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Three Reasons Why Market Liberalism is a Religion

Like all fundamentalist faiths, Chicago School economics is, for its true believers, a closed loop. The starting premise is that the free market is a perfect scientific system, one in which individuals, acting on their own self-interested desires, create the maximum benefits for all. It follows ineluctably that if something is wrong within a free market economy – high inflation or soaring unemployment – it has to be because the market is not truly free. There must be some interference, some distortion in the system. The Chicago solution is always the same: a stricter and more complete application of the fundamentals.

Several years ago I read Fr. Sergei Bulgakov’s claim that Marxism is not social science but a kind of religion. Recently I realized his argument could also be applied to the laissez-faire capitalism promoted by “market liberalism” (which is basically libertarianism). Beginning with Bulgakov, here are a few reasons why I think market liberalism is a religious movement.

Market liberalism possesses an eschatology. This was Bulgakov’s argument against Marx. Christians believe in the kingdom of God, and Marx believed in a communist utopia. He said history would move through a series of predictable economic failures until society finally abandoned private property and became communist. Laissez-faire capitalism also an eschatology. Karl Polanyi observed that market liberals claim a self-regulated market will cause some temporary pain, but in the end it will bring prosperity for all. The problem, Polanyi observed, is that human beings will not let themselves be crushed under the wheels of progress. They organize, fight back, and reign in the free market to protect themselves from its consequences. So the capitalist eschaton never arrives, which allows market liberals to keep arguing that we just need to “give the market a chance.” This is faith in an unproven future, not science. (I say more about Karl Polanyi here.)

By Phoebe Wong via Wikimedia Commons

Market liberalism utilizes circular reasoning. Klein hinted at the circular reasoning of market liberalism in the statement above. Faith in the power of the free market is both the founding premise and the conclusion of the argument. This circular reasoning is at work in Milton Friedman’s Capitalism and Freedom. Friedman was the University of Chicago economist who is most responsible for modern arguments against government interference in the market. His thesis is that we need to have a free market if we are going to preserve political freedom; but he defines freedom as the absence of state coercion in the free market. This is called begging the question. He defines freedom in a way that presumes the truth of his thesis. That is fine for faith, but do we really want to base an economy on someone’s beliefs?

By Макаров via Wikimedia Commons

Finally, market liberalism tends to deny evidence. This is perhaps the most obvious and distressing sign that market liberalism is more faith than fact. It is an ideology. Christian fundamentalists today deny evolution, exercising selective reasoning when it comes to the fossil record. Likewise I hear market liberals today deny that deregulation of the market and greater tax breaks for the wealthy are the cause of the economic calamity of 2008, whose effects we still experience today. Instead, they double-down. According to market liberals, the problem was too much bungling regulation of the market. Get out of the way, they say, and let the market do its job.

22 thoughts on “Three Reasons Why Market Liberalism is a Religion”

It seems like you are using the idea of a perfectly pure free market as a straw man in order to attack free markets in general. Pure free markets don’t exist in the real world. However, there’s actually lots of evidence that liberalized markets perform better than heavily centralized or regulated markets. One could point to the history of the 20th century where freer markets succeeded while the economies of socialist countries like the USSR, East Germany, North Korea, and Cuba all failed miserably. Or one could even point to the difference between heavily regulated California, whose economy is sputtering, and a less regulated Texas, whose economy is doing very well. So, free market principles are successful not only in theory, but also in practice. It might require faith to believe in an (imaginary) perfectly free economy, but you can use scientific methods and empirical evidence to see that liberalized economies work. I’d also add that a belief in free markets isn’t incompatible with a strong commitment to social justice, but perhaps that’s a discussion for another time. . .

I do not have time to debate your history, as I am presently watching my kids jump in leaves, but I think debating things that do not actually exist (i.e. pure theories) is tantamount to establishing straw men, particularly when a more or less completely unfettered market (save for Friedman’s three or four things government should do) represents an ideal for which libertarians strive, and toward which they push our policies.

