Samuel S. Abrams, a Wall Street Journal author, argues that US universities should require courses in free-market economics and claims that students’ growing interest in democratic socialism reflects a weak grasp of market fundamentals. He suggests that this intellectual drift leads to flawed reasoning on issues such as housing, where, in his view, students fail to properly calculate returns or appreciate market efficiency, even as they demand state intervention. 

Abrams’ line of argument is predicated on the questionable idea that what passes for mainstream economics is impartial, objective and value-free. However, mainstream economics, as it is typically taught in most universities and colleges, relies on implicit normative assumptions and abstract models that often oversimplify economic complexities and gloss over the intricacies of actual social and economic life.

For instance, standard expositions of mainstream economics often fail to adequately engage with questions of justice, conflict and power, which are arguably central to real-world economies. Instead, mainstream economics often involves interaction among rational individual agents who engage in constrained optimization in the workplace, the family and the wider community. Though mainstream economics engages with themes such as justice, conflict and power, it mostly does so in microeconomics rather than macroeconomics. Therefore, what is portrayed as “basic economic knowledge” is not unquestionable but rather one among many alternative interpretive frameworks.

Housing beyond market returns 

The housing debate that Abrams highlights reveals a more fundamental paradox in the logic of mainstream economics. He argues that rent controls, by reducing the stream of net returns, will reduce future house construction and supply. This ignores both public housing and the problem of social reproduction of workers. When students in Abrams’s class argue that housing is a human right, they are, in effect, arguing that, in the absence of decent housing, workers will not be able to socially reproduce themselves, which would affect the future supply of productive workers for firms.

In addition to supply by owners and demand by tenants and other housing end users, speculation (driven by financialization) also affects rents and housing prices. Governments often need to regulate the role of financialized speculation in the housing market. If unregulated, financialized speculation tends to lead not only to adverse trends in housing prices and rents but also to a decline in future house construction due to boom-bust cycles, periods of rapid increases in housing prices followed by sharp declines, that have long-term financial implications through the channel of debt.

The relationship between housing policy and wages has additional economic implications. When governments provide housing subsidies or maintain lower housing costs through rent controls, the overall cost of living for working households tends to decline. This, in turn, reduces the pressure on employers to raise wages and helps stabilize labor markets. In contrast, when housing is fully commodified and subjected to market volatility, rising rents increase the cost of living, intensify demands for higher wages and heighten the likelihood of labor unrest or make the social reproduction of workers unviable.

From this perspective, subsidies for or policy interventions about housing are not distortions of an otherwise efficient system but integral mechanisms through which the economy might sustain itself by seeking a balance between growth and social reproduction. The claim that subsidies or related policy interventions are economically irrational overlooks their role in sustaining social stability and therefore long-term profitability.

Selective faith in the free market

More broadly, Abram’s insistence on free-market economics becomes untenable when confronted with contemporary economic realities. The US, long a proponent of deregulation and market liberalization while pursuing an implicit industrial policy, has increasingly embraced explicit industrial policy in response to global competition, particularly from China.

This shift in policy rhetoric exposes a fundamental contradiction: The same system that once invoked free market economics to justify weakening labor protections and related state intervention both domestically in the US as well as internationally now relies on explicit industrial policy to try to support its firms. Such selective application of free-market economics reveals that this rhetoric has often functioned less as a universal principle and more as a strategic tool to advance the economic interests of elites. This also implies that mainstream economics and free-market economics are becoming less synonymous in the contemporary world.

Abrams’ criticism of “jargon” is likewise questionable. The vocabulary of capitalism is rarely scrutinized in the same way that terms connected with alternatives are written off as ideological. Catchphrases such as “consumer is king,” “market efficiency” or the “promise of aspirational lives” serve as potent narratives that influence behavior and normalize current structures of power. Uncritically accepting the conceptual framework underlying these catchphrases would ignore how conflicting ideologies shape economic speech itself. Therefore, labelling one set of ideas as jargon while dismissing the ubiquity of another’s influence would be uncritical at best.

Markets, power and global inequality

At a global level, the functioning of contemporary economies further undermines the notion of a neutral, self-regulating market. The neoliberal phase has been marked by a sustained squeeze on working populations, albeit in different forms across the Global North and Global South. In the Global North, this squeeze has mostly involved wage stagnation, precarious employment and declining social protections. In the Global South, this squeeze has principally taken the form of informalization, sweatshops and the integration of marginalized strata into global production networks under super-exploitative conditions. These dynamics are not anomalies but structural features of a system that relies on squeezing labor costs while enhancing profits.

The persistence of global inequalities also points to the role of power beyond the market as conceived by mainstream economics. The hegemony of the Global North has historically depended not only on a technology gap but also on political, financial and military influence that shapes global finance, trade and investment patterns and therefore the magnitude of this technology gap (through export controls on technology, for instance). The view that market outcomes alone determine economic success overlooks the extent to which these outcomes are embedded in broader systems of hegemony.

The case for economic pluralism

Free-market economics is no longer a cohesive or persuasive theory. Its underlying models frequently rely on oversimplified assumptions that ignore institutional context, power dynamics and inequality. Its policy recommendations are implemented unevenly, with state intervention itself an outcome of social dynamics. Its language, far from being neutral, has its own ideological emphasis and influences how people view and interact with one another in both economic and non-economic domains.

Therefore, students’ growing skepticism towards free-market economics should be seen as a reaction to inconsistencies in this conceptual framework rather than being written off as a failure of education. What seems to be a shift towards radical views could actually be part of a broader realization that the so-called free market is neither entirely free nor advantageous to everyone. It is a historically contingent structure that is maintained by a mix of state action, private power, and ideological framing.

To enable a more nuanced understanding of how economies actually operate, the authentic challenge for economic education is to critically engage with these contradictions through a pluralistic approach (and therefore in dialogue with other disciplines) rather than reinforce a singular approach.

[Luna Rovira edited this piece.]

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.