Free Markets, Free Speech, and Social Justice, Part I

The Open Mind
Guest: Prof. Cass R. Sunstein
Title: “Free Markets, Free Speech and Social Justice” Part 1
VTR: 4/8/97

I’m Richard Heffner your host on The Open Mind. And since May 1956, when I first said those words on the air, I’ve often wanted to add, and sometimes have added, a reference to Barnard College’s Dean Virginia Guildersleeve and her admonition to her young ladies always to have an open mind, but not so open that their brains fell out. Which is to say that over the years on this program, I’ve worked to a fare-thee-well always to be open minded and fair. And I trust that I’ve mostly succeeded. But I’m certainly not an intellectual eunuch. I have strong opinions on most of the subjects we discuss at this table, and I confess that in recent months these opinions may have surfaced somewhat more than ever before as I’ve spoken here with several of a new breed of contemporary thinkers about the proper relationship of free markets, free speech, and social justice. For something is going on in our times, in our thoughts. And while the New Deal thinking I grew up with is not yet widely current once again, still that holy mantra of the 1980’s and early ’90’s, “Deregulation, deregulation, deregulation,” is clearly less and less widely embraced.

Well, Cass R. Sunstein, Carl N. Llewellyn Distinguished Service Professor of Jurisprudence at the University of Chicago Law School and Department of Political Science, is among the young scholars who do not bet their all intellectually on the free market as an absolute guide to social policy. And I’ve asked him here today to discuss his Oxford University Press study entitled Free Markets and Social Justice, and to touch, too, on his earlier volume on Democracy and the Problem of Free Speech.

Professor Sunstein, welcome. And let me ask you, to begin with, a question that I jotted down here as I read through your volumes: What is, in your estimation, the real connection, or perhaps the disconnection, between free markets, free speech, and social justice, since I’ve lumped them all together?

SUNSTEIN : Well, the connection is, if you have free markets, that means anyone can compete. And in South Africa, under the apartheid regime, probably the worst source of injustice was that black people couldn’t compete. So I think the best thing about free markets, from the standpoint of social justice, is that everybody gets a basic chance to enter the market, buy goods, get a job, and so forth. Where free markets might not serve the goals of social justice is that, if you don’t have the tools to compete, or if there’s something in the structure of competition that works against you, then social justice and free markets will be at odds.

HEFFNER: Yes, but, you know, the way you put it, it seemed to me that in Free Markets and Social Justice, your newest book, you seem to put that in a more definitive form, that, after all, if you’re born in a certain place, as you suggest, on a certain street in Chicago, you can participate in the free marketplace a hell of a lot more easily than if you’re born 10 blocks away.

SUNSTEIN : Right. The worst unfairness in free markets is that some people don’t have the tools to get into the market at all, because they’re badly educated, because their parents haven’t given them the proper training or skills to get involved even in education. So I think the worst thing, from the standpoint of social justice, about the deregulation movement and the notion that free markets are the be all and end all of government, is some of our fellow citizens will do really terribly in free markets, and they won’t be able to get even a basic chance. As you say, I live on 57th Street in Chicago. And most people, I’m happy to say, who live on 57th Street or 58th or 56th, free markets are pretty good for them. They don’t need a whole lot more than free markets. But if you look 20 blocks south, 30 blocks south, 15 blocks north, not a very huge difference, free markets have much worse consequences for children born there. And in a country like America, that’s a terrible thing. And, in a country like America that respects free markets, free markets really in that domain are the problem, not the solution.

HEFFNER: You say in a “country that respects free markets.” How do you account for the fact that we continue to respect free markets, it is in itself a slogan, the free marketplace, when we have, in the last half century, become increasingly aware of disparities of opportunities? Talking about the person whose parents didn’t provide them: they picked the wrong parents. How do you account for the fact that we’re so blind to the inadequacies?

SUNSTEIN : Well, I think a lot of the sloganeering of the last 20 years may be mostly under the Reagan period. And while President Reagan did a number of good things, the idea that the government is the problem, not the solution, that’s really a big mistake. Even if you want free markets to work well, you need government. It’s often said by people who like free markets that they’re against government. But you can’t have a free market without a pretty strong government. Look at Russia, for example, now. If you tell them, “Have free markets; get rid of government,” that’s a recipe for anarchy and disaster. So I think what’s happened is we’ve lost sight of the extent to which free markets depend on government. You need property law, you need criminal law, you need contract law, you need the law of tort – all those come from government – to get free markets going. And I think the ways in which government is necessary to get people started into the system of free markets, that’s become a little bit lost in American public discussion in the last 20 years, I think under some mantras that are Reagan inspired.

