought from the time of Cicero onwards.

0:16:26.3 Trevor Burrus: So in terms of the concepts that are most important… Of course, as you said, there’s a bunch in Cicero, but the ones that Adam Smith and others take, is it about a mutual respect and appreciation of the person you’re exchanging with that is the basis for how exchange is… Whether is it fair or just or all the above, or a moral endeavor? If you exchange on a certain level of equality versus exchanging on a level of inequality for example.

0:16:57.4 Jacob Soll: So Cicero is living in a time of Roman senatorial oligarchy. He’s a new man. His last name is chickpea, so it’s not very fancy. But he was from a very connected lower noble landowning family. And through his family connections, he manages to move up and become console. But lots of people look down on him as a new… As a supervene [0:17:20.5] ____ nouveau riche guy. And it’s often the person who arrives who defends the system most strongly, right? It’s the new person who sort of embraces it and loves it. And he becomes the greatest spokesman for Roman Republicanism of all time. And his ideal is precisely that. The only good exchange… It can’t happen with a merchant or a Mercator. That’s one of his big insults for a person. A Syrian, a Mercator, the people who live in the marketplace. No, no, no. It happens amongst senators who are friends… Ideally, the friendship, and use of the word love, which is another word for friendship… Who exchange based on a disinterested mutual need, but out of love and affection. Now, he didn’t necessarily do that and was often laughed at as a hypocrite. But that is what the work says. And that will become extremely appealing to Christians. And that’s why Cicero who himself is a martyr for a moral idea for the Republic, becomes literally, one of the pillars of Christian thought from the earliest times of Christianity onwards.

0:18:29.0 Jacob Soll: So he emerges with this idea that if you exchange morally and in this correct way and this disinterested way, then the economy will run as it had run in Rome for 500 years. It looked free to him, and it looked eternal to him, and it looked really natural; it was based on good farming and people that got their money from farming and land. And they had the morals, the old… By the way, Cato the Elder and Varro had those morals, that the people who knew how to work the land had a moral superiority to others. And that agrarian virtue allowed you to know not only friendship, but also a sense of philosophy, because you had a relationship with nature.

0:19:17.1 Trevor Burrus: So this is a qualification of exchange, if you were to compare it to… Let’s say, the modern general equilibrium model. Just taking, say, Milton Friedman, where… I mean, in your view, like… In his view, or maybe more course free marketers, that type of moral or respect… Morality or respect is not required, would you say, in that they are not in the tradition of Cicero? That they’re looking more to predation or unequal exchange, justifying unequal exchange, not thinking like moral philosophers? Have they broken… Have modern free marketers broken from that tradition?

0:20:00.1 Jacob Soll: Well, yeah. There is this idea that, essentially, supply and demand, or demand, desire, and supply. And that’s, I think, what it should be called. And that would literally just run the market. And that all these… This does return to some 17th-​century ideas, but all these individual desires would create a kind of democratic function within the market, and it would just work. And there’s something to be said for that, right? Absolutely something to be said for that. But no, there isn’t an inherent, necessary moral training element. And so they’ve gotten rid of stoicism. And stoicism is Cicero’s main foundational basis of thought, and it will be what attracts Christian thinkers. It is Smith’s entire life and vision. He is a modern deist stoic. And that means that all your acts are based on a deep, learned study of personal ethical discipline and service to ideals such as philosophical truth, friendship and love, honesty, disinterestedness, and above all, well, also to the understanding of nature and the relationship one would have with nature. And then above all, service to the state. So that is a very different idea, and that’s why I sort of call the last chapter, that modern movement, the end of virtue, because it is a kind of… John Stuart Mill is the last free market thinker, and remember, he moves between free markets and socialism, and you can do that.

0:21:41.2 Trevor Burrus: Yeah, I was gonna call you out. I wouldn’t just call him a free market thinker, [0:21:44.7] ____ but I know I’m definitely not.

