Neoliberalism

Fish at the NYT is upset today because he is accused of "Neoliberalism." He characterizes this as an ideology that solves everything with markets, and he points to Ronald Coase as one of its proponents.

Fish seems to want to separate ethics from efficiencies, and that makes no sense. Destroying economic value makes society poorer, and a series of destructive economic decisions collectively make society materially worse-off, increasing misery, poverty and want.

A few Marxists may continue to hold that a relatively wealthier society with high inequality is ethically preferable to a relatively poorer society with less inequality, but otherwise, most ethical frameworks do, in fact, try to preserve things that are of value, rather than destroying them.

A number of philosophers define ethical goods in terms of utility. Neoliberals don't oppose state intervention in markets; they oppose the destruction of value and inefficient mechanisms that prevent utility-maximizing outcomes.

The state is implicitly involved, for example, in the Coase hypothetical involving the factory and the stream, because there has to be a rights framework to determine how the burden will be distributed.

The dispute between the fisherman and the factory is a very direct example of a market failure requiring a legal correction. If there is no state mechanism to protect the fisherman's rights, the factory owner will pollute without regard to the damage to the fish, and the fisherman will bear the cost.

This is an economic externality, where part of the cost of economic behavior is borne by someone who is not a participant. The market will not account for this external cost, and the state must step in to correct the externality.

The notion that efficiency generates the best possible outcome merely instructs the state in how to solve the problem; i.e. by awarding damages to the fisherman, or facilitating a settlement between the factory and the fisherman, instead of allowing the fisherman's livelihood to be destroyed without affording him compensation, or shuttering the factory to preserve the stream.

I assume Fish is being accused of neoliberalism because his previous columns have suggested that academic tenure creates value-destroying situations. This characterization is incorrect; Fish seems to argue against expansive academic freedom and tenure protections as a moral bad. The neoliberal would disagree with Fish, arguing that tenure, which is an agreement mutually reached between universities and professors, is a value-maximizing arrangement in which the benefits of giving the professors broad discretion in their activities and near-immunity from termination exceed the costs.