HEFFNER: You say “in the last 20 years.” It was Thomas Jefferson, if I remember correctly, who said that “Government which governs least governs best.” Am I mixing up my historical figures?

SUNSTEIN : No, you have it right. Well, American history is very complicated on this.

HEFFNER: What do you mean?
SUNSTEIN : We have two great heroes with respect to free markets and the role of government. One is Alexander Hamilton, and the other is Thomas Jefferson. And you’re right, Jefferson said, whether he actually practiced this religion is another question, but he said that “Government is best which governs least.” Alexander Hamilton thought that America needed to be a commercial republic. And to be a commercial republic, Hamilton thought, the government can’t drop out. He was the Secretary of Treasury. He believed in a very aggressive, strong government in order to ensure that free markets worked well. So the Hamilton strand, which is Roosevelt’s strand, and in some modest ways, Clinton’s strand, opposes the Jefferson strand you’ve described.

HEFFNER: You say Roosevelt’s strand. Franklin Roosevelt’s strand.

SUNSTEIN: Yeah.

HEFFNER: What do you mean?

SUNSTEIN: Well, Roosevelt’s view was that better the occasional mistakes of a government that lives in a spirit of charity than the consistent indifference of a government frozen in the ice of its own incapacity. That was Roosevelt’s Hamilton like tribute to the need for a government that makes mistakes, but that lives in a spirit of charity.

I think the way to think about American history is that – it’s simplified, but there’s truth in it – was that Jefferson was anti government, or at least he spoke that way; Reagan was anti government, and at least he spoke that way (the deficits ballooned under Reagan, so it’s not quite right to say that he was really anti government); but there’s also a strand, I think the dominant strand in our tradition, which sees the relationship between markets and governments as really designed to make sure people have good lives. And if governments can improve on markets or ensure well functioning markets, then they might have to do a lot. That’s what Roosevelt was committed to when he spoke of the spirit of charity. And there’s a little bit of that in Kennedy and Clinton. And that was Hamilton at our founding period.

HEFFNER: It’s interesting you say “a little bit in Kennedy.” Just a little bit?

SUNSTEIN: Well, Kennedy didn’t have much time to do the sorts of things that he probably wanted to do. But certainly government under Kennedy in some ways grew, and I don’t think that’s something we should be ashamed of. I think there’s a difference between our practice, which is a kind of strategic use of government to promote human purposes, and some of our rhetoric, which opposes the individual to government. Gee, individuals can’t get going without government providing at least protection against criminal violence at the hands of government or private people. So I think American rhetoric at some stages in our history really doesn’t serve our own practices very well.

HEFFNER: Free Markets and Social Justice, the title of your newest book, The “and” emphasized or de-emphasized? Or neutral?

SUNSTEIN: Well, I want to have the “and” there as an ambiguous term. Because there are really two sides to the coin. If you have free markets and you’re interested in ensuring some kinds of opportunity, free markets will get you some kinds of opportunity. And that’s why I say under, in the South African regime, they certainly did not have free markets. And that was part of the lack of social justice. In America today, thank goodness, women, African Americans, Hispanics, just about anybody, by and large, can enter the job market. The government isn’t stopping that, by and large. So that’s the way in which free markets promote social justice. On the other hand, there’s a bad side to this picture. And I think in the last 20 years we’ve lost sight of that bad side, certainly in our rhetoric. To some extent it’s frozen our political debate. But I do think your opening remarks were quite right, that there is a new trend developing, and we’ll probably see it flower in the next 15 years.

HEFFNER: How and why? Or why and how?

SUNSTEIN: Well, the why, I think it’s partly the good sense of the American people. It’s partly the fact that Republicans and Democrats alike have seen problems in free markets. With respect to the media market, many Republicans think there’s a problem when the media market is producing, let’s say, a kind of sensationalistic rush to the bottom, and William Bennett and Newt Gingrich have both expressed concerns about how free market is working in entertainment. So I think they’re responding, in a way, to the good sense of the American people. So it’s partly just the lived experience with free markets that aren’t doing so well, And I think it’s partly the lived experience with persistent inequalities which are bad for people who are at the floor. And when things are bad for people at the floor, something’s going to go wrong for people toward the top. Because if people at the floor are suffering terribly, they’re going to engage in criminal acts. And so just the self interest of people who are doing well is calling for limitations on free markets.

HEFFNER: Isn’t there a self destructive quality to the concept of free market?