0:21:46.0 Jacob Soll: No, but that’s the thing is, if you read Mill, and oh yeah, I mean, Mill is just… He’s such a brilliant guy, and a funny, interesting guy, you know? Such a complex person and thinker. He’s the last one who’s sort of seen as a free market thinker, but of course, also is kind of a socialist and has a very complex relationship with the state himself. But he’s the last great political economist who makes references to Cicero. I find that a sort of amazing change. And as you get to the modern field of economics, much of which is taking place at Cambridge, I’m shocked that those economists, Marshall and Jevons, had so disconnected themselves from classical moral studies, which were and are a huge element of life. I went to Cambridge at Cambridge. So…

0:22:42.9 Trevor Burrus: That’s the interesting part about the book that I thought was missing from my standpoint, not… Because within what the book is about, Free Market: The History of an Idea, but if you do start talking about post-​enlightenment political philosophers in particular… And I do consider particularly Mises and Hayek to be political philosophers who also practice economics. They have to have a theory of exchange, as we discussed, like Cicero does, but they also have a theory of the state. And those two work together, right? It’s not just it’s certain types of exchange that are voluntary are presumptively moral, so they’re not bereft of moral philosophy. And other types of exchange, such as taxation, are presumptively immoral without a proper justification, and that’s not a radical thought, actually. That’s post-​enlightenment political philosophy, right? If we’re Lockeans, we say, at best, the state is loosely justified to do certain things. And that is not a Ciceronian concept of the state, to say the least, much less anyone before the Enlightenment, about what the state is for and what it’s allowed to do. And so that seems to be like a break, that what the state is doing, if you’re in the classical period, the medieval period, the Middle Ages, or the Renaissance, it’s a very different concept of the state than it would be for post-​Enlightenment thinkers.

0:24:03.8 Jacob Soll: Well, I mean, you just… You mentioned Locke, and Locke is a product of Renaissance thought. I mean, I see him as someone who straddles the Renaissance and the Enlightenment. But Locke has a pretty heavy vision of the state. I just… People need to realise that… And that was also, just as you said, based on the idea of political economy and politics at the same time. And he started working for absolutist regimes. He writes the constitutions of Maryland, which is… It’s an absolute monarchist constitution, with noblemen and slaves written in there. And it has a big effect on American culture. I mean, it’s not a small thing. He later repudiates it, but doesn’t get into a lot of detail about his repudiation; I find that kind of interesting. But he is a guy who believes very strongly in a strong state that intervenes in terms of efficiency and production. So that… Let’s just say you are an indigenous person in America, and you’re not farming or doing trade. Well, he believes that you have to be forced to do that, or the land should be taken away from you; otherwise, you’re breaking the Christian covenant of productiveness. He also believes… And my friend Jeffrey Collins, who’s written an amazing book on Locke, In the Shadow of Leviathan; I’m looking at it on my shelf. Jeff helped me a lot with this chapter, ’cause Locke’s not easy.

0:25:41.4 Jacob Soll: Locke also felt that people who were landowners and who were inefficient also risked the ire of the state; that the state didn’t like inefficient landowners either. And that is… And that comes… By the way, people, when they read Locke, they can’t just read his Second Treatise. They have to read the Garden of Eden Treatise; that’s Treatise number one. And that’s some heavy Christian thinking about the punishment of original sin, about the punishment of labour. That’s our punishment, is to actually have to go work for things, because in the Garden of Eden, we didn’t. And the responsibility then to take that punishment seriously and make that labour fruitful. And that means that the state can sort of get involved. I mean, this is one way of reading Locke, and it’s a legitimate way, and I think Collins and I both agree on that. So, I think it’s pretty complicated. I do think you’re right, that the 20th-​century thinkers had a certain level of moral thinking, but it was not within the tradition, the old tradition of stoicism. So they had broken from that. And so there wasn’t a theoretical concept, like, an umbrella concept of virtue that had really existed in one way or another since antiquity. There had been a tradition of virtue which Christianity adopts, or you could actually say evolves with, because so many of the founders of Christianity were not only Jews but Greeks, but were also trained in the Ciceronian tradition, like Augustine and St. Ambrose.

0:27:27.7 Trevor Burrus: What sort of concepts have to kind of fall in place to get to something like modern, or let’s say, proto-​modern or pre-​modern theory of free markets that would start to look recognisable? I think one reason why we like Adam Smith, and I use that both in the real way of he’s still very well-​known and popular today, and in my world, people like Adam Smith a lot, but it looks proto-​modern in some of the concepts that we have. Going back and reading someone… Say, Machiavelli or Augustine, it might start to seem kinda weird that they’re talking about markets. You know, in Machiavelli’s day or a little before Aquinas, just price theory seems bonkers to modern free marketers. There’s a huge disparagement of the merchant class. There’s almost no capital markets, or there’s very, very few capital markets. Usury is a sin. These are… It takes a lot of intellectual development to get over some of these things that would be preventing the emergence of sort of like a modern commercial capitalist culture, and it takes quite a few centuries to get there.

