Thomas Wuil Joo (University of California – Davis Law School) has posted The Worst Test of Truth: The 'Marketplace of Ideas' as Faulty Metaphor on SSRN. Here is the abstract:
Dissenting in Abrams v. United States, Justice Holmes proclaimed that “the best test of truth is the power of the thought to get itself accepted in the competition of the market.” This Article critiques the basic argument that has developed from the “marketplace of ideas” metaphor: that speech should be “free” because markets are “free,” and because free markets produce “truth.” These assertions about markets are taken for granted, but they portray markets and market regulation inaccurately; thus economic markets provide a poor analogy for the deregulation of speech.
First Amendment jurisprudence invokes the supposed truth-finding function of markets to argue that competition, not law, should distinguish the true from the false, and that the law should refrain from attempting to equalize the relative strength of competing speakers. The Supreme Court used the marketplace metaphor to support the first assertion in Alvarez v. United States (2011), and the second in Citizens United v. Federal Election Commission (2010).
The assumptions of the metaphor are inconsistent with theory and experience, however. Economic markets do not produce normative or empirical “truth.” Existing regulatory law reflects this understanding. Mail fraud law and securities regulation, for example, assume that markets are particularly bad at identifying the truth, and thus information is more aggressively regulated in the market context than in other contexts. Economic regulation also assumes that markets require some degree of “equalizing.” Antitrust law and insider-trading law, for example, treat certain types of advantages as impediments that must be corrected in order to ensure that markets remain competitive.
Holmes, the great dissenter of Lochner, opportunistically appropriated free-market language for its rhetorical appeal in the interest of free speech. But he inadvertently gave support to laissez-faire norms and contributed to the present pervasiveness of free-market rhetoric in legal discourse.