How We Learned to Love “Free” Markets

March 11, 2023   •   By Rebecca L. Spang

The Currency of Politics: The Political Theory of Money from Aristotle to Keynes

Stefan Eich

Free Market: The History of an Idea

Jacob Soll

NOBODY HAS EVER seen the economy. We can see specific markets, but my local farmers’ market looks very different from the Diamond District in Manhattan and even the street stalls I frequented in East London. Markets are institutions with more or less physical infrastructures, but “the market” (like “the economy”) is an abstraction, no more fixed or certain than “the Left” or “nature.” If “the economy” and “the market” are often described as though they were things out there in the world to be measured and monitored while other abstractions (such as “beauty” and “joy”) are not, that tells us as much about ways of thinking as it does about the workings of the world. Powered by this insight, the history of economic thought (and related “new histories of capitalism”) has grown over the past 20 years to become one of the most lively and popular historical subfields.

The recent controversy over Jacob Soll’s new book Free Market: The History of an Idea (2022) reveals just how attached some people are to their economic ideologies (no surprise there) and to their ideas about who gets to have “economic thoughts.” In a sweeping text that ranges across 2,500 years in barely 250 pages, Soll argues that, for centuries, “free” markets were understood as existing only where strong, moral governments liberated trade from domination by selfish, moneyed merchants. Markets had to be set free—they were not born that way—and the danger has always lurked of commerce being recaptured to enrich the few rather than benefit the many. This is a loosely “antitrust” way of describing market freedom, and it might have barely registered at all had Soll attributed it chiefly to Louis Brandeis, Frances Perkins (secretary of labor under FDR), or even Machiavelli. But by invoking the name “Adam Smith,” Soll seems to have violated the holy of holies. 

Histories of modern capitalism routinely start in the 18th century. Standard economics textbooks (such as those by Harvard economist N. Gregory Mankiw) make a point of mentioning Smith (1723–90) by name. He is, they often say, where it all started. Soll, by contrast, treats the author of An Inquiry into the Nature and Causes of the Wealth of Nations (1776) more as a concluding figure than a founding father. For Soll, Smith’s upbringing as a Scottish Calvinist and his training in classical philosophy align him with thinking about markets, “men,” and morality that can be traced to Cicero and others in the Stoic tradition. Although humans were naturally flawed, and society could not be trusted to flourish on its own (Smith believed), an appropriately educated, self-disciplined, benevolent elite could guide policy and attitudes such that commerce would serve the common good. 

Soll’s Smith sounds strangely like the president of a Midwestern public university in places: he believes in the value of education, gives the state a crucial role to play in improving the human condition, and understands agriculture to be the foundation of wealth. This is not the Adam Smith many think they know from the first chapters of Wealth of Nations, where he posits a natural human “propensity to truck, barter, and exchange”; asserts that animals other than humans do not cooperate among themselves (“Has this guy never heard of bees?” a student once asked in response); and announces that the division of labor (the creation of proto-assembly lines) is responsible for the “universal opulence” found in “a well-governed society.” But Soll insists that just because the book starts this way, we should not conclude that Smith thought industry morally preferable to agriculture or that he valued pin factories over arable acres. Factories might increase wealth, but they and their owners were not the cause of it—something that those who would live in a well-governed society forgot at their own peril. 

Prioritizing policies that favored landowners over exporters of manufactured goods and importers of luxuries—this was Smith echoing concerns expressed in the late Roman Republic and, more pointedly, taking aim at the nabobs of the East India Company. Soll contends that it was only with the 1846 repeal of the “Corn Laws,” import tariffs that protected British agriculture from cheaper imports, that industrialists co-opted “free-market” thinking to defend big business and international trade. Imported canned foods dominated the British diet for more than a century thereafter.

