Radical Markets: Uprooting Capitalism and Democracy for a Just Society

"I love reading economics and I love reading science fiction. Radical Markets is a great combination of both. This book is by E. Glen Weyl and Eric Posner, son of the Richard who played a critical role in the spread of the Chicago School view. It centers around five ideas for promoting more inclusive growth. Each idea gets its own chapter, beginning with a fictional vignette set in the near future, depicting their idea in action and explaining the economics of the idea. Both of the words in their title may be modest understatements. The first idea eliminates private ownership, enabling anyone to buy anything from anyone else, whether or not it’s offered for sale. Prices would be posted. People pay wealth taxes based on these prices, so overpricing possessions is discouraged. And anyone could buy anything. The wealth tax, which at 7 percent makes Senator Warren’s proposal for a top rate of 3 percent look modest, allows the authors to abolish every other tax and pay for a universal basic income. This would solve all sorts of economic problems, like “hold up”, where one person interferes with an efficient project by trying to extract the maximum benefit for themselves. Other chapters propose other ideas, including a radical reform that would let people sponsor an immigrant who would essentially be tied to them, “quadractic voting,” which would give people a voting budget they could allocate across different issues, a plan for people to be paid for the data they provide to tech giants, and a new rule limiting the ability of large fund managers to foster collusion among the companies they hold. None of these ideas are ready for prime time. Most of them may never be ready. But all of them have important applications and implications for how competition leads not just to a better economy but a better polity and society. Lack of competition is not the only problem in the digital sector, and the digital sector is not the only place in the economy plagued by a lack of competition. But it is an important aspect of an important issue and I hope we showed how it is possible to make progress on it. While the report our expert panel put forward, Unlocking Digital Competition , may not be as fun reading as some of the books we’ve talked about, in some ways it reflects many of the ideas. Like Rajan and Zingales, it is motivated by the belief that competition will lead to more choice, quality and innovation but that companies left to their own devices try to limit that competition. Like Bork, we center our work squarely around benefits for consumers. Like Whinston, we have a broader concern about some practices that might otherwise seem benign. And while we cannot compete with the Posner and Weyl’s radicalism, our ideas—which were based on listening sessions, written submissions and extensive evidence gathering—share their interest in more inclusive growth. Support Five Books Five Books interviews are expensive to produce. If you're enjoying this interview, please support us by donating a small amount . Our report made six strategic recommendations that could be advanced through 20 recommended actions. The most important was the establishment of a “Digital Markets Unit” that would engage in pro-competition regulation, helping to foster more entry and consumer choice by requiring a code of conduct for the most strategically important platforms, necessitating data mobility and systems with open standards, and moving towards more data openness. We also recommended several measures to update merger control for the digital era, taking into account some of the risks mergers have for eliminating potential competitors or undermining innovation. Finally, we called for greater international cooperation on these issues. I am thrilled that the UK is in the process of implementing a number of our recommendations and have also been pleased by the broader global discussion of these issues."

"There’s lots and lots and lots in this book that I do not agree with, but as I said, what I like about it enormously is its willingness to stir up grief. It’s not perfect at all. It’s one of those books where they make a big claim and then there’s a whole bunch of other stuff which is sort of related to the big claim and sort of not related, but for obvious marketing reasons they combine these semi-connected questions together and say it’s all part of one thing. If there is a fundamental insight behind the book it’s more or less as follows: if we look at the last 50 or 60 years of economics, we’ve seen this huge push towards what is called ‘mechanism design.’ This is the idea that you can create these kinds of mechanisms that are going to reveal information and push towards socially optimal outcomes. Mechanism design people think that we can move away from much of the problematic nature of current politics to one where we’re far better able to figure out what it is that people want and to let them get there. Weyl and Posner use this to come up with radical arguments. They say that the problem with a lot of free market economics is that it isn’t free market enough. We have property rights, but who needs static property rights in a truly dynamic market? We might instead have a perpetual auction in which property would always be allocated to whoever wanted it most. “What I like in that book is its sense of experimentalism—a sense of ‘okay, let’s take crazy ideas and push them as far as they can go.’” Quadratic voting is another idea that they propose. They suggest that we might be able to change electoral systems so that they reflect the strength of people’s preferences much more than they do at the moment. They also have ideas about how to free up immigration through a variety of mechanisms. Posner