Blog Symposium on From Free to Fair Markets

Lessons for Interdisciplinary Research: Blog Symposium on ‘From Free to Fair Markets’ #1

Dr Amal Sethi

This is the first piece of LSPR’s Blog Symposium on ‘From Free to Fair Markets’.

Before I proceed to my core comment — the need for academics to embrace interdisciplinary collaborations to the same extent (if not more than) as interdisciplinary training (at least in constitutional studies) — I will take a slightly long detour to lay down the context behind my contention. 

Richard Holden and Rosalind Dixon’s ‘From Free to Fair Markets’ chalks out novel economic paths for liberal societies emerging from the COVID-19 pandemic. It rethinks liberalism in a manner that prioritizes fair and well-functioning markets over free markets. By their own admission, Holden, an economist, and Dixon, a constitutional theorist, wrote ‘From Free to Fair Markets’ with the present economic and political debates in the United States of America in mind. I spent the better part of the last decade studying and working in academic institutions on the East Coast of the United States. Surrounded by academic lawyers and social scientists, many of the issues implicated in ‘From Free to Fair Markets’ were topics that came up naturally in almost every conversation I had. At the same time, being originally from India, I could not stop thinking about these issues in Indian terms – where these topics are just as relevant but from a different perspective. Over the past few decades, the free-market turn observed across the globe has led to issues on all fronts – which the COVID-19 pandemic has only exasperated. Free markets have not made life better for the general populace as they continue to come to terms with stagnant wages and increased costs

Therefore, it is no surprise that, at least among my peer group in India and the United States, ideas associated with democratic socialism began gaining much traction. I am extremely sympathetic to the increased allure of democratic socialism (more so among my generation of millennials, most of whom are having difficulty providing for their basic needs). However, I cannot help but look at the glass as half empty. While there are a plethora of problems with reforming our societies using a democratic socialism lens, two stand out for me in particular. First, most ideas associated with democratic socialism require increasing public spending ‘significantly.’ Without a workable long-term plan (see why wealth taxes do not work) to increase revenues (which might not be politically attractive), governments raise funds by borrowing from future generations. In societies with a demand for such policies, this helps politicians achieve short-term electoral gains with few net negatives in the present. Yet, the long-term effects of such measures can be problematic. 

The consequences of borrowing from the future remind me of a frequent occurrence in the National Football League, commonly known as the NFL (yes, the American game that’s not the real football). To ensure parity between teams, the NFL has a salary cap that marginally increases yearly to account for inflation and increased revenue by the league. All teams are subjected to the same salary cap; however, there is a small workaround. Teams can use creative accounting tricks and back-loaded multi-year contracts to technically spend more than the salary cap in a given year. These solutions result in borrowing salary cap space from the future. Aggressive use of such tactics can ensure short-term team success. Curiously, the winners of the Superbowl in both 2021 and 2022 resorted to these tactics. Nonetheless, the salary cap catches up eventually, and a team might not have sufficient money to put together a competitive roster for several years. Some NFL teams do not consider this the worst-case scenario because winning a single Superbowl followed by a few terrible years is better than not winning anything – especially in a league where it is Superbowl or bust. However, this is professional sports. In the real world, a country cannot afford many years with little public funds to spare

There is another predicament associated with democratic socialism, particularly in countries in the Global South, such as India. If the government has a complete monopoly over vital sectors of society, then politicians will be the ones making the important decisions regarding the day-to-day operations of these sectors. Though this thought might come from a place of privilege, I am left with the dilemma of considering whether I trust corrupt and inefficient politicians more than the forces of the free market (despite the inevitable flaws it has). I also worry that a government with a much larger say over everyday life would give politicians the keys to an authoritarian toolkit (which they may not hesitate before opening). This does not mean we should completely eliminate the government or even drastically reduce its size. There are some things the forces of free markets are incapable of performing (or achieving). Nevertheless, I am unsure if the absolute other end of the spectrum is the answer. A pragmatic middle ground is perhaps where the sweet spot must lie. This is where ‘From Free to Fair Markets’ comes in.

