Market Fundamentalism

I coined this term a while back and have been using it for nearly 10 years now and have finally noticed folks using it as well. I did so back in 2007 because what I was recognizing as the current, dominant economic paradigm and the moral philosophy increasingly being adopted by self styled libertarians needed a new term.

The core belief behind market fundamentalism is that the direction of an unregulated market, no matter how destructive to human potential, the environment, or the national or international interests of the country or the planet, is necessarily the morally correct direction. If an unregulated market demands that children go hungry and uneducated, so be it. If an unregulated market means that groundwater is contaminated with frakking waste, so be it. If an unregulated market means that for profit prisons and police departments victimize the most powerless so the rich can have tax cuts and the expansion of shareholder value, so be it. Those would, by definition, be morally wholesome. Moreover, any attempt at intervention from those outcomes would be morally repulsive as they would require "socialism" which, as we know, is deleterious to human freedom without need of explanation.

Some libertarians may look at the above and say that it is a bit of an overstatement of their positions, but I would challenge them to explain where. Moreover, I would state that this position needs a term like Market Fundamentalism because it is different and distinct from any historical definition of Capitalism -- a system that has, since its beginning, required studied regulation.

Oops. Looks like Stiglitz and Soros had it before I did.

Here's an example of the problem. My bolding.

Ayn Rand, "For the New Intellectual" wrote:

Capitalism demands the best of every man—his rationality—and rewards him accordingly. It leaves every man free to choose the work he likes, to specialize in it, to trade his product for the products of others, and to go as far on the road of achievement as his ability and ambition will carry him. His success depends on the objective value of his work and on the rationality of those who recognize that value. When men are free to trade, with reason and reality as their only arbiter, when no man may use physical force to extort the consent of another, it is the best product and the best judgment that win in every field of human endeavor, and raise the standard of living—and of thought—ever higher for all those who take part in mankind’s productive activity.

Ayn Rand, "What is Capitalism?" wrote:

The economic value of a man’s work is determined, on a free market, by a single principle: by the voluntary consent of those who are willing to trade him their work or products in return. This is the moral meaning of the law of supply and demand.

So on the one hand, it's asserted that the value of a man's work is based on it's *objective* value; that is, it is independent of irrational concerns. On the other hand, it is said that the value of a man's work is uniquely determined by what others are willing to trade with him for that work.

These both cannot be true together, and they are also false individually, as recognized long before Rand decided she was the greatest thinker in history. The problem is that people are fundamentally irrational (in the sense used by economists, that is, they don't hew rigidly to their best interests in economic decisions). Any analysis of human behavior that requires rationality describes a state we will not ever reach.

Market Fundamentalism is, at it's core, an unwillingness to allow for the *human-ness* of humans. Because of that, it has huge gaps of reasoning in it which, when taken advantage of by those with more resources, become far more like forced feudalism than a world of equals voluntarily not coercing each other in order to extract maximum value from each relationship they maintain.

Instead of raising everyone's standard of living, Rand's prescriptions tend to increase inequality in the real world. Where we've adopted these suggestions, we've essentially based our economics on a fallacy; "first, imagine all men are completely rational...".

That, to me, is one of the fundamental mistakes of libertarianism in it's modern American form.

First, imagine all humans are grasshoppers which, during times of excessive plenty, phase into locusts...

Robear wrote:

So on the one hand, it's asserted that the value of a man's work is based on it's *objective* value; that is, it is independent of irrational concerns. On the other hand, it is said that the value of a man's work is uniquely determined by what others are willing to trade with him for that work.

The answer I've gotten from Objectivists when pressing them with this contradiction (mostly by asking "so isn't Rand an existentialist?") is that before determining the value of another man's work, you should first be a moral person, and in Objectivism that's some sort of Aristotelianism.

Disregard - my bad.

cheeze_pavilion wrote:
Robear wrote:

So on the one hand, it's asserted that the value of a man's work is based on it's *objective* value; that is, it is independent of irrational concerns. On the other hand, it is said that the value of a man's work is uniquely determined by what others are willing to trade with him for that work.

