Math and MarketThink
I say 'challenge', not 'refute'. Slee takes a patient approach, showing readers how to construct simple economic models and reason about their consequences. The models, in fact, are deliberately oversimplified in order to isolate patterns and identify their potential recurrence in a variety of situations.
Slee's title example is a schematic fable of the rise of big outlet stores on the fringes of town: Wal-Mart comes in, underprices the smaller and economically interdependent downtown stores; consumers, who value access to a vibrant downtown, nevertheless 'selfishly' shop at Wal-Mart when it suits them, relying the patronage of others (upon which they 'free-ride') will keep downtown afloat. Downtown declines, and consumers are (potentially) all made worse off as a result.
This little story alone is (as Slee recognizes) hardly an indictment of Wal-Mart. But it is an internally consistent model that is no more schematic than the implicit model of commerce (which Slee calls 'MarketThink') underlying much economic discourse. It puts failure of 'market democracy' on the table as a thinkable, plausible outcome; as such it can shift the terms of debate and orient more empirically-grounded investigation.
As I see it, unregulated free markets, and crude forms of MarketThink, have at least two serious weaknesses:
1) they fail to adequately address concerns about equity and the welfare of the worst-off;
2) they fail to give adequate provision of public goods (like clean air and water, nature, community development, etc.), and they overproduce public 'bads' (like traffic), with similar potential problems involving fashion goods, network goods, and other goods proeducing 'externalities' of various types.
The claims of the disadvantaged upon public conscience and policy in the US have, on the whole, come a long way in the past century; but as no objective measure of human welfare has been widely accepted, their foothold within economic theory remains tenuous. GDP, 'consumer surplus', and other measurable constructs--generally biased towards markets and equity-insensitive--serve as dominant proxies for human welfare. Problem 1) poses a serious challenge, in discourse as well as on the ground.
On the other hand, problem 2) (which is Slee's focus) has (to an extent not realized by many people) long been recognized and taken seriously by economic theorists. The 'Welfare Theorems' inspired by the writings of Adam Smith, which undergird the general confidence in markets by neoclassical economic theorists, explicitly assume away the possibility of goods whose production and consumption directly affect anyone except buyer and seller. (They also make a certain technical assumption, involving convexity, that is meaningfully restrictive and worth pondering--another post, maybe.) Economists have acknowledged real-world violations of these assumptions, and proposed various remedies (often market-based), at least since Pigou in the '30s. Game theory has expanded and clarified these debates (as Slee shows, while also showing how little in the way of 'hard math' is really involved to make the basic points).
Still, the Welfare Theorems form the 'core message' of most introductory econ texts I have perused or studied from, and the Invisible Hand is the most pervasive idea (often implicit) in popular discussions of markets. Further, I believe that many critics of market absolutism have, in their suspicion of economics, insufficiently tapped the Prisoner's Dilemma and related ideas of game theory, which combine
-establishment credentials and currency within the discourse of economics, without being dependent either on the crudest assumptions (e.g. "money's all that matters") popularly and incorrectly attributed to that field, or on assumptions and concepts foreign to it;
-considerable integrity and truth.
This is not to say game theory doesn't have shortcomings--it does. Nor is it to say that game theory points the way to any clear solutions to the dilemmas it diagnoses, or that any rival to market liberalism can definitively solve them. Again, Slee's book doesn't aim to describe a master theory, or match theory to observation, or save the world. Instead it illustrates that mathematics can help us think (and argue) about social reality without laying claim to full knowledge, denying the world's complexity, or suppressing and devaluing the unmeasurable. This alone is enough to make me hope 'No One Makes You Shop At Wal-Mart' gets widely read.