In ‘From Free to Fair Markets,’ Richard Holden and Rosalind Dixon construct an alternative to the idea of free markets for our current day and age, which they term ‘democratic liberalism.’ Democratic liberalism improves upon the idea of free markets and largely ameliorates my core concerns with respect to democratic socialism (as well as goes beyond addressing them). Holden and Dixon’s democratic liberalism draws on principles from both democracy and liberalism and emphasises notions of equality, dignity, and freedom. It outlines a relatively modest albeit effective role for governments in our society and states that governments should play a part in (i) guaranteeing access to a public baseline of core goods, (ii) ensuring equality of access to certain relative goods, (iii) regulating sources of monopoly power, and (iv) responding to negative externalities associated with private markets. At the same time, democratic liberalism maintains a strong commitment to individual choice, national and global markets, and the flexibility and efficiency gains they offer. 

Regarding how democratic liberalism would work in practice, let us take Holden and Dixon’s proposal on universal health care (likewise, they have comparable proposals for job guarantees, minimum wages, and the climate crisis). Holden and Dixon start by arguing how it is a mistake to equate the need for universal access to healthcare with the need for universal government provision via a single-payer system. Instead, they highlight compelling arguments for combining a system of private health insurance and a public baseline level of healthcare. They argue that this approach is more affordable and sustainable than proposals such as ‘Medicare For All In The United States.’ They also contend that their approach is more respectful of individual choice — especially choices to keep current insurance plans or current choice of doctors. Furthermore, to pay for the public baseline level of healthcare (and other similar baselines in other sectors), Holden and Dixon posit an elaborate workable mechanism of competitive corporate tax rates, moderate taxes on capital and income, and value-added taxes to pay for these policies. In doing so, they point out how proposals such as Alexandria Ocasio-Cortez’s 70% personal income tax rate or Elizabeth Warren’s ultra-millionaire wealth tax are not viable options. 

Holden and Dixon do not just stop at laying out a political theory (or an economic theory). They artfully combine teachings from constitutional studies (and allied disciplines) to demonstrate how their theory will operate more efficiently when accompanied by certain non-obvious legal tweaks. Holden and Dixon argue that democratic liberalism will work best when accompanied by a range of electoral regulations or reforms. These could include (i) campaign finance regulations that ensure access to and influence over the democratic political process for all citizens regardless of wealth or income, (ii) electoral redistricting processes that limit the capacity for temporary political monopolies to reduce future electoral competition and “lock in” their hold on power by partisan gerrymandering, and (iii) measures to encourage widespread voter participation as a means of discouraging the kind of strategic extremism among parties and representatives that can deprive many voters of true electoral choice. This could also involve measures designed to encourage voter registration and turnout, including automatic voter registration, increased access to vote-by-mail, and compulsory voting.

Democratic liberalism might not be everyone’s cup of tea. As Holden and Dixon acknowledged, the ideas in their book might be “too modest for some, for others… too radical to complete.” For most of my politically active friends, democratic liberalism would be too mild. Personally, in countries like India and the United States, I think that moving toward democratic liberalism might be too arduous to achieve in the near future (albeit for different reasons in each country). Contrasting Holden and Dixon, I do not have much optimism for President Biden’s recent relief measures, which were passed completely on party lines and received pushback from the Republicans. Things in the US might have been completely different if there was one less Democrat Senator in Congress. In India, the dominance of the Narendra Modi-led nationalist Bhartiya Janta Party makes democratic liberalism a distant dream. Yet, unlike democratic socialism, which I see far beyond the realm of possibility in these countries, democratic liberalism has a degree of real-world promise. It can certainly be envisioned theoretically in these extremely different countries. Even otherwise, democratic liberalism can function as a normative standard to guide policies or long-term goals. 

