Alfred A. Knopf • 1997 • 410 pages • $27.50
Robert Kuttner’s Everything for Sale carries the subtitle The Virtues and Limits of Markets. Unfortunately, Kuttner sees few, if any, virtues and many limits when it comes to free markets.
Of course, it will surprise few that Kuttner holds this view. After all, he is a ubiquitous, outspoken proponent of big government. Open a newspaper, a magazine, or turn on a public-policy-oriented television show, and chances are unusually high you will come across Robert Kuttner.
In television sound bites and his rather short newspaper columns, Kuttner manages to sound naïve, misguided, misinformed, and even dangerous, all at the same time. What Everything for Sale clearly demonstrates is that such cloudy thinking is not a function of the medium, but lies at the core of big-government liberalism.
In Everything for Sale, Kuttner conveniently argues against his own perverse, ill-informed ideas of what free markets are all about, forcing the reader to plod through a field of straw men which the author delights in knocking down. The most obvious of these straw men is his attack on perfect competition. Kuttner wrongly asserts that market proponents view the perfect competition model as a reflection of market realities; then he shows that markets are not perfectly competitive, proclaims market failure, and calls for widespread government intervention.
In reality, of course, few if any, economists see perfect competition as a reflection of actual markets. Indeed, most freshman economics students quickly understand this fact. As James Gwartney and Richard Stroup explain in their fine, market-oriented textbook Economics: Private and Public Choice, perfect, or pure, competition is an abstract, simplified model whose purpose is to “help us develop the economic way of thinking.” Beyond perhaps certain parts of the agriculture industry, this model has little direct application to the dynamic, day-to-day functioning of actual markets. However, the constant use of the perfect competition model in economics instruction, I think, can confuse people outside the economics profession, and apparently, as exemplified by Kuttner, a few inside it as well.
Kuttner also suffers from serious lapses in logic. Much of his case for continuing to regulate such markets as health care, banking, finance, labor, and so on, rests on nothing more than the idea that these markets have long been highly regulated. In the case of health care, for example, he goes so far as to assert inanely that true market reform “turns out to require massive government regulation.”
All of the trite liberal views of the marketplace are given full voice in Kuttner’s book. The author sees markets only producing winners and losers. He seems incapable of grasping the fact the market produces winners on both ends of each transaction—both buyers and sellers are better off.
In Marxist fashion, Kuttner vastly discounts the critical aspect of individual freedom in the marketplace, favoring bankrupt notions of class warfare and exploitation instead. And, of course, in contrast to centuries of economic progress through free markets, the author believes that markets are inherently short-term in outlook, yet offers no evidence in support of this thesis. In addition, while Kuttner criticizes free-market economists for applying economic analysis to noneconomic decisions (a criticism that may apply to some but certainly not the majority of such economists, despite what Kuttner implies), he fails to consider the importance of incentives in his own analysis of straightforward economic decisions.
There is much in this book to identify the author as an extremist when it comes to his opposition to free markets and in his support of government action. Consider the following statements:
- Yet in a Keynesian sense the war [i.e., World War II] was stunningly efficient.”
- Trust, civility, long-term commitment, and the art of consensual deliberation are the antithesis of pure markets, and the essence of effective politics.”
- [W]e need the habits and institutions of a strong democracy precisely to keep markets in their place and to provide resilience during those historical periods when the market goes haywire and makes ordinary people vulnerable to the appeals of tyrants.”
- In this century, the expansion of state constraints on the market and the expansion of the province of personal liberties have gone hand in hand.”
Oddly, for the free-market reader, Everything for Sale is at once both frustrating and encouraging. The book frustrates due to its misrepresentations and misunderstandings of the workings and benefits of markets. However, the book proves to be so intellectually bankrupt that it should encourage those looking to advance economic freedom. If this is the best the opposition has to offer, free-market economics is in a much better position than many of us might previously have thought.