Perspicacious press pundits have proclaimed that Rupert Murdoch’s possible purchase of the Wall Street Journal will lead to the destruction of that newspaper, a decline in unbiased reporting, and possibly the end of American democracy as we know it.

The enemies of Mr. Murdoch seem to think that the market for ideas only works when its assets are owned by enlightened saints with an appropriately enlightened left of center worldview.

What an odd idea. The markets for steel or coal or computers do not depend on the moral character of their capitalists. Adam Smith himself took a dim view of the ethics of businessmen but thought that competitive markets turn private peccadilloes into public virtues.

The past two centuries of economic success have shown the power of competition among imperfect people to make our world wealthier, wiser, and more democratic.

The market for ideas also is better served by freedom than by more regulations restricting investment in newspapers. My joint work with a professor of Economics at Harvard, Claudia Goldin, and an assistant professor of Economics at the University of Chicago’s business school, Matthew Gentzkow, for the National Bureau of Economic Research chronicles the competition-led transition of newspapers from unabashed partisanship to relative independence. At one time, the government aggressively used its power to select and support individual journalists. Philip Freneau edited the anti-Federal National Gazette while he was also on the payroll of Thomas Jefferson’s State Department.

In the mid-19th century most newspapers had formal political affiliations — the New York Times was a Republican paper. Papers relied on their political allies for government printing contracts and other subsidies. Some editors, like Horace Greeley and Warren Harding, used publishing as a springboard for a political career. Few cities had a single independent newspaper in 1870.

In those days, politics completely drove the news coverage of a political event like the Credit Mobilier scandal. The New York Sun, one of the era’s few independent papers, broke the Credit Mobilier story by publishing a letter ostensibly written by Rep. Oakes Ames describing how he had allocated railway stock to Republican politicians where “it will produce the most good.” Democratic papers responded with a stream of invective that would make Michael Moore blush.

Republican papers assured their readers that “the libel was invented by knaves, but it is retailed by fools,” as written in the Albany Evening Journal. In another Republican paper, the Philadelphia Evening Bulletin, the first mention of the story included six sub-headlines including “How Leading Republicans are Vilified” and “The Whole Thing Proven To Be False.”

The newspaper told their readers that “the attempt to fasten the charge of bribery … has already been shown to be utterly untrue.” Even more remarkably, one-half of the Republican papers in our sample didn’t bother to report the existence of the letter at all. As a Grant administration loyalist, I appreciate the enthusiasm of these journalists, but I wouldn’t call it unbiased reporting.

Between 1870 and 1920, newspaper reporting became far more independent and informative. Papers dropped their political affiliations, stopped calling their opponents liars, and actually reported major national stories. In the Teapot Dome Scandal, 50 years after Credit Mobilier, almost every paper in our sample reported the major facts without violent political invective.

Originally broken by the Wall Street News, a predecessor of the Journal, the Teapot Dome Scandal involved the connection between the lease of the naval oil reserves near Teapot Dome, Wyo., and an unsecured loan of $100,000 given to the secretary of the Interior, Albert Fall, by oil magnate Edward Doheny.

The press became informative and independent because of a desire for readers and advertisers. In 1870, newsprint was expensive and papers sold only a small number of copies.

Government patronage was worth more than readership. As printing became cheaper, press barons, like Joseph Pulitzer, made fortunes selling cheaper papers and more expensive advertising. The rise of independent papers happened first in large markets, like New York, that offered the biggest profits from selling papers.

Current research on bias in the press suggests that today’s newspapers are relatively homogenous with a moderate left wing slant. Mr. Gentzkow and another assistant professor of Economics at the University of Chicago’s business school, Jesse Shapiro, found that this bias is best understood as the result of competition for newspaper readers, who are, on average, somewhat left of center. Papers fight furiously for stories and today they take to the center-left to make sure that they are palatable to their readers and advertisers.

The history of newspapers suggests that government control leads toward bias and the suppression of facts, while competition spreads ideas and moderates bias. Rupert Murdoch has always shown himself to be more interested in profits than politics. He will not want to jeopardize the Journal’s standing as the nation’s premier business paper by turning it into a 21st century version of the Albany Evening Journal.

We are better off with our news press in free hands, however imperfect, than we are when political leaders pick our publishers.

Mr. Glaeser is the Glimp professor of economics at Harvard, director of the Taubman Center for State and Local Government, and a senior fellow at the Manhattan Institute.