Clickbait describes a phenomenon where a headline is given a deliberately provocative title to try to get users to engage with some kind of online content. We may bemoan the phenomenon, but it persists because it’s effective. The most effective form of clickbait is known as rage bait. As the name suggests, rage bait is when content producers try to get engagement by deliberately angering people with their content. Again, while this might seems deplorable, it persists because it works – content that makes people angry is more likely to be engaged with than content eliciting any other reaction. This simple observation can help explain why some of the most successful and high profile people in public conversation often seem needlessly antagonistic. The snarkiest, most enraging people will tend to rise in prominence, giving an incentive even to those who are actually more mild mannered to put on a deliberately antagonistic persona. Rage sells. At this point, its worth considering Sherwin Rosen’s work on the economics of superstars. The gist of this idea is along these lines. Consider acting as a profession in, say, the year 1600. Across Europe, there would be a very large number of stage actors to fill theater demand. The number of actors must be large because each performance is local – it can only be seen by people in a particular theater at a particular time. It also meant the quality of actor performances was heavily determined by local conditions. If your local troupe consisted of mostly mediocre actors, that was the best you could get. And an actor of great talent was still limited in how much he could benefit from that talent, for the same reason. Even if he joined a traveling theater troupe and expanded his range, he can still only perform one place at a time. Over time, and as technology improved, actors were not limited in the same way in how far their performances could reach. As the movie industry arose, suddenly the most skilled actors could have the entire world as their audience. And on the other side of the coin, audiences could benefit from the performances of the most skilled actors in the world. The same was true with music – a couple of centuries ago, someone with Bruce Springsteen’s level of performance ability couldn’t have had the actual Springsteen’s level of success – their market simply wasn’t big enough for that. Nor could anyone have benefitted from their Springsteen-level skills unless they happened to be within the area where this musician could perform. (I’m personally not a huge fan of Springsteen, I  just grabbed his name out of the air because he’s been very successful over a very long time – feel free to substitute your own favorite musical act.) This change in reach brought about by technology had a couple of effects. One, the highest levels of success were more heavily concentrated among the very highest performers. In the past, being one standard deviation above average in acting ability could have secured you a career, and being five standard deviations above average wouldn’t have made your career all that much more successful than your one sigma counterpart. But today, when movies have global releases, only a very small number of actors are needed to serve the global market. People who live in Wichita, Kansas aren’t solely dependent on the quality of actors who reside in Wichita. They can witness the performances of the very best actors the world has to offer. To have a shot at being a successful actor, you need to be at the far right end of the distribution. The second effect is that even very small differences in ability at the top end can have huge effects in overall success. If you have 90% of Anthony Hopkin’s acting skills, you don’t end up with 90% of Anthony Hopkin’s career success. You’re more likely to be 10% as successful as Hopkins, as he wins Oscars and gets remembered as one of the all time greats, and you have a minor supporting role on a modestly well received sitcom. I think rage bait follows a similar dynamic, for the same reasons. With the reach of internet and cable TV, content producers have virtually no limits with how far they can reach – and with how many competitors they have. If I’m 90% as rage-inducing as some other content creator, I won’t be 90% as successful for it. This creates an incentive for people to keep upping the ante – but it doesn’t have the same natural plateau as the distribution of something like acting skills or musical ability. People can choose to be more provocative much more freely than they can choose to be more skilled with an electric guitar. I find this to be a discouraging analysis – but then I look at the world around me and it seems to explain things pretty well. Still, what do you think? Does this seem to fit your observations, dear EconLog reader? I’d love to be convinced I’m wrong about this! (0 COMMENTS)

From June 1 through June 13, I was in Park City, Utah participating in the Law Institute for Economics Professors run by the Law & Economics Center at Scalia Law School.  It was a two-week crash course in American law and I will be sharing some insights over future posts (as an aside, if you are an economics professor, I highly recommend this program).   One of the big takeaways I had related to my research is how important it is to break down disciplinary barriers.  There is a developing trend in American public discourse to separate things into distinct disciplines: X is a political issue, or Y is a public health issue.  Thus, one should just “listen to the experts” in that field and ignore what everyone else says.  I have seen this twice in the past 5 years.  First, during the Covid pandemic, as governments were doing seemingly random policy, whenever economists would give an opinion, we would be told to “stay in your lane.”  But, of course, economics permeates every aspect of our lives: it is the study of how people make choices given constraints.  If you change the constraints, if you change the incentives, economics has a lot to say on that matter.  Indeed, if the public health officials listened to economists (and other disciplines) more, they could have avoided the cascading failures that characterized the American response to Covid.  More recently, economists are being told that our criticisms of Trump’s trade policy are irrelevant because it’s a “political” issue.   But attempting to separate issues into distinct silos leads to poor thinking.  Economics (and other disciplines) have insights into real world problems beyond what some person claims is the nature of the problem.  Yes, economics had things to say about pandemic spread because we knew that price controls lead to shortages, which in turn cause people to search more for the goods they need.  Consequently, in a pandemic spread by close contact with each other, people have more contact points, creating more disease vectors, leading to increased spread.  Economics also had insights on how to produce more needed goods, another thing which was ignored.   To bring this back to law and economics, one of the things that struck me during the conference is how much law and economics have to say to one another.  