SUNSTEIN: Well, I think so. For one thing, if a free market’s going to work well, it has to depend on certain principles of cooperation and trust. If you think of maybe any community in the United States that really has a free market – and by that I mean people can buy and sell as they wish, they can enter jobs as they wish, they aren’t frozen in place, at least not by law – you look at any place like that … I grew up in a suburb of Massachusetts, and what held us together really, in part, were principles of trust and cooperation. And those aren’t created by free markets. They can even be (I think this is where I’m agreeing with you), they can even be destroyed by free markets. If free markets create principles of acquisitiveness and greed and self seeking, which I think is a tendency in our recent history, then free markets will destroy their precondition, and the precondition is trust and cooperation.

HEFFNER: But you say “the precondition is trust and cooperation.” There are many who would say the precondition in a competitive, free enterprise, free market society is just the opposite; that it is the dog eat dog quality that makes for the success of the free market.

SUNSTEIN: Well, dog eat dog can work in some domains. It can work, to some extent, on Wall Street. But, as I say that, it occurs to me, I actually worked as a lawyer on Wall Street, and even on Wall Street things are more complicated than that. That if you’re really dog eat dog, then the system is going to break down, because if people are actually each out for their own profit, that’s how we understand free markets, that will eat up cooperation. And if people don’t cooperate, then we’re going to have crime, and we’re going to need to bring in the police even more than we now do. So the idea is that, for free markets to work well, they depend, in a way, on principles of not actually promoting your self interest always.

HEFFNER: Or recognizing that your self interest is very much involved in cooperative enterprise.

SUNSTEIN: Right. If you look at any workplace or any family, it’s clear that people often engage in sacrifice to their self interest, narrowly defined, and people exchange favors for one another in any well functioning workplace. And they don’t pay for the favors. That would be inconsistent with how people are working with each other. They don’t treat each other as just, you know, goods that they’re trading on markets. So I think one risk in, let’s call it the religion of free markets rather than the kind of pragmatic, sensible belief in free markets, one risk in the religion of free markets is that it eats up principles that have made America work well in suburbs and in cities and in small towns.

HEFFNER: But you say those principles that have made America work well in certain areas. And when you add them all up, you’re talking about the entirety of our country.

SUNSTEIN: Sure.

HEFFNER: That notion has not prevailed. The practice may have prevailed, but we think, for instance, of the frontier, the lone frontiersman pushing forward on his own. But we know, as historians, that that really wasn’t true, that he couldn’t have made it on his own, and cooperativeness and a barn raising rather than a barn burning was all important.

SUNSTEIN: Right. And that guy forging forward in the West, chances are – well, this is actually not just chances; this is our history – had a family, and there was a woman there, chances are very good, who was sacrificing her self interest, narrowly defined, to ensure that that family doesn’t just act in its own self interest. And if you look at our great frontiersmen, they weren’t greedy entrepreneurs; their greatness was that they were entrepreneurial, but they also had a kind of public spirit and a commitment to their communities. And, to some extent, government can encourage that. We can think of Kennedy’s Inaugural Address: “Ask not what government (sic) can do for you, ask what you can do for your country.” And that idea, I think, is part of the frontier spirit. And the deregulation movement, at least in some of its forms, some of what it’s done has been good, but some of the deregulation movement is inconsistent even with our frontier spirit, which isn’t about greed.

HEFFNER: But you’d never guess that from the spin control that has been done.

SUNSTEIN: All right. I’ll tell you a story. There’s a test done by some psychologists that’s quite relevant to law. It’s a test of undergraduates to see if they’ll cooperate with each other. What will they do under conditions in which they have a task? Will they cooperate with each other? And they did the same test, at one point they called it “Wall Street,” and at another point they called it “Cooperation.” The test was the same; it just had two different names.

HEFFNER: (Laughter)

SUNSTEIN: When they called it “Wall Street,” they didn’t cooperate, and things broke down, and it was a disaster. When they called it “Cooperation,” the students did cooperate. Same exact test. Now, what the government calls what it is that we are doing in our system, that is, if they call it “Wall Street” or “Cooperation,” on that, that matters to whether things will break down or not.

HEFFNER: Yes but, you know, you said a moment ago, when you said I was correct in indicating in my opening comments that there is a new feeling at hand, cooperative feeling, those who don’t embrace so totally the notion of dog eat dog. And you say this is a tribute to the intelligence (I don’t know what the word was that you used) of the American people. Isn’t this much more a function of a few highly self selected individuals?

SUNSTEIN: Well, I think there are two things happening. One is that, I think, in the country there’s some dissatisfaction with the idea that government is the problem, not the solution. For one thing, if you want free markets, you can’t have them without government. And I think people know that. I think there’s another development, which is that this good sense is, among some people who are working on books and working in government, becoming a kind … It’s just in its beginning stages, so it’s quite an exciting time in this country with all our technologies changing as dramatically as they are, at the same time that there’s a new beginning movement which I think attempts to draw on what’s best in the New Deal spirit, but without thinking that the kind of rigidity of New Deal programs is well suited to our current economy. So I think, yes, there is a very vague movement brewing among the American people. I think it’s here for a long time. It’s going to be here for a long time. But there is also a narrower set of people working sometimes from the policy perspective, sometimes from the (pardon the word) academic perspective, on trying to figure out how to make these things work.
HEFFNER: From what comes this? On the side of the public, what do you think leads to what you see? I wish I shared your optimism, your observation. What does it come from?

