market fundamentalism

Market fundamentalism (or free-market fundamentalism) means the conviction, based on an incorrect understanding of economic theory, that free markets are universally beneficial. The term has been made popular in 1998 by George Soros in his book The Crisis of Global Capitalism (1998): "This idea was called laissez faire in the nineteenth century... I have found a better name for it: market fundamentalism" . The expression market fundamentalism is now used by various economic authors to signify some exaggerated and irrational belief in the ability of markets to solve all problems in a society. It is also used to rebate the arguments of the evangelists of the "virtues of radical free-market economics" or, in Soro's own words, agaisnt the ideology which "has put financial capital into the driver's seat." Joseph E. Stiglitz also used the term in his autobiographical essay in acceptance of Nobel Prize to criticize some IMF 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." People and organizations it refers to generally reject the label as a pejorative term. The meaning can be considered economic liberalism or laissez-faire capitalism taken to an extreme.

Philosophy

It is based on the idea that the free market is "always" beneficial to society and that the common good is "always" best served by market forces, as if guided by the invisible hand described by Adam Smith in The Wealth of Nations - without taking into consideration Smith's own constraints to it. Smith's message is in fact very different from the popular understanding of it; namely that greed - including the following of market price signals for the sole purpose of maximising individual profit - is best both for individuals and their communities. Rather, his message is that our social consciences lead us to re-evaluate our self-interest, without our being fully conscious of the process. The so-called "free market" has become highly manipulated over the last two and a half centuries.

A "fundamentalist" approach to market capitalism, not unlike fundamentalism in religion, reduces it to a blind adherence to the strictly financial bottom line. This single focus on profit motives has become the mantra for market fundamentalists; in practice this may signify that the markets may work, sometimes, in conflict with the public good.

The functions that cannot and should not be governed purely by market forces include many of the most important things in human life, ranging from moral values to family relationships to aesthetic and intellectual achievements. Yet market fundamentalism is constantly attempting to extend its sway into these regions, in a form of ideological imperialism. According to market fundamentalism, all social activities and human interactions should be looked at as transactional, contract-based relationships and valued in terms of a single common denominator, money. Activities should be regulated, as far as possible, by nothing more intrusive than the invisible hand of profit-maximizing competition. The incursions of market ideology into fields far outside business and economics are having destructive and demoralizing social effects. But market fundamentalism has become so powerful that any political forces that dare to resist it are branded as sentimental, illogical, and naive.

Yet the truth is that market fundamentalism is itself naive and illogical. Even if we put aside the bigger moral and ethical questions and concentrate solely on the economic arena, the ideology of market fundamentalism is profoundly and irredeemably flawed. To put the matter simply, market forces, if they are given complete authority even in the purely economic and financial arenas, produce chaos and could ultimately lead to the downfall of the global capitalist system. George Soros, op. cit.

Critics of this "fundamentalist" attitude argue that "perfect markets" produce beneficial results, but "imperfect markets" usually produce negative results. They argue that where the market works for the public interest, it should be allowed to do so, and where markets work against the public interest, state regulation should step in.

Targets

The term may be used, pejoratively, to criticize some groups which are mainly viewed as advocating strongly against "any" state regulation and defend a "totaly" free market, such as:

• Objectivists publicly and absolutely adhere to this philosophy. This group, spearheaded by the Ayn Rand Institute (after the author of the same name, Ayn Rand, née Alissa Rosenbaum, who wrote Atlas Shrugged and The Fountainhead), however, reject any appeal to the "public good", as altruism is considered to be immoral. Instead, their support of laissez-faire capitalism comes from desiring a "complete separation of economics and state."
• Anarcho-capitalists believe in the absolute right to private property, and envision a market system completely free of state regulation.
• Libertarians generally believe in limited government powers, and reject regulation of a free market. (see also:Minarchism)
• Reaganism, the "Reaganomics" of the 1980's defended by Ronald Reagan
• Thatcherism, the economic policies of Margaret Thatcher
• Washington Consensus, phrase initially coined in 1987-88 by John Williamson, to describe a relatively specific set of ten economic policy prescriptions, that were considered a "standard" reform package for crisis-wracked countries, jointly promoted by Washington-based institutions such as the International Monetary Fund, World Bank and U.S. Treasury Department.

See also

• Anarcho-capitalism

• Capitalism

• Central planning

• Classical liberalism

• Critique of capitalism

• Economic liberalism

• Invisible Hand

• Liberalism

• Libertarianism

• Manchester capitalism

• Objectivist philosophy

• Ordoliberalism

• Reaganism

• Thatcherism

Bibliography

• RITZER, George (editor). The Blackwell Companion to Major Social Theorists, Series: Blackwell Companions to Sociology, Blackwell publishing, 2003. ISBN 9780631207108 ISBN 0631207104 See "market fundamentalism" in Postscript to Anthony Giddens' entry, pag. 690, online readable.

Publications on Market Fundamentalism

Books

• ALBERS, Detlev, HAELER, Stephen, MEYER, Henning; (Editors). Social Europe: A Continent's Answer to Market Fundamentalism. London: European Research Forum at London Metropolitan University (23 Jun 2006) ISBN 0954744837 ISBN 978-0954744830

• KELSEY, Jane. A Review of Economic Fundamentalism: The New Zealand Experiment - A World Model for Structural Adjustment?, Pluto Press, 1995.

• 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. Paul Rayment is Director of Economic Analysis at the UN's Economic Commission for Europe. Richard Kozul-Wright is a Senior Economicist at the United Nations Conference on Trade and Development (UNCTAD). ISBN 9781842776360 ISBN 9781842776377
• FFRENCH-DAVIS, Ricardo. Reforming Latin America's Economies: After Market Fundamentalism. Palgrave Macmillan, 2006. ISBN 140394945X ISBN 978-1403949455

• SOROS, George. The Crisis of Global Capitalism Public Affairs, 1998.

Articles

• BLOCK,Fred. Reframing the Political Battle: Market Fundamentalism vs. Moral Economy., Longview Institute

• GERASKOV, Emil Asenov. Market Fundamentalism and The Paradox Of Transition., 1997 Conference held on American University in Bulgaria, April 25-27, 1997.

• POLANYII-LEVITT,Kari. Keynes and Polanyi: Then and Now A Seminar by Kari Polanyi-Levitt Monday 25 November, 2002 London School of Economics

• ROSEN, Ruth. Note to Nancy Pelosi: Challenge Market Fundamentalism., January 30, 2007 Ruth Rosen is a journalist and historian. She is a senior fellow at the Longview Institute in Berkeley and a professor emerita of history at the University of California, Davis. She is currently a visiting professor of public policy and history at U.C. Berkeley.

• SAINAH,P. Poverty, Market Fundamentalism and the Media, 2001 P. Sainath, an award wining Indian journalist, is Rural Affairs Editor of The Hindu and the author of Everybody Loves a Good Drought.

External links

• And then there was the market
• GERASKOV, Emil Asenov. Market Fundamentalism And The Paradoexes Of Transition.
• Review of George Soros's The Crisis of Global Capitalism, by Brink Lindsey
• SOROS, George. The Crisis of Global Capitalism Public Affairs, 1998.

This article contains content from Wikipedia. Current versions of the GNU FDL article Market fundamentalism on WP may contain information useful to the improvement of this article

WP