0:28:44.1 Jacob Soll: Well, I mean, I just do wanna point out that my book shows that the Franciscans saw all that. And that is one of the most interesting things. It’s not my discovery; it’s an Italian historian named Giacomo Todeschini. But I worked out from his work, and boy, was that fascinating. I mean, again, those are books that we earlier discussed that are hard to find and hard to get. All this early Franciscan market thought… And by the way, this guy named Olivi, who I talk about a lot in the book, really, we think, is one of the first people to use the word capital. He’s very much aware of it, and he’s aware of how capital value is affected by market forces such as scarcity, risk, skill… And it’s really amazing. These guys are super visionary. So for example, I’m very admirative of someone who can see a market mechanism, which I think is different than general equilibrium. There are all these mechanisms that work in markets. They’re super interesting. They’re very hard to understand, because I don’t believe they always work. I just don’t necessarily believe in general equilibrium, but obviously, I believe in market mechanisms.

0:29:55.1 Trevor Burrus: How do we get over just price theory, for example? I mean… I mean, first of all, how is that articulated, and then how does it get… We move past it?

0:30:04.1 Jacob Soll: Well, how do we move past it? I mean, first, I’ll get back to Smith, ’cause that was your question, but… The Franciscans can’t stand the… Well, they believe in a much more sophisticated just price theory. They believe that ultimately, and all medieval Christian thinkers believe, ultimately, you have this authority of the church, and the church is gonna step into your life, and the church is gonna oversee a lot of things. However, it can also oversee them badly. Therefore, they have to be aware of that. So when Aquinas shows up with a just price theory… And this is why Aquinas goes after these guys. And remember, this is such an academic story. They don’t get jobs in Paris. They end up getting in trouble. This is such an academic story. I mean, I feel some personal connection with this. You don’t get the Ivy League job, you have to walk in the desert, then maybe eventually, you get the job at Montpelier. [laughter] So I mean, I feel like I’ve lived that story. But they say, “Look, just price… First of all, what do we know about the just price? ‘Cause we don’t understand value; only merchants can understand that. So we’re gonna need to talk to them.” And that is probably one of the most revolutionary statements in economic thought, to say that the…

0:31:18.6 Trevor Burrus: I mean, I’m a massive Hayek fanboy, and I was like, “Ooh, they were kind of saying that no one really knows the price except for people who are involved in transactions and have the local knowledge to figure out what the price would be.”

0:31:29.6 Jacob Soll: One hundred percent.

0:31:31.1 Trevor Burrus: Which is Hayekian. It’s proto-​Hayekian in some way.

0:31:32.6 Jacob Soll: It’s what they say. It’s what they say. I think that is a revolutionary, startling moment, and it… And that’s it. That is a sort of invention point. And they quite literally not only say that, but then they go on… This guy, Olivi, goes on to use the word capital. And that stunned this Italian thinker, who was very attuned to this and could read the medieval Latin and got it. I mean, it’s just really amazing stuff.

0:32:02.5 Trevor Burrus: What about the emergence of the merchant class? That was the other one I asked about.

0:32:05.6 Jacob Soll: People ignore that! I mean, come on!

0:32:07.9 Trevor Burrus: Well, my friend Deirdre McCloskey wrote three long books about it. About that… The importance of that being, you know, a non-​economic input into the development of modern markets.

0:32:18.8 Jacob Soll: Absolutely. But McCloskey has an idea that it’s these British 18th-​century virtuous people that does it. I hate to break it backwards, but it’s a bunch of Catholic Italians who really do this, and what Catholic means back then means all these different splintering groups who are not agreeing with each other, [chuckle] which means Franciscans and Dominicans. And also, [laughter] I mean, when you look at Florentine merchant thought, and that exists, and I’m really shocked that that has never entered into the history of free market thought.

0:32:57.7 Trevor Burrus: Yeah, you mentioned that the writings of the merchants, which seemed quite difficult to get, they’re like diaries, kind of?

