McMurtry, J. (2004). Understanding market theology. In The Invisible Hand and the Common Good (pp. 151-182): Springer.
Understanding Market Theology
The long struggle of escape [is] from habitual modes of thought and expression….The difficulty lies not in the new ideas, but in escaping from the old ones which ramify, for those brought up as most us have been, into the very corner of our minds.
John Maynard Keynes
(Preface, The General Theory of Employment, Interest and Money, London, 1936.)
I. Understanding Market Theology
A standard critical view of the relationship between capitalism and religion is that religion is an ideological cover story for capitalism. Capitalism, it is contended, structures the real world. Religion conceals and sanctifies it in justifying illusions. Marx most famously pressed this view with an enlightenment epigram derived from Voltaire: “Religion is the opiate of the people.”1 He sought, in contrast, to scientifically lay bare the “real relations of society” underneath.
This paper will explore a deeper possibility – that the classical and neo-classical market doctrine is itself a religion, and that its “invisible hand” prescriptions regulate society’s economic relations themselves. Beneath the notice of the social sciences, I will argue, market theory and practice together depend on a core structure of presuppositions of a necessary and benevolent design which constitutes an unacknowledged religious metaphysic.
There has, of course, been a long scholarly interest in the relationship between religion and capitalism, most notably with Max Weber’s 1904 classic, The Protestant Ethic and the Spirit of Capitalism. Weber’s analysis highlights the personal-religious code of “time is money” that the U.S. founding father, Benjamin Franklin, bore as the “spirit of capitalism” over 200 years before the global corporate capitalism of today. The analysis here, in deep contrast, investigates the non-scientific and impersonal mechanism of market doctrine as a machine-god idolatry, quite the opposite of Franklin’s folksy religious pragmatism of self-advancement. Weber looks for the motivating force of will and method behind pre-industrial capitalism’s emergence. I analyse an inherited system of assumption presupposing an “invisible hand” regulator of world economies, a metaphysics of “iron necessity,” and an inevitabilist market mechanism producing the public interest independent of human plan – in short, a tacit fundamentalist religion that regulates beneath consciousness of it.2
II. The Rationalist Religious Origins
A primary clue to the market religion emerges when one recognises that the market doctrine’s foundational idea of “the invisible hand’ is originally a Deist concept. From the very birth of market doctrine, Adam Smith’s canonical treatise, An Inquiry Into the Nature and Understanding of the Wealth of Nations, discerns God’s regulating purpose at work in the world underneath the clash of individual wills and interests.3 His implicitly deist economics asserts that self-seeking market agents necessarily but blindly fulfil the common good by the guidance of an unseen design which operates beyond any goal or control of humanity. Smith’s underlying metaphysic has been so deeply assumed by economic orthodoxy since that it is concealed in presupposition as an unseen regulator of understanding. Long a defining frame of mind of market thought and practice, its a priori logos has admitted of various historical expressions – from tolerance of a mixed-economy “welfare state” in the post-War quarter century, to an absolutist orthodoxy of one-right-way economic rule closed to any deviation. The “neoliberal agenda” has distinguished itself in this chequered history by a militant certitude of formulaic rule across the world with no “distortion” tolerated. Its crusade for a “global market” has so prominently featured “market miracles,” “necessary sacrifices,” and “harsh punishments” for disobedience that its covertly deist metaphysic has come to resemble an Old Testament fundamentalism.
The deep-structural pattern of regulating thought I lay bare here is not, then, as with economistic critique, an “ideology” that reflects the economic base determining it, as the Marxian model proposes. The fundamentalist religious pattern I disclose is, rather, a meta-framework of understanding which regulates the perception and understanding of orthodox market thought and practice as the ruling formula of the common good. It is not a question, then, of a “mask” over economic reality so much as an organizing mind-set which is blind to the religio-moral metaphysic regulating it.
III. The Foundational Idea: The Invisible Hand
“A theology without God is a contradiction in terms,” it might be objected, “and there is, in fact, no market God.” A theism implies the existence of God, Allah, or a supra-human Ruler, and there is no such postulate in market theory.
In answer to this objection, we need to keep in mind that a transcendental ruler of the market is, in principle presupposed by the notion of “the invisible hand” which, it is believed, always brings the economy’s supply into efficient fulfilment of (“Classical Theory”) or mathematical equation to (“Neo-Classical theory”) the rule of market demand. This preordained state is idealized by such neo-classical mechanics as “equilibrium,” and has been reified for generations as a perfect, but factually false, necessity of Supply = Demand (“Say’s Law”). John Maynard Keynes, a philosopher by training like Adam Smith, successfully challenged this long-reigning formula of economic rule, but he has been ignored or vilified for most of the time since. Only a Depression and War saved him from the fate of heretic during the years in between.
Throughout the long era of society’s dominance by the market religion, a two-stroke master idea has persisted through alternative formulations: ( 1) the necessary operations of “the invisible hand” adjusting market supply to market demand by natural laws of motion; and (2) the achievement of what no human, alone or all together, could ever plan – an optimum social end state that could not be better. From the outset, no scientifically qualifying as if attached to the notion of “the invisible hand” to indicate a metaphoric purpose. Even when neo-classical “equilibrium” has been admitted as a theoretical idealization, or “market failures” have been acknowledged, there is no dint in the strictly regulating assumption that the market’s invisible hand necessarily produces the best of all possible worlds. The transcendental form that is here presupposed as “the Market” is not challenged as a certitude even by leading moral philosophers of the era.4
Adam Smith explained this equilibriation of supply to demand by “the invisible hand” in the matter of human lives very succinctly. “The demand for men, like any other commodity,” he explains, “necessarily regulates the production of men.” But this necessity of the invisible hand’s ordering of who lives and who dies is a law of nature. “Every species of animals,” he continues, “naturally multiplies in proportion to their means of subsistence – [Thus] among the inferior ranks of people the scantiness of subsistence sets limits to their reproduction – – [which] it can do with no other way than by destroying a great part of their children.“5
Market doctrine and theory, it is true, no longer talks like its classical founder of the necessity for mass sacrifice of children to the machinations of the invisible hand. It is no longer socially acceptable, but neo-classical theory has in any case rarefied these matters into mechanical equations. Yet no principle rules it out, and nothing in the market has value for which there is no money demand – including children’s lives.
There must be exceptions to this attribution of “social optimum” to circumstances in which human beings are regularly left to starve if they do not fetch a price. Can a contemporary doctrine be so unconsciously homocidal? Surely, more thoughtful neo-classical economists cannot be so mind-locked. So let us, then, briefly consider the very best candidates of the learned orthodoxy – Kenneth Arrow and Frank Hahn. We will meet Paul Samuelson ahead. Frank Hahn explained his doubts to peers about the lead tenet of the Doctrine over twenty years ago.6
The eminent Kenneth Arrow acknowledged in the same period near the globalization turn that there may be “failures of the market” in providing for its own conditions.7
Yet neither economic theorist permitted himself to imagine that the social optimality of market selectors could ever be bettered. In Arrow’s representative case, the market’s optimising structure is best understood by formal and mathematical techniques, even if they “do not study actual economies.” He also confides in passing that market “efficiency” can require publicly subsidized measures to support the market “where prices are inapplicable.”8 The latter condition has been in place since Smith.
