Book review: “Free Lunch Thinking – How Economics Ruins the Economy” by Tom Bergin
When I first read the blurb of Free Lunch Thinking, my initial reaction was “Oh please, not yet another anti-capitalist polemic! Britain needs another one of those like the Vatican needs another copy of the Bible.”
But I was then very positively surprised. Free Lunch Thinking is not a polemic at all. It is a critique of free-market economics, yes; but Tom Bergin is one of the very few critics of free-market economics who actually understand free-market economics. Normally, when I read a left-winger’s account of what free-market liberals supposedly believe, I want to yell “But that’s not what we’re saying at all!” into the pages of the book. Not in this case. Bergin steers clear of the usual caricatures. He could pass an “Ideological Turing Test”, that is, he could write an article pretending to be a free-marketeer, and actual free-marketeers would not spot that he is not really “one of them”.
The book offers an informative overview of some of the major debates in economics, and how they evolved over the years, such as: how responsive are people to tax incentives? Do employment protection and minimum wage laws really hamper job creation? Does regulation really hold back economic dynamism? If you want to catch up on some of those subjects, you could do a lot worse than reading this book, irrespective of whether you ultimately agree with Bergin’s conclusions or not.
Nonetheless – I have a couple of issues with the book.
A critique of mainstream economics?
While Free Lunch Thinking purports to be a critique of mainstream economics, it is really, in the main, about debates within mainstream economics. Bergin presents competing positions on a number of issues, and then picks a side. There is nothing wrong with that, but that is not a “critique of economics”. That is just taking a side in an economic debate.
Bergin’s main beef is not with “economists” per se. It is with economists of a particular persuasion, namely, with small-state, pro-market economists. Most of Bergin’s positions are simply the positions of a left-wing economist. He believes that high levels of taxation and regulation are not economically damaging, and that a large, active government is a force for good. These are, broadly, the positions of economists such as Paul Krugman or Joseph Stiglitz, or in the UK, of David Blanchflower or Simon Wren-Lewis. It is a perspective which is already abundantly represented within the profession.
The final word?
Bergin begins each chapter by outlining what he dubs the “orthodox” economic position, on issues such as taxation, labour markets, and regulation. He then shows how that position has supposedly since been “debunked”, either by empirical evidence, or just by particular case studies.
But has it really?
Most of the issues covered in Free Lunch Thinking are issues on which there is quite a lot of disagreement among economists. This is because the empirical literature on these issues is not conclusive. You can find good empirical evidence for a spectrum of positions, rather than around one single consensus position. On each of these issues, there are empirical studies which find evidence for a particular economic effect, and there are empirical studies which fail to find it. You could claim that the latter studies “debunk” the former – but you could equally claim that the former “debunk” the latter. Or we could just admit that neither side has been comprehensively vindicated or debunked, and that we ultimately have to make a judgement call.
It would be easy to critique this book by saying “Bergin fails to mention study X, which contradicts his position”, or “Bergin conveniently forgets to include study Y, which comes to the opposite conclusion.” But that would be missing the point. There is always another study. There is always a “Yes, but what about…”. These issues are not settled, and they will not be any time soon. Bergin’s version of events represents one end of a spectrum, not the final word.
How influential are economists?
Bergin sees economists, or rather, free-market economists, as a hugely negative influence in economic policymaking.
But how influential are economists, free-market or otherwise, really? Politicians constantly ignore economic advice, and do things which make economists tear their hair out. Perhaps ironically, this is especially the case in areas where the empirical literature is relatively conclusive, and where there is something approaching a consensus among economists. This is not my observation. I am merely paraphrasing ”Murphy’s Law of Economic Policy”: ”Economists have the least influence on policy where they know the most and are most agreed; they have the most influence on policy where they know the least and disagree most vehemently.”
Examples are not far to seek. Pretty much everything that happens in British housing policy goes against the advice that almost any economist would give. Immigration policy has long been impervious to economic reasoning, and the whole Brexit process was handled in an almost deliberately anti-economic way.
Economists are influential when they are not just economists, but also public intellectuals and commentators. The aforementioned Paul Krugman and Joseph Stiglitz come to mind, and so do Thomas Piketty, Mariana Mazzucato, Yanis Varoufakis, and Ha-Joon Chang. Of course, none of those could be remotely described as free-marketeers.
The wrong timing
And this leads me to my final issue with the book: it seems to be a bit stuck in the era of Thatcher and Reagan, or maybe of Blair and Clinton, but certainly in an era when there was a much broader acceptance for pro-market ideas. It does not reflect the fact that the pendulum has since swung completely into the opposite direction, with both the Left and the Right falling out of love with the market economy. The dominant ideology on today’s Right is not Thatcherism, but communitarianism. Conservative communitarians, such as Nick Timothy or Phillip Blond, spend far more time attacking (imaginary) libertarians than they would ever spend attacking fans of Big Government. Today’s Left, meanwhile, has given up on the relatively market-friendly social democracy of the “Third Way”, and has rehabilitated socialism as a mainstream ideology. To the extent that pro-market thinking was ever an “orthodoxy” (and I would strongly dispute that it ever was), it is the defeated orthodoxy of yesteryear. Bergin is really knocking on an open door.
While I ultimately disagree with Bergin’s assessments, I would nonetheless recommend this book. Bergin could easily have played to the gallery. He could easily have written the umpteenth anti-capitalist polemic, and given that there seems to be an infinite demand for books of that genre, this would probably have done wonders for his sales figures. Instead, he has written a thoughtful, fairminded, and intellectually honest critique of free-market economics, which raises some interesting challenges for free-marketeers. He combines that with an insightful account of the recent history of economic thought. If you are looking for a book which challenges you without being annoying – make it this one.
Recommendations for further reading/watching/listening:
- “Free Lunch Thinking: How Economists Ruin The Economy” by Tom Bergin
- Tom Bergin vs Kristian Niemietz – debate on CapX Live