I do not mean in the sense of Richard Posner, who argued that economics should shape law into being more efficient.  Rather, I mean that both law and economics study social orders.  We just come at it from different angles.  To be clear, by “law” I do not mean simply statutes or government-created rules (although they are part of a social order).  Rather, I refer to “law” as the broader set of rules, both government-created and emergent, that govern our daily lives.  Economics has a lot to say about the emergence and the persistence of these emergent rules.  Economics has a lot to say about the incentives that various legal actors face (judges, juries, expert witnesses, etc).  And, likewise, the law has lots of things to say about how people bargain and exchange.   Adam Smith famously discusses how the division of labor can increase our productive capabilities and lead to more discoveries.  But he also warns against extending this logic too far.  If one becomes too specialized, it can lead to a “torpor of his mind,” rendering him “as stupid and ignorant as it is possible for a human creature to become” (Wealth of Nations pp. 781–782).  Siloing is exactly that.  Yes, we should specialize.  But we must not become so ignorant of the world around us as to reject insights from other disciplines.  To that end, I will be sharing some insights from the law over the next few posts. (1 COMMENTS)

The human brain seems wired to notice patterns.  This presumably has some evolutionary advantages, but this attribute can lead us astray in a world that is overloaded with data.  I’ll start with a personal anecdote, and then show the implications for data analysis. Back on June 18th, I was traveling through the west side of Vancouver and noticed a street name “Trutch”.  I recall thinking that this was an odd name.  Just a few days later, Tyler Cowen linked to an article in the Vancouver newspaper, discussing the fact that this street’s name had just been changed: Vancouver’s Trutch Street is now šxʷməθkʷəy̓əmasəm Street. Not everyone is happy Dan Fumano: Many residents of the street very recently known as Trutch said they support changing the name. But they worry about possible practical implications of a street whose sole name is spelled in a language other than English. Author of the article:  By Dan Fumano  Published Jun 17, 2025, Last updated Jun 18, 2025 That’s an even odder name! Notice that the name change occurred right about the time I observed the street.  That seems like a rather amazing coincidence.  But that’s not all.  This past Monday we stayed one night in a hotel in Calgary, before flying home.  The next morning I woke up and checked Marginal Revolution.  This is the first post that I saw: Calgary is resuming with fluoride, and Quebec fact of the day That’s even more of a coincidence.  It’s almost as if Tyler knew of my travel plans and intentionally posted material that related to my location.  Of course that’s nonsense, he didn’t even know I was on a vacation.  But you can see how a superstitious person might find the coincidences to be meaningful.  What are the odds? Perhaps you are thinking that in a world where billions of events happen every single day, a coincidence isn’t all that meaningful.  But much of our research in science and social science is premised on the assumption that coincidences are very meaningful.  At least in physics, scientists often insist on highly unusual coincidences, “5 sigma events”, which means more than 5 standard deviations from the predicted value.  But in many fields there is a much weaker test of significance, just two standard deviations from the null hypothesis.  That means that random coincidences with just 20 to 1 odds against are viewed as highly meaningful. In a recent EconLog post, Kevin Corcoran had this to say: In 2007, Eliezer Yudkowsky wrote an interesting article advocating for what he called “defying the data.” The idea was fairly simple – say you have some theory explaining how the world works. A new study is published with data that can’t be accounted for with your theoretical framework. How should you respond? One response is to abandon your theory in favor of the new data. Another response is to keep your theory intact and, as Yudkowsky says, “attack the experiment – accuse the researchers of dishonesty, or flawed design, or conflict of interest.” But there is a third possibility – that of simply defying the data. . . . If a theory has been well-established and upheld by multiple studies and experiments, then one really striking appearance of contrary data shouldn’t amount to much. At first glance, that might sound unscientific.  But in practice it is often the case that evidence “refuting” a given theory is nothing more than a garden-variety coincidence—something that happens every single day. Even very smart pundits (and myself) are occasionally fooled by coincidences.  One of the worst recent examples involves the debate over the origin of Covid.  Throughout history, pandemics often begin in major cities in southern China, where large populations live in close proximity to wild animal markets.  This is how the first SARS epidemic began in November 2002.  The Covid pandemic (SARS-2) seems to have begun in an almost identical fashion, in a wild animal market in one of southern China’s largest cities. Despite that fact, many pundits have embraced the completely unsubstantiated theory that Covid came from a lab leak, because among the half dozen largest metro areas in southern China, it first popped up in one that has an important virus research institute.  That’s one of the weakest coincidences I’ve ever seen, and yet many people seem to view it as providing strong support for the lab leak theory.  In contrast, the animal market hypothesis is based on a coincidence that is many orders of magnitude more unlikely to occur at random. There are millions of streets in the world.  The fact that I noticed a certain street in Vancouver right before Tyler posted an article about that street is actually a pretty amazing coincidence.  And then for Tyler’s fluoride post to occur just 10 days later, just as I was passing through Calgary, is an even more amazing coincidence.  In contrast, the entire lab leak theory is based on nothing more than a mild coincidence that is about as interesting as rolling the same number two consecutive times when tossing a six-sided die. (0 COMMENTS)