Frank Hahn, in contrast, seems to challenge the faith at its core. He openly questions the factual plausibility of idealized market models to explain the miraculous serendipity achieved by “the hand” of reconciling “private greed” and “happy social outcomes.”9
Yet despite near-heretical wonderments at how the invisible hand works, in particular regarding the “the co-ordination of intertemporal decisions” to equalise Supply and Demand, Hahn does not ever imply that anything other than market magic could work. He worries far more that “Government failure” by “intervention” will bring much worse consequences. Markets are assumed, unlike any other social subsystem, to be properly independent of public authority. Hahn thus cautions delay of any “intervention” by more “argument and thinking,” which he nowhere recommends to the market. He specifically warns against any “diminishment of the scope of the invisible hand,” lest it “kill the hand altogether.”
Hahn’s reflections on the invisible hand, then, do not doubt its miracle performing role of actually transmuting “private greed” into “happy social outcomes.” Rather, he upholds suspicion of any social meddling by democratic authority in the invisible hand’s supra-human management. He bravely hints in borderline apostasy (emphasis added) that “in general one can describe some form of collective or co-operative action which would improve the lot of everyone. But,” he quickly adds, “I will not pursue further this quite important scent, for there are many more central issues to be discussed.” Hahn’s confession could be studied as a sincere searching of the neo-classical soul. But in the end, only the mysteries of the Invisible Hand remain for him that none has yet fathomed, not any question as to its supra-human rule.
As with other deifications of ruling systems in the past, only the “vastly incomplete” nature of our understanding of God is finally asserted. The regulating article of creed that the market’s unlimited growth is for the common good remains intact throughout, whatever Hahn’s pointed doubts about his peers’ models to explain how the Invisible Hand operates. Consequently, he remains “unconvinced that there are any intrinsic limits to its beneficence in its unlimited growth” (emphases added). In paradigmatic substitution of the idealized model’s expectations in place of tracked facts, Hahn specially emphasises that “increase in leisure” and “healthy appetite” are necessary consequences of the market’s limitless and unregulated growth.10 General facts the opposite of a priori certitudes elude attention. That working hours have, in fact, never decreased in market societies if left to be self-regulating – and in particular since the deregulating Global Market Crusade began – does not register. That the link between more commodities and “healthy” disposition is nowhere demonstrated, and shown to be the opposite in the highest growth markets, is not a reality to deter the certitude of the received metaphysic.11 In such doctrinal inversions of the real world through the lenses of the ruling mind-set, we glimpse the depths of its pangloss operations in even its most searching mind.
IV. The Market’s Doctrine of System Magic
The market religion, as we know, was first announced by Adam Smith. He strikingly revealed that purely self-seeking investors of money capital are “led by an invisible hand” to achieve, in fact, the opposite of what they aim at, the common interest. ln this reversal of the normal sequence of human aims and unintended consequences, “the invisible hand” guarantees that market capitalists are infallibly led to achieve the opposite of what they aim at, the good of society as a whole (emphases added):
… It is his own advantage, indeed, and not that of the society, which he [the capital investor] has in view. But the study of his own advantage naturally, or rather necessarily, leads him – to promote the public interest. – He intends only his own gain, and in this, as in many other cases, is led by an invisible hand to promote an end [the public interest] which was no part of his intention.12
Note that there is no conditionality to this account, not of time, place, circumstance, or agent. Investors everywhere at all times, whatever the investment or the commodity supplied, are “led necessarily to promote the public interest” by the contrary motivation, self-seeking greed – always, everywhere, and with all investor gains. No qualification of society is said, is averred. No account of the meaning of the public interest itself is worthy of deeper reflection. The Market achieves the common good with no human participation in planning the certain happy social outcome it ensures by its Invisible Hand management. We see here not only an unquestioning deification of the Market. At the more technical level of explanatory logic, we disinter a doctrine of unintended consequences which is the opposite of fallibilist reasoning. Unintended effects are no longer apt to bear negative consequences for reason to avoid by more co-operative forethought. They are, on the contrary, infallibly positive unintended effects for all societies. The perfect orchestration of countless changing factors by the apotheosized Market Hand exceeds the wonders of Yahweh. The causal sequence is predestined without human reason involved.
A metaphysical doctrine of the necessitation of optimal results by not planning or verifying first is thus asserted which would ordinarily stagger the scientific mind. But we are dealing here with a metaphysical story-line so deeply ingrained that the implied predications of a fundamentalist religion go unnoticed. An omnipotent, omniscient and benevolent Invisible Hand rules. Like God, the Market is unlimited by any contingency of culture or space time.
The absurd entailments of this blind structure of dogma are, however, blocked by its foundational presupposition. For example, it follows from the doctrine’s magical thinking that “the public interest” is necessarily achieved by investors competing to sell homocidal weapons, junkfood, and prostituted children to the market at the lowest price if there is sufficient or growing demand for them. Each and all’s revenues of sale count to the market calculus as “economic growth” and, thus, more aggregate welfare, and there is no theoretical qualification to rule against this entailment. In consequence, the general prescription of “free trade” obliges the greater supply and sale of such commodities in “free circulation” across borders. It was on this value basis of the common good, for example, that the mass import and sale of opium was prescribed by force of gunboats and cannon in the nineteenth century, with the analogue of cigarettes 130 years later.13 Similarly, ever more weapons sold to ruling oligarchies to repress their own people has increasingly boosted “growth” and “value adding” since, to become the leading commodity of manufacture trade in the world today. Although weakly prohibited by some states, child prostitution has multiplied exponentially since the 1980s in the “new deregulated global market” with little or no critical interest by market theorists.
As innumerable health-depleting commodities and violence entertainments and weapons systematically replace the “uncompetitive” organic products and cultures of local societies, revealingly, no problem can be discerned of the doctrine’s coherence as a theory of “welfare maximization.” For greater “welfare” means only that more commodity value has cleared in the market. Pathological consequences following from the market’s growth need not be engaged because the magic workings of the invisible hand assure the opposite a priori, the “social optimum,” by competitive market operations. Doctrinal closure to the counter-indicative facts of life is, in these ways, as confidently presupposed as the motions of the tides.
Once laid bare, the paradigm discloses what none dares to suspect – its logic of superstition. Optimum consequences for the common weal are posited to follow automatically from the guidance of the Invisible Hand, even if heinous effects in fact follow, because there is no theoretical resource to recognise them, less so to select against them. Just as a benevolent disposition for humanity’s welfare is known to be built into God’s omniscient plan, so the market doctrine assumes happy outcomes of the Market – however the evidence of despoiled life systems may demonstrate the contrary. The difference is that such ill-fare effects cannot be directly traced to the decision structure of God or Allah, but they can be to the Market’s. In terms of disconnection from reality and deleterious consequences, we probably confront here the most powerful structure of superstition in history.
If life harms do register to the neo-classical value system, they are conceptualised as “externalities” – an approximate theoretical correlative of “the fallen material world” – which, it is supposed in more non-sequitur substitutes for reality, more private property rights and market transactions will inexorably correct.14 Once troublesome negative facts are thus expunged by these set-point operations of the market’s metaphysic, only postulated “equilibriums” and “optimums” remain to appear to the pangloss calculus.