0:33:04.4 Jacob Soll: Yeah, there are… Often, there are these kind of commercial diaries which can double as account books, but historians of medieval Italy use them all the time as major sources. Why they haven’t been used as free market sources on economic thought is sort of beyond me, because they really talk about markets, how they should work, and most importantly, their own productive value, and this is a huge paradigm shift in Christianity. No one before these Florentine thinkers would ever call a merchant a good person. The word that the medieval thinkers use for them is paupers. Who could be poorer than the person that goes out to seek wealth as their profession? I mean, you can be a farmer, a peasant, a priest, a soldier, or a prince. Those are all noble things, but to be someone that quests for money is the poorest thing you can possibly do, and that’s one of the reasons that Franciscans go to minister them… To them, ’cause they feel so bad for them. [laughter] Sorry. I mean… But these Florentine guys say, “No, wait a minute. What about Cicero?” [laughter] And they bring Cicero back and say, “Actually, we’re creating wealth that helps our city.” And this is civic humanism.

0:34:22.7 Jacob Soll: “And our city brings all these good Christian ideas,” and this is in the Middle Ages; it’s actually in Siena that we see it in Lorenzetti’s fresco. “And with that money that we put into the city, we get peace. We get a wealthy economy for living standards. We get a constitutional government,” which means blind justice. And they have… Lorenzetti’s frescoes have images of this. And then you literally have Florentine merchants saying, “My family did good things in this rich market and made it work by being successful, and therefore, we serve the city, and we are virtuous,” just like Cicero said. Now Cicero never said it that way. And I think… And I mention one thinker, actually, is perfectly aware that Cicero never said that, but twists Cicero around in order to make it fit. But that’s a big moment, when a merchant says, “My productivity and my taxpaying creates civic value.” That’s… And no… I’m sort of startled that in free market thought, that is such a necessary… That’s such a necessary element to have. I was also surprised that that wasn’t integrated into the thought. And so, you could see my work as actually… I’m sure Italian historians and… You know, will see my work as a bit amateurish, although I had them read the chapter, and I… But it’s a start. No one else saw that, so I think it’s important.

0:35:52.2 Trevor Burrus: Yeah. I’m gonna send it to my friend, Alberto Mingardi, who’s a free market Italian thinker in Italy, so he might know about it, but if he doesn’t, he’ll be grateful. So leading up to Smith… We’ve mentioned there’s a bunch of French thinkers who go [0:36:10.7] ____ into what we talk about, and some of them are known, some of them are less known. But does Smith… Is there a break there? Does he do something different, that is… That… Because, you know, you could kind of say, just in terms of economic thinking, it’s a jumping-​off point, a branching… Whatever metaphor you want to use. After Smith, your next line, whether it’s Ricardo, Marshall, Jevons, Menger… You know, into the 20th-​century, they’re all footnoting Smith in some sense, so what does he do? ‘Cause you put him very much in context, which is very useful. He’s not… He doesn’t come outta nowhere. He doesn’t, you know, spring out of nowhere with these new ideas, but what does he do that is important that changes the trajectory so much?

0:36:50.9 Jacob Soll: Well, I’m still struggling with that question. What does Smith really… Well, what Smith does that no one else does, and this, I think, is unarguable, is that he creates this giant, panoramic description of economy and society. By the way, he did not think you would’ve read The Wealth of Nations without The Theory of Moral Sentiments, and by the way, he couldn’t have imagined that you didn’t read all of Cicero’s works, [laughter] or his…

0:37:20.0 Trevor Burrus: Oh yeah. The long time listeners, we’ve done a bunch of episodes on Adam Smith. And I read The Theory of Moral Sentiments, first as a philosophy major and Wealth of Nations is just a sequel. I mean, the way I see it is Theory of Moral Sentiments is how do you have care for and compassion and sympathy, as he would say for people you know in the limits of that. And then the Wealth of Nations is, well, how do you have at least care or at least non harm for people you don’t know and are so far outside of that sympathy sphere but you don’t want to hurt them. So how do you serve them…

0:37:52.0 Jacob Soll: That’s exactly right.

0:37:52.9 Trevor Burrus: And that’s the sequel. I agree.

0:37:53.5 Jacob Soll: Yeah, that’s exactly right. So he has this giant panorama… And he describes things and… I think he talks about economics in a way that no one else has, because he’s not an economist. There is this world of economist. He meets them in Paris through Hume, but he’s a professor of moral philosophy. And those enlightenment professors of moral philosophy believe that the great philosophical tool was history. It’s how we understood humanity, it’s how we understood humanity’s traditions and how to create progress. They believed in progress. So Smith writes this sort of grand panoramic, semi historically based, but it’s pretty loose without footnotes, ’cause people used footnotes back then. This giant story of the ideal way of society and a market should work. He fills that book with these maxims and statements, which are almost… They come out of a long tradition from La Rochefoucauld, who’s a big influence, who’s also a Ciceronian and an Augustinian. And so he fills the book with these statements. And one of the things I point out is that you can cherry pick Smith and come up with Smith as the libertarian. You can come up with Smith as the hardcore infant industry, Alexander Hamilton state early intervention.

