Every so often, a person who was brought up to believe in big government and disdain laissez-faire capitalism breaks free of those ideas and grasps the tremendous virtues of economic liberalism. Thomas Sowell, for example, was a Marxist in his early years but was fortunate enough to have had some professors who got him to go beyond what he calls “Stage One” thinking.

The same can be said of Wall Street Journal deputy editor Matthew Hennessey, who grew up in a household that lionized Franklin D. Roosevelt. He went to college late and at first shied away from economics, which seemed to be both abstruse and frightening. But once he got into the subject—luckily with professors who explained it in plain English (they are increasingly rare)—he was smitten and decided to read Adam Smith’s The Wealth of Nations. That got him thinking like an economist and he realized how much of the logic of human action he had previously missed.

In his new book Visible Hand, Hennessey gives the reader an easily understood series of lessons on the miracle of the market: the beneficial consequences of liberty coupled with secure property rights and government that’s limited to protecting freedom. Those lessons don’t involve any statistics or mathematics; rather they involve choice, something everyone can understand.

Human nature and the market / Right from the start, Hennessey wants to disabuse readers of the idea that Smith was some monster who is responsible for most of the world’s woes. He recommends that everyone read The Wealth of Nations, but since that isn’t likely to happen, he presents the basic concepts Smith sought to convey.

The “invisible hand,” for instance, is frequently attacked by those who demand interventionist policies. Hennessey points out that the phrase appears only once in Smith’s great work, but it contains a profound insight into human nature. In a market economy, the way for a person to get ahead is by producing goods and services that other people are willing to pay for. The pursuit of self-interest thus leads to harmony and cooperation. To those who might credit Smith for inventing capitalism (or blame him for that), Hennessey replies that Smith’s work was one of revelation: his insights into human interaction simply revealed how people go about their business. Because of that natural harmony of interests, no government economic planning is needed. Here’s how Hennessey explains the point:

All of our selfish buzzing and scurrying adds up to something bigger. It moves the world forward in a way we could never achieve if we woke up every day trying to figure out a way to move the world forward. That’s the invisible hand, not some big foam finger pushing you into the mall. Greed isn’t good, ambition is—ambition to improve your circumstances, ambition to feed yourself and your family, ambition to make a better life for the next generation.

That understanding is quite remarkable given Hennessey’s upbringing. As is true for most Americans, in school he learned a very slanted version of our economic history: the “robber barons” were greedy monopolists; labor leaders were virtuous men fighting for equality; the Great Depression came about because of the instability of capitalism and Roosevelt’s New Deal saved us from it. Economics, Hennessey was taught, is a zero-sum game where the profits of a few come at the expense of the many. With this book, he intends to save others from this miseducation.

A liberal (in the true sense) free market economy will sometimes create losers (along with many winners), but, he argues, it is far better to then use the wealth and innovations of the market to help those deserving of aid than to “drag everyone down with central planning.”

Dismal science / Hennessy takes us through the basic elements of economic thinking: tradeoffs, the subjectivity of value, incentives, marginal thinking, the benefits of free trade. People who think that learning economics is too hard, or even dismal, will have no trouble understanding his chapters.

I use the word “dismal” for a reason. One of the book’s few mistakes occurs when Hennessey stumbles into a common misunderstanding of the term “the dismal science.” He writes that economics is called that because people “often find themselves exhausted by economists’ gloomy forecasts.” They might feel that way, but the origin of the expression comes from British opponents of laissez-faire economics in the mid-19th century who found free-market arguments against slavery to be “dismal.” (See David M. Levy’s 2001 book How the Dismal Science Got Its Name.) I think it’s worth trumpeting on behalf of classical economics that slavery advocates hated its conclusions.

Hennessey knows that market opponents usually concentrate their fire on the price system, arguing that it is unfair to the poor, who struggle to pay for essentials. (See “Prices Are Hell,” p. 42.) It’s a fine sentiment to want to help the poor, he argues, but tampering with the price system is a bad way to do that. The result will be a misallocation of resources that won’t help the poor and will harm everyone else. Price controls (including so-called anti-gouging laws), rent controls, minimum wage laws, and other interference with the price system are detrimental, he shows. If the government, for example, tries to make medical care free, the result will be long waiting times and a decline in the quality of care—and even after that, people will still end up paying the monetary costs in higher taxes or some other way.

Currently, inflation is a top concern of Americans. Hennessey explains that it stems not from business greed but from politicians who cannot resist creating excessive amounts of money to cover their insatiable desire to spend. In one of the book’s weak points, however, he sides with the people who contend that “a little inflation” is economically beneficial—that it’s necessary to “grease the wheels” of commerce. Yes, some economists argue that, but their case is far from certain. The United States enjoyed spectacular economic development in the post-Civil War era when the gold standard kept the amount of money bounded to production of the metal and prices slowly declined. Besides, a policy of “a little inflation” almost inevitably becomes more and more accommodating to the government’s appetite for spending. It would have improved the book if Hennessey had just denounced inflation as a scurrilous way of cheating debtors and expanding the scope of the state.

Confronting anti-marketeers / Far more persuasive is his chapter on “the anti-marketeers.” On the left, we find numerous intellectuals and politicians who want to move the country away from reliance on markets and voluntarism and toward comprehensive government control over the economy and society. They complain about inequality and use it as a lever to remake America along collectivist lines. Serious leftists these days, Hennessey writes, “are all about seizing the golden goose and forcing it to lay golden eggs to finance their progressive dreams.” What these people can’t see is that socialism always diminishes human flourishing. That, however, is a long-run consequence and politicians mostly focus on winning the next election.

On the right, we also find quite a crowd of people who are unhappy with Smithian liberalism. They complain that laissez-faire unleashes forces that undermine our culture and say that America has grown decadent and disconnected because of an excess of economic liberty. Their favorite epithet for classical liberals like Hennessey is “market fundamentalists,” suggesting that their advocacy of a non-interventionist economic policy is akin to a religious belief. These “common good” conservatives are making their weight felt in Republican circles with their claims that it’s more important to protect the family and culture with aggressive federal policies than to uphold free market principles.

Hennessey’s reply to “common good” conservatives is right on target:

Pushing the institutions of government to define the collective common good and then promote it is a project practically begging to be hijacked by those who don’t share your definition of the common good. Once the state is empowered to meddle in people’s lives, the toothpaste is out of the tube.

He also strikes a much-needed blow against the popular notion that government spending is costless or even an economic stimulant. He observes that the government can only spend what it either taxes away from the productive sector of the economy or borrows, requiring future Americans to pay higher taxes. Moreover, government programs inevitably have high deadweight costs. Everyone is worse off, except for the happy feelings among the left-wing or right-wing interventionists.

Visible Hand has an optimistic tone that will leave readers wanting to know more about Adam Smith and how the economy works best. It would be a good choice, especially for younger people whose heads have been filled with the kinds of anti-market propaganda that Hennessey managed to overcome.