Picture a society in which property is put to its most productive and valuable use rather than being held indefinitely by its richest citizens, and voters are able to cast ballots that reflect not only their interests but the intensity of those interests.
In this world, ordinary people might be able to sponsor guest workers from other countries, creating income for both, or take part in a new digital economy that allows individuals to earn money for sharing the personal data that, right now, millions give up for free. In this future, free competition would reign, all in the name of reducing income inequality, economic stagnation and political instability.
This is the vision that Prof. Eric Posner and economist E. Glen Weyl pitch in a new book that examines how a truly free market, one unencumbered by concentrated power and wealth, could reinvigorate our democracy. Radical Markets: Uprooting Capitalism and Democracy for a Just Society (Princeton University Press) puts forth five proposals for reforming market systems—property, voting, migrant labor, investment capital and personal data—and pushes readers to reconsider the role that economics can play in social reform.
“The country is facing a serious problem because our existing economic institutions are failing us,” said Posner, the Kirkland and Ellis Distinguished Service Professor of Law. “The book explains our specific proposals, but our larger point is that people should start thinking in a more radical way about our institutions and whether they’re working properly. And when I say radical, I mean it in the core sense of the word: we have to go to the roots of things and understand how they really work.”
The ideas—which are designed to stand alone or, better yet, work together—are serious proposals grounded in economic theory. But they’re also daring in a way that recalls the discipline’s early days as an ambitious instrument of social change, from Adam Smith in the late 18th century to economists like Henry George, whose work in the late 19th century helped shape the Progressive movement.
“People like Adam Smith were actually radical—they were highly critical of existing economic institutions, often because they seemed to promote monopoly,” Posner said. George, he and Weyl wrote, was deeply concerned about inequality and worried that private property could inhibit a free market.
Posner and Weyl are affirmatively pro-market, but concerned about capitalism’s tendency toward monopoly. They worry about institutional investors who dampen competition by diversifying their holdings within industries—for instance, by buying stakes in every airline and creating incentives for profit-boosting fare hikes. They think that the passive collection of “free” data by giants like Facebook and Google robs society of a labor market that would encourage competition, lead to a more efficient digital economy, and create new jobs at a time when data-powered artificial intelligence is displacing others.