In which I take the ‘Free Marketplace of Ideas’ metaphor too seriously

There’s a striking contrast to the diametrically opposed concepts of ‘the free marketplace of ideas’ and ‘cancel culture’. Both are phrases used by free speech advocate types, yet sub-textually they couldn’t be further apart. ‘Free marketplace’ invokes the cold, hard, quantifiable logic of markets, commerce, and capitalism (it’s probably no coincidence this marketplace metaphor originates from US Supreme Court Justice Oliver Wendell Holmes Jr., who practiced commercial law before becoming a judge), yet ‘cancel culture’ invokes the soft, vague, qualitative traits of culture and the broader humanities.

While I wouldn’t lump myself together with the so-called free speech advocates, I actually don’t think the ‘free marketplace of ideas’ metaphor is useless altogether. One typical criticism is that the metaphor presupposes that all ideas have value, but markets don’t determine value, they determine price. In theory, price is positively correlated to value, but that requires fully rational market participants and the market is never fully rational. Similarly, ideas gain social capital not by their legitimacy or truth, but by their memetic potential.

Fundamentally, this metaphor of the marketplace is used to argue against censorship, deplatforming and ‘cancelling’. The argument is that ideas should be allowed to ‘trade’ in the marketplace, and market mechanisms be used to determine their underlying value. I don’t really disagree! My objection is that this is not actually an argument against censorship or cancelling.

First, a brief primer on financial markets. If you are a participant in a financial market, then there are three positions you can take vis a vis a given asset:

-Delta Neutral

A ‘long’ position is one in which you profit when the price of that asset goes up. The most obvious form of a long position is a spot long: you buy the actual asset with cash (or other fungible asset) you own. This asset could be an individual stock, an Exchange Traded Fund (ETF), or commodities like bitcoin or gold.

A ‘delta neutral’ position is one in which you do not profit or lose from the price fluctuations of an asset. The most obvious example would be to just not hold any units of a given asset. Don’t want to be exposed to the price fluctuations of gold? Don’t buy any!

A ‘short’ position is the inverse of a ‘long’ position. With a short position you profit from the price of a given asset going down. A short position is somewhat more complicated than a long position. You can’t just sell the asset to ‘go short’. Doing so simply makes you delta neutral. Future price fluctuations won’t affect your portfolio. To go short (assuming you don’t utilize derivatives like options or futures), you have to first borrow the asset, then sell it on the market. Once the price goes down, you repurchase the asset at the lower price and return it to the lender. The difference in the price you sell it at and the price you re-buy it at becomes your profit (minus interest paid to the lender).

The ability to ‘short’ assets is a vital market mechanism. It ensures there is sell-side liquidity to match buy-side liquidity. It provides incentives to push asset prices down. If you can only profit when prices go up, then market participants are incentivized to continuously buy assets, pushing prices up and causing inflation. With shorting, a market participant can profit not just from spotting undervalued assets, but from spotting overvalued ones as well.

So what does all of this have to do with the ‘free marketplace of ideas’? Well, if it is indeed a marketplace of ideas, then it seems logical to me that you can also have ‘long’, ‘delta neutral’ and ‘short’ positions for a given idea!

To be ‘delta neutral’ an idea is obvious. Ignore it. Do not speak of it, do not promote it. It will explode into public consciousness or wither on the vine without your intervention.

To ‘go long’ an idea is also obvious. Promote it heavily. Share it on social media. Talk about it. Express the idea in your creative works.

What does it mean to ‘short’ an idea then? Well, you believe the idea to be overvalued, you want it to die. You don’t just want to ignore it, you wish for it to be suppressed, with you helping the process along. So you denounce the idea. You deplatform people who promote this idea. You ‘cancel’ them.

If shorting a financial asset is vital in discovering its value (or lack thereof), then why not apply the same principle to ideas? If we ‘ban’ shorting an idea because its supposedly a violation of free speech, then are we not banning an important market mechanism? Will the marketplace of ideas now inflate with an infinite number of overvalued ideas? Even government censorship isn’t necessarily out of the question in this metaphor. After all, governments intervene in financial markets all the time. They stop trading of stocks of outright fraudulent companies. They prosecute insider trading and market manipulation.

Maybe we shouldn’t think of deplatforming, cancelling, or even outright censorship as some great sin against the market. Maybe they are themselves part of the market. Maybe they are important mechanisms to ensure that valueless or outright false ideas do not cloud the minds of many.

Maybe this sounds dangerous to you. Maybe you protest, ‘but who decides what is a valuable idea!? Who decides what ideas are false!?’

The buyers and sellers. Always, the buyers and sellers.