The answer I've gotten from Objectivists when pressing them with this contradiction (mostly by asking "so isn't Rand an existentialist?") is that before determining the value of another man's work, you should first be a moral person, and in Objectivism that's some sort of Aristotelianism.

Isn't that all a bit circular though? If morality is determined by an unregulated market, doesn't successful participation in one determine one's moral standing? Or is morality something separate from the market itself and has bearing on what can and cannot be marketed or how it can be (i.e.: regulated).

There are, after all, markets for snuff films, child porn, underaged brides, and all manner of things we, as a "socialist" collective determine are harmful to society.

Paleocon wrote:
cheeze_pavilion wrote:
Robear wrote:

So on the one hand, it's asserted that the value of a man's work is based on it's *objective* value; that is, it is independent of irrational concerns. On the other hand, it is said that the value of a man's work is uniquely determined by what others are willing to trade with him for that work.

The answer I've gotten from Objectivists when pressing them with this contradiction (mostly by asking "so isn't Rand an existentialist?") is that before determining the value of another man's work, you should first be a moral person, and in Objectivism that's some sort of Aristotelianism.

Isn't that all a bit circular though? If morality is determined by an unregulated market, doesn't successful participation in one determine one's moral standing? Or is morality something separate from the market itself and has bearing on what can and cannot be marketed or how it can be (i.e.: regulated).

That's what I'm saying--I asked about the circularity of it, and was told it's not circular, it's technically some kind of modern update of Aristotelian morality.

Of course, that morality is not very well emphasized. Hence the vacuum of morality in that philosophy gets filled by that kind of secular gospel of prosperity, where if you're successful on the free market, you're necessarily moral.

There are, after all, markets for snuff films, child porn, underaged brides, and all manner of things we, as a "socialist" collective determine are harmful to society.

Yeah, stuff like that--you don't have to be a "socialist" collective to determine those things are crimes, though. You don't have to resort to "it will harm the collective" to be on pretty solid moral bedrock in condemning those things--you can get there just with a philosophy of individual rights, I think.

Of course, children's rights don't get talked about much, and when they are it's kind of horrifying.

In any case, (edit) if you're looking for circularity problems, the real issues I think are things like pollution: if my factory that I own on my property threatens to pollute your equally profitable cattle ranch you own on your property, what legal principles guide us? I've never been able to find a good answer to those sorts of questions.

Nothing to see here. Sorry SallyNasty.

Sorry, I was out of line with sh*tposting and I apologize.

I do see some great value to discussing market fundamentalism in terms of the current American political climate.

Less value in market fundamentalism as an inherent flaw in libertarian thinking. Especially because those currently pushing for market fundamentalism in practice are, by and large, not actually libertarians.

The funny thing is I was just about to post a topic concerning my beliefs that capitalism has failed. It hit me hard when I recalled a part of the recent Lorax movie where some mogul wanted to box up and start selling air. The final straw for capitalism for me in reality is when we are only one step away from life imitating art when we start "streamlining" water, the second most basic necessity for life. And I am not talking about Flint, MI. Flint MI is just the tip of the coming iceberg with our decaying infrastructure. There are 1000's more Flint's in waiting in this country.
Greed is "managed" now and not prosecuted. You don't shun greed, you make sure it is either: always maintained to a level just above or below public outrage, hidden in the short term so that you can get a running head start when it is uncovered, or released amidst other scandals to entice fatigue and favorable comparisons.

Jolly Bill wrote:

Less value in market fundamentalism as an inherent flaw in libertarian thinking. Especially because those currently pushing for market fundamentalism in practice are, by and large, not actually libertarians.

Well, there's a lot of crossover, with various Freshwater School conservative economists being associated with Rand, and their ideas being brought into the mainstream of Republican thinking. Also, the Koch brothers have been working hard to bring libertarian economic ideas into the Party.

