There’s No Such Thing as “Market Fundamentalism,” Part 2

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If “market fundamentalism” were a serious phenomenon, you would think the authors could give some clear examples of it — as they do for fundamentalist opponents of economic freedom. (There are a great many people who automatically dismiss arguments in favor of economic liberty, calling them “right-wing” propaganda motivated by sheer greed; to their credit, the authors criticize them.)

Morson and Schapiro, the authors of Minds Wide Shut (Princeton University Press, 2021), try to sneak past their lack of evidence here by citing people who are generally hostile to laissez-faire and the concept of spontaneous order. First, they quote George Soros, who claimed in his book The Crisis of Global Capitalism that those who think government should play little or no role in economic regulation “believe their conclusions to be certain.” But believing that your conclusions are correct, even “certain,” just shows confidence in one’s thinking, not that it is fundamentalist. 

The closest Morson and Schapiro come to demonstrating their point is to cherry-pick a statement by Nobel laureate Gary Becker to the effect that he was sure that Americans would agree with his stance in favor of allowing sales of human organs once they considered his arguments. Sorry guys, but it isn’t “fundamentalism” to say that you regard your case as persuasive, and if someone had disagreed with Becker, he would have replied with more arguments, not with a fundamentalist dismissal.

Morson and Schapiro also rely on economist Joseph Stiglitz, who decries what he regards as unwarranted confidence in free markets. That, however, does not show that market advocates are guilty of fundamentalism. It only shows that Stiglitz is not persuaded by them. 

Too bad that an editor at Princeton University Press didn’t point out how feeble the authors’ case is here.

Authors offer weak evidence

Not only do Morson and Schapiro fail to demonstrate that “market fundamentalism” exists, but they give no reason for indicting it as divisive. Going back to the 19th century, numerous economists have argued that we would be better off if government stayed out of the economy. For the most part, their arguments were brushed aside by politicians and interest groups, which is why we today have a leviathan state. So why is it harmful for some economists today to make the case against, say, tariffs, federal student loans, or rent control laws? Elsewhere, the authors quote John Stuart Mill on the importance of counter-arguments to test and strengthen positions. That’s right, so what is divisive or harmful about subjecting any interventionist policy to a radical, free-market critique?

The notion that free markets are mostly all right but need a large dose of government control is deeply rooted in the minds of most Americans, including the authors. Very rarely do the “fundamentalists” convince authorities that some instance of government control is counterproductive and ought to be abolished. There are, however, some such cases. We got rid of the Civil Aeronautics Board and its airline price fixing regulations. That, by virtually all accounts, turned out very well for consumers. Fortunately, that decision was not stopped by cries of “market fundamentalism.” If that worked out well, why dismiss other arguments against government economic intervention as “market fundamentalism?” As rationalists, Morson and Schapiro should understand that each argument for or against government control needs to be evaluated on its own merits, not ridiculed with an epithet. 

Just how feeble this part of the book is can be seen in the authors’ discussion of the minimum wage. They write that while a few economists would abolish it and others would raise it to $25 per hour, the best policy must lie somewhere in the middle. But that conclusion doesn’t follow at all. Radical or extreme positions are not refuted just by pointing out that they are “out of the mainstream.” In fact, by calling arguments for eliminating government intervention in the economy “fundamentalist,” the authors are actually doing exactly what they spend the book deploring, namely, dismissing arguments they don’t want to engage with just by pinning a pejorative label on them.

Voluntary alternatives to regulation

Morson and Schapiro commit another common mistake (but one that seasoned academics should have avoided) in assuming that those who argue for government non-interventionism are also in favor of doing nothing to ameliorate whatever problems arise. That is simply untrue. Advocates of free markets are not unmindful that some people will be worse off, but they say that instead of government acting to help, it should be left to civil society, that is, voluntary action.

Consider free trade. Morson and Schapiro understand that free trade is highly beneficial but contend that government policy has to do something to help those who lose their jobs as a result. They overlook the fact that charitable efforts to assist individuals who find themselves in need are widespread, effective in targeting assistance, and don’t have the waste and harmful side-effects of government action.

Contrary to the authors, it isn’t “fundamentalism” to argue in favor of free trade and against government programs to deal with any resulting economic hardship. Instead, it is to argue that government intervention is consistently harmful. The key word is argue. You don’t find market advocates declaring that government programs are wrong per se.

Here’s another issue Morson and Schapiro get wrong because they depict advocates of the free market as “all or nothing” thinkers — student college debt. Some “progressives” cry that many college graduates are suffering under the heavy burden of their loans and want the government to bail them all out. Now, the authors correctly point out that many of those with large debts also have good careers and large incomes to pay their debts. Then, however, they point an accusing finger at the “market fundamentalists” who don’t think the government should give any students debt relief. Again, that’s erroneous. Just because you don’t think the government should be “generous” with taxpayer money by wiping out student loan debts doesn’t imply callous indifference toward those who are truly in distress. There are voluntary means of helping such students, like GoFundMe. Relying on them is far better than a blanket debt relief.

I would also like to know how the authors would respond to advocates of government minimalism who point out that there would be no student loan “crisis” if the government hadn’t made the huge and unconstitutional move of starting federal financial aid in the first place. No students would be looking at six-digit balances today if we had listened to the opponents of federal student aid back during Lyndon Johnson’s presidency. Many of today’s problems have their roots in the unwise expansions of federal power over the last century.

Strawman arguments weaken their case

Market fundamentalism is a strawman. It’s a shame that the authors thought they needed to include it in their attack on fundamentalist thinking. If anyone exhibits minds that are wide shut, it’s Morson and Schapiro, who have utterly misrepresented those who maintain that minimal government is best.

Despite their “market fundamentalism” blunder, Morson and Schapiro have identified a real problem. They earnestly implore people to listen to and reason with one another. Again, that’s fine, but how do we get there?

What’s missing from Minds Wide Shut is analysis of the causes for rising fundamentalism. The authors briefly adverted to a major cause when they mentioned their students who believe that fundamentalist thinking is actually thinking. Throughout our educational system, students are increasingly subjected to teaching that’s meant to indoctrinate them, to see the world in black and white, to ignore the necessity of trade-offs. American students learn to accept and defend certain positions (positions that are invariably favorable to governmental control) rather than to identify and evaluate evidence before coming to any tentative conclusions. That begins in grade school and continues through high school and into college. 

The demands that speakers be prevented from talking on campus and that books with “hurtful” material be cancelled come from students who have been steeped in “progressive” ideology for years. We won’t successfully combat fundamentalist thinking unless we return our schools to teaching knowledge and pull the plug on political activism.

The resurgence of fundamentalism is a serious problem for liberal societies. Minds Wide Shut provides a worthwhile introduction, but it calls for much more work. I would suggest to Morson and Schapiro that they revise the book to focus on true fundamentalist thinking and leave out their misleading and ill-conceived attack on “market fundamentalism.”

This article was originally published in the September 2021 edition of Future of Freedom.

The post There’s No Such Thing as “Market Fundamentalism,” Part 2 appeared first on The Future of Freedom Foundation.