Market fundamentalism (also known as free market fundamentalism) is a term applied to a strong belief in the ability of unregulated 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 worldwide 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. Historian Edward E. Baptist contends "unrestrained domination of market forces can sometimes amplify existing forms of oppression into something more horrific", such as slavery, and that "market fundamentalism doesn't always provide the best solution for every economic or social problem".
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. 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".
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 to criticize groups which are viewed as advocating strongly against any state regulation and which 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.
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