SUNSTEIN: Well, I think Americans know that one thing … Well, we can think of it in different domains. I think Americans are very uneasy with persistent poverty. Now, if persistent poverty is the price we have to pay for ensuring that inflation doesn’t go crazy, then maybe Americans will stand for persistent poverty. But I think Americans don’t like the poverty. I think people are very concerned about environmental issues, which is not to say that they think that environmental issues are number one on the agenda, but they think that that’s important, our natural heritage. And if there’s one area where it’s clear free markets won’t work, you have to do things to make them, to adjust them, government has to. If there’s one area where free markets by themselves won’t work, it’s the environment. I think people, you know, one thing that really gets people concerned is when you talk about your children. And the notion that free markets are a great thing in their, let’s say, purest form for your children, whoever they are, that’s not likely. And I think when people think about the entertainment business, movies, the internet, and so forth, people believe in free speech, and they believe in market incentives, but they think it’s much too simple. So I think we see a set of very different goals. Persistent poverty, children related things.

HEFFNER: Well, I’m going to ask you to stay where you are and do a second program with you, and want to go further into the media, entertainment, our children. But let’s tackle that question now. Are you so positive that we have seen the light and that our concern for our children is going to disrupt, to some extent at any rate, the free marketplace, the free marketplace of ideas, if I may?

SUNSTEIN: I think that if an American president said, “Government isn’t the solution; government is the problem,” or a candidate for president said that, at this stage, it would fall on deaf ears. I think people would say, “That’s a slogan. If we’re going to have markets that work well, we need a strong government. If we’re going to have markets that are adjusted when they hurt people, we need strong government.” So I think it’s, what happened in our last presidential campaign and in our legislative races is extremely revealing.

HEFFNER: Is that why the Republicans recaptured the house?

SUNSTEIN: Well, I think that was a complicated matter. But the Republicans, to the extent that they were believing that free markets and social justice were the same thing, rather than believing, rightly, that free markets can sometimes be a good tool, I think the Republicans were hit hard, and most of them don’t believe that free markets and social justice are the same thing. What the Republicans have been rightly drawing attention to is the fact that we need smart government that isn’t blind to unintended side effects.

HEFFNER: I guess where we differ is this matter of social justice. You do feel that the American people are concerned to achieve social justice, which means not, “I’m all right, Jack; let the Devil take the hindmost,” but others. You do feel that. And you’re not positing your notions, your thoughts about this matter on the assumption that people are saying, “For me to be all right, there has to be some modification of this I’m all right Jack business.” Do you really feel there’s a social …

SUNSTEIN: Well, I think cultures don’t, you know, cultures extend over time. And the American culture wasn’t born yesterday. Our culture’s a very complicated, diverse culture. But one strong stand in our culture, in both its religious and non religious forms, is about ensuring that at least that there’s equality of opportunity. And what the Republicans are committed to is the ideal of equality of opportunity. And free markets don’t provide that if people’s starting points doesn’t give them a start.

HEFFNER: It’s so interesting to me. You’re saying, you know – and I agree with you – that free markets do not provide that. But you’re also saying that we, the American people, know that too.

SUNSTEIN: Well, here’s an example: The minimum wage was increased for the first time in a while under President Clinton. Now, I, myself, I like the ideals that underlie increasing the minimum wage. I’m not so sure that’s the way to go. But the Republicans were divided on it. They went along with it, partly because they were convinced in principle it was right, partly because the American people wanted it. And it’s very interesting, again, whether the minimum wage should be increased is a complicated question about what the consequences of the increase will be. I think there might be better ways to go. But it was political suicide …

HEFFNER: To oppose it.

SUNSTEIN: … to oppose the increase in the minimum wage. Now, isn’t that a striking, surprising fact, post Reagan?

HEFFNER: Next program we’ll talk about that. I don’t think it’s so surprising; it’s very political. But anyway, Professor Sunstein, thank you for joining me today. Stay where you are. We’ll go on to next week.

And thanks, too, to you in the audience. I hope that you go on to next week with us also. Meanwhile, if you would like a transcript of today’s program, please send $4 in check or money order to: The Open Mind, P. O. Box 7977, FDR Station, New York, New York 10150.

Meanwhile, as an old friend used to say, “Good night and good luck.”

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