It’s funny how certain ideas you encounter early in life can stick inside your head, regardless of where they came from. As a young child, I immensely enjoyed reading cheesy horror stories aimed at kids and teens. One book (I’ve long since forgotten the title or author) had a scene that lodged an idea in my head ever since.

The book told the story of a vampire who lived in an old, abandoned house. One evening, a group of high schoolers snuck into the house (because…reasons?) and were trapped inside by the vampire. He explains that he only needs to take one victim and will let the rest of the group go. However, he insists that the teens themselves must decide who he will take. At one point, one of the teens volunteers herself to spare her friends. The vampire announces she is free to leave – he operates according to certain rules, and by those rules, volunteering has spared her.

Immediately after this, another teen volunteers herself to the vampire, and he promptly accepts her offer. When she protests that the vampire is contradicting himself over the rules, he responds that it only seems that way to her because she doesn’t understand what the rules are. She was under the mistaken impression that the rule was “anyone who volunteers will be freed.” But the actual rule was that acts of genuine self-sacrifice would set someone free. Volunteering as a roundabout act of self-preservation didn’t confer the same result. To my young self, this was a fantastic twist in the story, and it lodged an idea into my young brain. If someone’s behavior seems inconsistent or contradictory to you, that probably just means you don’t really understand what’s animating their behavior in the first place. (If only a certain breed of behavioral economist on a mission to “correct” certain peoples “irrationally inconsistent” behavior had read cheesy vampire stories in their childhood – but that’s a rant for another day!)

I was reminded of all of this when reading a remark by frequent commenter PhilH, where he suggests there is a contradiction in different metaphors economic liberals use to describe the market. On the one hand, classical liberals describe freedom in the market as “just freedom to do what you want,” but also describe the market itself as “an ‘invisible hand’ and a powerful force.” Is that a contradiction? How does one reconcile believing that market freedom is the freedom to do what you want, while also believing the market acts as an invisible hand powerfully directing people’s behavior?

Whether this seems like a contradiction depends on what one means when they speak of force. To economic and classical liberals, “force” is narrowly defined to describe actual (or believably threatened) acts of violence. By contrast, adjusting your behavior in response to market signals does not qualify as “force” or a restriction on freedom. We don’t deny that the market can provide constraints on one’s behavior – which is why we frequently employ terms like “budget constraints” or “constrained maximization.” But when we speak of the freedom to act as you wish in the market, that does not mean “the positive ability to achieve anything you desire, free of constraint.” It simply means that you may do whatever is in your budget set, with a willing trading partner, and nobody may use force (as defined above) to stop you.

Suppose I wanted to import a custom Lamborghini. Unfortunately, I look at the cost of doing so, and look at my bank account, and notice the massive gulf between the two. I end up with no Lamborghini in this case.

Now imagine that my bank account was significantly bigger, so there was no budgetary constraint preventing me from importing that Lamborghini. However, suppose a law had been passed outlawing such imports. Here, too, I end up with no Lamborghini.

In the first case, the invisible hand of the market is saying “If you attempt to get a Lamborghini, your trading partner will decline due to lack of payment, so no Lamborghini for you!” In the second case, the state is saying “If you and a trading partner voluntarily agree to exchange for a Lamborghini, it will be seized and you will be fined/arrested/subject to legal sanction, so no Lamborghini for you!” The result in both cases is the same, but economic liberals insist there is an important difference between the two. And given how different these situations are, we should not use the same word to describe them – doing that would be bad lexicography and would only muddle our thinking. So only situations involving threats or acts of violence or state sanction are called “force.”

A good description of this issue (and a quippy response) can be found in Thomas Sowell’s book The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy:

The cosmic perspective of course extends beyond the law. But, in whatever field it appears, its adherents are quick to say that people did not really have a “free choice” in what they did. Thus to Noam Chomsky, “freedom is illusion and mockery when conditions for the exercise of free choice do not exist” – and these conditions do not exist for “the person compelled to sell his labor power to survive,” i.e., for anyone who works for a living. Any circumstantial constraints or potential consequences hanging over people’s decisions makes their choices not “really” free. But this conception of a free choice requires an unconstrained universe. Only God could have a free choice – and only on the first day of creation, since He would be confronted on the second day by what He had already done on the first.

Someone might agree with Chomsky and disagree with Sowell about freedoms and constraints. But even if Chomsky and his fellow thinkers are correct, the perspective of Sowell and economic liberals would merely be wrong – but it would not be contradictory. The seeming contradiction rests on a misunderstanding of what is meant by the terms.

 

Kevin Corcoran is a Marine Corps veteran and a consultant in healthcare economics and analytics and holds a Bachelor of Science in Economics from George Mason University.