The Invisible Hand does not, however, operate by merely ad hoc miracles to which previous religions have been typically confined. Now human affairs are ruled by a magical system which infallibly alchemizes out of the dross of private money-greed the panacea of the public interest. In “the global market era,” these infallibly benevolent outcomes by ever more deregulated acquisitiveness of “investors” competing to sell is universalized as inevitable and providential for peoples everywhere – across all societies of vastly different histories and cultures and with no time horizon, whatever the ill-fare results in the actually existing world. If, in life reality, civil and ecological degradation and collapse systemically accompany market reforms across borders, the “laws” of market supply and demand remain assumed to be naturally regulated for production of the public interest. “Government interference” to regulate investors’ speculative capital flows or the ruinous atmospheric emissions of their enterprises is, accordingly, repudiated as “dictatorial,” increasing investor costs and violating consumer freedom, and thus obstructing the market’s necessary promotion of the common good.15
If state intervention becomes undeniably required to preserve life conditions themselves, a doctrinal decision sequence follows. The problem is first denied and its identifiers are invalidated as bearers of market-hostile “negative thinking” or the lunacy of Chicken Little (“the sky is falling in”). If the problem of “externality” affecting the public interest persists, the experts reporting it are discounted and, if the issue continues in the public eye, are publicly attacked. If the problem still persists as evident beyond the corporately funded doubts of “Science,” corrective intervention is prescribed as acceptable only if it “avoids the heavy hand of government” – the opposite of the invisible hand. The conditions for action are, then, to “earn the confidence of investors” and to enlist “the magic of the free market” or, more specifically, to extend to the affected large corporations new public subsidies, pollution credits, bid opportunities for privatization of resources, with willingness-to-pay readings of market signs as the legitimating process for public concerns. Throughout this regulating doctrinal sequence of resolving assaults on life conditions themselves by profitable market activities, one ruling principle holds – to prescribe further market extensions to resolve the market-driven problems. All roads lead back to Rome, the regulating certitude of the doctrine that benevolent effects for society are inexorable by the free and spontaneous operations of the Market’s Invisible Hand. That no trial or proof of the “necessary” market remedies is proceeded with prior to public subsidisation reveals the ruling repertoire of the superstitious mind-set.
Manna and cargo cults of diverse kinds have, it is true, long bewitched our kind, but none with a more systematically superstitious cause-effect metaphysic than the Invisible Hand that infallibly produces the public interest from the unalloyed greed of surplus-money possessors. Poignantly propounded as “science,” its inner logic is hardly less preposterous than tithes to Rome to save the world from sin. What is magic if not action at a distance by an invisible power known to work desired effects with no possibility of being disproved? Has there, in truth, been a magic thinking ever instituted which matches the orchestration by the Invisible Hand of numberlessly diverse and contesting decisions across temporal and spatial divides to infallibly achieve the common good? “Surely such nonsense cannot be left to rule the world!” the sober-minded may exclaim. Yet which mainstream market axiom, principle or economic theorist’s work yet calls into question any part of this structure of thinking?
Our condition in this way becomes an institutionalized thrall, the invisible prison of a ruling paradigm closed off from its contra-indicative consequences by a priori postulates of benevolent outcomes by competing greed within the market’s one universal Form. In a non-superstitious paradigm of economic organization, the self-maximizing behaviours of money-privileged factions would not be assumed necessarily to produce beneficial social outcomes by the optimising wisdom of a non-human design. The actual market organization would be systematically tracked in its this-worldly consequences of life gain or loss, and would be judged and improved accordingly. This is, however, the road of reason which cannot be taken – as long as the doctrine entails in principle the abdication of human responsibility for how we make ourselves and the world.
V. The Taboo Against Economic Self-Determination
A necessary normative prohibition follows silently from the market’s concealed religious metaphysic. This implication is that no human agent ought to play any role in the intention or the will to bring about what “the invisible hand” necessarily achieves without human intervention. Only so long as the eternally serendipitous adjustment of economic supply to demand by the invisible hand is “not interfered with” can its magic work. Thus humans are never to form co-operative arrangements which seek to alter or counteract the invisible hand’s rule. Just as religious group-think “leaves it to God to decide,” so too market doctrine demands that human governments “leave it to the market to decide.” In both cases, true believers prophesy collective ruin as certain if there is violation of the self-regulating order. In consequence, a converse dogma arises – namely, that the perfectly regulating design of the market so transcends the capacity of human purpose or will to aspire to that not even entire societies operating peacefully together can presume to interfere in the received form of production and distribution governing their lives. A system prohibition is thus absolutized – a taboo against all human will that would flout the preordained perfection of the market God. Thus for F.A. Hayek, any human planning or acting in concert to modify the price operations of the market’s invisible hand is doomed. Arrogation of economic control by “social plan” or other hybris of social human self-determination is a “fatal conceit” and the moral equivalent of blasphemy in the market theology.16
Adam Smith, we know, makes it very clear that the invisible hand of the market serves the social good “through no intention” of humanity. Hayek, the senior statesman of capitalist market doctrine in the contemporary era, goes further with no demurral from fellow believers. He deepens the abyss between the market’s suprahuman perfection of design and humanity’s incapability of ameliorating its rule by explicitly affirming the certitude of market capitalism’s “transcendent order” to which “humankind owes its very existence.” Humanity, he asserts in the free market’s unnoted denial of free will, “does not have the option of choos ing.”17 The “extended order” of the capitalist market, Hayek warns, proclaims, is a higher order of perfection than mere human intelligence can comprehend, and to which all peoples must subordinate their earthly wills. “Thy will (ie., not mine) be done on earth as it is in heaven” are his words, with his italics, in explanation of market capitalism’s transcendantal authority. In the abject enthusiasm of the fundamentalist mind-set, he proclaims that capitalism’s ruling order “far surpasses the reach of our understanding, wishes and purposes and our sense perceptions.”18
VI. The Religio-Moral Metaphysic as Scientific Fact
One crowning meta-assumption remains, however, to astonish the unbeliever. This structure fanatic frame of thought is assumed to proffer strict empirical generalisations from objectively established facts and to be the only scientific form of economic reason that exists. That is why the best-selling representation of the doctrine is called Economics with no qualification to suggest that it, not all of economics, is the one and only Economics that exists.
Yet however God may be named, this one-size-for-all Economics posits a higher-than-human ruler of human affairs which prescribes commandments of how humanity must think and act, and its “inexorable laws” are divined as certain, inalterable, and universally binding. In human society’s long coming of age, social groups’ worshipping their own orders as commands of God is well known.19 Typically but not necessarily, a dominant sect reaps privileges from this arrangement, and a public ideology apotheosizes its ruling norms as eternal, necessary and obligatory. With imperialist regimes, the reigning order is proclaimed as inviolable for all who live outside the group as well – the sacred cause of “fighting infidels,” or “bringing market freedom to the world” – with increasingly efficient methods of violence and propaganda to impose the master order on others. What is most remarkable in the modern era, however, is that this ancient pattern is not seen through in a scientific culture. Instead, it is assumed that because we live in “a modern market society,” this absolutization of its norms and their attribution to a transcendental authority is impossible. No irony could be more fateful.
Beneath the conscious lives of the actors, a cunning of unreason has developed. The group-mind disposition to deify its own social order has not been superceded by scientific market doctrine, as supposed. Rather, it has transmogrified into another form – a form that unprecedentedly deploys technological science as its tool, rather than, as with collective superstitions and theological institutions of the past, repudiating material science’s vast instrumental powers as a threat to the stability of orthodox belief. The religio-moral metaphysics of the market is free from all such impediments. For scientific technology has long been the fund-dependent servants of its rise to power – from Galileo’s research into missiles and navigational co-ordinates in the early market states of Italy to genetically engineered foodstuffs and space-age weapons today.20
Science is the instrument, the Market is God. Yet the new Universal Church has escaped the enlightenment critique which exposed its predecessor. Dressed in an engineering-physics lexicon to hide its fundamentalist metaphysic, and legitimated by the regime’s pervasive regulation of everyday life as “economic necessity,” former vulnerabilities of fanatic dogma are concealed.21 In this manner, the presupposition of the market’s “invisible hand” links with its this-worldly powers as the invisible and the visible signs of its benevolent rule. The more the normative order is globally instituted and people are habituated to its ritualized demands of daily survival as “without alternative,” the more iron and universally necessary the order is presupposed to be.