So it's hard to draw a line separating libertarian influenced economics, Rand, and the GOP since the 80's.

Market fundamentalism is the Adam Smith invisible hand?

Economists started coming up with these kinds of theories after the Magna Carta and rise of corporations. As in, push back the power of sovereignty in favour of free markets. Since when have the rich wanted restraints on banking capital at everyone else's detriment (which is what the concept of profit really represents).

But it doesn't work. We need look no further than the tragic history of the commons, externalism and the rise of interventionist policy (read up on Keynes) because the market often doesn't correct itself without severe consequences hence intervention to cushion the landing.

Robear wrote:
Jolly Bill wrote:

Less value in market fundamentalism as an inherent flaw in libertarian thinking. Especially because those currently pushing for market fundamentalism in practice are, by and large, not actually libertarians.

Well, there's a lot of crossover, with various Freshwater School conservative economists being associated with Rand, and their ideas being brought into the mainstream of Republican thinking. Also, the Koch brothers have been working hard to bring libertarian economic ideas into the Party.

So it's hard to draw a line separating libertarian influenced economics, Rand, and the GOP since the 80's.

Sure, but as was noted (and possibly removed) the moral or logical underpinnings of libertarianism itself is both well traveled territory around here as well as less relevant than the Koch's views or any current conservative economists associated with Rand.

The weird thing is that it's Trump who is causing (or laying bare) a fissure in the Republican party and a revolt against ideological 'elites' that have been pushing these ideas.

Jolly Bill wrote:

Sure, but as was noted (and possibly removed) the moral or logical underpinnings of libertarianism itself is both well traveled territory around here as well as less relevant than the Koch's views or any current conservative economists associated with Rand.

More important, to my mind. If you start with a false premise, then the whole show is invalid. A political philosophy (or moral philosophy, or social philosophy, or economic philosophy, or whatever) that depends on the rationality of man has problems that need to be solved before it's useful. The fact that we've made major adjustments to our economy and society based on these mistaken assumptions is horrifying.

cheeze_pavilion wrote:

The weird thing is that it's Trump who is causing (or laying bare) a fissure in the Republican party and a revolt against ideological 'elites' that have been pushing these ideas.

Ironic, isn't it?

Robear wrote:
Jolly Bill wrote:

Sure, but as was noted (and possibly removed) the moral or logical underpinnings of libertarianism itself is both well traveled territory around here as well as less relevant than the Koch's views or any current conservative economists associated with Rand.

More important, to my mind. If you start with a false premise, then the whole show is invalid. A political philosophy (or moral philosophy, or social philosophy, or economic philosophy, or whatever) that depends on the rationality of man has problems that need to be solved before it's useful. The fact that we've made major adjustments to our economy and society based on these mistaken assumptions is horrifying.

I find that less useful in this case, since the people using these assumptions are already using a bastardized version of it and therefore the false premise needs to be reexamined under the "new" ideology.

Which leads mostly to pointing out the selfish actions of a privileged upper class, but in this context I still think it's more valuable than hand waving away an entire ideology that includes a heck of a lot more people than the handful of politicos who aren't really true believers anyway.

Jolly Bill wrote:

I find that less useful in this case, since the people using these assumptions are already using a bastardized version of it and therefore the false premise needs to be reexamined under the "new" ideology.

I honestly don't understand this. If people say "oh, 2+2=5", and build a philosophy on that, how does "re-examining" that philosophy help them understand that they have a fundamental flaw in their philosophy, and thus their recommendations are flawed?

It's like the joke about mathematicians - "...First, assume all horses are spheres..." but following that up by saying "Well, we need to think more about it, maybe they have a point?".

Or am I missing your point entirely?

The reason I often think about this "fundamentalism" in terms of "ideology" is because "ideology" at least implies a lot of unrecognized assumptions. I don't think many believers really do the self-examination necessary to assess the baseline assumptions like "value = market value."

My personal interest in a thread like this is to better understand how to get people I care about to confront their assumptions—Randian though "check your premises" may be. I don't think Brecht or "theater of the oppressed" is going to do it.

