Wall Street Journal Reviews Harcourt's "The Illusion of Free Markets"

Price And Punishment
James Grant
The Wall Street Journal
December 20, 2010

Free enterprise is not so free, and the prison population is immense. On these indisputable facts University of Chicago Prof. Bernard E. Harcourt builds a disputable theory. Says he: The very idea that markets ought to be unregulated—that they can even be free—is in no small way responsible for America's teeming jails.

You rub your eyes. Chicago was the academic home away from home of Friedrich Hayek, the individualist philosopher and economist who sang the praises of the perfectly free market that Mr. Harcourt says not only doesn't exist—no argument there—but couldn't, hasn't and shouldn't.

Untrammeled, free-range capitalism is a myth, the author contends. Just as the 18th-century Parisian grain market was regulated to within an inch of its life, so is the 21st-century Chicago Board of Trade. The first chapter of "The Illusion of Free Markets" is filled to overflowing with the comparative details of the two regulatory arrangements—you never imagined that there was so much to say about Commissioner Emmanuel Nicolas Parisot, the investigator and examiner for the Saint-Antoine district of Paris in 1739, and his confrères. "In all markets," the author concludes, "the state is present. Naturally, it is present when it fixes the price of a commodity such as wheat or bread. But it is also present when it subsi