This characterization of Smith has provoked nothing short of outrage. National Review—which proudly announces itself as “America’s most influential magazine for conservative news, commentary, and opinion”—has attacked Soll repeatedly, charging him with “shoddy historical revisionism” and “a profound mischaracterization,” while the reviewer for AdamSmithWorks (a website supported by the right-libertarian Liberty Fund) accuses him of “dubious, unsupported and unsupportable assertions.” Barton Swaim (formerly of The Weekly Standard) was equally sharp-tongued in his own review. Perhaps this is as it should be: if Rupert Murdoch’s Wall Street Journal were going to embrace Free Market’s message enthusiastically, Soll would have had no reason to write the book. For what it’s worth, Swaim also responded to Glory Liu’s 2022 book Adam Smith’s America: How a Scottish Philosopher Became an Icon of American Capitalism (a review introduced, revealingly enough, with a photo of Milton Friedman) in a similar fashion—further proof, one might conclude, that both books hit their target square on.

Soll’s short book moves fast and its prose undoubtedly has something of the textbook about it. He succumbs at times to cliché (Rome falls, the Renaissance arrives) and sometimes holds his story together with shorthands that will make specialists wince (e.g., “by the eleventh century, ideas about business had evolved”). No one will mistake Free Market for a revised doctoral dissertation; it is, instead, a book written for a general readership and thus, of necessity, a picture painted with broad strokes. When you finish the book, you may not agree with Soll’s two paragraphs on Karl Marx, but he will have also introduced you to St. John Chrysostom, Peter John Olivi, Samuel Hartlib, and a host of other figures not mentioned in the last economics book you read. If Soll missed a trick by not showcasing the tokens issued by Smith’s hometown of Kirkcaldy in the 1790s—with legends reading “the penny of Scotland” and “wealth of nations,” they were stamped with Smith on one side and various tools, including a prominent plow, on the reverse—he is hardly the first historian of economic ideas to ignore numismatic evidence. 

Soll has recently responded to the reviewers; Jerry Muller—author of Adam Smith in His Time and Ours: Designing the Decent Society (1993) and The Mind and the Market: Capitalism in Modern European Thought (2002), among other books—has hit back with more criticism, and the brouhaha shows little sign of abating. But Free Market spans centuries and summarizes dozens of texts; that its critics are so preoccupied with the chapter on Smith (and, to a lesser extent, with the discussion of Milton Friedman) is therefore both curious and telling. Why are self-styled “conservatives” so attached to the name “Adam Smith”? If you want to argue that supply and demand is an inviolable natural law, then does it matter who first described it? Wouldn’t it be true regardless of the author? If the division of labor’s wonderful powers are known only via Smith’s teachings, are we really in the realm of social science, or is it religious doctrine? In their vehemence, Soll’s critics reveal both their own originalist attachments and a very strong commitment to policing the boundaries of what counts as “economic thought.” 

Similar to Soll’s book, Stefan Eich’s The Currency of Politics: The Political Theory of Money from Aristotle to Keynes (2022) offers Plato-to-NATO coverage of money’s place in the history of political thought. Eich, perhaps wisely, has little to say about Adam Smith at all—a shame, really, given how much Smith wrote about money. He could be quite sly on the subject, in fact, suggesting that it would be as logical to stockpile hardware “to the incredible augmentation of the pots and pans of the country” as to hoard gold or silver. More “archaeological” in structure than Soll’s book, The Currency of Politics addresses the place of money in the writings of four familiar authors (Aristotle, John Locke, Karl Marx, John Maynard Keynes), as well as one slightly more obscure figure (Johann Gottlieb Fichte, best known as an early German nationalist), offering a final chapter on the “depoliticization” of money in the 1970s and beyond. Eich’s crucial claim throughout—not one unique to him, but one he articulates with great clarity and force—is that money is central to how polities are constituted (as Harvard professor of law Christine Desan likes to say, money is a “constitutional project”) and remains so even when its value has been notionally outsourced to gold or blockchain technology. 