0:39:20.1 Jacob Soll: You can come up with Smith as I did, as this extremely complex thinker, who has no economic experience… I think it’s really important. That guy was not… That guy actually gave office space to James Watt and had no clue about the importance of wide-​scale manufacturing and wealth creation. He still believes that all wealth creation is really gonna come from agriculture. But he thinks business and commerce are going to spur that and expand it. And so he has these statements that if you just take them outside alone seem to be either incomprehensible… And I think a lot of Smith appears incomprehensible and people sort of gloss over it. Or it can seem just out of context to be completely libertarian that the state should never tell anyone how to spend their money, etcetera. Smith becomes a tax collector, remember that. Smith also says that the navigation law is the smartest law of all time. He also says infant industry might need some subsidies. He sort of says all these things. But…

0:40:24.8 Trevor Burrus: And some people might call that mercantilism. And which he was supposedly fighting against. And you get into the complexities of defining mercantilism.

0:40:33.7 Jacob Soll: Mercantilism is a modern idea. Smith uses the word mercantile system to describe any government run by merchants and businessmen because he believes they do not have the moral fiber to run a disinterested government. He says, by their very definition, they will seek to further their own monopolies. And that for him is mercantilism. And that was what he criticized called Colbert about. It wasn’t… He criticized him about regulation, but his great fear in Colbert’s economics was that Colbert was favoring manufacturers and allowing them to have a say in government, which actually isn’t totally true. I mean, Colbert himself was having a say in government and not necessarily that many people were. But Smith is right, Colbert sees agriculture as not having great added value and he sees manufacturing as what should be the base of the economy. And therefore he has the state favour it to the point where France is actually quite successful considering where it comes from in that period.

0:41:42.1 Jacob Soll: Smith doesn’t like that for a whole bunch of moral and social and economic reasons. So when you say, “Why does Smith get so popular?” I think it’s because of the quotes taken out of context. I really do. I think that he lends himself to so many different kinds of thought. By the way, I tend to think… You kinda wonder which books are… Why books are successful and why they’re not. And as…

0:42:15.0 Trevor Burrus: Oh that’s it’s own… Oh yeah no…

0:42:17.4 Jacob Soll: Yeah but…

0:42:17.5 Trevor Burrus: If you have a quotable title and you come up with something cool… I mean, John Rawls came up with The Veil of Ignorance. It’s not a very readable book, but you can repeat that and there you go. Not really crapping on John Rawls, but sometimes it’s just something like that.

0:42:32.6 Jacob Soll: But it’s like a weird thing. So I think about [0:42:36.1] ____ math…

0:42:36.4 Trevor Burrus: I mean, as academics we wanna be like the best book should win, but that is not the reason the books win.

0:42:41.3 Jacob Soll: It’s not how it works. Well, I mean look… Sorry, I shouldn’t even bring this up, but… You know, Piketty’s book sells a million copies. Nobody’s read that book. I don’t know why anybody bought it or read it. It could have just been one paragraph. Literally.

0:42:56.1 Trevor Burrus: It blows my mind. I agree.

0:42:56.2 Jacob Soll: Just one… I mean, I’m not gonna… I don’t wanna dirt talk him, but I will just say that he could state his thesis and his backup in literally a page. It’s a thousand… It’s this huge tome. Everybody buys it. Nobody really discusses it in any serious way, as far as I’m concerned about how he uses evidence. But that’s actually the problem with lots and lots and lots of books. But let’s get back to… I always see Smith and Machiavelli together because they are these two guys whose books are so important and they’re read in two ways. Machiavelli as this devil of tyranny or as the great Republican, which he was. And Adam Smith as the libertarian and less so as what I think he was, was this super complex moral thinker who saw the world around him and was able to describe it in great complexity.