When I was in high school (approximately 730 years ago, or so it feels these days) I first learned basic trigonometry. A common type of problem in homework and tests involved situations where you had to find the length of one side of a triangle based on other values provided. For example, a problem might tell you that there is a post of unknown height. The problem then tells you there is a shadow of such and such length being cast from that post by a light source at such and such an angle. The given information could then be combined with various trigonometric identities to work out the missing information. I always enjoyed these sorts of questions, and found it very satisfying how they worked in any direction. If you tell me the height of the post and length of the shadow, I can tell you the angle of the light – or if you tell me the angle of the light and the length of the shadow, I can tell you the height of the post. But, upon working out that the post is six feet tall, suppose you wanted to know why the post is six feet tall – what caused the post to be that height? It would be really weird if I were to try to tell you that the angle of the light and the length of the shadow caused the height of the post. More than just weird – it would be such a confused answer that it’s not even wrong. Trigonometric identities are true, and the math behind them is impeccable. The relationships among these variables are ironclad. But it would be the height of nonsense to answer a question about what caused the light to be at its current angle by attributing that to the height of the post or the length of the shadow. If I move the light to a new position, the length of the shadow will change. If I hammer the post down into the ground by six inches, the light will hit at a different angle and the shadow will be a different length. But you can stare at the mathematical equations all day and not be able to say what caused the change in the angle of the light or the height of the post. Trigonometric identities are not causal mechanisms. Unfortunately, there is no shortage of economics commentators who have failed to absorb this very basic point, and speak as though setting out an accounting identity and then solving a math problem is the height of economic insight. Every time someone who styles themselves as a sophisticated dealer in economics talks as though levels of private or public debt are caused by the trade balance, the world becomes a more tediously confused place. Accounting identities are not causal mechanisms. (0 COMMENTS)

In the Summer issue of Regulation, I suggest that the growing popularity of industrial policy (also called “industrial strategy”) all over the world is a return to Jean-Baptiste Colbert, the Finance Minister of Louis XIV in the 17th century. Industrial policy is not just an assemblage of political meddling acts—otherwise it would be everywhere in the history of mankind—but, as some experts define it, “government policies that explicitly target the transformation of the structure of economic activity in pursuit of some public goal.” In my article, I write (“Of Tariffs and Industrial Policy,” 48-2 [Summer 2025], pp. 7-8): Considering government as it is, instead of what the interventionists dream it could be, reveals that coherent industrial policy is impossible. … The calls for industrial policy are essentially ideological. … Industrial policy can be seen as the offspring of what Jean-Baptiste Colbert (1619–1683), a minister to King Louis XIV, tried to achieve. As described by economic historian Donald Coleman, Colbertism was “a systematic treatment of economic activities.” Colbert “used a variety of tools: subsidies, special tax, reductions or exemptions, protection against foreign imports,” etc. He encouraged exports and domestic manufacturing. He was a dirigiste mercantilist who believed his policies enriched the country and thus the king—even though they likely explain why France lagged far behind England when the Industrial Revolution got underway. … [Industrial policy] is about the ideology that a coercive allocation of resources will produce the goods that politicians and bureaucrats think consumers should want. At best, it is a belief that political and bureaucratic processes will, by some magic, adapt to what consumers want better than market competition will. At about the time Regulation hit the newsstands, actual and virtual, British Prime Minister Sir Keir Starmer announced a new attempt at industrial policy. He was proud, he said, “to launch a new industrial strategy for the nation today.” Contrary to the past ones, this one will be “robust, strategic, and unapologetically long-term.” It “meets the challenges or our era,” notably with a “10-year plan.” (Keir Starmer, “The Industrial Strategy Will Provide Certainty for Business,” Financial Times, June 23, 2025.) The Economist wisely expresses some doubts. Referring to the government’s policy document, the magazine writes (“Britain’s Industrial Strategy Is Unlikely to Boost Its Economy,” July 24, 2025): The sprawling document spans wildly different sectors and is jammed with “transformative” funds, hubs and accelerators. … Experience suggests some scepticism is in order. Industrial policy and even more industrial strategy are attractive labels for an age-old illusion that politicians and democrats can boost economic growth by deciding where more resources should be allocated. One hope of many supporters, if not their goal, is that tax revenues and the state will grow. In the 1930s and 1940s, economists Ludwig von Mises and Friedrich Hayek showed how central planners cannot have the dispersed knowledge on supply and demand, costs and preferences, that would be necessary to guide the economy toward real prosperity as diverse individuals want it. (0 COMMENTS)

On June 17, Treasury Secretary Scott Bessent tweeted: Recent reporting projects that stablecoins could grow into a $3.7 trillion market by the end of the decade. That scenario becomes more likely with passage of the GENIUS Act. A thriving stablecoin ecosystem will drive demand from the private sector for US Treasuries, which back stablecoins. This newfound demand could lower government borrowing costs and help rein in the national debt. It could also onramp millions of new users—across the globe—to the dollar-based digital asset economy. Bessent makes two Econ 101 errors in this tweet.  First, as pointed out by my old GMU professor Larry White, increasing demand for Treasury bills would increase the equilibrium quantity of those bills exchanged in the market.  In other words, it would increase the quantity demanded of US government debt, not lower it. Secondly, as interest rates fall,* the cost of borrowing for the government falls, too. It’s the law of demand: as the cost of something goes down, the quantity demanded rises.  People will want to hold more debt and the government will want to issue more debt. So, if Bessent is correct that stablecoins will be a “thriving” market, then the incentives would be for more government debt, not less. Now, it is possible that Secretary Bessent read my EconLog post from about a year ago where I argued: The people making spending and budgetary decisions do not face the full costs of their decisions.  Neither do voters (indeed, the costs are spread out across all taxpayers).  Consequently, we end up in a situation that James Buchanan and Richard Wagner call “Democracy in Deficit”: politicians prefer easy choices over hard, and will generally support higher spending and lower taxes. In this case, the supply of Treasury bills is unrelated to the price level of Treasury bills: the supply is perfectly inelastic (a vertical line, for those of you drawing along supply and demand graphs at home).  But, in this case, the Treasury Secretary is still incorrect in his assessment.  If the amount of borrowing is unrelated to the price, then an increase in demand would lower the interest rate, but it would have no effect on the amount of debt issued.  It would still be incorrect to claim that the Federal Debt would be reined in. While it is theoretically possible that the demand curve for Treasury bills slopes upwards (although I am not sure why Treasury bills would be a Giffen good), it’s empirically unlikely. — *For those not well-versed in monetary economics: the prices of bonds and their interest rates (also known as the bond yields) move in opposite directions.  If the price goes up, the interest rate goes down.  If price goes down, interest rates go up.  The price of the bond is what you pay for the bond.  The interest rate (yield) is what is paid to the holder of the bond over and above the price at maturity. (2 COMMENTS)

