The Free Market of Ideas Is The Best Way To “Regulate” Social Media

by | Oct 5, 2019

The view that social media platforms like Twitter and Facebook are corroding our public discourse has become increasingly accepted wisdom, the starting point for a debate rather than the debate itself.

The view that social media platforms like Twitter and Facebook are corroding our public discourse has become increasingly accepted wisdom, the starting point for a debate rather than the debate itself. The marketplace of ideas, that famous metaphor suggesting that the truth will emerge in a forum of free speech and public debate, is failing and must be fixed.

On the surface, problems we experience today, like trolls, fake news, and the power of large corporations controlling social media platforms, might be seen as calling the marketplace metaphor into question. Others might say the metaphor has never been more apt, that we are witnessing “market failures” in our public discourse that must be regulated away by governments.

Both groups fall victim to the trap currently laid in the vast majority of Econ 101 textbooks, which teach a dialectic between an idealized perfect market and market failures that must be regulated away. If we instead view markets, as economists like Joseph Schumpeter and Friedrich Hayek did, as dynamic and evolutionary processes fueled by the exchange of information, then we might take the metaphor as a sign of great hope for social media as a positive force in our political exchanges.

An Obsolete Epiphany?

I was in college when I first came across the phrase “marketplace of ideas” in reading assigned for a class. While I remember neither the reading nor the class, I can confidently place that moment on the short list of my life’s greatest epiphanies because I have an indelible image of where I was when I read it — sitting one night in the beautiful University of Michigan Law Library.

A few classes into an undergrad degree in economics, I realized the material I loved so much wasn’t only about commerce, important as that may be, but about the entire world. If competition will yield the best outcome in a product market, it will also yield acceptance of the best ideas in a forum of free speech.

The metaphor goes all the way back to John Milton’s Areopagitica in 1644 and owes much to John Stuart Mill for developing the underlying ideas in his 1859 treatise On Liberty. But U.S. Supreme Court Justice Oliver Wendell Holmes Jr., writing in 1919 against the infamous espionage act that restricted antiwar speech in the United States, provides perhaps the most quotable distillation of the idea:

But when men have realized that time has upset many fighting faiths, they may come to believe even more than they believe the very foundations of their own conduct that the ultimate good desired is better reached by free trade in ideas — that the best test of truth is the power of the thought to get itself accepted in the competition of the market, and that truth is the only ground upon which their wishes safely can be carried out.

A century later, as it becomes increasingly fashionable to lament the corrosive effect of social media platforms like Twitter on our public discourse, some may find Holmes’ words lofty almost to the point of preciousness. But that depends on how we think about the markets behind the metaphor.

New Voices at the Gates

Twenty-five years ago, news reporting and political dialogue was an industry with somewhat high fixed costs. With high fixed costs come high barriers to entry, so it’s no surprise that public discourse was dominated by elite organizations with elite people acting as gatekeepers. They produced the ideas, and everyone else had little possible influence beyond dinner tables and water coolers.

Social media platforms used for discussing politics (I’ll mainly use Twitter as my example) have blown those doors open, giving everyone at least the possibility of a seat at the table. I can’t blame some of those established elites for feeling like the dwindling Roman aristocracy in the year 410 when the Visigoths came to town. But lower barriers to entry, resulting in greater actual and potential competition, are usually seen as an unmitigated good for society as a whole.

So far, so good… right?

The Bad and Ugly

Enter the trolls. As definitions go, I can’t do any better than Wikipedia:

In Internet slang, a troll is a person who starts quarrels or upsets people on the Internet to distract and sow discord by posting inflammatory and digressive,extraneous, or off-topic messages in an online community (such as a newsgroup, forum, chat room, or blog) with the intent of provoking readers into displaying emotional responses and normalizing tangential discussion, whether for the troll’s amusement or a specific gain.

In the marketplace metaphor, trolls are something akin to fraudsters, the fake watch and handbag salesmen on New York City’s Canal Street mere blocks away from the high-end stores of Soho. In the narrative of economics taught in most colleges today, they are market failures stemming from departures from the world as imagined in perfect competition. Specifically, trolls prey on the limited information or rationality of Twitter’s readers.

