Jacob Viner was an important historian of economic thought, and an early Chicago-schooler. He was one of Friedman’s profs, and his article on “Adam Smith and Laissez Faire” is both a citation classic and an excellent, nuanced read. After reading that, I was delighted to come across a much later (1960) piece in the Journal of Law and Economics, about “The Intellectual History of Laissez Faire”. Viner traces the pre-history of Laissez-Faire through Greek and Roman times up through the Christian middle ages, 18th and 19th century political economy, all the way up to the 20th century. Viner’s treatment is fun, and insightful, tracing notions of justice, fair price, and government.
In the end, Viner argues that “laissez faire” and its opponents have more in common than we might think. The arguments between the two sides are much more about facts than principles. For example,
“Even between extreme mercantilists and extreme advocates of laissez faire the difference in avowed general principle might consist only in that the mercantilist would stress the duty of intervention unless, by exception, good reason existed for leaving things alone, while the laissez faire doctrinaire would insist that the government should leave things alone unless by exception special reasons existed why it should intervene.” (56)
In general, I’ve thought it a shame that more sociologists don’t study enough economics to learn its language. I think economists have incredibly useful tools for describing the failure of markets. For example, externalities are a powerful concept. Recoded in the language of economists, I think one major difference between sociologists and economics is that economists think that externalities are relatively rare, mostly small in magnitude, and difficult to resolve in a manner more satisfactory than simply leaving things the way they are. Economists will champion one or two externalities – e.g. Mankiw’s quest to pass a Pigouvian carbon tax – but mostly think things work well as is. Sociologists, on the other hand, think externalities are pervasive, large in magnitude, and worth at least attempting to resolve through collective action through the state or otherwise.
Viner provides a bit of ammunition for the sociological side in a quote near the end, which I particularly enjoyed. In addition to externalities, Viner also notes the tension in laissez faire presented by the tendency of capitalists to create monopolies. Many authors railed against monopolies in theory, but then ignored the fact of monopoly in their empirical analyses. Viner argues:
In any case, monopoly is so prevalent in the markets of the western world today that discussion of the merits of the free competitive market as if that were what we were living with or were at all likely to have the good fortune to live within the future seem to me academic in the only pejorative sense of that adjective. (66)
Oh, Snap! Another way of saying this: We’re not in Adam Smith’s world any more, Toto!