The more research I have done on economic statistics, appreciating the practical challenges, the less certain I am that we know anything solid about today’s economy. –Diane Coyle, The Measure of Progress: Counting What Really Matters,1 (page 29) It would be nice to have definitive measures of economic progress. We would like to know whether progress is faster in one country than in another. We would like to know whether progress was faster in one period of time than in another. We would like to know how different policies and institutional arrangements affect progress. Diane Coyle has spent decades doing research on the problem of measuring progress. Her experience and her thought process make her work, The Measure of Progress: Counting What Really Matters, a valuable treatise. The most commonly used indicator is Gross Domestic Product, reported either as a total amount or on a per capita basis. But GDP data are often quoted in the press or used by economists without much consideration of the problems in constructing the estimates. To start with, consider a simple economy that produces wheat and automobiles. We can measure the bushels of wheat harvested and the number of automobiles manufactured. Suppose that we want to compare total output last year relative to the previous year. We attach a value to a bushel of wheat and a value to an automobile, based on market prices for the two goods. We multiply yearly wheat production by its value and yearly automobile production by its value. Then we sum these values to arrive at GDP. There are some issues with how to get from market prices to relative values, especially if market prices change from year to year. We want to try to determine the extent to which price changes reflect purely monetary inflation. But these issues are relatively minor. A major difficulty is that important sectors of the economy provide goods and services that are not as readily measurable as bushels of wheat or number of automobiles. How do you measure the amount of health care services, or the amount of banking services, or the amount of education provided by colleges? Today, agriculture and manufacturing, which are the most measurable sectors, account for much less of economic activity compared to the 1940s, when GDP statistics were first being developed. In 1947… about half the economy was measurable, by 1990 less than a third, and by 2019 less than a quarter, or more likely only about a fifth…. The structure of the leading economies has changed so much in the last nine decades that the [GDP] framework is a distorting lens, or even a set of blinkers. A new one is needed. (pages 14-15) In a chapter called “Value,” Coyle points out that the measurable sector of the economy consists of goods and services for which we can observe quantity, quality, and prices. For many consumer online activities, we do not observe quantity. For rapidly-changing consumer items, such as smart phones, it is difficult to assess improvements in quality. And in the digital world, where much is provided for free, we do not observe prices. And for many items, prices are artificial: hospital charges, college tuition, and the imputed rent of housing services. To attempt to assess quality, we can think of a product as a bundle of goods. For example, a car’s bundle includes its durability, its fuel efficiency, its styling, its seating capacity, and its amenities. In theory the value of each portion of the bundle can be calculated and the overall bundle can be valued by addition. But consider how fraught this calculation is when trying to value a smart phone. The bundle includes a camera, telecommunication services, a computer, and many apps. Or consider the bundles offered by companies that provide telecommunications services, either cable to the home or wireless. In the United States and other Western countries, since at least the early 1970s, there has been a slowdown in the rate of progress as measured by GDP. Coyle points out that most economists see this slowdown as genuine, and they offer various explanations for it. But it remains a puzzle on which the data do not shed much light. I now think that the exploration of productivity at either firm or sector level will not make much progress…. The reason is that the data available is being asked to bear an impossible weight…. It might be that part of the productivity puzzle is a problem of overstated deflators that lead to underestimates of the value of new and better goods and services. (pages 53-54) The GDP calculations assume that, apart from durable goods such as automobiles that provide services over time, consumption is instantaneous. But the dimension of time has increased in importance. For many digital goods and services the monetary price of consumption is often zero, but time and attention are required. (page 66) This confounds normal ways of measuring the cost of consumption. There is no process for collecting information on the time cost of a consumer item, and in any case this differs among consumers. “Among other things, this shows that in order to tell whether the standard of living has improved, we need to know how different people weigh the importance of different goods in their lives.” Another way that time enters measures of progress is to consider how much a typical person must work in order to purchase various goods. On page 194, Coyle lists some examples for the United Kingdom in 2019 relative to 1990. In 2019, the number of hours worked to buy a refrigerator had fallen in half, but the number of hours worked to buy a movie ticket had tripled. Among other things, this shows that in order to tell whether the standard of living has improved, we need to know how different people weigh the importance of different goods in their lives. Coyle is concerned with how the consumption of natural resources affects living standards, especially going forward. The world is increasing its demand on natural resources in absolute terms. Ed Conway’s Material World (2023) highlights the growth in the human planetary footprint: “In 2019, the