The ideas we present in the book would radically change many features of our society. You might naturally ask why we believe such fundamental change is necessary and whether it isn’t more dangerous to take a step into the unknown than to maintain our institutions that have generated relative stability. At one level we agree, and all of our ideas have narrow, cautious initial applications. However, we believe that wealthy countries are at a moment of fundamental crisis that threatens the legitimacy and stability of our values and institutions. Unless we can inspire a new generation with a productive vision for the future, we believe the coming years hold great peril for wealthy societies.
The crisis we perceived has three components. First, inequality within wealthy countries, and in particular the US and UK, has been growing dramatically with especially the share of national income going to workers falling. “Neo-liberals” like Ronald Reagan and Margaret Thatcher promised that in exchange for such inequality their “trickle down” economics would stimulate growth and create jobs. Yet, second, at the same time economic and productivity growth rates have fallen dramatically and employment has declined. This combination of inequality and stagnation, which we call “stagnequality”, has largely discredited existing economic policy in the eyes of much of the public. At the same time, democratic politics has struggled to respond to conflicts between minorities and majorities within countries, as well as those between international cooperation and national sovereignty, leading to increasingly polarized politics. Responding to both these crises of legitimacy, dangerous and incompetent populist leaders and policies have become prominent and threaten hard-won social progress. Together we call these events the “crisis of the liberal order”.
To respond to this crisis, we look back to a nineteenth-century tradition, led by thinkers like Adam Smith, Jeremy Bentham, John Stuart Mill, Henry George, Léon Walras and Beatrice Webb. These self-styled “Radicals” inspired political movements from the American Progressive Movement to Sun Yat-Sen’s Nationalist revolution in China with their ideas that saw free, open and competitive markets as a force that could emancipate societies from feudal prejudices and privileges. While many of their ideas were neglected during the conflicts of the Cold War, they were further developed in the ivory tower by thinkers like Nobel Laureate William Vickrey and used to design auctions for advertising slots on webpages and the radio spectrum. In Radical Markets, we revive this Radical tradition and show how it can address the crisis of the liberal order.