Wall Street Journal editor Matthew Hennessey rightly criticized Vice President JD Vance’s statement that the market is just “a tool, but it is not the purpose of American politics.” (“JD Vance Is Wrong: The Market Isn’t a ‘Tool,’” Wall Street Journal, May 26, 2025). Hennessey argues that markets are simply the way humans naturally trade and exchange without coercion:
I give you this, you give me that. Simple exchange is what makes a market. Not faith, not mantras, not brick and mortar. Wherever people come together to trade is a market. …
Markets harness supply and demand to coordinate economic transactions between people and firms. They facilitate the free exchange of goods and services. They are mechanisms for shared prosperity based on freedom from coercion.
As true as that is, it misses, at least explicitly, an economically inspired philosophical argument that provides an important justification of the market. When he trades in the abstract locus that the market is, an individual aims at satisfying his preferences, whatever they are. He pursues his own ends, goals, or purpose, even when he claims he doesn’t. An individual’s possible purpose of charity, solidarity, or communality is what this individual subjectively considers such. He doesn’t pursue the “purpose of American politics,” except perhaps if he has been infected by naive democratism or become, to quote Adam Smith, one of these “insidious and crafty animal[s], vulgarly called a statesman or politician, whose councils are directed by the momentary fluctuations of affairs” (The Wealth of Nations, Book IV, Chapter 2).
Contemporary classical libertarianism, even in its tamer forms, is more radical than Mr. Hennessey’s defense may suggest. Let me give two prime examples.
Friedrich Hayek, a 1974 Nobel economics laureate, argued that in a free society, each individual is free to pursue his own ends and the state (“government”) does not impose collective ends, which would coercively impinge on individual ends. In the autoregulated order of a free society, there exists no collective purpose. Except for levying necessary taxes, the state can, in normal times, impose only general and abstract rules that forbid the use of certain means that would defeat the benefits that individuals derive from a free society. The state, for example, may ban murder and theft, in conformity with the rule of law, but it may not force an individual in a specific occupation (at least in peacetime, Hayek would say, opening a Pandora box). The “public good” can only reside in rules that facilitate the pursuit of individual ends by all individuals.
(These ideas are notably defended in Hayek’s Law, Legislation, and Liberty, whose three volumes I have reviewed on Econlib: Rules and Order, The Mirage of Social Justice, and The Political Order of a Free People.)
But is it possible to establish or maintain a free society without imposing this very goal enterprise as a collective purpose to be forced upon any individual? The intellectual enterprise of James Buchanan, laureate of the 1986 Nobel Prize in economics, was to answer the question. He endeavored to find a rational justification beyond Hayek’s recourse to the traditional rules that evolved in Western societies. The subtlety of his (and his co-authors’) social-contractarian solution cannot be overstated. A rational individual, he argued, does not want to be regimented at the service of a collective purpose that could turn against him and exploit him. He can only accept a set of rules that would be chosen unanimously by all individuals, thus giving him a veto right. The state is the organization charged with enforcing the set of rules that benefits each and every individual. The state is constitutionally constrained to remain within these strict limits, so as not to become a tool for the exploitation of some individuals.
(The three seminal books developing these ideas are: James Buchanan and Gordon Tullock, The Calculus of Consent; Geoffrey Brennan and James Buchanan, The Reason of Rules; and James Buchanan, The Limits of Liberty—more or less in the order of the most technical to the most accessible. The links are to my reviews.)
The radicalism of classical liberalism is a far cry from the economic illiteracy of the insidious and crafty animals who run governments, on the right or on the left, and their supporting mobs.
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Our collective goal is the other way
READER COMMENTS
Craig
May 31 2025 at 10:50am
Of note VP Vance actually did respond to Hennessy: https://www.wsj.com/opinion/jd-vance-the-market-isnt-the-purpose-of-u-s-politics-economics-92a8b3e7?gaa_at=eafs&gaa_n=ASWzDAgB-6YO2b-4F9xRyRqoCiILZvoWtm1wVAJGip6aR8pCm6-KEpnyBxV3e61JLw%3D%3D&gaa_ts=683b19aa&gaa_sig=xJS6gVrS9BBKuxc5gHg4EfJi2Zv8rpSVN2w_3FwMEBH-009gvIQYvZESihAoGYHNJJGThfMPv_u3jV-EBLtvuA%3D%3D
“JD Vance Responds to Matthew Hennessey on Markets and Politics
One needn’t look far in American history for examples of lawmakers wielding the market to the betterment of our people.”
Therein Vance comments: ” I described it as both an exceptionally efficient way of provisioning goods and services, as well as a tool available to lawmakers as they go about the work of governance. Most important, however, I argued that reducing barriers to free markets shouldn’t be the ultimate aim of our politics. Instead, we should use them, and other tools, to improve the well-being of our people.”
It seems a bit esoteric but I would suggest Vance should be reminded of the economic calculation problem? In any event I just figured this would further your initial post, Pierre.
Pierre Lemieux
May 31 2025 at 11:08am
Thanks, Craig. I had not seen Vance’s response. As you suggest, it strengthens my criticism. Vance seems to think that everything in the world (perhaps including dark matter and God) is a tool in the hands of anointed politicos. And you are right about the economic calculation problem. The “our people” is especially North-Koreanesque.