Ironically, such a system can become self-fulfilling in the same way as other ruling dogmas such as the natural servitude of slaves. No alternative is permitted, and people become conditioned to the only way to survive (as slaves) or prosper (as masters) – with labour factors of production and owners of capital the modern era’s correlatives of the relationship of ruler and ruled. Thus when scientific method’s demands for intersubjectively observable invariance of sequence are applied to the market regime, the saturating operant conditioning of its subjects and its institutionalized incentives and aversive consequences can eventually enforce the aggregate conformity which is thought to be produced spontaneously by natural laws. Like the “eternal” Five Relations of Confucianism with its 3000 rules of conduct expressing the “Mandate of Heaven,” or the patriarchal Yahweh or Allah of the Middle Eastern Gods with their elaborated universal commands of every-moment existence, a socially constructed regulating order is, over time, assumed as transcendentally given, and to be necessarily obeyed – with harsh punishments for the deviant, and accumulating rewards for the chosen.22
The circle remains closed in the prescribed given in even the “science of economics,” however, because one may not expose its coercively normative structure on pain of unscientific “value judgement.” Only the presupposed value system is not a “value judgement.” In expression of this ultimate modal confusion, neo-classical practitioners and textbooks invariably proclaim the “value neutraI” nature of their inquiries, even although an elaborately institutionalized and strictly enforced value system of private property, monetary exchange, and rewards/approbations and punishments/ disapprobations commands market actors through every moment of the system’s daily reproduction.
As long as this meta-circle remains closed to its own normative assumptions and construction, the Market’s institutionally prescribed norms of private appropriation of the social means of production, money-demand rights over all their products, and rounds of exponential increase and accumulation of wealth in the possession of surplus-money possessors are assumed to be the laws of “freedom,” and are prohibited from any “confiscatory taking” in a “free and democratic society.” Moral prescriptions and physical laws are thus conflated as “the inexorable laws of the market,” which are assumed to structure social reality independent of human choice. Even Marxists, who detest the system, suppose that its operations are “independent of men’s will,”23 and wait upon the certain outcome of these very “inexorable laws” by an “inevitable class revolution.” This sequence, it is again believed, is necessary, only here the necessity is to cause workers to “remake society anew” in the right way. As with other customary constructions presumed as given by an inalterable design, a religio-moral system of necessarily happy results endures by its pervasive assumption – through “inexorable laws” either way.
Once socially constructed norms are thus reified, their necessary validity is instituted by orthodox theory. Neo-classical orthodoxy thus assumes these prescribed norms as “empirical laws” which “value neutral science” discloses. As Bernard Hodgson has shown in judicious internal critique, however, axioms of neo-classical economic theory are assumed without the evidence to confirm their assumed lawlike nature.24 In such a theoretical situation, he argues, only a “nexus of institutional determinants” making the economic facts conform to these a priori generalizations of neo-classical theory can provide the factual confirmation required to transform their normative idealizations into empirically confirmed hypotheses. I propose a deeper route – examine the norms themselves as socially regulating value structures, not as empirical laws. Then within the space of reason and choice thereby opened, think through this prescribed system for how society lives in light of its proven life benefits and options. The formula of competitive market greed as necessitator of the common good by ministration of the supersensible Hand is magical thinking until it has been life-tested against alternatives.
This magical metaphysic of neoclassical economics is, however, blocked from view by an operation that is progressively built into its method – representation by mathematical formulae whose formally hypothesized conditions are not, in fact, remotely satisfied in real economies. By this formal decoupling and reduction of economic analysis, reality is no longer the object of study.25 In its place, just-so stories of economic operations are encoded into self-standing econometric models, and existing actuality is thus made to disappear. It is dissolved into an a priori normative apparatus masked as positivist by algebraic notations, and hermetically sealed off from real economies by linear equations with few or no real referents to empirically confirm or disconfirm them.26
Perfection of the orthodoxy develops over generations, often in the same world-renowned scholastic centres as served the former Universal Church. Yet because interpretation of the invisible hand’s operations is open to contention, these differences are mistakenly misunderstood as testing of the doctrine. Now as then, the Church has many factions. But none doubts the benevolent rule of God, or the optimal outcomes of the invisible hand’s operations for the common good. The basic difference in metaphysical comportment from other fundamentalist religions is that neo-classical theory adopts a nineteenth-century engineering model of flows and equilibria to understand the ruling economic Design. Its paradigm can in this way “scientifically” presuppose economic institutions as given in the way that physical Jaws are given. They are no longer directly conceived as laws of God, but of Nature, with the order sustained in eternal equilibriation by the Invisible Hand. With the neo-classical model’s template as engineering mechanics, its Jaws are even less open to dispute and contesting hermeneutics. One cannot interrogate or disobey physical laws.
VII. The Problem of Freedom
Throughout the mechanistic presuppositions and inferences of this theory, the Market’s laws are nevertheless propounded as “the basis of human freedom.” Although it is absurd to assert there is “no alternative” and freedom of how to live at the same time, there can be no question that the pervasive cause-effect linkage of the global market to democracy and freedom has assisted in the selling of market commands. Again we might consider a parallel here to prior Church method. Just as the adoption of popular pagan celebrations by the Church became its festive face to the masses, so contemporary global market doctrine presents itself as democratic, with festivals of periodic elections occurring under ceremonies of high-end market selling of competing images and products.
In considering this curious recent equation of the market to the liberating structure of democracy, we should note that the alleged equivalence of meaning only emerges a century after Adam Smith. Yet the certainty of democracy as well as the wealth of all nations serendipitously completes the benevolent powers attributed to the market God, and so incites more fundamentalist passions of devotion to its rule. With human freedom as well as material wellbeing necessarily dependent on the market’s providence – both incarnate in every shopper’s choice – a darker political converse then follows as well. Isolation, embargo or invasion must collectively punish societies who transgress the market’s beneficient order of liberty and prosperity as a solemn obligation of “the Free World” (especially if the delinquent Other sits on native subsoil resources of oil). The governments of the “market democracies” have, accordingly, waged the “Cold War” and now the “war against terrorism without any end in sight” to preserve “the Free World” from threats to its way of life.
As the mild and eminent American neo-classical economist Paul Samuelson counsels in his famous text, evangelical spread of the doctrine is a duty – if not by war (which there is no reason to suppose he counsels), then by propagation of the One Truth: “Spread the gospel of economics any way we can, I say.” Samuelson’s exhortation is exemplary of the doctrine, as is his categorical title, ECONOMICS which assumes the one truth a priori.27
VIII. The Moral Grammar of the Market Doctrine
There are, of course, various versions of the market gospel. Many adherents to the doctrine explicitly defend and advocate its rule as the moral command of God – televangelists, the religious right, and recent Republican U.S. presidents, for example. Others of more scientific temper advocate and justify it as akin to a natural or biological system, which is understood as an inalterable and spontaneously providential order of nature. The more formally inclined suppose it as scientifically self-evident mechanism of human production and exchange which can be mathematically represented in the form of number holding sway over the flux. There are diverse visions of the One Truth, contesting sects and hermaneutics at many levels. But what is in common among the variations on the master structure of thought is an underpinning set of normative tenets which are not questioned but assumed as the necessary order of the world. At the highest level of generality, we can deduce these principles of political-economic creed by the logical method of transcendental deduction – disclosing the market doctrine’s normative grammar of affirmation and negation by laying bare its regulating presuppositions.