latest year at the time of writing, we mined, dug and blasted more materials from the earth’s surface than the sum total of everything we extracted from the dawn of humanity all the way through to 1950″…. Put starkly, we are progressively deforesting and concreting the earth. (page 205) I should point out that this alarmist view is contestable. In a 2015 white paper entitled “Nature Rebounds,” Jesse Ausubel pointed to signs of greater efficiency in food production and distribution’ This was leading to American farmland being returned to wilderness.2 And in their book Superabundance, Marion L. Tupy and Gale L. Pooley point out that the prices of raw materials have been declining, which would indicate that we are not using them up at an unsustainable rate.3 Coyle suggests that the concept of capital should be expanded to include six types of capital: … physical or produced capital and human, natural, social, institutional, and knowledge/intangible capital. (page 212) I agree that all of these elements are important for prosperity. But I am skeptical of her “comprehensive wealth” concept, because I do not see arriving at a nation’s wealth by measuring these elements and employing simple addition. For example, a nation’s institutions affect the productivity of all its other types of capital in a highly nonlinear way. In her concluding chapter, Coyle suggests that, … a time-use accounting framework alongside the measurement of comprehensive wealth provides a holistic approach to understanding progress: How efficiently do societies use all the resources available to them to produce and consume activities and products of value? How sustainable is this activity—are we serving our own well-being by depleting the resources or capabilities available to future generations? (page 258) I came away not convinced by this. Instead of trying to find a better answer to the questions about economic progress, I would suggest thinking more carefully about the questions. Different questions may require different indicators. For more on these topics, see Diane Coyle on GDP. EconTalk. “Pitfalls in GDP Accounting,” by Robert P. Murphy. Library of Economics and Liberty, November 7, 2016. Martha Nussbaum on Creating Capabilities and GDP. EconTalk. It is probably inevitable that progress will mean different things to different people. That suggests that we ought to be skeptical of the project of coming up with a single measure of progress. Instead, we can pay attention to a variety of anecdotes and indicators. And then we can expect people to argue over what these observations imply. Footnotes [1] Diane Coyle, The Measure of Progress: Counting What Really Matters. Princeton University Press, 2025. [2] Nature Rebounds, by Jesse Audubel. Rockefeller.edu, Jan. 13, 2015. PDF file. [3] Marian Tupy and Gale Pooley, Superabundance: The Story of Population Growth, Innovation and Human Flourishing on an Infinitely Bountiful Planet. Cato Institute, 2023. *Arnold Kling has a Ph.D. in economics from the Massachusetts Institute of Technology. He is the author of several books, including Crisis of Abundance: Rethinking How We Pay for Health Care; Invisible Wealth: The Hidden Story of How Markets Work; Unchecked and Unbalanced: How the Discrepancy Between Knowledge and Power Caused the Financial Crisis and Threatens Democracy; and Specialization and Trade: A Re-introduction to Economics. He contributed to EconLog from January 2003 through August 2012. Read more of what Arnold Kling’s been reading. For more book reviews and articles by Arnold Kling, see the Archive. As an Amazon Associate, Econlib earns from qualifying purchases. (0 COMMENTS)

Roger Scruton English philosopher Roger Scruton was knighted in 2016 for his contributions to philosophy, teaching, and public education. A conservative thinker, he drew on Adam Smith’s Theory of Moral Sentiments1 (herein TMS) and The Wealth of Nations2 (herein WN) in his reflections on human nature, sentiments and reason, justice, and markets. Like Smith, Scruton engaged with a wide range of subjects, including aesthetics and music, social and moral philosophy, and political and economic institutions. Both thinkers shared a belief in the gradual evolution of institutions and customs, and in the importance of moral sentiments and cultural norms in shaping human behavior. They were skeptical of overly rationalistic approaches to organizing society—Smith criticized centralized economic planning, while Scruton opposed any attempt to redesign society based on abstract principles that disregarded tradition. Despite these similarities, their views diverged on fundamental issues. Smith argued that, besides leading to a better allocation of resources than alternative systems, free markets are compatible with a morally strong and cooperative society and, by implication, are not a menace to local customs. In contrast, Scruton believed that unfettered markets tend to erode traditional values and local cultural heritages. In his Dictionary of Political Thought, the entry on “conservatism” argues that defending limited government and private property does not necessarily imply a defense of capitalism (131-132). Moreover, he thought that “free trade is neither possible nor desirable. It is for each nation to establish the regulatory regime that will maximize trade with its neighbours, while protecting the local customs, moral ideals and privileged relations on which national identity depends” (A Political Philosophy, 32-33). In The Meaning of Conservatism, he concluded that “without the state’s surveillance, destitution and unemployment could result at any time” (112, 62, 150). Besides, he rejected liberalism for its atomistic focus; its separation of State and society, and its attempt “to speak for a universal human nature” (Ibid. 106). These theoretical differences complicate Scruton’s view of Smith as the theorist who “provided the philosophical insight that gave intellectual conservatism its first real start in life,” as he eventually held in Conservatism: An Invitation to the Great Tradition (2018, 27). The latter recognition marks a notable shift from his earlier neglect of Smith, which did not include Smith’s work either in the chapters or in the further suggestions. Scruton’s evolving view of Smith was explained a few years later in his Modern Philosophy: “Every now and then a thinker of the past is rediscovered as a great philosopher, and then makes the transition from the history of ideas to the history of philosophy. This happened recently with Adam Smith” (31). In light of Scruton’s evolving relationship with Smith’s ideas, I present his interpretation in a thematic and chronological order and a critical examination of his claims. The text is divided into three sections respectively entitled the human condition and the economy, the invisible hand, and morality and markets. All in all, while Scruton developed a greater appreciation for Smith’s contributions over time, he did not fully understand or embrace his most fundamental concepts. The Human Condition and the Economy In A Short History of Modern