Defending the American economy against an economic-liberty killer: fear.


Competing notions of economic freedom are at the heart of the struggle between a genuinely conservative, pro-worker, pro-family, pro-industry economics, and the dominant libertarian, neoliberal economics that American policymakers have recently begun to question.

The orthodox view generally sees economic freedom in terms of a kind of hydraulic relationship between the state and the market: Less state imposition means more freedom for private actors to engage in voluntary exchange as they choose, which means more economic freedom. Conservatives attuned to the experiences of working Americans, by contrast, have begun asking a simple question that complicates this view: What does “voluntary” really mean?

Take Senator Marco Rubio, for example, who in 2019 questioned whether the principles of economic freedom required permitting employers to impose noncompete agreements on millions of low- and middle-income workers. Such agreements are contracts, after all, ostensibly the result of voluntary and mutually beneficial negotiation in the market. Rubio declared that “those who might defend noncompete agreements by pointing to the right to freely enter contracts must remember that these contracts, in important respects, are often not freely entered into,” because workers are often pressured, deceived, or otherwise misled into signing. Economic freedom must mean something more than merely formal, theoretical freedom to contract. Actors in the market must be actually free to engage, compete, and negotiate in the market. All too often, American workers are not, and all too often it’s not the private sector constraining their freedom.

The argument on noncompete agreements is just one particularly sharp instance in the larger ongoing debate about the true meaning of economic freedom. Conservative leaders such as Senators J.D. Vance, Josh Hawley, and others have been willing to name the ways that private actors can violate Americans’ economic freedom. And in remarks delivered last month to the annual antimonopoly summit of the American Economic Liberties Project, an interesting voice added to that conversation: Biden’s Federal Trade Commission Chair Lina Khan, who named another one.

Khan argued that the threat of concentrated private power concerned more than the typical economic metrics usually cited in policy arguments. There is another measure that also matters:

When we talk about the harms of concentrated corporate power, these are the things we usually mean. Higher prices for goods and services, and lower wages to pay for them. Less innovation and less opportunity. Markets that are less resilient. A democracy that is less robust. But there’s another harm we don’t talk about often enough, one that is just as pervasive as the rest: fear.

Khan described observing rural farmers’ visible fear of even describing the way their industry worked, lest they incur the wrath of the few processing firms whose market power allowed them to dominate every aspect of how the farmers ran their business. “This kind of fear,” Khan suggested, “runs rampant across the American economy today. Fear stifles free speech and undermines economic liberty. We see it everywhere…this fear is anathema to freedom. An economy where workers or businesspeople live in terror is neither fair nor free.”

The argument, in sum, is that a market characterized by pervasive fear cannot really be a free market, because pervasive fear constrains the actual, substantive ability of Americans to make truly voluntary choices in that market—and that private actors, not just state actors, can impose that kind of fear.  

Of course, state power can and very often is the primary source of real tyranny, and fear is a fundamental feature of such regimes. The Czech playwright and statesman Václav Havel famously described what life for ordinary people is like under oppressive states which demand fear-induced submission. A greengrocer who puts a communist party poster in his shop window doesn’t do so out of deep conviction, Havel argues, but out of a fear of losing his livelihood if he doesn’t. Pervasive fear is not only a product of state tyranny, but an instrumentalized tool deliberately wielded by it. 

The mistake in libertarian orthodoxy is to assume that only state oppression can produce and wield pervasive and freedom-restricting fear. The new school of conservative economics argues (and Khan does, too) that this doesn’t reflect reality: Both public and private power can constrain economic freedom. Private power can absolutely tyrannize through instrumentalized fear, if state policy gives it the latitude to do so.  

With that in mind, let’s consider which kind of fear characterizes the American labor market. Is it only the normal levels of ordinary apprehension present in any economy (the healthy fear of losing one’s job due to playing video games all day on company time, for example)? Or can we detect more pervasive fear used as a means of deliberate control?   

Khan’s speech offers evidence on this question, turning to the same example Rubio and others have: noncompete agreements. Khan argued that “non-compete clauses hold millions of workers captive in fear. These workers are locked into bad jobs and blocked from taking better ones.” She described a woman who signed a noncompete unwittingly during her onboarding, was sexually harassed in this new workplace, attempted to get another job at another restaurant—and was promptly sued for $30,000 by her old employer for violating the noncompete. Khan makes the obvious point: “Tolerate sexual harassment, or face financial ruin? These are choices that no one should ever have to make.”

The American people, for their part, seem to have a picked a side on the question of what liberty really means. In a recent American Compass poll, we asked a cross section of Americans which definition of liberty was closer to their view. Option one was: “Liberty means the freedom to do what I want. The smaller the government and the fewer its constraints on us, the more liberty we all have.” Option two was: “Liberty means the ability to live a good life. Government must not oppress, but there are many ways that government policies and programs can help us to achieve liberty.” Americans prefer option two by close to a 2:1 margin. Freedom, it seems, isn’t as simple as a state-market dichotomy. At least, not to average Americans.

If they want to connect with those Americans and represent them well, many policymakers will need to update their thinking accordingly. Ask American workers and small business owners what they think liberty really means—ask them, as Lina Khan and her “Khanservative” compatriots are trying to do, what they are most afraid of in the market—and the old orthodoxy’s defense of concentrated private power collapses quickly. An honest look results in a richer understanding of economic freedom: That a market shot through with pervasive fear is not a free market, that such economic-liberty-killing fear can result not only from state oppression but from the abuse of private power as well, and that policymakers’ obligation is to defend the American economy against both.   

Chris Griswold
Chris Griswold is the policy director at American Compass.
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