The Economics of Freedom of Speech

21 August 2010 at 10:17 am 17 comments

| Nicolai Foss |

Recent, uhhmm, debate here on O&M has made me wonder why we don’t have an economics of freedom of speech. Freedom of speech has been hailed as the fundamental hallmark of free, open societies and a fundamental human right. It is also clear that freedom of speech is under attack, not just by its traditional enemies within various fundamentalist factions of established religions and authoritarian, populist, and socialist/communist regimes, but also by the tendency to turn political disagreements into moral disagreements (in Europe, most prevalent among lefties who just don’t disagree with you but think you are downright evil in case you defend free markets, nuclear power, etc.).

Related to the latter point, increasingly individuals, groups, and nations define certain opinions, political positions, moral judgments, etc. as “hatecrimes.” This position seems increasingly influential in the EU. Proponents of the right to freedom of speech has countered that part of living in a free and open society is that there is simply no right to avoid insults, hurt feelings, and the like. For example, such arguments have been invoked here in Denmark in the aftermath of the Mohammed cartoon crisis, and are currently being leveled against DK legislation regulating blasphemous utterances. However, even the most ardent defenders of freedom of speech draw the line at the explicit verbal promotion of violence against others. And most defenders of freedom of speech would also argue that organizations and associations have the rights to regulate their members’ freedom of speech.

These are clearly externality and property rights issues, and would therefore seem to fall directly within the orbit of economic arguments. And yet, economists have had very little to say about freedom of speech. Specifically, negative or positive externalities are not conventionally seen as including the untraded effects of utterances. One of the few papers that have dealt with these issues, Coase’s “The Market for Goods and the Market for Ideas,” basically argues that if there is a case for regulating the market for goods, there is also a case for regulating the market for ideas (specifically, politicians — which admittedly adds to the attraction of the idea).

However, it also seems clear that regulating the “market for ideas” is a very slippery slope. It invites to massive strategic behavior, as any individual can present a case that his or her feelings, etc. have been heavily hurt by someone’s utterances — and call for regulation, court action, disciplinary sanctions, compensation, etc. The slide down the slope may lead into an Orwellian nightmare, or a modern-day version of the Inquisition. Protection against this kind of strategic behavior and its consequences calls for strong commitment to freedom of speech. Relatedly, “selective intervention” á la Williamson in which only a subset of (types of) utterances (e.g., nazistic, homophobic, anti-Danish, etc.) is forbidden is probably unworkable for the same kind of reasons: It is too vulnerable to strategic behavior.

Another reason why regulating freedom of speech should be avoided has to do with the growth of knowledge which is prompted by ongoing critical discussion, including discussion of “outrageous,” “offensive,” etc. positions.  Regulating freedom of speech limits the variation that the selection forces of critical discussion can work on.

Given the above arguments, and given that the positive externalities (economic growth, growth of scientific, moral, traditional, etc. knowledge) most likely overwhelm the negative ones, can we conclude that freedom of speech should basically be unlimited (save for the above constraints)? I think so.

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17 Comments Add your own

  • 1. Koen  |  21 August 2010 at 5:18 pm

    Some work has been done in this area though, from legal, (social) epistemological and economic perspectives. (and of course there is the considerable literature on the economics of science and scientific knowledge )

    This article by Goldman and Cox may be a good source of references

    Similarly for this more recent article

  • 2. Pietro Poggi-Corradini  |  21 August 2010 at 8:35 pm

    Did Armen Alchian write anything on free speech?

  • 3. Rafe  |  22 August 2010 at 2:16 am

    It is interesting that the people who want to regulate so-called “hatespeech” are often the same people, or at least from the same groups who are extremely lacking in civility in debate and are prone to assign the worst possible motives to opponents. Civility and tolerance are important bourgeoise virtues but it is up to individuals, not state action to promote them.

  • 4. Nicolai Foss  |  22 August 2010 at 2:25 am

    Rafe: You are completely right. Check out Roger Scruton’s latest book, “The Uses of Pessimism”, for reflections on this.