Philosophy [1981] Scruton discusses the theory of moral sentiments in British philosophy, although he leaves out an analysis of Smith, whom he sees as merely continuing previous insights, concluding that he “produced no new system” (222-223). Therefore, the only substantive comment in regard to Smith’s thought is found in a chapter on Marx, in two paragraphs worth quoting at length: “The Wealth of Nations had summed up a century of liberal and empiricist thought by attempting to demonstrate that the free exchange and accumulation of private property under the guidance of self-interest not only preserves justice, but also promotes the social well-being as a whole (…). In order to establish that conclusion, Smith considers human nature to be something settled. The homo economicus of liberal theory is not thought of as a historical being. However, he is motivated by desires and satisfactions which, while represented as permanent features of the human condition, may in fact be no more than peculiarities of the eighteenth-century market economy” (212-213). Two brief commentaries are warranted regarding these ideas. First, by downplaying Smith’s originality, Scruton went against the trend at the time, especially considering that Oxford University Press had already started publishing Smith’s complete works, sparking a renewed interest in his ideas. Secondly, Scruton correctly describes Smith’s take on economic dynamics, noting that free markets satisfy individual needs while promoting overall social prosperity. However, by confining Smith’s analytical framework to the specific characteristics of the eighteenth-century economy, he limits the broader applicability of Smith’s insights and diminishes their contemporary relevance. Scruton provides neither evidence nor a clear rationale for asserting that Smith’s descriptions were limited to the society of his time. In fact, the burden of proof falls on anyone who claims that homo economicus—the self-interested, desire-driven agent—is a concept confined to the past. That said, Scruton may be onto something when he introduces the historical element in his analysis, since Smith recognized that economic institutions are dependent on historical and geographical factors. Whatever those forms may be, he still concluded that the “liberty, reason, and happiness of mankind (…) can flourish only where civil government is able to protect them” (WN 803). “I believe that Scruton’s reading would have been enriched by recognizing that Smith’s account of the economic agent contains valid claims of universality while also acknowledging the historical and cultural variability of economic institutions.” Therefore, I believe that Scruton’s reading would have been enriched by recognizing that Smith’s account of the economic agent contains valid claims of universality while also acknowledging the historical and cultural variability of economic institutions. In other words, from a Smithian perspective, while economic dispositions and dynamics transcend specific times and locations, economic systems develop along different paths shaped by their unique political and cultural contexts. The Invisible Hand In his Dictionary of Political Thought [1982], Scruton also included entries for “Adam Smith” and “Invisible Hand.” He concludes that, “Smith’s long-term influence on political thought, however, lies in his subtle development of the invisible hand conception of human society” (638-639). This conceptualization, however, requires clarification. Smith’s notion of the invisible hand is not a broad, general idea of human society; it specifically refers to the unintended benefits that arise from self-interested economic behavior. For example, when affluent consumers satisfy their material desires, they unintentionally contribute to the “distribution of the necessaries of life” to others, thereby aiding “the proliferation of the species” (TMS 184). Similarly, when businesspeople pursue the highest possible profits, they often, unintentionally, benefit society by increasing its annual revenue (WN 456). In both cases, the metaphor of the invisible hand explains how individual economic motivations can lead to positive unintended outcomes for society. In extending the invisible hand to every aspect of social life, Scruton overlooks the fact that Smith’s approach to understanding human society goes far beyond material exchanges. His work encompasses morality, science, politics, fashion, literature, language, and religion—areas where the invisible hand concept does not apply. Smith presents a more complex and nuanced social analysis, where homo economicus is accompanied by natural sympathy and benevolence—dispositions that are also relevant for a flourishing society. Another point that needs clarification is the assessment of beneficiaries in the market process. Scruton notes that the invisible hand does not “necessarily work to the benefit of the participants,” as there are instances, like the “prisoners dilemma,” where individuals may thwart their own goals (345). However, it seems problematic to use the example of two suspects under police arrest, in a fearful and confined situation, as a representative sample of market interactions. In any case, the key issue is not whether market participants are perfectly rational, but rather what alternative we use as a basis for comparison. Smith’s argument is that “the system of natural liberty” (WN 687) consistently proves more beneficial when compared to other systems, such as mercantilism, provided that certain conditions are in place. Chief among these conditions is the government’s role in protecting individuals by ensuring security against harm and administering justice fairly (TMS 340-341; WN 687, 708). Examples of market exchanges that fail to benefit economic agents often involve instances where self-interest violates the rules of justice—such as when producers seek special privileges driven by “the wretched spirit of monopoly” (WN 461) or when a “few individuals […] endanger the security of the whole society” (WN 324). In Political Philosophy [2006], Scruton himself acknowledges that “the ‘invisible hand’ depends upon, and is secretly guided by, a legal and institutional framework” (18). However, it is unclear why he refers to these frameworks as “secret guides,” since in Smith’s account they are intentional, explicit, and publicly known structures that ensure just and orderly interactions. Additionally, in areas such as public works and basic education, institutions must be established and managed through deliberate political decisions. This ‘visible’ hand of government, however, does not extend to passing laws for the protection of “the social well-being of the workforce,” as Scruton argues (2018, 30). Although Smith expressed concern about the mental conditions of workers, he did not call for welfare laws to directly address these issues. In any case, Scruton is right to recognize that the invisible hand process “is a distillation of social knowledge, enabling each participant in the market to respond to the desires and needs of