Free Markets Under Siege: Cartels, Politics and Social Welfare

by Richard A. Epstein

In this paper, Richard A Epstein, Professor of Law at the University of Chicago, explains how there are substantial gains to be made from countries getting 'easy' policy decisions correct. Societies collapse and become impoverished when they do not accept the basic principles of freedom to contract and competition. Even in the developed world these principles have not been accepted in key areas such as agricultural and labour markets. Significant welfare gains could be achieved from liberalisation in both areas. Epstein explains how liberal economists, politicians and civil servants often spend much time discussing 'difficult' cases. While these issues may be important to particular groups in society, the implications of getting 'difficult' cases wrong is not serious. Thus policy-makers and their advisers, Epstein says, would do well to concentrate on the 'easy' cases. In his study, Professor Epstein uses evidence and analysis derived from the disciplines of both law and economics. Professor Geoffrey E Wood provides a commentary that elucidates Epstein's argument and shows how it can be further applied to policy issues relevant to the UK.

Genres: Economics

144 pages, Hardcover

First published January 1, 2004

About the author

Richard A. Epstein is the James Parker Hall Distinguished Service Professor Emeritus of Law and Senior Lecturer at The University of Chicago Law School.

Epstein started his legal career at the University of Southern California, where he taught from 1968 to 1972. He served as Interim Dean from February to June, 2001.

He received an LLD, hc, from the University of Ghent, 2003. He has been a member of the American Academy of Arts and Sciences since 1985 and a Senior Fellow of the Center for Clinical Medical Ethics at the University of Chicago Medical School, also since 1983. He served as editor of the Journal of Legal Studies from 1981 to 1991, and of the Journal of Law and Economics from 1991 to 2001.

His books include The Case Against the Employee Free Choice Act (Hoover 2009); Supreme Neglect Antitrust Decrees in Theory and Practice: Why Less Is More (AEI 2007); Overdose: How Excessive Government Regulation Stifles Pharmaceutical Innovation (Yale University Press 2006); How Progressives Rewrote the Constitution (Cato 2006). Cases and Materials on Torts (Aspen Law & Business; 8th ed. 2004); Skepticism and Freedom: A Modern Case for Classical Liberalism (University of Chicago 2003): Cases and Materials on Torts (Aspen Law & Business; 7th ed. 2000); Torts (Aspen Law & Business 1999); Principles for a Free Society: Reconciling Individual Liberty with the Common Good (Perseus Books 1998): Mortal Peril: Our Inalienable Rights to Health Care (Addison-Wesley 1997); Simple Rules for a Complex World (Harvard 1995); Bargaining with the State (Princeton, 1993); Forbidden Grounds: The Case against Employment Discrimination Laws (Harvard 1992); Takings: Private Property and the Power of Eminent Domain (Harvard 1985); and Modern Products Liability Law (Greenwood Press 1980). He has written numerous articles on a wide range of legal and interdisciplinary subjects.

He has taught courses in civil procedure, communications, constitutional law, contracts, corporations, criminal law, health law and policy, legal history, labor law, property, real estate development and finance, jurisprudence, labor law; land use planning, patents, individual, estate and corporate taxation, Roman Law; torts, and workers' compensation.

Reviews

[Parker Hewitt · Rating 2 out of 5]

Quick and boring but decently informative. Not much to be learned outside of some more minute details about the actual formation of cartels amongst and within industries. His big point is that it is important to get the easy things right and that one big easy thing is not to extend protections and compensation for losses suffered in a competitive market to anyone ever. Overall felt a bit more dogmatic than was justified by such a short treatment of the issues, but the author was aware of that fact given that this was an updated version of a lecture that he gave. For a more detailed, though possibly not more informative, version you could check out Epstein's other work. I doubt I will anytime soon.

[Paul Sand · Rating 3 out of 5]

[Imported automatically from my blog. Some formatting there may not have translated here.]

I've been kind of a Richard Epstein fanboy since I read his work on eminent domain, Takings[image error], years back. (Then-Senator Joe Biden theatrically held up a copy of Takings during Clarence Thomas's confirmation hearings in 1991, warning him that anyone who took the book's libertarian arguments seriously couldn't be qualified to sit on the Supreme Court.)

So anyway: I won one of the trivia contests that Drew Cline used to have at his blog, and picked up this book as a result. It's short, around a hundred pages including index, and the pages are tiny too (roughly 7 x 4 inches). But (truth be told) it's a surprisingly tough read.

It's based on a lecture Epstein gave in England in 2003. Since Communism is more or less defunct these days, and doctrinaire socialism isn't looking too hot either, Epstein considers the prime ideological conflict to be the forces of competition vs. those of protectionism. He outlines the ways that—obviously, to me, and probably you too—competition is a far superior road to travel for any modern economy. Unfortunately, protectionism in all its guises is a pretty hefty opponent.

The relevance of this conflict has become even greater since the lecture. Irony alert: in President Obama's State of the Union address, "compete" appears five times, "competition" thrice, "competitive" once. Obviously he knows the appeal of the concept, even if he's operating out of the protectionist playbook himself.

Epstein looks at how the competition/protectionism conflict has been waged in the fields of labor and agriculture. To put it politely, it's not the most page-turning reading.

Bottom line: it's not bad, but there are not a lot of surprises or insights. I would recommend that Epstein fans, and those who want an introduction to his thought, look elsewhere. For example, here's a recent interview from Reason magazine.

[Ben · Rating 3 out of 5]

I did not expect this book to delve so deeply into labor law issues. Professor Epstein begins the work, which is short enough that it could easily pass for a law review article, with a good analysis of classical liberalism, socialism, and libertarianism and continues with an analysis of U.S. history and its move toward collectivism, particularly during the New Deal era. He then goes into an comparative analysis of English and American labor law--collective bargaining, cartels & so forth. I have a really difficult time staying focused when reading about labor law. Thus, despite the relevance to individual & property rights (areas in which I have a great deal of interest), I did not follow the last part of the book as well as I should have, or would have I needed to know the material for an exam.