  • 5. aje  |  22 August 2010 at 7:23 am

    It’s a great article by Coase. The following is something I’m yet to hear a non-free market economist answer satisfactorily:

    Advocation of free speech is intellectually incompatable with government intervention in the goods market

  • 6. Richard Ebeling  |  22 August 2010 at 12:02 pm

    If I may be allowed, in the November 2004 issue of “The Freeman,” shortly after Aaron Director’s death, I wrote a piece about him, called “Aaron Director on the Market for Goods and Ideas.”

    Click to access ftp1104.pdf

    It focused on his argument concerning the commonality between the market place of ideas and the market place for goods.

    Director was highly logical, but impassioned, about those on the “left” who were only interested in the market place of ideas and had disregard or even contempt for the market place of goods. And how this demonstrated their lack of interest in the very “masses” they claimed to be so concerned with.

    Why? Because the market place of goods is where ideas are applied in the everyday affairs of life, and make the standards and varieties of living that provide prosperity to the broad mass of the population. Too many intellectuals were merely interested in intellectual “exchanges” about the superiority and role of politics in assuring people what they “really” needed (or should be taught they really need.)

    The insular life of too many of those intellectuals blinded them from appreciating that without private property and a competitive market place of goods, any market place for ideas is threatened by the power of the state and its monopoly authority over the use of coercion.

    Director originally wrote this article in 1953, during the high watermark of the “McCarthy” years, when individuals were accused of national “disloyalty” and lost their government, or government-related, employments. If not for the predominance of the “private sector” and jobs opportunities outside the immediate control of the State, their fate would have been sealed with a total deprivation of any means of earning a living.

    Milton Friedman took up Director’s theme in the opening chapter of “Capitalism and Freedom,” that deals with the relationships between political and economic freedom.

    Richard Ebeling

  • 7. Peter Klein  |  22 August 2010 at 1:22 pm

    The analogy between goods markets and idea markets is also usefully treated in Bill Bartley’s Unfathomed Knowledge, Unmeasured Wealth (1994), though I don’t recall if the specific issue raised by Nicolai is addressed.

  • 8. Dick Langlois  |  23 August 2010 at 11:36 am

    The question of free speech seems to me a subset of the larger issue of what Calabresi and Melamed called “moralisms” (and what I once called “transcendental externalities”). If I say something that offends you, I am visiting an externality on you. But this is also true if I do something silently that annoys you (like, say, reading the collected works of Nicolai Foss in private). In this sense, the economics of free speech is bound up with the large literature spawned by Sen’s famous paper on the impossibility of a Paretian liberal.

    Click to access cj2n1-9.pdf

    You can also make the Millian growth-of-knowledge argument about silent moral externalities as well as speech exteralities.

  • 9. Roger Koppl  |  23 August 2010 at 11:50 am


    I wonder what counts as an “economics of free speech.” If you’ve really identified a gap in the literature — wow. But I’m not sure what counts as an “economics of free speech.” What are the main questions (or the one main question)? Would J.S. Mill’s defense of free speech count as part of the literature? Presumably, efficiency would not be the main normative criterion. What would it be, then? Veracity? Peace? Innovation? Should we drag in the analytics of K. Menger’s “Morality, decision, and social organization”?

    I don’t think you are under some sort of obligation to have tidy responses worked out, but I’d like to know where you may have gotten to in your thinking.

  • 10. Nicolai Foss  |  23 August 2010 at 1:30 pm

    Dick: Thx for the thoughtful remarks. I hadn’t seen the Sen connection, but you are clearly right!

    Roger, Nothing very deep. Just wondering if economics can supply us with efficiency reasons why we should prefer freedom of speech. Or, if on grounds of efficiency, one defend limited freedom of speech. This seems unlikely b/c of strategic behavior ec. Its not a big deal; I just haven’t seen it done.

  • 11. Henri  |  23 August 2010 at 1:34 pm

    I disagree in principle with non-discursive sanctions against opinions (blasphemy being the best example), even though in practice I would probably support prohibitions against nazist, racist, etc. other forms of hate speech. Maybe these distinct principled and practical attitudes could be consoled by conceiving free speech in ways that cover genuinely novel opinions and insights rather than repeating tired speech acts.