While morality and normativity itself are assumed by market doctrine to have been purged from its “value neutral science,” what regulates all orthodox market opinion is a normative syntax in conformity to whose principles the common good is necessarily produced. To the extent that anyone or any school or any political party or faction affirms these basic principles of economic and social morality, they are acceptable members of the “free market” community of meaning and value. Conversely, to the extent that individuals, schools or policy formers reject these guiding principles for “getting the fundamentals right,” they are to that extent deviant from or heretics against the doctrine. Where we find a movement of mind to critical thought (e.g., to rethink principle (6) below in perceived emergencies), the thrall of the mind-lock is opened to question. The straightforward test is whether these principles are implicitly or explicitly affirmed or rejected in actual judgements and behaviours.
The guiding moral story of the market religion is the ruling cause-effect theorem analysed in this paper’s first section – namely, that competitively self-interested money-capital investors necessarily produce the public interest by the equilibriating operations of the invisible hand. The regulating norms formalised below then follow from this inner logic of understanding as sustaining subsidiary principles for achieving the common good. Orthodox market theory and practice express these regulating principles of value set and judgement by tacitly or aggressively rejecting any policy or position which violates them. Together these principles constitute the system-deciding imperatives of the market value-set:
- Pursuit of maximal monetary assets and control for oneself is: i. natural, ii. rational and iii. required for economic and social development;
- There is no rightful limit on acquisition of these assets and control, in particular by state redistribution;
- Freedom to buy and sell in self-maximizing transactions of money and priced goods is the ultimate basis of human liberty and justice, and there is no known limit to its rightful universalisation;
- The market’s money-price system optimally allocates resources and distributes goods and services in any society, as well as all societies at once in “the global market;”
- Profit-maximization by investors is simultaneously : i. the ultimate engine of economic advance and social well-being, and ii. is not to be hedged by state regulation or ownership;
- Government interference or intervention in the market is: i. always bad unless to support market opportunities for private-profit and ii. is dictatorial in proportion to its reduction of such opportunities;
- Individual consumer desires are: i. permanently increasing and unlimited in their growth, and ii. social welfare is necessarily increased by greater commodity consumption to satisfy these market desires;
- Growth of production and purchase of priced goods within the law – “economic growth” – is necessary and desirable with no market limit to the conversion of planetary and human life-organization into marketable commodities and technological substitutes for natural scarcities;
- Protectionism of domestic production of any kind is bad and to be publicly deplored (while politically excepting dominant corporate sectors);
- Whatever facts of life disaster may seem to contradict the necessity and validity of principles (I) through (10) for society’s production and distribution of goods in short supply, these facts only appear to conflict with the market’s production of the social optimum, and can always be explained and corrected by the more rigorous understanding and implementation of market principles;
- Individuals or arguments which doubt or criticize: i. the supremacy of the market system, or ii. the inherent efficiency of its production and distribution of goods, or iii. the freedom of its agents are hostile to human freedom;
- Any and all societies, parties or governments which seek to live by any alternative or opposed order of economic organization are, to the extent of their opposition, enemies of liberty to be corrected by all means available from financial embargo to armed invasion.
There are of course many variations of conformity to this regulating catechism of value-set – from reflex denunciation of deviation as “nonsense” or “subversion” to silent acquiescence. A generic question, however, tests the hold of these principles as an unexamined moral absolutism. To what extent can we identify any market theorist, advocate or politician in office who does not implicitly or outspokenly conform to all of these principles, or, more precisely, who repudiates any by the maxim of his/her action or statement? Exceptions release thought from the closed box.
IX. The Justification by Individual Freedom
A perplexity arises. The primary justification of global market rule is “the freedom of the individual.” The individual is said to be free because the “consumer is sovereign,” and the “investor is free of government interference.” Yet what, exactly, is the choice range of the rationally self-maximizing market agent. Let us again deploy the method of transcendental deduction to expose the regulating premises of market theory, some of which are stated and others presupposed. I will be concise. All agents seek only to maximize their own preferences (“rationality”). Each’s preference-object is consistent or fixed (“consistency”). No standard of justice or right external to the market is or can be appealed to within the neo-classical framework of decision. Each market agent’s position is preordained independently of moral deserving (“original endowment”). All choices and outcomes are confined to known money-sum equivalents (“comparability”). The preference order of payoffs or losses is prescribed in advance (“perfect knowledge”). No concern for the market competitor’s interests can, by constraints of the calculus, influence a decision unless by monetary impact on one’s own. No outcome is related to any relationship or bond of life beyond market transactions. No payoff received by market agents requires any contribution to the production of any life-good. Deviation from any of the above by regulating principle is ruled out a priori.
When we disinter the presuppositions of the market’s structure of individual choice, the question arises: What room for individual autonomy, or concern for individuated life expression is in truth allowed here? What is the meaning of the free individual which is asserted? While assuming “individual freedom” is certain in the market, the model of the market in principle rules it out by each of its regulating terms. individuals in fact disappear, and a system of aggregation mechanisms takes their place. This is true both methodologically and substantively. While “responsible individuals” are pervasively declared as the freely exchanging agents of the market’s covert moral world, corporate “persons,” in fact, dominate the globalising market which is assumed to liberate individuals. These actual market agents are under law distinguished precisely by their individual non-responsibility for harms to others (the doctrine of “externalities”), and by their stockholders’ immunity from personal responsibility for corporate malfeasances, crimes or debts (the law of”limited liability”).
What was once the “free market” of Smithean individuals becomes in these ways the opposite today. Yet none of this radical restructuring of market agency is represented in neo-classical models, within which the word “corporate” does not appear. However much the market itself reverses in the nature of its agents, however oligopolist the control of supply and demand becomes in factual contradiction to the model’s assumptions, neo-classical axioms continue to assume the individual market agent just as before. Accordingly, the alleged common welfare is achieved the same way as before – by the invisible hand regulating individual competition in the market in which, it is assumed, none influences supply or demand, and the state is neutral among their interests of size and wealth. Hence the market’s allocation of resources and distribution of goods necessarily achieves the happy outcome of the social optimum – as the “Fundamental Theorems of Welfare Economics” now axiomatise this benevolent structure. This necessary causal sequence was, in fact, never true. Yet, more internally contradictory, the very properties of the market first annunciated by Adam Smith and encoded in market models of perfect knowledge and competition upon which the alleged social optimum depends are, in fact, systematically violated by the actual global market system.28
Deep questions thus arise as to the meaning of “the free market” when none of the conditions of freedom its models assume exists in the world. More precisely, the free market is not free:
- when oligopolist corporations, not natural persons, are the owners;
- when their determination of supply and demand is not ruled out, but is systemic and increasing;
- when consumer desires are not autonomous or need-based, but are constructed by the operant conditioning of transnational corporate conglomerates;
- when control of the means of exchange is not neutral or by savings, but by unregulated money creation by private bank leveraging and control of the economy’s credit;
- when the producers are not owners, but only instrumental factors in the master story sequence of turning money demand into more money demand for money investors;
- when exchanges are not negotiated by the transacting agents, but are prescribed from the central command posts of corporate head-offices with interlocked directors;
- when regulation and spending by public authority are not impartial or for required market infrastructure, but are for subsidizing, licensing and advantaging the most dominant corporations at home and abroad;
- when most of the volume of global market transactions are not for the purchase or production of any life good for human individuals or societies, but for private corporate and syndicate financial leveraging without productive function.29
Where does “the free market” in fact exist that is alleged to produce the common good?
X. The Unfalsifiability of the Market Theology’s Principles of Rule
A religion or theology is not in itself a bad thing. If its values are protective and enabling of human and environmental life, and believed in as ultimate ties of commitment, then its source of inspiration, its God, can be as good as its believers realise these values in the world. But what distinguishes a fanatic theology from a life-affirming religion is that the fanatic doctrine postulates an external and absolutist rule that is assumed to be infallible and closed with harsh punishments enforcing obedience to its fixed prescriptions.