The Currency of Politics began, Eich tells us (albeit halfway through the book), as an attempt to understand why Karl Marx marginalized the history and politics of money in his own analysis of capitalism. As Eich shows, this is an especially fruitful question because Marx’s correspondence and journalism reveal that he avidly tracked the convulsions of high finance throughout the 1850s. But much like the 1848 revolutions, the bubbles, booms, and bank failures of the following decade disappointed Marx’s hopes. By the time of the 1866 spectacular collapse of Overend, Gurney, and Company, the so-called “bankers’ banker,” Marx no longer imagined that financial panics could yield fundamental change; fellow radicals who thought they could transform society by revolutionizing money were to be castigated as “utopians” or worse.

Eich’s key claim, that “even under capitalism money oscillates between currency and capital” (in other words, that money is a creature of both governments and markets), could not be more relevant today. Consider, for instance, current debates about the US debt ceiling. Self-styled “deficit hawks” argue that money and finance are subject to market considerations alone: by their logic, the United States is a household like any other and should not be spending more than it earns. Proponents of the heterodox economic theory known as Modern Monetary Theory (MMT) say, in contrast, that because the American government issues the money it spends, it can never go bankrupt—resource deficits matter, but budgetary ones do not. Both positions have a compelling logic about them, but neither is true. The United States is not a household; in any ordinary sense, it is not going to grow old, get sick, or die. It doesn’t need to save for retirement, and its earning potential will continue to grow. 

I’ve argued elsewhere that the debt ceiling should be abolished—a move conservatives ought to support, since then the market alone would constrain how much debt the United States could sell. At the same time, it would be a calamitous mistake to conclude that economic realities (as generally understood) should have no bearing on policy decisions. If the United States were to default on its debt or attempt to cover it by doing something historically unprecedented (such as minting a trillion-dollar platinum coin), social chaos and political collapse would almost certainly result. 

Soll and Eich both challenge received wisdom, but they do so in ways that leave a narrow definition of “economic thought” firmly in place. Neither, for example, even nods in the direction of Nancy Folbre and other feminist economists who have shown how the modern celebration of wage-earning independence created “women’s work” as its denigrated opposite. Neither attends to the effects of Western monetary politics and gunboat laissez-faire on colonized populations or even on China. And like so many other scholars in this thriving subfield, they operate with a highly restricted definition of thought and thinkers. 

Yet consider the 140 working-class women whose autobiographies are key sources for historian Emma Griffin’s 2020 book Bread Winner: An Intimate History of the Victorian Economy—all had “economic” ideas, and many recorded them. From childhood, Leily Broomhill and Muriel Box remembered tense scenes and “daily bickering” whenever their mothers tried to get money from their fathers; other women were aghast at family spending patterns or recalled vowing to reject any suitor who “couldn’t keep me at home.” Or what of the 100,000 or more Americans (as Christopher Shaw’s 2019 book Money, Power, and the People details) who responded to the financial crisis of 1907 by buying postal money orders payable to themselves? And what of the 13.5 million men who cast votes in the 1896 presidential election, when William McKinley campaigned on behalf of the gold standard and William Jennings Bryan, advocating bimetallism, gave one of the most famous speeches in US political history? Voters and nonvoters were keenly aware then that money was a political matter: they sang songs and wrote poems about it; some got into barroom fights about it; a Kentucky actress and an Iowa newspaperwoman were among the many unenfranchised individuals who campaigned actively on behalf of “Free Silver.” All of these people thought about money and markets; they all had “economic thoughts.” The ideas of the powerful may often be the most powerful ideas, but theirs are not the only ideas, nor do they somehow make others’ ideas unthinkable.


Rebecca L. Spang is Ruth N. Halls Professor of History at Indiana University and currently a Guggenheim Fellow (2022–23) and a National Fellow of New America (2023). Her most recent book is Stuff and Money in the Time of the French Revolution (Harvard University Press, 2015).