The California v. Texas illustration oversimplifies the issue to the extreme. I will only say that an economy that creates many low paying jobs cannot exactly be said to be thriving. Are you familiar with capability theory? Sen offers some helpful perspective on how not to compare two economies.

I take issue with your claim that belief in free markets is somehow irrational or unscientific because you can’t apply scientific methods or point to empirical data to reach those conclusions. You can. Actual facts are important. So, re: Texas, you should look at the data, because it’s economy is doing very well across the board. (Some actual data here: http://politicalmathblog.com/?p=1590). There aren’t just low wage jobs, but even if there were, low wages are better than no wages. (And re: capability theory, this objection would be much more applicable to comparisons of different _national_ economies, than to different _state_ economies. Comparisons of different US state economic metrics are a used all the time.)

But I don’t believe I said that belief in free markets is unscientific or irrational. I only said its partisans (even rather prominent ones who should know better) engage in circular reasoning when they define freedom in such a way that makes rejection of market liberalism impossible, that it is based in faith in a future that has never arrived, and which the evidence contradicts at major points. (Speaking of logic, pointing to one fallacy does not disprove the entire argument.) That does not mean you are precluded from using certain metrics to craft policies or judge economies. Though I do think, qua capability theory (and Bulgakov) that we should think more deeply about the presuppositions that sometimes skew those metrics or cause us to draw faulty conclusions from them. I do not believe economics is wholly scientific. It is what Bulgakov called a hybrid science because it deals in people. So it requires a fair amount of philosophical and even theological analysis to be properly applied. But that is another argument. As for Texas, I will review the link in the morning. Of course, I think I still have the banking crisis in my corner, so to speak.

If you think you can count the financial crisis as on your side, then you yourself are ignoring facts about it’s causes. I think the link below nicely sums up the way I and other libertarians see this story. You really can’t deny the role that Fed policy, Fannie and Freddie, the CRA, and other governmental forces played in distorting the market (unless you want to sound like a fundamentalist yourself). But, as you note, people – especially partisans – are rarely swayed by evidence. http://myslu.stlawu.edu/~shorwitz/open_letter.htm

I do not deny the role the government played in the crisis. I heartily agree that interest rates were kept too low for too long and that the public-corporate venture of Fannie and Freddie had a lot to do with the collapse. The solution, in my opinion, is not to take government out of the picture. Historically, it is impossible to deny that laissez-faire does anything but produce profound hardship for all but a few members, and there is overwhelming evidence that it requires a powerful central government to repress local, democratic resistance that always manifests whenever the allegedly invisible hand is let loose on the masses. F&F is an excellent example of how the interests of the public and those of corporations – as they are currently defined by law – are antithetic to each other. The artificially low rates of the fed owe a great deal to false belief in market self-regulation and correction (Greenspan himself said he was basically libertarian) and monetarist theory having become an ideology run amuck. Government involvement in the market is impossible. The question is whether it is going to be used to liberate the market at the barrel of a gun, or is going to be subject to the democratic rule of the people involved in it. This goes right back to my point that market liberalism tends to beg the question in the way it defines freedom.

I mean that from first to last Orthodoxy is about the love of God, and love is its own foundation. Science, philosophy, and reason operate within those bounds. For example, I can exercise reason in my relationship with my wife, but I cannot use reason to understand my love for her.

I have reasons for believing in Orthodoxy. I can make arguments to another Christian for certain things we believe or do. But that presumes we agree on certain fundamentals. That is less possible with an atheist. In either case, neither produces faith or can claim responsibility for it. I have very little patience for apologetics because I do not believe people become Christians by losing arguments.

You people are realy nothing more than democrates. I thought that Distributism had to do distributing the means of production among the general populace, rather than being centralized under the control of the state. What I’m hearing is the Democratic Party’s party line. The economic calamity of 2008 was caused by the Federal governments involvement in housing market. Anyway, I’m unliking this site.