Guest post by Paul Horton.

Law Professor and Political Scientist Bernard Harcourt published an important book in 2011 called The Illusion of Free Markets. I went to his local book talk and chatted with him a couple of times about the book before he left Chicago to travel to the Sorbonne on some fancy fellowship. So did my brother Scott at Harper's.

Bernard basically argues that markets have always been regulated, paying special attention to market regulation by guilds in early modern France.

The real question to ask is, who should do the regulating, some sort of outside governmental entity or the market itself?

As we all know a debate grew out of this argument, Adam Smith articulated the possibilities of an expanded and unregulated local and international marketplace bracketed by phrases like "nature suggests" or "nature recommends."

The thirties global depression poured sugar into the gas tank of global capitalism and governments grew to create demand by creating jobs, and reform and regulate markets.

Some of these governments turned out to be more than just scary and conservative economists like Friedrich Hayek began to equate big government with political repression. His native Austria, after all, was steamrolled by "National Socialism."

According to Historian Kim Phillips-Fein (Invisible Hands:The Making of the Conservative Movement From the New Deal to Reagan), American corporate leaders determined to reverse the free market bashing of the thirties latched onto a speech made by Hayek at Mont Pelerin Switzerland in early 1947.

They invited Hayek to speak in the United States and introduced him to some heavy hitters in the corporate community who would sponsor an American Mont Pelerin Society to promote free enterprise economics. The Volker Fund then paid for a fellowship for Hayek to teach at the University of Chicago, which then became the incubator of papers supporting a return to free market economics. (pp. 26-52)

Harcourt's impassioned critique of the Chicago School of Economics picks up here, in the late 50's, with an analysis of the work and influence of Ronald Coase. Coase's work, predictably argued that government regulation created higher transaction costs and thus made regulated businesses inefficient. The solution was to return to the free market eliminate transaction costs and created by government regulation. The idea was that if markets could regulate themselves, everybody would be better off because inefficiencies that had been passed on as higher costs to the consumer would be eliminated.

The crux of Harcourt's critique is Coase's assumption that government regulation created higher transaction costs. He could not prove it or create a mathematical model that could, but his assumption shaped the project of the Chicago School. Chicago economists "naturalized" the idea of market mechanisms by insisting choosing the enlightenment trope of a machine, and "an idea of orderliness: a presumption, a bias, a prejudice that favors the natural mechanisms of market exchange over state intervention. Of course Coase used a different vocabulary; his jargon was more technical, his lexicon more scientific, and these differences in language matter because they made his argument more persuasive. Rhetorically, a mathematical model, even a hypothetical mathematical model, does much more work today than mere talk of 'natural order.'" (pp. 125-26)

Chicago Economists championed mathematical studies of self-regulating markets like the Chicago Board of Trade to prove that market models provide the most efficient operation. Of course, they also used their peculiar brand of scientism to prove government inefficiencies. Bernard's point is that their discourse rose to prominence when 70s stagnation brought Keynesianism under close scrutiny and was wedded to political power when Reagan and Thatcher took office. Even though these leaders practiced what has been described as "military Keynesianism," they helped propagate market ideology with the help of conservative think tanks like The Heritage Foundation, The American Enterprise Institute, CATO, and the Manhattan Institute.

The point is that what many now call neo-liberalism also conquered "liberal" think tanks like the Brookings Institute in the 90s under Clinton when it was discovered that solutions that supported privatization attracted the Wall Street bucks necessary to win elections. Labor unions were then shut out of major policy decision meetings because they represented such a small constituency that they had little economic leverage within the Democratic National Committee.

Democrats, however, have embraced the more moderate expressions of Chicago Economists Gary Becker and Judge Richard Posner who both assert that, given the opportunity, individuals will make rational market choices that will benefit them. Those who do not make these constructive choices, suffer a market penalty.

This penalty has nothing to do with morality and everything to do with creating a more efficient economy that can more effectively compete in international markets.

That President Obama has absorbed these lessons while living in Hyde Park is something of an understatement. While the Tea Party harks endlessly on the relationship of the President to Bill Ayers, Obama has been influenced beyond recognition of his early nineties self by University of Chicago academics Gary Becker, Richard Posner, Cass Sunstein (who moved to Cambridge), and R.J. Rajan.

For these intellectuals, government needs only to nudge rational behavior to move the markets toward more efficiency. This is the philosophy of Hayek with a smiling face, supplemented by a little Keynesian plucking of facial hair.

