Economic Perspectives on Free Speech

Abstract

The metaphor of a ‘marketplace of ideas’ has long pervaded discussions of free speech in and beyond the United States. For early scholars of law and economics, including Aaron Director and Ronald Coase, the similarities and differences between the metaphorical marketplace for ideas and literal markets for goods and services were subjects of much attention. More recently, however, while the law-and-economics movement has flourished, economic analysis of free speech has lagged. Although law and economics has branched out from its traditional emphasis on private law to topics such as criminal law, judicial behavior, and agency structure, free speech has faded from its focus. The leanness of the law-and-economics literature on free speech should not be understood to imply that economics has little to say on the topic. Perhaps most significantly, the ‘new information economics’ for which George Akerlof, Michael Spence, and Joseph Stiglitz won the Nobel prize in 2001 carries profound implications for free speech — implications noted by a handful of legal scholars but not exhaustively explored. The new information economics challenges the faith in free markets reflected in the writings and thinking of early law and economics scholars, and — though less directly — the faith in a free marketplace of ideas reflected in much of US First Amendment jurisprudence. It suggests that under certain circumstances, the regulation of speech not only can protect individuals and societies from speech-related harms but also can promote speech itself. This chapter provides an introduction to the economic analysis of free speech, with special attention to the new information economics perspective. Section 1 critically summarizes the small law-and-economics literature on free speech. Section 2 offers an overview of the new information economics. Section 3 applies insights from the new information economics to free speech subjects.