Market fundamentalism

Market fundamentalism (also known as free market fundamentalism) is a pejorative term applied to a strong belief in the ability of laissez-faire or free market policies to solve most economic and social problems.^[1]

Critics of laissez-faire policies have used the term to denote what they perceive as a misguided belief, or deliberate deception, that free markets provide the greatest possible equity and prosperity,^[2] and that any interference with the market process decreases social well being. Users of the term include adherents of interventionist, mixed economy and protectionist positions,^[3] as well as billionaires such as George Soros,^[4] and economists such as Nobel Laureates Joseph Stiglitz^[5] and Paul Krugman. Critics cite as fundamentalist the unshakable belief, despite contrary evidence, that unfettered markets maximize individual freedom, that they are the best means to economic growth and that society should adhere to their ideas of progress.^[6][7][8] Ideas ascribed to fundamentalists include the belief that markets tend towards a natural equilibrium, and that the best interests in a given society are achieved by allowing its participants to pursue their own financial self-interest with little or no restraint or regulatory oversight.^[1][9] Critics claim that in modern society with world-wide conglomerates, or even merely large companies, the individual has no protection against fraud nor harm caused by products that maximize income by imposing externalities on the individual consumer as well as society.

According to economist John Quiggin, the standard features of "economic fundamentalist rhetoric" are "dogmatic" assertions and the claim that anyone who holds contrary views is not a real economist.^[10] This approach follows from evidence that neoclassical economics provides a scientific explanation of economic phenomena, an explanation that economists state represents the status of scientific truth (if, and only if, all of the assumptions involved in deriving the economic analysis are simultaneously satisfied). However, Kozul-Wright states in his book The Resistible Rise of Market Fundamentalism that "ineluctability of market forces" neo-liberals and conservative politicians tend to stress, and their confidence on a chosen policy, rest on a "mixture of implicit and hidden assumptions, myths about the history of their own countries' economic development, and special interests camouflaged in their rhetoric of general good".^[11]

History of the term

The expression "market fundamentalism" was popularized by business magnate and philanthropist George Soros in his book The Crisis of Global Capitalism (1998),^[12] in which he writes "This idea was called laissez faire in the nineteenth century... I have found a better name for it: market fundamentalism.".^[13] P. Sainath believes Jeremy Seabrook, a journalist and campaigner, first used the term.^[14] The term was used by John Langmore and John Quiggin in their 1994 book Work for All.^[15] A full description of the origins of the free market economics dating as far back to the conception of natural laws as mathematical, eternal and absolute—a reflection of some perfect mathematical form—derived from ancient Greek philosophers Pythagoras (569–500 BC) and Plato, and reinvigorated by the Enlightenment is well beyond the scope of this article, but can be read on Chapter 4, A Brief Account of the Historical Origins of Economic Fundamentalism, in Dr. Lee Boldman's book (2007).^[16]

The expression is now used by various authors writing on economic topics to signify an allegedly unjustified belief in the ability of markets to solve all problems in a society.^[17] The term has been used, pejoratively, to criticize some groups which are mainly viewed as advocating strongly against "any" state regulation and defend a "totally" free market.^[17] It is also used to disparage the arguments of the proponents of "the virtues of radical free-market economics" or, in Soros' own words, against the "ideology" which "has put financial capital into the driver's seat."^[13]

Joseph E. Stiglitz used the term in his autobiographical essay in acceptance of Nobel Memorial Prize in Economic Sciences to criticize some International Monetary Fund policies: "More broadly, the IMF was advocating a set of policies which is generally referred to alternatively as the Washington consensus, the neo-liberal doctrines, or market fundamentalism, based on an incorrect understanding of economic theory and (what I viewed) as an inadequate interpretation of the historical data." ^[18]

The theories that I (and others) helped develop explained why unfettered markets often not only do not lead to social justice, but do not even produce efficient outcomes. Interestingly, there has been no intellectual challenge to the refutation of Adam Smith’s invisible hand: individuals and firms, in the pursuit of their self-interest, are not necessarily, or in general, led as if by an invisible hand, to economic efficiency.^[19]

—Joseph E. Stiglitz

The sociologists Fred L. Block and Margaret Somers use the label "because the term conveys the quasi-religious certainty expressed by contemporary advocates of market self-regulation."^[20]

See also

References

Bibliography

• Albers, Detlev, Haeler, Stephen, Meyer, Henning; (Editors) (23 June 2006). Social Europe: A Continent's Answer to Market Fundamentalism. London: European Research Forum at London Metropolitan University. ISBN 0-9547448-3-7. 
• Camerer, C. (1995): Individual Decision Making, in: Kagel, J.H. & Roth, A.E. (Eds.): Handbook of Experimental Economics, Princeton, Princeton University Press, 587-703. ISBN 978-0-691-05897-9
• French-Davis, Ricardo. Reforming Latin America's Economies: After Market Fundamentalism. Palgrave Macmillan, 2006. ISBN 1-4039-4945-X ISBN 978-1403949455
• Kelsey, Jane (1995). A Review of Economic Fundamentalism: The New Zealand Experiment - A World Model for Structural Adjustment?. Pluto Press.  ISBN 1-86940-130-1
• Kozul-Wright, Richard. The Resistible Rise of Market Fundamentalism: The Struggle for Economic Development in a Global Economy. United Nations Conference on Trade and Development (UNCTAD), London: ZedBooks Ltd, 2007. ISBN 978-1-84277-636-0 ISBN 9781842776377
• Ritzer, George (editor) (2003). The Blackwell Companion to Major Social Theorists. Blackwell Companions to Sociology. Blackwell publishing. ISBN 0-631-20710-4. 
• Soros, George (1998). The Crisis of Global Capitalism: The Crisis of Global Capitalism: Open Society Endangered. New York: PublicAffairs.  ISBN 978-1-891620-27-0
• Soros, George (2008). The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means. New York: PublicAffairs. ISBN 978-1-58648-683-9. 
• Sunder, S (1995). "Experimental Asset Markets: A Survey". In Kagel, J.H. & Roth, A.E. (eds). Handbook of Experimental Economics. Princeton: Princeton University Press. pp. 445–500.  ISBN 978-0-691-05897-9

External links

• Longview Institute page on Market Fundamentalism
• The free market is an impossible utopia. The Washington Post, July 18, 2014.