0:43:49.6 Jacob Soll: He did not understand the basics of economics, that manufacturing is where value was gonna come from. That artifice was actually the source of wealth. He thought it was farming. He was wrong about that. That’s a big thing to be wrong about. But he saw the complexity of this new agricultural world with commerce on it, and he slapped over that, this remarkable series of moral thoughts. And the work is huge, it’s unwieldy, and if it’s read out of context, it can be read in many different ways. As you know, I see Smith as this Ciceronian Stoic Lockean guy who’s defending agricultural wealth in this new context with the idea that there has to be this massive moral framework. And that this oligarchic aristocratic society is precisely the thing that’s going to do that, because those land owners and their sons who he teaches… That’s how he makes his living… Are the ones that sit and learn moral philosophy with him and at the university. And will have that force to create a society in which merchants are not given a leading role in government and are peacefully encouraged to invest in the right way.

0:45:11.2 Jacob Soll: That’s pretty interesting. I think that’s kind of amazing. But again, the book is so complex that… And I describe in the book by showing all the different quotes and how they can be used, that he can be used in different ways. By the way, we never quote his endless quotes against merchants. He doesn’t like them. He doesn’t like companies either. He has an old-​fashioned admiration for the land owner and for the working man. And that’s really archaic and it’s old-​fashioned in some ways, but he sees it in a frame of progress that these learned men can access philosophy and open up this world of progress in a moral way to help the working man. I don’t know, it’s fascinating. It’s just not…

0:45:57.6 Trevor Burrus: It’s very Jeffersonian in a way… Yeah… With the agrarian. And of course, a lot of people have been big, big fans of the agrarian lifestyle and put various moral qualities upon the farmer and what they can produce.

0:46:15.7 Jacob Soll: Or… I hark back to Cato and De agri cultura, and the idea that nature should actually give you your lead in all your thought. And I will say with climate crisis, I don’t know, maybe we should listen to those guys more. He doesn’t just say farming. It’s an understanding of nature and how to use it in good husbandry, which means using it without polluting, without destroying things. Those are like these [0:46:46.5] ____ uber conservative texts that are actually pretty green or red. They talk a lot about wine.

[laughter]

0:46:58.0 Trevor Burrus: So after Smith the other… So I ought to ask a question for my Austrian economist friends, which is… ‘Cause as I mentioned, they would agree with you in many ways. My friend Pete Boettke who’s at the George Mason University, would agree with you that the general equilibrium model… I don’t wanna put words in his mouth, but I’m presuming that this is a problematic thing. And one of the problems could be math. So there are no equations and there’s no calculus in Adam Smith. There are no equations. We get to a point of, say, John Maynard Keynes, and of course after. And now we’re not moral philosophers anymore, we’re running complex equations. We have econometrics, we have math econ. And maybe just the issue is that methodology is what pulls people to this general equilibrium model and pulls them away from moral philosophy and other considerations that we should be thinking of more.

0:47:56.6 Trevor Burrus: And again, my Austrian economist friends would 100% agree with this and say that, it’s never an equilibrium. It’s always being pushed out of it. Entrepreneurship pushes it out of equilibrium. It’s always searching for equilibrium but it’s never there. And it’s a lot better to talk about it in words than to use equations. So maybe the problem is the mathematization of economics to get to… If your problem is general equilibrium, maybe that’s the problem that happens… [0:48:21.0] ____ issues.

0:48:21.7 Jacob Soll: First of all it’s Jevons who comes up and says, we should do it more…

0:48:23.2 Trevor Burrus: Jevons yeah. [0:48:24.8] ____.

0:48:26.0 Jacob Soll: But Smith… I mean, Smith lived in a world… Smith’s mentor was Hume. Hume is actually like a technical genius. Hume as a philosopher is just like, “Whoa.”

0:48:39.0 Trevor Burrus: Oh, he’s my favorite philosopher of all time, absolutely.

0:48:43.0 Jacob Soll: Hume is someone that… Smith I think is amazing and interesting. Hume, I’m like, “Whoa.” That’s when I get reverential to the mind. That mind is just like… It’s mind-​blowing. These guys are late Renaissance scholars. They’re Enlightenment scholars. Of course, they know the powers of mathematics. Of course, they’re familiar with Newtonian-​ism, but they… And Smith writes this super interesting small text, which no one’s read and they should, which is History of Astronomy from 1773. In which he tries to actually say that within the mathematical Newtonian world of planetary movement, there’s a moral world of human choices and of stoic ethical moves… Like being the disinterested spectator that will create a chain of morality that creates society that can also move like the planets, but it has to be a moral chain. That’s super interesting stuff. So they’re aware of it and they say of course it needs to be on a moral historical standpoint. And Smith is always referencing history. And Hume writes these great things saying history is the only way to understand humanity.