and Weyl say that if you really want to maximize the material well-being of the world’s poor, you need to compromise on the rights to political equality. They suggest migration systems which would involve limiting the political rights of migrants, so allowing them to get to richer parts of the world more easily. Danielle Allen, a wonderful political theorist at Harvard, has made some very good arguments pushing back against these claims, but as Danielle says, the value of this book and this way of thinking is that it forces you to be clear about what it is that you value (and moreover, she and Weyl have worked together since). If you think equality is a fundamental part of human dignity, this book forces you to say more explicitly that this is so and here are the trade-offs that you are willing to face in order to achieve what you think is the appropriate way of doing things. Some people will agree with Posner and Weyl some of the time. There are some ideas that are definitely worth agreeing with or at least pursuing experimentally. They talk about how their ideas should initially be implemented using small-scale experiments to see how they work. But for me, like Danielle, much of the value of the book comes from how it forces people who disagree with them to sharpen their disagreements and to say more explicitly what their own foundations for arguing are. So when I read this book, I think, ‘Okay. These are people who are throwing out more radical ideas than most of us would dare. I would love to see people who are coming from a different, less pro-markets perspective begin to think in a similarly radical fashion.’ If we have the means to experiment on a wider scale, how do we experiment, on what basis do we experiment, in what kinds of ways could we think about the world radically differently than we think about it at the moment and what kinds of things might be revealed by doing that? That’s what the book presses you to think about. It is interesting enough to try out. Roughly the idea is as follows: quadratic voting provides a means of registering people’s intensity of preferences in a way that our standard system of voting does not. So you and I vote and you are voting for candidate X who is associated with a bundle of different things. I’m voting for candidate Y who’s associated with a different bundle of things. You might have your preferences. You might feel really, really strongly about fox hunting, whereas I might feel really strongly about the safety of our water supply. But there is no way for me to sufficiently signal the intensity of my preferences or you to signal the intensity of yours. What they propose is a system which would make it much, much easier for you to vote on particular issues and, in a sense, to save up your important votes for the things that you absolutely care about. This has benefits, if you think of voting as a system that is primarily designed to allow people to express their preferences and have those preferences aggregated into collective choices. You could alternatively say part of the benefit of our existing system of voting is that it forces candidates to persuade the majority, who don’t necessarily care all that much, that they should care. This kind of discussion has its own benefits. I recently re-read Doug North’s book on Institutions, Institutional Change and Economic Performance, which has a passage describing debates about slavery, where a large number of people in the mid-nineteenth century opposed it diffusely, while smaller groups were passionately in favor and passionately against. The implication of quadratic voting is that people who were strongly invested in slavery—because they had an economic and financial interest in it—might plausibly have prevailed over the majority who vaguely felt that ‘slavery is bad’ but weren’t necessarily prepared to invest their life’s worth in opposing it. Processes of persuasion are an important part of current democracy and might be lost if we go over to giving people who have very strong preferences their way. We might get stuck in Yeats’ “ The Second Coming ” equilibrium, where “The best lack all conviction, while the worst / Are full of passionate intensity.” And then we’d be in trouble. The point that I’m making here is not that quadratic voting is necessarily bad. It’s that each of these systems has specific strengths and weaknesses and trying to figure out what those strengths and weaknesses are with respect to particular issues or problems is a process of exploration and experimentation. And again, this is something that we don’t have a strong sense of how to think about in a systematic way. They suggest that people aren’t nearly as attached to things as they think. Most of the time, you will want to keep your house, and people won’t want to take it from you. But the way I would put it is that this kind of book is often less valuable as a set of practical proposals for reform, than as a set of proposals for interesting ideas to investigate and start pushing the envelope on. It also provides a mental astringent, a kind of, ‘Yikes! I really don’t like this. Why is it that I don’t like this? Why is this unsettling to me?’ It forces you to really think through what your values are and what your commitments are in a way that most books don’t. This gets back to the dichotomy we talked about previously. If you think of human beings as pure and simple market actors then the logic of many of Posner and Weyl’s claims unfold pretty straightforwardly. If you think about human beings as being the messy and complicated bundles of drives and contradictions that we are, animals who grow attached to their homes and have irrational affections, then it doesn’t work nearly as well. But the book makes you think more specifically about those trade-offs."