Beyond the Marketplace of Ideas
November 12, 2015
Almost a century has passed since the most powerful dissent in American history advanced our nation’s understanding of freedom of speech. The concept of free speech is captured by the First Amendment and its protected activities—speech, writing, peaceful assembly and the exercise of religious belief. The late British economist, R.H. Coase, distinguishes these activities from the market for goods, with the Holmesian inspired term—the market for ideas.
By Laura Ruiz-Colón C’16
From the United States Supreme Court Justice Oliver Wendell Holmes Jr. dissent in Abrams v. United States:
“But when men have realized that time has upset many fighting faiths, they may come to believe even more than they believe the very foundations of their own conduct that the ultimate good desired is better reached by free trade in ideas—that the best test of truth is the power of the thought to get itself accepted in the competition of the market, and that truth is the only ground upon which their wishes safely can be carried out. That, at any rate, is the theory of our Constitution.”
Beyond coining the term “marketplace of ideas”, Justice Holmes dissent remains a robust classical liberal defense of free speech and the First Amendment. By understanding speech as competing ideas in a market that is “essential to our society’s efforts to discover truth,” Holmes assumes, that by nature, man is rational and reasonable. 
Accepting the rationality assumption and examining the market of ideas in contrast to the market of goods allows us to conclude the following: If we demand a market for ideas with limited government, then we ought to insist in a market for goods with limited government regulation.
In The Parity of the Economic Market Place, Aaron Director, argues that free speech is the “the only area where laissez-faire is still respectable.” This leads to the question, why is a limited role of government insisted upon for the market of ideas and not for the market of goods?
R.H. Coase, In The Market for Goods and the Market for Ideas, delivers a response. He begins by stating that governmental regulation in the market for goods is “commonly desirable”, while in the market for ideas, government regulation is undesirable. He argues that this is due to different type of participants belonging to each market. The market for ideas is “the market in which intellectuals,” the “rational” people, conduct trade. In contrast, the market for goods is driven by people who are “merely engaged in earning a livelihood,” implying a lack of capability.
It seems that the distinction between the two markets and the role of government in each differs in a very fundamental way, the acceptance of man as capable and rational. One sphere, the market for ideas, has faith in its participants and the other, the market for goods, does not. In essence, accepting the rationality assumption leads to less government intervention, while dismissing it leads to more government. Whether the acceptance or denial of this assumption is good or bad is beyond the scope of this post, but if we follow the logic in Justice Holmes dissent, then we must accept a universal conception of man as rational.
This should not be hard to acknowledge. America is one of the top 5 most educated countries in the world with 41.3% of citizens having obtained a tertiary education and 80% a secondary education—man is capable.
Participants in the market for goods are just as rational as those in the market for ideas. Supporting limited government regulations in the market for goods, as we do in the market for ideas is not contentious, it is simply right.
 Ingber, Stanley. “The Marketplace of Ideas: A Legitimizing Myth.” Duke Law Journal Vol.1984.1 (1984): pp. 1-6
 Cahn, Steven M. “Second Treatise of Government by John Locke.” Political Philosophy: The Essential Texts. New York: Oxford UP, 2005. Print.
 Director, Aaron. “The Parity of the Economic Market Place.” The Journal of Law and Economics Vol.7 (1964): pp. 1-10
 Coase, R.H. “The Market for Goods and the Market for Ideas.” The American Economic Review Vol.66.2 (1974): pp. 384-391
 Frohlich, Thomas. “The Most Educated Countries in The World.” 24/7 Wall Street. Web.
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