Those who make bad decisions are poor. People need to be nudged to make good decisions. The penalty for not acting rationally in the marketplace is poverty, prison, or second tier public schools that serve, in effect, as detention centers to keep those who will make bad decisions off of the streets.

Because public institutions are inefficient, all government functions should be privatized: prisons, the military, roads, airports, and schools.

Schools are the new bonanza for private investment because public schools are inefficient, they waste taxpayer's money, they breed poverty; teachers are thick, lazy, and overpaid, and teacher unions prevent meaningful reform.

The school model that makes sense from the point of view of our Education Secretary is competition, choice, standardized curriculum, standardized tests, charter schools, and data collection. Moreover, all of these elements are necessary to hold all schools accountable and to decrease the Achievement Gap between low-income and middle class students. In this way, this regime will eliminate poverty by providing greater opportunity for all students who are made "college ready."

The focus is on bringing more efficiency into the Education marketplace and to penalize those who fail to make rational choices. Government thus needs to nudge more competition between schools by encouraging the establishment of charter schools.

This all sounds too good to be true! What would Hayek say about such unprecedented data collection and Federal supervision of Education Reform?

Education market ideology may very well be a very crude smoke screen.

According to Diane Ravitch, charter school investor and Republican gubernatorial candidate in Illinois Bruce Rauner told her that he did not care about the students who did not enroll in charter schools. Mayor Emanuel famously told Chicago Teacher's Union President Karen Lewis that he "was not going to waste any money on the bottom twenty-five percent low income Chicago public school students. And a close friend of the President told me "who do you think you are kidding, only 8 or 9 percent of those kids (in my Chicago Woodlawn neighborhood) have a chance anyway" when I pressed him on school closings.

This same gentleman told me that all in the President's close circle support the above set of initiatives as the "fastest way to get where we need to go." Indeed, as I have written elsewhere, much of the President's close circle is heavily involved in the world of public-private partnerships that have torn down public housing, speculated in real estate, and invested heavily in charter schools. Not surprisingly, this gentleman also told me that teachers earn way too much for what they do, and most parents (at least in the 1%) are very upset with their general incompetence. He told me that if I wanted to make money, there was plenty of opportunity. "You are an idiot if you can't make it in this country." When I quizzed him about the opportunity cost of choosing to become a teacher, he indicated to me that teaching was not a rational choice within a capitalist economy; that teachers deserve no respect for what they have chosen for themselves.

This is classic Chicago School thinking, and it dominates our public discourse about Education, especially among Democrats who push neoliberal education reform as the "Civil Rights Movement of our time."

Many are beginning to push back hard against this way of thinking. An umbrella organization (Network for Public Education) of those opposed to neoliberal Education Reform met two weeks ago led by Diane Ravitch, author of Reign of Error: The Hoax of the Privatization Movement and the Danger to America's Public Schools.

A very compelling recent study by Christopher A. and Sarah Theule Lubienski, claims that the case for education privatization is built on an ideological house of cards as compelling as Marxism was to CCNY students in the early thirties.

Much as Professor Harcourt suggested in The Illusion of Free Markets, economists who claim to find the economic truth using complicated mathematical models have never been able to more accurately predict the behavior of markets than their Keynesian adversaries, the Lubienskis assert that claims for market education reform are exaggerated. When it comes to predicting the behavior of markets, Warren Buffet and George Soros are much better than professional economists. When it comes to education reform, say the Lubienskis, the neoliberals are scamming all of us.

What neoliberals pushing corporate market education reforms do have, however, are power, money, and the control of most of what passes for public discourse in this country.

The Lubienskis strongly argue in their recently published, The Public School Advantage: Why Public Schools Outperform Private Schools, that market reformers simply don't have the numbers on their side; in effect, challenging the Chicago School Economists at their own game.

Indeed, they contend that the weight of hard evidence has never supported the privatizers who rely on dated studies with small sample sizes, corporate sponsored think tanks and foundations, "bought" Education Departments (Arkansas [Walton money] and Harvard [Gates money]) and articles in journals and publications that are not peer reviewed. The propagation of the siren song of privatization ad nausea on the airwaves, the digital media, and editorial pages is nothing short of the repetition of the Big Lie. (pp. 134-38)

The Lubienskis, professors at the University of Illinois, are formidable researchers and they display their data and methods throughout their book and in the appendixes for other scholars to examine. They achieve a level of transparency and rigorous peer review that can not be matched by the foundation and think tank propagandists can get their work published almost verbatim on the editorial pages of the New York Times, the Chicago Tribune, and the LA Times. The publishers at the University of Chicago Press brought in their ace number crunchers to recrunch their numbers in rigorous peer review.