    However, I cannot see how this could be analytical related to discursive sanctions like moralizing as Nicolai does! In no way there is anything unethical “the tendency to turn political disagreements into moral disagreements”. That is an exercise of free speech, not an attack against free speech. It seems to me quite a common argument for fundamentalists lacking good reasons to cry how they are “silenced by the mainstream”. This is a symptom when one’s arguments are not considered very good. It must hurt.

    Why would the recent “debate” lead Nicolai to think of free speech and speech acts in terms of economics? Members of free societies should be able to cope with other people saying utterly stupid things. They should also be fine with others calling their own ideas and opinions utterly stupid. In my opinion, as a society we cannot start acknowledging negative value that individuals attach to speech acts (externalities).

  • 12. Nicolai Foss  |  23 August 2010 at 1:45 pm

    Henri: I am not sure I understand everything you write (the complexity of the argument — and the spelling and syntax — tax my capabilities). Let me clarify this, though: When I mentioned “the tendency to turn political disagreements into moral disagreements,” I have in mind using the coercive machinery of state power to silence free speech — that is, exactly the opposite of what you are talking about here. So, for example, we do see a tendency to silence people who are critical of immigration on grounds of morality (e.g., hate speech legislation in Belgium which likely can be used to silence political critique of immigration).

  • 13. Henri  |  23 August 2010 at 2:01 pm

    Sorry I was maybe juggling three very unrelated things at once.

    Right. So we all agree on principle that we (i.e. the state) should not attach any economic value to speech acts. Thus, thinking of speech having negative externalities is in principle a very bad idea.

    I was not aware of anyone in the “debate” you referred to insisting on legal sanctions against the courageous scholar? You were very unclear in using the term “moral disagreement” in reference to fines and prison sentences.

    This is even less clear when you then go on to say that “in Europe, most prevalent among lefties who just don’t disagree with you but think you are downright evil in case you defend free markets, nuclear power, etc.” — is this not a case of free speech? I am confused – do you (A) endorse the lefties or (B) think their free speech is of a wrong type? I doubt it is either of the two, but then what is this an example of?

  • 14. Koen  |  23 August 2010 at 2:05 pm

    “Recent, uhhmm, debate here on O&M has made me wonder why we don’t have an economics of freedom of speech”

    Richard Posner “Free Speech in an Economic Perspective” n

  • 15. Nicolai Foss  |  23 August 2010 at 2:11 pm

    Henri: Hmmm, I think you are really misunderstanding the purpose of this blog — which is to ask the question, What can we say on economic grounds about freedom of speech? The available tools are those of externalities and property rights. A pertinent question then is: Should these property rights be constrained/limited? Why? Why not? I am calling for these kind of exercises.

    I agree with you that the lefties-in-Europe-example is perhaps unclear. But the point is that the distance between extreme moral outrage (believe me, being an outspoken libertarian in a dept of pretty radical socialists cpl of decades ago, I have tried this myself!) and the call for political action may be small. (In general, I think it is a good bourgeois virtue not to become overly agitated and emotional in discussions).

  • 16. Nicolai Foss  |  23 August 2010 at 2:12 pm

    Koen: Thx so much for this!!! There it is (perhaps — haven’t read it yet). Seems to be a pretty obscure journal (?).

  • 17. konastephen  |  15 January 2011 at 2:22 pm

    This analysis basically holds up even if one disagrees, as I and Russell Kirk do, on the point of politics and religion/morality being incompatible. Kirk states in The Conservative Mind that the first canon of conservative thought is that “political problems, at bottom, are religious and moral problems” and that conservatism is undergird by the belief that “a divine intent rules society as well as conscience”.

    Contending, as you (and some Austrians) do that the answer to specious leftist cries of “hatespeech” whenever one defends free markets is to put morality back into a safe little lock-box reserved for private contemplation on Sundays is begging the larger question, imho. That question is simply the question of Truth. Does A also simultaneously equal non-A? Obviously it does not. If it did, there would be no logic, math, reasoning or knowledge at all.

    Are free markets immoral or not? That depends on what the meaning of the word “is” is, or in other words, no they are not. If the devil’s in the details, one must get down with the details without fear or faltering to fight the devil there. Allons-y.

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