In the previous section, I defined the command principles of normative syntax underlying this religio-moral system from which, it is supposed, “the public interest” or “the social optimum” follows. Together these presuppositions of orthodox market theory and practice are the moral stays of the market’s One Universal Form – always “the market,” never competing possibilities. As such, the Market is a transcendental universal in terms of which all existing particular markets must undergo “reforms” to conform to it “free of distortions” (e.g., by prescribed elimination of social preventions of capital flight or food security). Consider a defining example. The International Monetary Fund enforces “system stability” by 111 “conditionalities” which are prescribed as a monolithically uniform iron bed to achieve the rectification of “market distortions.” These Procrustean prescriptions are the engineering counterpart of the bleeding remedy to remove impure elements from the body’s flows, and frequently dismantle the existing life economy and the society’s ability to reproduce its own people.30
“The market punishes hard all those who have not got the fundamentals right.” Perceived as the structure of reality to which all societies everywhere must conform to survive, the master code of market “laws” is known in advance to be necessary and desirable for all peoples and cultures without exception. It is for this reason that society’s moral and material ruin has been assumed certain by orthodox economists since David Ricardo if welfare assistance to workers disemployed by capitalism defies the “market’s laws of supply and demand.” It is a fate as universal and certain, holds Ricardo with no evident dissent, as “the law of gravitation.”31
Neo-classical orthodoxy agrees. Yet what is ignored is that this socially constructed order of rule is presupposed as not only physically necessary as a natural law is, but morally infallible as well. Unlike laws of physics, its regulating order is held as good as well as necessary – serendipitously promoting efficiency of resource allocation, the wealth of nations, the public interest and – in more recent revelations– democracy and human rights too. Whatever the mass misery in fact follows from market prescriptions, its laws are assumed to confer the most benevolent outcomes possible by its natural order. “Poverty reduction” is now also promised as certain from more “market reforms,” even as people become, in truth, poorer and more life insecure from radical market restructurings of economies.32
Such presupposition of the omniscient beneficence of the market God is idolatrous theology. Moral absolutism cohabits with positivist science in the same claims with no notice of the confusion. God-like commandments operate in a language of cool detachment beneath consciousness of them. Market perception and understanding throughout is organized a priori by an absolutist moral grammar which regulates judgement independent of evidence. This is why neo-classical theory never interrogates, disconfirms or even tests its assumptions of the market’s universal promotion of the common good. This is why only “efficiency,” “productivity,” and “development” can be discerned in “self-regulating market competition” whatever may, in reality, occur. All of these beneficent outcomes are assumed to be necessitated in accordance with what is not recognised – a market deist meta-narrative which is supposed as axiomatic from Adam Smith through the Primary Theorems of Welfare Economics. In the final stage of the doctrine, more salvational outcomes join this ruling narrative as the inevitable denouement of the market’s transcendental plot. A this-worldly transfiguration of society everywhere into a promised land of “wealth, freedom and democracy” is known to be certain before it happens, just as the medieval morality play always culminates in the triumph of God’s Good over Evil by adherence to the One True Faith.
What principle of neo-classical theory rules out or disconfirms this inner logic of its theory? There is none. If there is no principle of the doctrine that provides for possibility of factual falsification of the defining axioms and theorems by whose operation the “social optimum” is necessarily achieved, then we confront an a priori system promising the best of all possible worlds which rules out all counter-evidence to it. Once adopted as an a priori frame of value-set and decision, inscribed in equations all testifying to the truth of the happy-ending plot, the market’s meta-narrative is assumed and prescribed as given as holy writ once was – only in the guise of mathematical science. If the promised land of harmonious “social optimum” never arriives, this is only because the market’s ideal laws have been flouted or disobeyed. More “necessary sacrifices” are required to reach the promised land, with IMF formulae, the same for all cases, minted in scores by neo-classical economists to ensure “freedom from market distortions.” Whatever depletion or despoliation of social and environmental life conditions then occurs is ruled out of view as an “externality ,” or justified as a “price which must be paid.” In this way, the ruling paradigm is never called into question. It is true a priori.
Not only are rewards and punishments assumed as law-like for whole societies in accordance with whether they obey or disobey “market laws” and “what the market decides,” but market growth is assumed to be the sole basis for anything of value for humanity to occur at all. Thus the President of Harvard University and former Secretary of the U.S. Treasury and World Bank Chief Economist, Larry Summers, has publicly asserted in perfect expression of this market idolatry “the essential truth” that all “basic value” – including, specifically, “literacy” – is linked to market growth.“33 His words deserve pause. Even if a non-market order ranks, in fact, demonstrably higher than all its market neighbours in nutrition, literacy, healthcare, infant mortality, longevity and other life indices, it is known beforehand that it cannot develop anything of human value. It follows further from the market’s moral syntax that a competing economic alternative is not to be tolerated, and must undergo “market reforms” to become free and blessed. The market God is, above all, a jealous God. No other economic idea may be put before it.
Beneath observation, the market God comes to surpass the classical predicates of the traditional Supreme Ruler. For it too is characterised by omniscience, omnipotence and benevolence, but rules the world directly without choice of wicked alternative. All is predestined. The supreme rule is discerned by the mathematical formulae of neo-classical science. “Optimums” of objective outcomes replace faith in God’s love. “Rationality” of systematic self-seeking substitutes for love of neighbour – with the invisible hand infallibly transforming the chaos of contending selfishnesses into the public welfare. In this way, the market’s best of all possible worlds replaces the conditionality of faith in an otherworldly divine grace, while the certitude of mathematical notations rules out all inhibiting ambiguity or doubt. Throughout, the incanted terminology of engineering mechanics replaces traditional prayers and hymns, economists replace priests as the knowers of the mysteries of the divine design, and symbolic equations replace Latin as privileged portals to the eternal truths. To compel belief, market miracles and sacrifices continuously demonstrate the consequences of market virtue and sin.
Yet an underlying problem is posed. There has been an unmarked tension between scientific method and deist design since the founding of the doctrine. Scientific method requires, by definition, that its general claims are confirmable or disconfirmable by empirical evidence, by their falsifiability as well as their demonstration by empirical evidence. Yet the axioms of market theory are not open to disconfirmation or falsification. Even less is their necessitation of the public interest. Not only is there no impartial test of the market’s success or failure as a form of economic organization, but no alternative to it of a competing form of economic organization is permitted with which to compare performance. With no factual state of the world recognised which can show any regulating market principle to be mistaken, we are confronted by a dogma that cannot discern its vicious circle. The closed circle rules out whatever facts could expose it. Thus when whole societies and continental regions suffer “meltdown” after programs of “market restructuring,” the connection between antecedent changes by the prescribed market solutions and the systemically disastrous life effects following their implementation is blinkered out. To raise the issue of “the colossally failed market experiment” in the former superpower USSR, for example, has been as unspeakable in public discourse since the early 1990s as a blasphemy against God in a past era. Most strikingly, relations between cause and effect are here suspended. Between market prescriptions and systemically destructive effects for societies falls a curtain of disconnection. Bad economic outcomes cannot be caused by market prescriptions because only the optimum can, in principle, follow from them. That is why other causes for “economic meltdowns” must be found, even though such ad hoc determinants of the economic catastrophes, like “crony capitalism,” are not defined, not compared across economies, nor factually related to the economic disasters they are claimed to explain.
