Through most of human history the word "freedom" has been used to distinguish the members of a social and political elite from those classes of people - women, slaves, serfs, menial laborers, and foreigners - who do not enjoy their privileges or share their ethos. Freedom today, in colloquial terms, means doing what you like and letting others do likewise. This dramatic reversal in usage is of special interest because freedom is one of the most potent words in our political vocabulary: those who command the language of freedom also tend to command the high ground in public discourse. When we ask whether the government should try to stimulate the economy, or whether certain businesses are "too big to fail," or whether individuals should be shielded from the consequences of bad economic decisions or bad economic conditions, or whether the unemployed, the uninsured, the unlucky, or the poor should receive public assistance, there is a folk intuition which says that in a truly free society none of these things would happen:  economic growth would be promoted by private rather than public means, struggling businesses would be allowed to fail, people would have to live with the consequences of their bad decisions or bad luck, those in need would be left to their own devices, and so on. The contrary policies can be defended by appealing to other values: justice, solidarity, prosperity, stability, sustainability or charity, for example. But the idea that freedom means market freedom - freedom to do what you want with what is yours and to enjoy the rewards or suffer the consequences - profoundly shapes debates about public policy even when other values prevail in a given case. In short, the language that we use to talk about questions of political economy - the language of the "free" market - predisposes us to respond to those questions in a certain way, even when we have reason to think that this is not the best response in economic or human terms.

In The Invention of Market Freedom I seek to explain how the market came to hold such a privileged place in modern thinking about freedom. In particular, I contrast market freedom with the older view, rooted in the tradition of republican political thought, that it largely displaced. By examining how republican ideas about freedom were confronted with, altered in response to, and finally overcome by the spread of market norms and practices - by learning to see market freedom as something that was invented in response to specific practical demands and for specific ideological purposes - I hope that we can become more aware of how the appeal to freedom in public life shapes and distorts our thinking about politics today.

The classical republicans sought to ensure that the exercise of power is supervised and controlled in such a way that it is made to serve the common good. To be free in this sense is to have a social status that shields the bearer from the arbitrary exercise of power, and to display the virtue befitting someone holding that status. Freedom so understood therefore requires that citizens make collective judgments about what kinds of social relationships and forms of behavior are worthy of a free people. The early modern Europeans inherited this conception of freedom from the self-governing republics of classical antiquity, and the threat that the rise of modern commerce was thought to pose to established beliefs and ways of life - that markets are ungovernable, and that participation in markets leads to the loss of individual virtue - appeared as a threat to freedom in this republican sense.

The early defenders of commercial society, such as Charles de Montesquieu, David Hume and Adam Smith, therefore faced the ideological challenge of showing that the rise of commerce was compatible with the enjoyment of republican freedom. In meeting this challenge they changed the terms of modern debates about the meaning and value of freedom in two ways. First, by pointing out that the security of a modern state depends on its wealth, and by tying the acquisition of wealth to the pursuit of commerce, they severed the traditional connection between civic virtue and the common good. The classical republicans did not distinguish between the demands of self-interest and virtue, because they saw the control of arbitrary power as a fundamental human interest, and did not see any way to realize this interest except through the practice of civic virtue. The insight that self-interested behavior can be socially useful - that private vice leads to public benefits, as Bernard Mandeville notoriously put it - called this harmonization of the demands of self-interest, virtue and the common good into question. Instead of asking citizens to sacrifice their personal ends to the common good, the defenders of commercial society associated virtue with the pursuit of self-interest through the prudent management of property. By making commercial success rather than military or political glory the test of virtue, they argued, we trade a lofty but volatile ideal for one that is less elevated but more dependable.

Second, the defenders of commercial society replaced the traditional republican demand for transparency and accountability in the exercise of political power with a demand that social outcomes be determined anonymously and impersonally through the market. In doing so they took advantage of a second ambiguity in classical republican thought, having to do with the question of whether power is non-arbitrary because it is supervised and controlled, or because it serves the common good. Again, the classical republicans did not distinguish between the two possibilities because they did not see any way to ensure that power serves the common good except through the proper design and supervision of political institutions. Here again the insight that socially beneficial outcomes can arise from self-interested behavior called the traditional view into question. The defenders of commercial society argued that the republican association of freedom with collective control over social outcomes is too cumbersome to be realized under modern conditions since each of us, whenever we make an economic decision, has a marginal and largely unintended effect on the overall pattern. By shifting decision-making power from the state to the market, they concluded, we are trading a mechanism that is fallible and subject to abuse for one that is reliably beneficial.

The market conception of freedom owes much of its resilience to the fact that it holds these two ways of thinking - one individual and personal, the other collective and impersonal - in fruitful tension. Indeed, there is a sense in which these lines of argument reinforce each other: whether we believe that the pursuit of self-interest is the best way to advance the common good, or that allowing individuals to pursue their interests is itself the end that we should pursue in public life, we are assured in either case that by looking after our own interests without thinking about the social consequences we are meeting our social obligations in the most efficient possible way. This is an enormously liberating point of view: a vision of a world that, once the right rules are in place, runs by itself. Here constraints on individual choice appear as a loss of freedom tout court, to be defended not by appealing to a broader ideal of freedom as immunity from arbitrary power or participation in a free man's ethos, but rather to the competing presence of a qualitatively different (and presumptively inferior) value.