I won’t link to my own recent experience — it contains a lot of truly ugly stuff. But seekers of context and cheap thrills won’t have much trouble finding it. The wise thing to do with large-scale trolling is to ignore and not engage them, but experiencing the phenomenon for the first time oneself is singularly unsettling, and by the definition above I was beaten badly.

One can find many more criticisms of free markets that have direct analogs on social media. Bubbles, where one communicates primarily with their ideological allies, tend to harden positions and breed misunderstanding. They tend to reward pithy zingers generating likes and retweets that reward our egos and others’ confirmation bias. The effect is compounded by the limited length of a tweet. It’s equivalent in some ways to the market for junk food.

And even as social media seems to have broken the old oligopoly of media outlets, we see new incarnations of market power from platforms themselves, with justifiable concerns about their power as gatekeepers. Under market-failure theory, these are problems government can and should correct, as evidenced by the recent initiation of an antitrust feeding frenzy by the Department of Justice and Federal Trade Commission. Even many who oppose such action lament the impact of Twitter on public debate and long for the good old days. Can this chaotic new world be redeemed?

Why We Need Social Media

The problems discussed above are real, but the leap many take to assuming that social media is a destructive force in the marketplace of ideas is fueled both by the conservative longing for an orderly equilibrium and the progressive fantasy of building a better market from the top down.

This view tends to interpret the marketplace metaphor as a world of competing “truth factories” where the best answer to some imagined question wins the day among informed consumers. This is of course an extraordinarily simplistic view of what we’re trying to accomplish when we talk about politics, economics, and scores of other topics.

We aren’t just searching for the right answers, but also the right questions, for different ways to frame the world. We’re searching for other ideas that are inherently subjective, ways to make seemingly impossible trade-offs. And the search has no end, as we can only hope for continuous growth and improvement.

We now find ourselves in a world of complexity that only a bottom-up evolutionary process can navigate. We need individual freedom of expression to process local information as described by Hayek, and Schumpeter’s process of innovation and creative destruction. Those processes are messy.

That’s why I’ve written that markets are not perfect, but are essential to the functioning of a complex society. We need to take failures seriously, but trying to stamp them out completely from the top down invariably leads to worse outcomes overall. That’s because evolution doesn’t work without failures.

It’s Up to Us

If there’s a reason why this process may be more problematic in the social media marketplace of ideas relative to traditional markets, it’s a lack of accountability. Consumers and firms have their money on the line, which both disciplines them and provides signals through the economy. Twitter has likes and retweets, which can and do provide signals, but those signals are far weaker than the price system. And discipline and accountability are at times nonexistent.

Right around the time I was fighting the urge to argue with scores of trolls on Twitter, and losing, an article came out about why the ugliness and misinformation that sometimes plague Twitter and Facebook happen far less often on LinkedIn. Simply put, on LinkedIn your boss is watching, and while I can guarantee mine is watching on Twitter, most of the really problematic behavior comes from anonymous accounts where people can dodge any accountability.

It’s hard to see a systematic way to correct that problem without interfering with some of the essential features fueling the evolutionary process that redeems social media in the marketplace of ideas. For instance, anonymous accounts also facilitate dissent in countries where self-expression could get one jailed and worse, and on a smaller scale enable people to participate in the conversation who might be treated unfairly by friends and family for their ideas.

So it’s up to us individually to help mitigate the problems discussed above and create environments online that come closer to reaching their full potential as evolutionary engines in the marketplace of ideas. We can’t take it upon ourselves to refute every troll, or dispute less malicious but still problematic overzealous misstatements inside our echo chambers. But once a day, or even once a week, take it upon yourself to not let something you see that’s untrue or uncalled for go unanswered.

These problems on social media will never entirely go away, but if enough people take enough of a custodial attitude, we can leave behind the fatalistic notion that social media is the enemy of the truth.

Made available by the American Institute for Economic Research.

Max Gulker is an economist and writer who joined AIER in 2015. His research often focuses on free markets and technology, including blockchain and cryptocurrencies, the sharing economy, and internet commerce. He is a frequent speaker at industry conferences, especially on blockchain technology. Max’s research and writing also touch on other economic topics, including governance, competition, and small businesses. Max holds a PhD in economics from Stanford University and a BA in economics from the University of Michigan. Prior to AIER, Max spent time in the private sector, consulting with large technology and financial firms on antitrust and other litigation. Follow @maxgAIER.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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