Market Failure and Censorship in the Marketplace of Ideas

81 Pages Posted: 20 Jul 2022 Last revised: 28 Feb 2024

See all articles by John P. Anderson

John P. Anderson

Mississippi College School of Law

Jeremy Kidd

Drake University - Law School

Date Written: July 11, 2022

Abstract

Use of the familiar metaphor of the exchange of ideas as a “marketplace” has historically presumed that free and uninhibited competition among ideas will reliably arrive at truth. But even the most fervent economic free-market advocates recognize the possibility of market failure. Market failure is a market characteristic (e.g., monopoly power) that precludes the maximization of consumer welfare.

The last few years have witnessed increased calls for censorship of speech and research pertaining to a variety of subjects (e.g., climate change; COVID-19 sources and treatments; and viewpoints concerning race, gender, and sexual orientation) across a variety of fora. The consistent refrain in favor of this censorship is that the spread of false or misleading information is preventing access to or distorting the truth and thereby inhibiting social progress: undermining democracy, fomenting bigotry, costing lives, and even threating the existence of the planet.

Though on their face these calls for censorship appear anti-liberal and contrary to the marketplace model, they can be made consistent with both if they are understood as a response to a market failure in the marketplace of ideas. While recent calls for censorship have not been justified expressly as a response to market failure, reframing the debate in these terms may prevent parties on both sides of the issue from engaging at cross purposes by locating the debate within an otherwise familiar model.

The Article proceeds as follows: Part I offers examples of recent calls for (and efforts at) censorship in the market of ideas concerning a variety of subjects and forums. Part II articulates a model of the marketplace of ideas that jibes with contemporary economic concepts, defines its components (e.g., sellers, buyers, intermediaries, etc.), considers the possibility of associated market failures, and highlights some common fallacies in the application of the concept of market failure more broadly. Part III explores the principal philosophical justifications for the utility of freedom of expression, focusing on the arguments articulated in John Stuart Mill’s classic, On Liberty. Part IV argues that, in light of these arguments (and taking into account contemporary critiques), the threat of false and misleading expression does not reflect market failure in the marketplace of ideas as modeled here. To the contrary, Part V argues that the ease with which recent public and private efforts at censorship have succeeded may itself reflect a market failure warranting correction—if not through legislation or the courts, then by social sanction and the court of public opinion.

Keywords: Market Failure, Marketplace of Ideas, Censorship, First Amendment, Cancel Culture, COVID-19, Climate Change, Hate Speech, Social Media

Suggested Citation

Anderson, John P. and Kidd, Jeremy, Market Failure and Censorship in the Marketplace of Ideas (July 11, 2022). Law & Economics Center at George Mason University Scalia Law School Research Paper Series No. 22-029, 76 Oklahoma Law Review 269 (2024), Mississippi College School of Law Research Paper No. 22-02, Available at SSRN: https://ssrn.com/abstract=4160182 or http://dx.doi.org/10.2139/ssrn.4160182

John P. Anderson (Contact Author)

Mississippi College School of Law ( email )

151 East Griffith Street
Jackson, MS 39201
United States

Jeremy Kidd

Drake University - Law School ( email )

27th & Carpenter Sts.
Des Moines, IA 50311
United States

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