The more that market prescriptions fail – and where have they succeeded in 20 years of radical global market reforms?34 – the stricter market reforms are believed necessary. Beneath the chaos and the distress of victims, there is one constant – the assumption that the market’s design must necessarily achieve the best of all possible worlds. It is here that we see the logic of infallibility most clearly at work. To ask, as we do of every other doctrine claiming scientific validity, what evidence might show that any defining market principle might be false, is not a question that is ever posed by its adherents – the tell-tale evidence of an unscientific dogma. Formation of any alternative economic order rouses the furies of destabilisation and war. As we follow this structure of meaning to its ultimate core, we eventually arrive at the doorway of an unsuspected general truth. Beneath any notice, the logic of an unintended world order is stitched into place by the regulating market group-mind.
XI. The Global Market Theocracy
Theocracy designates a form of governance in which an infallible authority transcending human agency is represented as the ultimate regulator of daily life, with all understanding, administration and enforcement of society’s rules and laws tolerated solely by compliance with the higher ruler’s prescriptions. A theocracy becomes totalitarian in proportion to the extent or totality of its rules over every domain of lived existence.
If we put “the market” or “the global market” into the logical spaces of these criteria! definitions, we discover an unexpected fit. The market is prescribed everywhere as the higher regulator of daily life, with its “invisible hand” known to ensure the common interest in all matters. No alternative or competing order is tolerated. No democratic legislation is permitted to replace, modify or override the prescribed order. Individuals who question the rule of the market are heretics. The recent past of more successful alternatives is not spoken. If the state was effectively related to other functions than serving the global market order– for example, ensuring the security of citizens’ lives and their collective self-determination independent of foreign corporate rule – the memory itself is abolished from public discussion. A U.S.-led world crusade for a global market order “free of government intervention” is preached from all pulpits, and moves from one field of social occupation to the next with the necessity of final solution.35
The globally declared meaning of “the new world order” has been quintessentially millennarian. Since the public interest is known in advance to be alone and best fulfilled by market laws, all government must be scaled back until it efficiently serves the global market and, thus, maximum productivity and trade, world prosperity, and the freedom of all peoples on earth.
Is there any recognised limit to this system’s reach for total world rule? We might test the truth of the totalitarian theocracy we face by a set of questions. ls there any condition placed in market theory on the global corporate market’s unconditional right to enter, appropriate and control the means of other societies’ existence? What world system has ever claimed a greater totality of life rule? What past religious compulsion to force all peoples to conform has more systematically attacked other societies’ deviation from the one right way to live? What God has ever been worshipped more lavishly in its powers to perform wonders, to bring societies to their knees, or to impose punishments on the undeserving? What totalitarian absolutism has demanded more sacrifices, imposed its yoke on more peoples, or stirred a more militant crusade of rule over the world’s peoples by armed assertion of supremacy? What non-human ruler’s signs have been more faithfully studied, recorded, and divined round the clock? What Supreme Power has ever so violated the natural order, left more monuments and idols in its wake, destroyed more communities of unbelief by its armies, or been so unaccountable to human question or continuous disaster?
If these questions seem to exaggerate the case, then consider. Where is the line drawn against the market God’s ordering of life and death itself across human cultures and the natural world? Where is there any instituted limit to the totality and validity of its rule? What catastrophe could prove its economic ordering mistaken?
I am indebted to the participants in the Ninth International Conference on Studies in Economic Ethics and Philosophy for their valuable responses to an earlier version of this paper, in particular to Bernard Hodgson, the organizer, Dennis Badeen, David Holdsworth, Edward Nell, Stephen Regocsei, Lee and Timothy Tavis, Mark Neufield, W. A. McMullen, Alex Michalos and Trudy Govier.
B. Hodgson (ed.), The Invisible Hand and the Common Good
© Springer-Verlag Berlin Heidelberg 2004
- KARL MARX: Writings of the Young Marx on Philosophy and Society eds. L. Easton and K. W. Guddat, New York (Doubleday) 1967) p. 151.
- My study of “market theology” began in the early l980’s with the emergence of a bellicose market fundamentalism adopted by the Thatcher and Reagan administrations See, for example, “The Market As God” in JOHN MCMURTRY: Unequal Freedoms: The Global Market As An Ethical System, Toronto and Westport Ct., (Garamond and Kumarian Press) 1998, pp. 57-92. This analysis moves to the doctrine’s system-deciding foundations in economic theory itself.
- The foundationally regulating principle that the commercial self-seeking of competing individuals in the micro produces in the macro what is in “the public interest” resembles Mandeville’s Fable of the Bees, only without Mandeville’s ironic distance of entymological model. The counter-intuitive inference of the common good to private selfishness derives its plausibility from characteristics of select cases which are falsely generalised into a generic cause-effect relationship of universal necessity.
- As Bernard Hodgson points out in his paper in this volume, David Gauthier deems that “‘coincidence of utility maximization and optimization in [the] free interaction [of the market] removes both need and rationale for the constraints that morality provides … ” (DAVID GAUTHIER: Morals By Agreement Oxford (Oxford University Press) 1986, p. 93.
- ADAM SMITH: An Inquiry into the Nature and Understanding of the Wealth of nation, New York (P.F. Collior and Son) 1909, p. 93.
- FRANK HAHN, “Reflections on the Invisible Hand”, Royal Bank Review. No. 144 (April 1982).
- KENNETH ARROW: Collected Papers of Kenneth Arrow: General Equilibrium Oxford (Blackwell) I 983, p. 151.
- ARROW, K.: Collected Papers, pp. 127, 152.
- All quotations and attributions in the next two paragraphs are cited from FRANK HAHN, “Reflections on the Invisible Hand”, Royal Bank Review. No. 144 (April 1982), pp. 1-21, especially pages 9-14.
- FRANK HAHN, “Reflections on the Invisible Hand”, Royal Bank Review. No. 144 (April 1982), p. 9.
- “Healthy appetites” for more market commodities has resulted, in fact, in exponentially increased volumes of global market junk foods and beverages with the consequence of “over a billion people obese” by 2001, and over half of the children of Hahn’s own society unhealthily overweight, according to University of London Imperial College researchers, (TIM RADFORD: “Scientists Reveal Appetite Hormone”, Guardian Weekly (August 15-21, p. 9). For general empirical demonstration that there is no evidence of increase in objective or felt well-being from increased commodity consumption or market growth, see ROBERT LANE: The Loss of Happiness in Market Societies, New Haven (Yale University Press) 2000.
- ADAM SMITH: An Inquiry into the Nature and Understanding of the Wealth of Nations, Book JV, Chapter 11, New York (P.F. Collier and Son) 1909, pp. 351- 52.
- Five hundred thousand people die each year in the European Union from smoking-related diseases, but the disease and mortality figures are graver in the developing world to which most cigarettes are exported. International epidemiologist Richard Peto of Oxford University has estimated that smoking is responsible for 3,000,000 deaths per year world wide, which he predicts will likely reach 10,000,000 by 2025. In China alone, Peto estimates that 50,000,000 people will die from smoking-induced diseases at present statistical rates. Former U.S. Surgeon-General, C. Everett Koop, observes: “I think one of the most shameful things my country ever did was to export disease, disability and death by selling our cigarettes to the world.” Clayton Yeutter, the U.S. Trade Representative, in striking contrast, thinks within the parametric of the neo-classical model, and so derives from its principles an opposite conclusion which bypasses life co-ordinates: “I just saw the figures on tobacco exports a few days ago and, my, have they turned out to be a marvellous success story.” (Figures and quotations are cited in GLENN FRANKEL: “U.S. Aided Tobacco Firms in Asia Conquest”, from The Washington Post in the Guardian Weekly (December I, 1996) p.15.