Robear wrote:
Jolly Bill wrote:

I find that less useful in this case, since the people using these assumptions are already using a bastardized version of it and therefore the false premise needs to be reexamined under the "new" ideology.

I honestly don't understand this. If people say "oh, 2+2=5", and build a philosophy on that, how does "re-examining" that philosophy help them understand that they have a fundamental flaw in their philosophy, and thus their recommendations are flawed?

It's like the joke about mathematicians - "...First, assume all horses are spheres..." but following that up by saying "Well, we need to think more about it, maybe they have a point?".

Or am I missing your point entirely?

I'm pretty sure you're missing my point. I'm talking about something like this: The Koch Brothers are NOT Libertarian or this The Koch Brothers’ Fake Libertarianism: War, Forced Pregnancies, and Homophobia.

There's a big difference between showing a flaw in libertarian philosophy and following that flaw to failed political action by libertarians... and showing a flaw in libertarian philosophy and following that flaw to people who lift wholesale from different philosophies as it suits them some of which just happen to be libertarian. In the first case what you're saying is self-evident. In the second there is a lot more room to talk about which philosophies are being borrowed from, for what purpose, and how that's contributing to political action.

To wordsmythe's point: people borrowing only parts of libertarian philosophy are already unconcerned with rationalizing their entire worldview... examining how and why different philosophies are being juxtaposed is a worthier discussion for this board.

Robear wrote:

More important, to my mind. If you start with a false premise, then the whole show is invalid. A political philosophy (or moral philosophy, or social philosophy, or economic philosophy, or whatever) that depends on the rationality of man has problems that need to be solved before it's useful. The fact that we've made major adjustments to our economy and society based on these mistaken assumptions is horrifying.

I think this kind of outlines my issues with at least some facets of the notion of a "free market". The more we learn about human behaviour, the less it seems to match a lot of the assumptions economic theories originally made about them.

Then there is a question as to whether or not the "free market" turned out to be what it was expected to be. We now live in an environment that contains issues that Adam Smith never even considered such as companies so huge that they can afford to operate branches in a community at a loss for years or could perform a hostile takeover of another company providing a better service so that they can dismantle it.

kuddles wrote:
Robear wrote:

More important, to my mind. If you start with a false premise, then the whole show is invalid. A political philosophy (or moral philosophy, or social philosophy, or economic philosophy, or whatever) that depends on the rationality of man has problems that need to be solved before it's useful. The fact that we've made major adjustments to our economy and society based on these mistaken assumptions is horrifying.

I think this kind of outlines my issues with at least some facets of the notion of a "free market". The more we learn about human behaviour, the less it seems to match a lot of the assumptions economic theories originally made about them.

Then there is a question as to whether or not the "free market" turned out to be what it was expected to be. We now live in an environment that contains issues that Adam Smith never even considered such as companies so huge that they can afford to operate branches in a community at a loss for years or could perform a hostile takeover of another company providing a better service so that they can dismantle it.

Possibly one of my favorite scenes in the Bioshock book that details the origins, rise, and fall of Rapture. Grocer is put out of business because a competing grocer buys up the contracts for trash and waste disposal, then dumps all of it on the original grocer and will only remove it for an exorbitant fee.

I dunno though, every time someone suggests the market will fix it, I'm left remembering Walmart and how they're in business largely through their ability to rely on government programs to keep their employees in a livable state. Then I just get angry as people complain about slackers living off food stamps, not recognizing that the single largest contributor to that program's enrollment numbers is Walmart, so we're all paying for that every time we enjoy our $1 DVD bundle with 5 movies in it.

Or I remember that thanks to our current political climate, there's a large number of folks who believe climate change isn't real and is only designed to hurt companies and reward those companies that are actively ok with the idea of destroying the planet for profit by shopping there. Just... bleh.