David Henderson
May 31 2025 at 11:09am
Good post.
Hayek’s Nobel was in 1974,
Pierre Lemieux
May 31 2025 at 11:17am
Thanks, David, including for spotting the error, which I just corrected.
David Seltzer
May 31 2025 at 5:19pm
Pierre: I suspect VP Vance characterizing the market as a tool , demonstrates his basic misunderstanding of how markets operate. Market activity begins with the choices individuals make in response to expected costs and benefits to themselves. The first lesson of economics, as you know, is scarcity. Given the complexity of economic interaction(s) between and among individuals and firms looking to economize their trade-offs, the best coordination of those interactions is achieved in free markets. How would Mr. Vance know what each person’s best-trade off is?
Jose Pablo
May 31 2025 at 9:57pm
What J.D. Vance is doing is expanding his “job description” to include something like: “hoarding and controlling markets according to my personal judgment, always in service of what I consider the betterment of the United States.”
Why should any single politician feel compelled to include limits in their job description in order to expand the role of markets and individual decisions?
The fatal conceit is allowing them to define their own job description in the first place.
Roger McKinney
May 31 2025 at 10:26pm
The first defense of free markets came from the Carholic theologians at the University of Salamanca during the Reformation. They defended free markets on two grounds. First, just prices can be found only in free markets. Second, property exists only in free markets because property requires control over buying and selling. Without such control, property doesn’t exist. State control of markets is a violation of the commandment Thou shalt not steal.
As a Catholic, Vance should know these tthings. His opposition to free markets destroys property.
Mactoul
May 31 2025 at 11:44pm
Recourse to Hayek and Buchanan illustrates the pretension of classical liberalism that there is nothing outside it to engage. This is identical to Justice Kennedy’s opinion in Obergefell that the dissenting justices had no rational argument against same-sex marriage but we’re moved purely and solely by irrational animus.
In Buchanan there is only a single state. A very simple model that doesn’t even begin to approximate the complexities of real politics.
Mactoul
Jun 1 2025 at 12:25am
As I understand it, Buchanan’s social contract is amenable to any degree of state action, provided the Constitution is consented to unanimously — a pious fiction it wouldn’t do to dwell upon.
So, Buchanan’s social contract is explicitly not libertarian or free market. It is even not necessarily classical liberal.
So, you need to show that Vance is explicitly going against the American Constitution. Which you won’t find easy.
Otherwise, you need to explain what sphere of state action you envision in the classical liberal society. Is the state supposed to wither away?
Hayek too envisions a lot of government in Constitution of Liberty and I see nothing in Vance’s remarks which will offend Hayek.
Pierre Lemieux
Jun 1 2025 at 11:14am
Mactoul: You write:
It depends on how you define “libertarian” or “free market,” and you are of course free to define these terms as you want. Your implicit definition, however, looks confused and not very useful. If you define these terms in terms of free exchange, you will find unexpected enlightenment. A free exchange is one you may accept or decline or, which amounts to the same, in which each party has a veto. Conceived this way, Buchanan’s theory is very liberal and libertarian.
Anthony de Jasay offers good objections to Buchanan’s theory, which might inspire you to go farther in your quest. See his Justice and its Surroundings.
Mactoul
Jun 2 2025 at 12:36am
In social contract a la Buchanan, a people might unanimously consent to a constitution which may have many unlibertarian features even illiberal features (such as zero immigration or zero trade). What is there to bar it?
I am interested in knowing what is the classical liberal model of government. Is the American constitution, informed as it is by classical liberal principles, a fair model of liberal constitution? What are illiberal features, if any, of American constitution? And is Vance, speaking against the American constitution or he is in favor of certain features of American constitution you deem to be illiberal?
Pierre Lemieux
Jun 2 2025 at 5:36pm
Mactoul: Your questions cannot be answered satisfactorily in a short comment. Let me just say two things.
(1) In short, nothing prevents a liberal social contract à la Buchanan from containing what may look to some like “illiberal” elements, except the requirement of unanimity. Value only exists in individual minds and there is no way to object to anything that everybody (or two parties to a private exchange) wants.
(2) The common denominator of (the many) classical liberal and libertarian schools of thought is (a) the supremacy or the primacy (there is a matter of degree here, as everywhere) of individual choices and (b) methodological individualism.
Jose Pablo
Jun 2 2025 at 9:41pm
may have many unlibertarian features even illiberal features
But for such provisions to be included under Buchanan’s framework, every individual would have to agree to them, which means they would, by definition, no longer be “unlibertarian” or “illiberal” from the perspective of those who consented.
Within a system where each person holds a veto over constitutional rules, there is no room for genuinely unlibertarian outcomes, unless one applies external value judgments that, in your example, would no longer reflect the values of any living individual (which is precisely why nobody used their veto in your hypothetical)
In theory, a constitutional provision granting the government the right to execute all left-handed men could be included, but only if no voting citizen were left-handed. In that case, the provision would be functionally meaningless, if not outright absurd.