0:50:00.7 Jacob Soll: And by the way, in the 18th century… When I joined the Philosophy Department at USC, which is a phenomenal department, and I love it, one of the things I joked about because I do history, is I said, “Well, in the 18th century, I would have been considered a philosopher because I do the history of ideas and the histories of these sort of movements,” and that’s what… How the whole thing started. I do think it’s enormously… And in my book… Look, I will overtly… I’m getting a lot of criticism for that last chapter. I’m not a modern historian. I really am a historian of early modern and even partially Medieval, but also of classical thought. I’ve trained in the history of all this early thought. And I know it and I can… I will make errors, but I can master it to a certain extent. The modern stuff is not my specialty, so I’m gonna just say that right there. So I did a kind of summation around this new approach to free market thought, which was devoid of stoicism and the quest for a traditional form of virtue, and that quest for general equilibrium, which turns into a numerical quest. Which I truly believe is quite dangerous.

0:51:22.2 Jacob Soll: And that’s… I guess that’s where I bring my values into the book. That when we’re sitting around banding these numbers and I see it all the time, just like, “That does not correspond to reality, man.” That’s like… That’s not gonna work on the street. You know what I mean? And by the way, that might be where I do become a kind of more free market guy. I’m like, what actually happens out there is way more crazy than what you’re saying. By the way, there’s a new movement, Piketty and others are trying to use history in economics. They’re not trained historians. They use it pretty badly, like the idea of tracing GDP, which is a modern concept. My friend Diane Coyle wrote a book about that. You can’t trace it over time. You can talk about it, but you have to say its output, and the statistics we have… They’re not terrible, but they’re really different than modern statistics.

0:52:15.2 Trevor Burrus: Part of the book is this great… From Cicero to Smith, and that’s most of the words of the book are on that part, and it is very interesting. And again, I don’t disagree that economics has arguably gone astray in its own way and could use a little bit more moral philosophy and Cicero, right?

0:52:35.7 Jacob Soll: I mean, that’s the conclusion of my book. And by the way, I was like, “Who’s gonna like that conclusion?” I’m like… Because at the end, I’d worked so hard on the book for eight years, and I sat around with people. I was like, “How do I conclude something that’s been like this entire period of my life,” and nearly… Literally nearly gave me a heart attack because I was working 24 hours a day on it, and having heart palpitations. This super hard book. The book stressed me out. It was like it just took a lot of work. How do you conclude that? And someone said, “Why don’t you just be honest?” And I was like, “Okay.” When I come away from all this reading, Hume gave me the most… Actually… I actually like the fathers of the church, even though I don’t agree with them, I dug reading them a lot and I dug Cicero. And I was like, “Well, if you’re really gonna be in the tradition of free market thought, time to quote some Cicero because he’s got a lot of… ”

0:53:32.2 Jacob Soll: Even… I’ll take him out of context a little bit because I think he did write to be taken out of context. He wrote as a kind of great maxim writer himself, and so that’s what I did. By the way, I wanna note, and I probably shouldn’t say this. I was attacked by the Wall Street Journal, I think super unfairly, and then Von Mises Institute called my book an absolute disaster with no value whatsoever.

0:53:55.6 Trevor Burrus: Yeah, we don’t really pay attention to them at Cato, so… They hate us too. So… It’s okay.

0:54:00.1 Jacob Soll: Well, I was… I gotta say, I was bummed out because I was like, “You can call me out on my last chapter, and I will tell you I’m not an expert, but to kinda… ” To say that I’m dissing the whole thing without thought, that’s not fair. I’m really am trying to engage and I guess I am kind of this person who technically disagrees with this, but then partially does agree with this. So I guess in my own life, I’ve had a really strange relationship even with Libertarian thought. I think as a young person, I was a Libertarian in a lot of ways. But then I was also like… I don’t even wanna say what my political beliefs were, because now I know that it’s just very fluid and I wouldn’t even define my political beliefs. But yeah, no, this comes out of a struggle with all this stuff. And if I made errors, I’ve made them with a lot of thought and sincerity.

[music]

0:55:06.4 Trevor Burrus: Thanks for listening. If you enjoy Free Thoughts, make sure to rate and review us on Apple Podcasts or in your favorite podcast app. Free Thoughts is produced by Landry Ayres. If you’d like to learn more about Libertarianism, visit us on the web at lib​er​tar​i​an​ism​.org.