every other” (2018, 28-30). This epistemic function of free markets is perhaps one of Smith’s most important contributions. Morality and markets In How to Be a Conservative [2014], Scruton writes that, for Smith, markets work properly “only where there is trust between its participants (…) it is where sympathy, duty, and virtue achieve their proper place that self-interest leads, by an invisible hand, to a result that benefits everyone” (28). This passage raises an inevitable question when approaching Smith’s works: how do markets relate to issues of trust, sympathy, duty, and virtue? For Smith, markets function primarily on the basis of individual material self-interest: we persuade others “that it is for their own advantage to do for him what he requires of them… [we] never talk to them of our own necessities but of their advantages” (WN 26-27). The moral qualities required to engage successfully in market dynamics propelled by self-interest include “industry, discretion, attention, and application of thought” (WN 304-305). Therefore, Scruton misinterprets Smith when he asserts that in a market economy “free exchanges take place under the eye of conscience – Smith’s impartial spectator” (74). Economic exchanges do not depend on the impartial spectator establishing degrees of sympathy, duty, and virtue; rather, they rely on the unconditional respect for the “rules of a fair game” (TMS 83; WN 687), regardless of whether conscience mandates it. Markets depend on trust in the system of justice, and trust arises from repeated interactions among individuals within a stable and predictable framework. It is justice that generates trust, not the other way around. Thus, merchants seek trustworthy exchanges and laws that protect them (WN 454). In this regard, Scruton correctly notes that for Smith, justice as a negative virtue is “the essential foundation of a well-ordered society” (2018, 27). In sum, the impartial spectator, contrary to what John Rawls thought, does not assess social systems, nor does it dictate economic actions, as Scruton believes. Its role is confined to evaluating the propriety of individual moral actions. This does not imply that economic exchanges are amoral; as noted earlier, Smith acknowledges the moral aspects of economic behavior. However, these actions are driven by individuals’ capacity to fulfill each other’s interests, rather than by direct moral considerations. By asserting that moral considerations must intervene in and define market outcomes, Scruton seems to endorse what Smith calls the moralist’s complaint that “wealth and greatness are often regarded with the respect and admiration which are due only to wisdom and virtue” (TMS 61-62). Again, wisdom and virtue undoubtedly have intrinsic value and are noble, praiseworthy qualities, but they do not govern the market. Indeed, while Smith critiques the “luxury and caprice,” “selfishness and rapacity,” and “vain and insatiable desires” fostered by the unchecked pursuit of wealth and power (TMS 184), he nevertheless believed that individuals should be free to pursue such excesses. In doing so, he argued, they would unintentionally benefit others throughout the process of satisfying their self-interest. Conclusion Roger Scruton grew increasingly sympathetic to Smith’s ideas over time. While in 1981 he found little originality in Smith’s work and confined his assumptions to eighteenth-century society, by 2018 he regarded Smith as the first important conservative intellectual and acknowledged his unique contribution to understanding free social orders. This shift is unsurprising, as Smith’s theory can be well integrated into the conservative defense of local cultures, social practices, traditions, and the norms and institutions that protect them. That said, conservatism may support state intervention to prevent social change, distrust abstract theories and general principles, defend forms of economic protectionism, and exhibit a “nationalistic bias,” as Friedrich Hayek pointed out in The Constitution of Liberty (519-527). In contrast, classical liberals embrace change if it promotes individual freedom, believe that government should play a more limited role in economic and social life, support general principles, and tend to downplay nationalistic concerns. From this perspective, Smith aligns more closely with classical liberalism than with full-fledged conservatism. For more on these topics, see “Why You Can’t Argue with the New Left,” by Arnold Kling. Library of Economics and Liberty, March 7, 2016. “Readings of Smith by Contemporary Political Philosophers: John Rawls,” by Alejandra Salinas. Adam Smith Works, September 22, 2021. Megan McArdle on Belonging, Home, and National Identity. EconTalk. Although Scruton supported some of Smith’s classical liberal ideas, he remained fundamentally a conservative. This position led him to criticize the liberal emphasis on individualism and to qualify his defense of markets by prioritizing national identity over the more liberal view of global economic orders. Indeed, Scruton’s conservative perspective shaped his interpretation of Smith’s key concepts. He saw the invisible hand as a broad conception of society, argued that global free trade was neither possible nor desirable, and believed that a strong sense of morality should limit markets. These views diverge from Smith’s, who used the invisible hand strictly as an economic metaphor, saw free trade as both conceptually possible and desirable, and argued that markets should be constrained mostly by the rules of negative justice. Footnotes [1] The Theory of Moral Sentiments, by Adam Smith. [2] An Inquiry into the Nature and Causes of the Wealth of Nations, by Adam Smith. References F.A. Hayek, The Constitution of Liberty. University of Chicago Press, 2011. Roger Scruton, A Dictionary of Political Thought. Harper and Row, 1983. Roger Scruton, A Political Philosophy: Arguments for Conservatism. Bloomsbury, 2019. Roger Scruton, Conservatism: An Invitation to the Great Tradition. All Points Books, 2018. Roger Scruton, How to be a Conservative. Bloomsbury, 2015. Roger Scruton, The Meaning of Conservatism. St. Augustine’s Press, 1980. Roger Scruton, Modern Philosophy: An Introduction and Survey. Bloomsbury, 2012. *Alejandra M. Salinas is a Professor at UNTREF and UCA in Buenos Aires, whose focus is on contemporary political philosophy, comparative political theory, social theory, democratic institutions and literature and politics. For more articles by Alejandra Salinas, see the Archive. As an Amazon Associate, Econlib earns from qualifying purchases. (0 COMMENTS)

What is capitalism, really? Drawing on Adam Smith, Douglass North, and his own experience as a teacher and economist, economist Michael Munger of Duke University discusses three stages of economic development with EconTalk’s Russ Roberts: voluntary exchange, markets, and capitalism. Along the way, the conversation explores the moral and institutional foundations that make impersonal exchange possible, […] The post What Is Capitalism? (with Mike Munger) appeared first on Econlib.

