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.
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, 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, as well as billionaires such as George Soros, economists such as Nobel Laureates Joseph Stiglitz and Paul Krugman, and Cornell University historian Edward E. Baptist. George Soros suggests that market fundamentalism includes the belief that the best interests in a given society are achieved by allowing its participants to pursue their own financial self-interest with no restraint or regulatory oversight. 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 combined with the claim that anyone who holds contrary views is not a real economist. 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".
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), in which he writes: "This idea was called laissez faire in the nineteenth century ... I have found a better name for it: market fundamentalism". P. Sainath believes Jeremy Seabrook, a journalist and campaigner, first used the term. The term was used by John Langmore and John Quiggin in their 1994 book Work for All. See also Jonathan Benthall, 1991.
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. 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. 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."
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."
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.
- Block,Fred. Market Fundamentalism, Longview Institute
- Block,Fred. Reframing the Political Battle: Market Fundamentalism vs. Moral Economy., Longview Institute
- Bidstrup, Scott. Free Market Fundamentalism: Friedman, Pinochet and the "Chilean Miracle", Revised 10/15/02
- Beams, Nick. Soros warns of "market fundamentalism". WSWS : News & Analysis : World Economy 22 December 1998
- Stiglitz, Joseph. Redefining the Role of the State - What should it do ? How should it do it ? And how should these decisions be made? Paper presented at the Tenth Anniversary of MITI Research Institute, Tokyo, March 1998.
- Edward Baptist (September 7, 2014). What the Economist Doesn't Get About Slavery—And My Book. Politico. Retrieved May 23, 2015.
- Soros, George, "The worst market crisis in 60 years." Financial Times, January 22, 2008 19:57
- Quiggin, John. Rationalism and Rationality in Economics, 1999, On Line Opinion,www.onlineopinion.com.au
- KOZUL-WRIGHT, Richard and RAYMENT, Paul. The Resistible Rise of Market Fundamentalism: Rethinking Development Policy in an Unbalanced World. London: Zed Books Ltd, 2007 p. 14 and Chapter 6
- BRESLOW,Marc. George Soros: Beware Market Fundamentalism. Dollars & Sense, issue #221, January-February 1999
- SOROS, George. The Crisis of Global Capitalism Public Affairs, 1998.
- SAINATH,P. And then there was the market.
- Quiggin, John. "WORK FOR ALL - REPLY". Retrieved 30 January 2012.
- Benthall, Jonathan, 'Inside information on "the market"', Anthropology Today, 7.4, August 1991, pp.1–2.
- Market fundamentalism The Language of Philosophy - Dictionary and Research Guide, Enlexica, Inc.
- Autobiographical essay in acceptance of the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel
- STIGLITZ, Joseph E. The pact with the devil. Beppe Grillo's Friends interview
- Fred Block and Margaret R. Somers. The Power of Market Fundamentalism: Karl Polanyi's Critique. Harvard University Press, 2014. ISBN 0674050711. p. 3.
Bibliography and further reading
- 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
- Cox, Harvey (2016). The Market as God. Harvard University Press. ISBN 9780674659681
- 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. Handbook of Experimental Economics. Princeton: Princeton University Press. pp. 445–500. ISBN 978-0-691-05897-9
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- Longview Institute page on Market Fundamentalism
- The free market is an impossible utopia. The Washington Post, July 18, 2014.