Liberalism, economic freedom, and the limits of markets

Social Philosophy and Policy

Volumn 24, Issue 1, 2007, Pages 120-140

  Satz, Debra ^a  

^a STANFORD UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 34247520661     PISSN: 02650525     EISSN: 14716437     Source Type: Journal    
DOI: 10.1017/S0265052507070057     Document Type: Review

References (42)

1. Cf. Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962), 6.
2. As Milton Friedman puts it, "The possibility of coordination through voluntary cooperation rests on the elementary-yet frequently denied-proposition that both parties to an economic transaction benefit from it, provided the transaction is bilaterally voluntary and informed." Ibid., 13. It is noteworthy how little time economists have spent on analyzing the concept of a "voluntary" act.
3. See Ravi Kanbur, "On Obnoxious Markets," in Stephen Cullenberg and Prasanta Pattanaik, eds., Globalization, Culture, and the Limits of the Market (New Delhi: Oxford University Press, 2004), 42.
4. Robert Mnookin and Lewis Kornhauser, "Bargaining in the Shadow of the Law: The Case of Divorce," Yale Law Journal 88 (1979): 950.
5. In this essay, I use the terms "freedom" and "liberty" interchangeably.
6. It is, of course, possible to challenge this claim. See Anne Phillips, Which Equalities Matter? (Cambridge: Polity Press, 1999).
7. There is a complex link between the efficiency and liberty defenses of ideal markets; although they overlap in certain respects, they are also in tension with each other. Amartya Sen has explored the tensions between Pareto optimality and freedom. See Amartya Sen, "The Impossibility of a Paretian Liberal," Journal of Political Economy 78 (1970): 1.52-57.
8. John Locke had earlier argued that no one has the right to sell himself into slavery: there are limits to the degree of permissible personal subjection to others. See John Locke, Second Treatise of Government, in Peter Laslett, ed., Two Treatises of Government. A Critical Edition (Cambridge: Cambridge University Press, 1988).
9. Friedman, Capitalism and Freedom, 13.
10. Cf. George Akerlof, "The Market for 'Lemons': Uncertainty and the Market Mechanism," Quarterly Journal of Economics 84 (1.970): 488-500.
11. See Debra Satz, "Noxious Markets: Why Some Things Should Not Be For Sale," in Cullenberg and Pattanaik, eds., Globalization, Culture, and the Limits of the Market, 11-38.
12. Other bases of market failure include the existence of natural monopolies, non-zero transaction costs, and economies of scale.
13. A classic defense of private property rights is that such rights allow people to internalize externalities: without private property rights, the commons would deteriorate. See Harold Demsetz, "Toward a Theory of Property Rights," American Economic Review: Proceedings and Papers 57 (1.967): 347-59.
14. Robert Nozick, Anarchy, State, and Utopia (New York: Basic Books, 1974).
15. This paragraph is drawn from my essay "Noxious Markets."
16. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776), ed. R. H. Campbell and A. S. Skinner (Oxford: Oxford University Press, 1976), 781.
17. Ibid., 785.
18. Ibid., 814.
19. Ibid., 815.
20. Ibid., 356-57.
21. Amartya Sen, Development as Freedom (New York: Alfred Knopf, 1999), 124-25.
22. Smith, Wealth of Nations, 157-58.
23. Ibid., 725.
24. David Gauthier, Morals by Agreement (Oxford: Oxford University Press, 1986), 95.
25. See Kenneth Arrow and Frank Hahn, General Competitive Analysis (San Francisco: Holden-Day, 1971).
26. Some key public choice economists are James M. Buchanan, Gordon Tullock, and Anthony Downs.
27. Nozick, Anarchy, State, and Utopia, 331.
28. Cf. Orlando Patterson, Slavery and Social Death (Cambridge, MA: Harvard University Press, 1982).
29. John Stuart Mill, On Liberty (1859), ed. Elizabeth Rappaport (Indianapolis, IN: Hackett Publishing, 1978), 101.
30. See John Gray, Liberalism (Minneapolis: University of Minnesota Press, 1986), 42.
31. Emma Rothschild, Economic Sentiments: Adam Smith, Condorcet, and the Enlightenment (Cambridge, MA: Harvard University Press, 2001), 117.
32. Smith, Wealth of Nations, 467.
33. Ibid., 412.
34. Ibid., 420.
35. Ibid., 143.
36. See Debra Satz, "Child Labor: A Normative Approach," World Bank Economic Review 17, no. 2 (2003): 297-309.
37. Garance Genicot, "Bonded Labor and Serfdom: A Paradox of Voluntary Choice," Journal of Development Economics 67, no. 1 (February 2002): 101-27.
38. Smith, Wealth of Nations, 157-58.
39. See also Elizabeth Anderson, "Adventures in Contract Feudalism," http://left2right.typepad.com (February 10, 2005).
40. Smith, Wealth of Nations, 781-82.
41. Ibid., 782.
42. See also Samuel Bowles and Herbert Gintis, "The Revenge of Homo Economicus: Contested Exchange and the Revival of Political Economy," Journal of Economic Perspectives 7, no. 1 (1993): 83-102.