- Ronald Coase’s just-so story of adjacent farmers’ property rights negotiated to resolve their interpersonal problem of costs (R. COASE: “The Problem of Social Costs”, Journal of Law and Economics 3 ( I 960) pp. 1-44). for which in significant part he was awarded the Nobel Prize in Economics, is typical of neo-classical orthodoxy’s two-step reductionism of: (I) methodological stripping of social problems to dyadic market transactions, and (2) meta-substitution of an idealised story for the complexities of reality. These are the instituted ways in which economic thinking is structured for systematic fact avoidance, and have become generalised to even United Nations’ prescriptions for resolving planetary ecosystem crises (e.g., INGE SAUL et al (Eds), Global Public Goods: International Cooperation in the 21st Century, New York (United Nations Development Programme (UNDP) and Oxford University Press) 2000, pp. 491-93) where “Coase’s Theorem” is presupposed as a structure of reality.
- For example, Eric Schaeffer, head of the U.S. Environmental Protection Agency until his resignation in February of 2002, reports in the Washington Monthly of August, 2002 that the “pro-free market” Bush White House and the Energy Department “undermined any attempt to hold corporations accountable for their effluent – [and] collaborated with corporate lobbyists to enlarge loopholes in the country’s environmental laws” by JULIAN BORGER, “Washington Diary”, Guardian Weekly, (August 22-28, 2002), p. 6.
- FRIEDRICH A. HAYEK: The Fatal Conceit, New York (Routledge) 1988.
- F.A. HAYEK:The Fatal Conceit, pp. 6-7, 74, 130-31.
- F.A. HAYEK: The Fatal Conceit, p. 74. It is worth noting that Hayek’s original project was to achieve an hegemony of the market mind-set after the Depression and World War II had engendered interventions by public authority in the market to serve social goals linked to life needs. Hayek wrote (emphasis added): “Our effort differs from any political task in that it must be a long-term effort concerned not so much with what would be immediately practicable, but with beliefs which must gain ascendance.” See citation by BERNARD CASSEN: “Europe: Market Not Community”, Le Monde Diplomatique, April 2002).
- Emile Durkheim first proposed the hypothesis that religion could be understood as social order deifying itself in The Elementary Forms of the Religious Life, London: (Allen and Unwin) 1915, but he revealingly confined his analysis to pre-industrial societies.
- An official publication of Canada’s Department of Foreign Affairs and International Trade, expresses the pattern in microcosm. “The U.S. Military’s Space and Naval Warfare Systems Command sends a clear message to all small telecom and information technology enterprises: it wants to do business with them”, CanadExport, (July 15, 2002) p. I. “Weapons of mass destruction” are thus assumed to be good by the measure of the market parametric, but cause for war if not.
- This process of global prescription and enforcement of an “inevitable” corporate market regime, “‘the global free market”, is excavated and analysed in Value Wars: The Global Market versus the Life Economy (London: Pluto Press, 2002).
- The totem and taboos of “‘primitive” societies, in contrast, retained a strict division between “the profane” and “the sacred” which, in the Global Market is overridden. The market is all.
- Marx most famously uses the phrase “independent of men’s wills” in his oft reprinted 1859 Preface to A Contribution to the Critique of Political Economy to describe ..the relations of social production into which men enter” in their material economic organisation.
- Bernard Hodgson, Economics As A Moral Science, Heidelberg (Springer-Verlag) 2001. Hodgson’s analysis has been of great assistance to this paper’s argument.
- Frank Hahn thus acknowledges of one of neo-classical economics’ “very impressive” analyses that “it is impossible to claim that it applies to actual economies.” “Reflections on the Invisible Hand”, Ibid, See FRANK HAHN, “Reflections on the Invisible Hand”, Royal Bank Review. No. 144 (April 1982) p. 10.
- As the Report of the Commission on Graduate Education states the general problem: “We might teach the language of mathematics, but not the logic of mathematics, and end up with the grammar of the discipline rather than its substance … [Thus] mathematical economics … leads to the elimination from the field of study of the very questions which the real world of economic life demands that we, as a profession, ask.” See citation by PETER J. BOETHKE, “What ls Wrong With Neoclassical Economics (And What Is Still Wrong With Austrain Economics)?” in: FRED FOLDVARY (Ed.) Beyond Neo-Classical Economics, New York (Edgar Elgar Publishing) 1996.
- PAUL SAMUELSON, WILLIAM N0RDH0USE: ‘”Thoughts On the Forty-Sixth Birthday Of A Classic Economics Textbook”, ECONOMICS, New York (McGraw-Hill) 2002, p. xxviii. I am indebted to Stephen Regoczei for his brilliant exposure of this point.
- I explain the absolutist prescriptivism of such international trade and investment fiat apparatuses as the NAFTA and the WTO in Value Wars. London (Pluto Press) 2002, pp. 111-20, 204-19.
- Systematic documentation of these transformations of the classical market system are provided in JOHN MCMURTRY: The Cancer Stage of Capitalism London (Pluto Press) 1999, pp. 41-5, and Value Wars. pp. 90-6.
- Joseph Stiglitz, former Chief Economist of the World Bank, describes the standard pattern of IMF reform of economies as a five-step prescription: (I) “briberization-privatization” by which corrupt officials (eg., in the former USSR and Brazil) privatise vast resources like oil, electricity, industrial assets, and water for a 10% commission on multi-billion sales; (2) “capital-market liberalization” or the “hot money cycle” in which foreign bank-backed cash speculates in currency, real estate and portfolio funds, drains national reserves in hours or days, and host governments are then required by the IMF to raise interest rates to 30-80% to tempt back the financial speculators who have hijacked the country’s capital funds; (3) “market-based pricing” or steeply raising prices on basic life means like food, cooking oil and water, to “squeeze the blood out of’ the poor countries (e.g., Indonesia, Ecuador and Bolivia) until “social unrest is predictably sparked;” ( 4) the anticipated “IMF riots” occur to justify the military solution in which Washington is most internationally invested, while simultaneously the accompanying flights of capital and public bankrupting allow foreign corporations to pick off the remaining assets “such as mining concessions or ports” at “fire-sale prices;” (5) “the poverty reduction strategy by Free Trade” or forced mass imports and “tributes” to foreign corporations coerced by “financial blockade” until domestic markets are open to floods of foreign U.S. imports and privatizations for foreign firms. See interview with JOSEPH STIGLITZ: “The Globalizer Who Came In From the Cold”, The Observe, (October JO, 200 I).
- Ricardo says specifically: “The principle of gravitation is not more certain than the tendency of such laws to change wealth and vigour into misery and weakness.” D. RICARDO: The Principles of Political Economy and Taxation, London (J.M. Dent and Co.), 1965, p.63.
- No global statistic shows reduction of poverty numbers since 1980. Even with a monetary, rather than a life-indicator metric, there continue to be over 150,000,000 people living on less than $1 dollar a day in the world (over 1.2 billion in 2000) than before global “market reforms” were instituted (Overview, United Nations Human Development Report 2000, New York (Oxford University Press) 2000, p. 6.
- Interview of LAWRENCE SUMMERS by JOHN ALLEMANG: “An Intellectual With the Gloves Off,” Globe and Mail (May 24, 2003) p. D I. Notice the robust epithet in titling the interview with Summers in which he reduces all “basic value” to more commodities sold.
- Since the collapse of the “market miracles” of the Asian Tigers and Brazil, mainland China’s economy has been identified as evidence of global market success, exemplifying the problem of unfalsifiable general claims of market success. China’s capital flows are directed by the Central Committee of the Communist Party, not a market condition that has been subsumed or accepted by any neo-classical model.
- The famous words of former U.S. Secretary of State, John Foster Dulles, are worth recalling here: “There are two ways of conquering a foreign nation. One is to gain control of its people by force of arms. The other is gain control of its economy by financial means.”
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