Jolly Bill wrote:

There's a big difference between showing a flaw in libertarian philosophy and following that flaw to failed political action by libertarians... and showing a flaw in libertarian philosophy and following that flaw to people who lift wholesale from different philosophies as it suits them some of which just happen to be libertarian. In the first case what you're saying is self-evident. In the second there is a lot more room to talk about which philosophies are being borrowed from, for what purpose, and how that's contributing to political action.

I guess my interest is in delineating belief systems as well as pragmatically dealing with the actions that result from them. For me, the former is an academic interest - discuss over brandy in front of the fire - such as, who are "True Libertarians" and who are hybrids. The practical part to me is that someone came up with economic ideas (or social ones or whatever) based on understandings we now know to be falsified (in this case, markets can be rational) and those ideas were seized upon and used, and created problems.

I'd rather just work to explain the problems to people and try to eradicate the ideas from *any* group that recommends them, rather than worry about the way they found those ideas. I mean, the latter is interesting, but we're past the point where we consider ourselves detached from the effects of the beliefs. We need to consider how to knock them down and replace them.

You know, looking back with SallyNasty's and Robear's posts edited the point I was trying to make went in a different direction than it should have.

I guess my true point is that Market Fundamentalism is merely a ruse by which very powerful and influential people have maintained their wealth and access to resources by convincing non-critically thinking Libertarians that it was appropriate and just.

Robear, maybe the point you were going towards a little sideways (probably with my help) is that you are hoping to convince libertarians to see the ruse? By proving this piece of doctrine false you open their eyes?

Jolly Bill wrote:

You know, looking back with SallyNasty's and Robear's posts edited the point I was trying to make went in a different direction than it should have.

I guess my true point is that Market Fundamentalism is merely a ruse by which very powerful and influential people have maintained their wealth and access to resources by convincing non-critically thinking Libertarians that it was appropriate and just.

Robear, maybe the point you were going towards a little sideways (probably with my help) is that you are hoping to convince libertarians to see the ruse? By proving this piece of doctrine false you open their eyes?

To that, I can only say, good luck. As long as a lot of people in our country see themselves as the "Have-Not-YETs" rather than Have-Nots, I suspect they'll continue to see any "infraction" against the Haves as something that will hurt them too.

Yes, Bill, but it only works with people who can question their assumptions.

Jolly Bill wrote:

You know, looking back with SallyNasty's and Robear's posts edited the point I was trying to make went in a different direction than it should have.

I guess my true point is that Market Fundamentalism is merely a ruse by which very powerful and influential people have maintained their wealth and access to resources by convincing non-critically thinking Libertarians that it was appropriate and just.

It's based on some flawed Tabula Rasa ass bullsh*t.

Robear wrote:

Yes, Bill, but it only works with people who can question their assumptions.

I think this just gets back to a lot of the P&C discussions we've had lately. This is Paleo's thread so I guess I'm more interested in his take on it, but pointing out flaws in philosophies that you expect no real debate on... feels a lot like people smugly pointing out how other people are wrong and then looking around for agreement.

Demosthenes wrote:
Jolly Bill wrote:

You know, looking back with SallyNasty's and Robear's posts edited the point I was trying to make went in a different direction than it should have.

I guess my true point is that Market Fundamentalism is merely a ruse by which very powerful and influential people have maintained their wealth and access to resources by convincing non-critically thinking Libertarians that it was appropriate and just.

Robear, maybe the point you were going towards a little sideways (probably with my help) is that you are hoping to convince libertarians to see the ruse? By proving this piece of doctrine false you open their eyes?

To that, I can only say, good luck. As long as a lot of people in our country see themselves as the "Have-Not-YETs" rather than Have-Nots, I suspect they'll continue to see any "infraction" against the Haves as something that will hurt them too.

Thanks, Demo, I didn't mean to ignore this at the time, but I was trying to nudge the conversation more in the direction of "Well, people just think that they are libertarians and really aren't" or "Well, people just think their leaders are libertarian, and they really aren't" rather than just "what's wrong with libertarian thought"