I believe that to realise democratic liberalism in India and the United States, as an initial step, a lot of reforms would need to be geared towards significantly increasing voter turnout (currently, in both countries, the voting percentages in national elections are in the 60s) and ensuring what Holden and Dixon term as fair political markets. Only then would democratic liberalism be something that would be attractive to a large chunk of electoral bases and hence politically realistic. ‘From Free to Fair Markets’ not only anticipates these requirements but also covers them in nuanced terms. For example, Holden and Dixon write that one way to limit partisan gerrymandering (i.e., the manipulation of electoral district boundaries with the view to create an unfair advantage for a party or an electoral group) may be by giving the task of redistricting to an independent agency, or a fourth-branch institution. Constitutional scholars are extremely familiar with the debate on fourth-branch institutions. However, they often study these institutions as counterparts to constitutional courts or as those that can account for the limitations of constitutional courts (or as part of other similar thematic debates). They may not think of these institutions as instrumental in economic matters. The fact that ‘From Free to Fair Markets’ engages in such analysis in multiple places is what I see as a hallmark of this book. I also believe that the sophisticated drawing from constitutional studies in ‘From Free to Fair Markets’ is one of the prime reasons behind it not propounding solutions that might be harshly criticised by other disciplines (the integration of discussions surrounding the minimum core of democracy and abusive constitutional borrowing were elements that as a constitutional studies scholar I found highly interesting, innovative, and relevant, in a project such as ‘From Free to Fair Markets’). 

This leads me to the point I intended to make in this response. In recent years, there has been increased pressure on scholars to conduct interdisciplinary research. Most academic institutions and funding bodies want to see scholars working on interdisciplinary projects. This has resulted in scholars trying to attain some degree of interdisciplinary training. In my field of constitutional studies, for reasons beyond the scope of this response, even the most sophisticated interdisciplinary projects merely draw methods or insights perfected in other fields, rather than combining two or more distinct fields based on their own merits. An illustration of this can be seen in two excellent interdisciplinary projects I reviewed last year – Ran Hirschl’s City, State: Constitutionalism and the Megacity and Adam Chilton and Mila Versteeg’s How Constitutional Rights Matter. Very few projects in constitutional studies engage with two distinct fields the way ‘From Free to Fair Markets’ does (although law and economics scholars tackling constitutional issues might have something to say about this). I believe that holistic projects like ‘From Free to Fair Markets’ are only possible when there are collaborations between scholars from disparate disciplines. Nevertheless, just like the proposals in ‘From Free to Fair Markets,’ things are easier said than done. Collaborations between scholars from distinct disciplines are only possible if academic policy allows scholars with the time, opportunities, conditions, and resources to undertake such projects in meaningful ways. We can only hope academic institutions and funding bodies can take inspiration from projects like ‘From Free to Fair Markets’ and create the circumstances necessary for such collaborations. At the same time, the burden for such collaborations is in small part on scholars as well. Scholars should not just be content with interdisciplinary training and drawing on interdisciplinary insights. When possible, they should aspire to move outside their comfort zone and pursue projects with scholars from other disciplines who might not even work on similar themes. Who knows what interesting ideas such collaborations might turn up? 

As for ‘From Free to Fair Markets,’ while I will refrain from commenting on what questions this book throws open for economists and political philosophers, I do see how it provides comparative constitutional scholars with a good deal to ponder. Among numerous questions: How does the global decline in democracy impact the prospects for democratic liberalism? Would democratic liberalism make our societies more (or less) susceptible to authoritarianism? What role do constitutional courts play in the development of democratic liberalism? Or, how would democratic liberalism change the role of constitutional courts, if at all? Would democratic liberalism require constitutions to be designed differently from the ways they have been designed in recent years? Do fourth branch institutions gain more importance in a world with democratic liberalism? 

In conclusion, I hope that scholars tackle not only some of the above questions but take up more collaborative projects with scholars from other disciplines working on distinct topics. This may pave the way for richer future academic discussions. 

Dr. Amal Sethi is a Senior Fellow at the Faculty of Law, University of Hamburg, where he researches and teaches on comparative constitutional studies.