I will be traveling for the next 19 days and so will be posting less frequently.   Cincinnati’s Beer-Loving Germans Endured Anti-Immigrant and Anti-Alcohol Resistance by Elizabeth Nolan Brown, Reason, August/September, 2025. Excerpts: Cincinnati’s population ballooned throughout the 19th century, from 2,540 residents in 1810 to 115,435 in 1850, when it ranked as the sixth-largest American city. By 1900, it had 325,902 residents, according to the U.S. Census Bureau. Much of this growth came from immigration. In 1850, nearly half of Cincinnati’s population was foreign-born. The bulk of Cincinnati’s immigrants came from Ireland or Germany—especially Germany. By 1890, German immigrants or people whose parents were both German immigrants made up 57 percent of Cincinnati’s population, according to “The ‘Zinzinnati’ in Cincinnati,” a paper in the October 1964 Bulletin of the Cincinnati Historical Society. Cincinnati Germans tended to settle together, building German-language schools and churches, launching German-language newspapers, and starting social and philanthropic clubs for German Americans. Among the many businesses they launched were beer gardens and most of the area’s biggest breweries. These included Christian Moerlein, founded in 1853 by a Bavarian immigrant, and the Hudepohl Brewing Company, founded in 1885 by the son of Bavarian immigrants. Both brands might still be familiar to beer drinkers today. And: Cincinnati’s latest influx of immigration has come from Africa, particularly Mauritania. German immigrants are old news now, and so is banning alcohol. But we’re in an age of renewed unease about immigrants—especially those that speak their native tongues here or don’t seem especially keen to “assimilate”—and renewed efforts to persuade Americans of the danger of drink. In both regards, Cincinnati’s German immigrant experience is instructive. It suggests that immediate assimilation isn’t necessary to eventual assimilation, and that retaining pride in one’s own language and customs isn’t a barrier to building businesses and other institutions that enrich the wider community. It’s also a reminder of the ways alcohol and establishments that serve it can bring people together and foster a sense of local identity and solidarity. In today’s atomized, globalized, and oh-so-mediated times, that seems especially important—and, in its own way, healthy. Prost! And sadly: Meanwhile, “local distillers were producing 1,145 barrels of whisky daily.” (At one point, “practically every storekeeper in the city kept a barrel [of whiskey] on hand for customers, who got a free drink while shopping,” the book claims. But “state and municipal licensing and regulations did away with free drinks.”) DRH note: This piece is full of interesting facts and gives some perspective on how immigrants integrated, but not totally, in the 19th century. The related picture shows how Germanophobia during World War I led to some major changes in name of streets. In Canada, which was in World War I from 1914 to 1918, there was a major change of a city name: Berlin, Ontario became Kitchener, Ontario..   Ben Powell on Why Immigration Improves Economic Freedom and Institutions Nathan Goodman interviews Ben Powell, Mercatus Center, June 25, 2025. In the first 6 minutes or so, Ben Powell does a beautiful job of sequencing: starting with the most important issues and working to less important issues. The rest is excellent also.   Have You Heard the Good News? by Clifford S. Asness and Michael R. Strain, The Free Press, July 1, 2025. Excerpts: Wages for typical American workers have never been higher. According to our calculations, after adjusting for inflation, the wages of nonsupervisory workers—roughly the bottom 80 percent of workers by pay, including manufacturing workers and service-sector workers who are not managers—have grown by around 60 percent over the past two generations. Over the past three decades, inflation-adjusted wages for typical workers have grown by 44 percent. And: According to the Congressional Budget Office (CBO), families in the 51st to 90th percentiles of the wealth distribution had an average wealth of $1.3 million in 2022, the most recent year data are available. That’s up from around $500,000 in 1990, after adjusting for inflation. DRH note: The big negative, of course, is the price of housing. But even with that, the overall standard of living is improving.   Taxing Remittances is a Big Risk for Very Little Reward by Yvonne Su, Los Angeles Times, June 30, 2025. Excerpt: A proposal to tax remittances sent by individuals without Social Security numbers has passed the House and is now before the Senate. At 3.5%, the levy was initially expected to raise $26 billion over the next decade. Changes made by the Senate on Saturday greatly narrowed the scope, so the tax would be 1%, and the yield only $10 billion over the next decade. However, the goals have remained the same: deter undocumented migration and recoup funds from those working outside legal status who send money to their families back home. It might seem like easy money to tax migrants, but that doesn’t make it smart policy. The proposed tax risks undermining both financial transparency and national security. The policy would push billions of dollars into unregulated channels such as cryptocurrency exchanges, make law enforcement’s job harder and ultimately hurt the very communities the United States seeks to stabilize abroad for geopolitical reasons.   Permission to use picture of Cincinnati granted by Elizabeth Nolan Brown, Reason Magazine.   (0 COMMENTS)