Their compelling critique closely parallels Professor Harcourt's: "Too often people [market ed reformers] not only interpret evidence through ideological assumptions but ignore facts that fall outside, or run counter to, those assumptions. Particularly in areas such as market theory, surrogate evidence on the quality of organizational options based on presumptions of how rationally self-interested individuals would act is often privileged over actual evidence about how organizations are actually performing. That is, ideological assumptions often trump empirical evidence." (p. 126)

"[T]here is a paucity of evidence supporting the marketist belief regarding how the private and independent school sectors actually perform. The extended infatuation with vouchers for private schools, for instance, or the nationwide effort to expand charter schools, regardless of the thin empirical basis for these policies, speaks to the power of this belief to guide policy. Such initiatives continue to gain ground despite the fact that published, peer-reviewed studies consistently fail to find persuasive evidence that these programs are effective at achieving their promised goals." (p.130)

This evidence, according to the Lubienskis, strongly favors continued public investment in all public schools. They claim that their data sets control for Socio- Economic Status (SES) of students, class size, charter and independent school selectivity (ability to turn away many special need students), school retention rates (the number of students who begin a school year vs. the number who finish the school year), additional public and private support given to charters, and retention percentage of cohort from initial enrollment to graduation (graduation grades vary with type of school). When all of these factors are controlled for, public schools are doing a better job than most private schools because they adjust their teaching methods to fit the needs of their students more flexibly. (pp. 138-146)

They conclude that empirical evidence does not support the marketist legitimation of privatization. The public sector has not failed, they contend, it has thrived and deserves much more support; parent choice does not work because parents often lack the information to make informed choices: "our data along with other research indicate that parents often pursue demonstrably inferior schools--for instance, the fastest growing segment of the private school sector conservative Christian schools, is also the lowest performing, and many low-performing charter schools have waiting lists of families hoping to enroll." In part, these poor choices reflect "nonacademic factors also highlights the limitations of market theory's focus on parent choice as the primary driver of quality improvement in education."(p. 141)

They also do not find evidence to support the contention of education market reformers that competition between public and private schools will make all schools better. Competition, from the neoliberal perspective, will spur innovation. The Lubienskis conclude that this is simply not the case. Far from creating innovation in teaching practice to enhance achievement, they find that many, if not most, of the newer charter schools teach to the test to increase inferior standardized assessments as the dominant measure of achievement gains. Older independent schools, they claim, are the most resistant to adjusting teaching practices that are ineffective for most students. These schools focus on traditional practice: lecture and discussion. (pp. 141-2)

While the Lubienskis are the masters of empirical data and analysis, their study includes a critique of "externalities" that impact the education marketplace, making it a less than a "perfectly functioning market." Though the school reformers may create a smokescreen of choice, the real choosers are those who can afford to send their kids to the best independent schools. Many parents simply cannot afford the public transportation to get to charter schools of choice. And, most obviously, many parents are not given any real input when a mayor appointed and controlled school board decides to close a neighborhood school.

While education marketists may claim that public schools have near monopolies in many states, counties, and cities; corporations that are near monopolies fund think tanks and foundations that shape the neoliberal national education discourse.

Simply put, the progressive populists in the education debate who oppose the Obama Administration's strange take on progressive education that prescribes standardization as a solution have their work cut out for them.

The leadership of Diane Ravitch, the organizational energy of the NPE that brings together disparate education constituencies, and the empirical academic work of scholars like the Lubienskis defy the characterization of the anti corporate reform movement as radical Tea Party ideologues.

Education beat reporters like Lindsey Layton of the Washington Post, Motoko Rich of the New York Times, and Noreen Ahmed-Ullah of the Chicago Tribune, as well as the editorial boards of these and other print and digital papers would benefit from reading the work of the Lubienskis.

They have all missed the story of the rise of the education policy progressive populists who defy Republican and Democratic neoliberal education policies makers.

The real question is: why do they choose to miss this story about the rise of democratic activism in education challenging fat cat technocrats with the truth? Does the silence have anything to do with money and influence?

Paul Horton has taught for thirty years in virtually every kind of school. He began his teaching career in a recently integrated rural Texas middle school. He then taught for five years in a large urban high school in San Antonio's West side where the majority of young people were ESL. He has been teaching at the University of Chicago Laboratory Schools, the country's most diverse independent school founded by John Dewey, for fourteen years.