Personal Details:-
Name: Drashti Joshi
Batch: M.A. Sem.3 (2022-2024)
Enrollment N/o.: 4069206420220016
Roll N/o.: 05
E-mail Address: drashtijoshi582@gmail.com
Assignment Details:-
Topic:- Market Fundamentalist
Paper: 203
Subject code & Paper N/o.: 22408
Paper Name:- The Postcolonial Literature
Submitted to: Smt. S.B. Gardi Department of English M.K.B.U.
Date of submission: 27 November 2023
Points to Ponder:-
Introduction
What is Market Fundamentalist
The myths of Market Fundamentalism
Example of Market Fundamentalist
Conclusion
Abstract:
This exploration delves into the multifaceted landscape of market fundamentalism, a concept synonymous with fervent advocacy for free-market principles and limited government intervention. The paper defines market fundamentalism, tracing its historical origins and elucidating its core tenets, including the veneration of free markets, minimal government interference, and an emphasis on individualism. Advocates assert that this approach fosters economic efficiency and individual freedoms. However, the study critically examines the drawbacks, exploring instances of social and economic inequality, environmental degradation, and market instability resulting from unregulated markets. The discussion navigates the delicate balance between the advantages and challenges posed by market fundamentalism, considering pragmatic approaches that acknowledge both its merits and limitations. Global perspectives are incorporated, examining how various countries interpret and implement market fundamentalism. The paper also explores alternative economic models, utilizing case studies to illustrate the real-world impact of market fundamentalism on sectors such as healthcare, education, and the environment. Finally, the study contemplates the evolution of economic thought on this subject, considering potential adaptations in response to emerging challenges and the future trajectory of market fundamentalism in the dynamic global economic landscape.
Keywords:- Market fundamentalism, critiques, global perspectives, alternatives.
Introduction:-
“There is no free market for the energy industry.”
-Rick Perry, Secretary of Energy under former President Trump.
Market fundamentalism (also known as free market fundamentalism) is a term applied to strong belief in the ability of regulated laissez-faire or free-market capitalist policies to solve most economic and social problems. The single word “Fundamentalism” means a religious movement characterized by a strict belief in the literal interpretation of religious texts, especially within American Protestantism and Islam, and it is originated from the American Protestant fundamentalism movement which arose in the late 19th and early 20th centuries in reaction to modernism, while the term “Market Fundamentalism” was coined by Nobel Prize winner and former chief economist of the World Bank itself –Joseph Stiglitz. (“Market Fundamentalism | Comparative Studies 1100: Introduction to the Humanities, Spring 2020”)
Markets do not reward what is most valuable and essential. They pander to where the money is.
A changing world order, a shrinking U.S. empire, migrations and related demographic shifts, and major economic crashes have all enhanced religious fundamentalisms around the world. Beyond religions, other ideological fundamentalisms likewise provide widely welcomed reassurances. One of the latter—market fundamentalism—invites and deserves criticism as a major obstacle to navigating this time of rapid social change. Market fundamentalism attributes to that particular social institution a level of perfection and “optimality” quite parallel to what fundamentalist religions attribute to prophets and divinities. (Wolff and Singh)
While markets serve as a prominent method of resource allocation, they are just one of many social mechanisms for rationing. The fundamental issue arises when faced with scarcity relative to demand: determining who obtains the resource and who goes without. The market operates as an institutional means of rationing scarce items. In this framework, individuals express their desire for the resource by bidding up its price. Consequently, those unable or unwilling to meet the higher price exit the competition. As higher prices eliminate the excess demand over supply, scarcity diminishes, obviating the need for further bidding. Those with the capacity and willingness to pay the elevated prices are then satisfied, receiving distributions from the available supply.
The most obvious recent government intervention to redistribute income upward has been the bailout of the financial industry. Faced with complete collapse in the fall of 2008, Goldman Sachs, Citigroup, Morgan Stanley and the rest did not yell that they wanted the government to leave them alone. No, these financial behemoths insisted that the government lend them money at below-market interest rates and guarantee their assets. Firms like Goldman Sachs even insisted that the government make good on the debts of bankrupt business partners, such as AIG. (Baker)
What is a Market Fundamentalist?:-
Market fundamentalism is a term often used pejoratively to describe a belief system that strongly advocates for the principles of free-market capitalism and minimal government intervention in economic affairs. Those labelled as market fundamentalists typically adhere to a set of economic ideologies centred around the conviction that free markets, driven by the forces of supply and demand, are the most efficient and effective means of organising and allocating resources in an economy.
Key characteristics associated with market fundamentalism include:
1. Free Markets:-
Advocates of market fundamentalism emphasise the importance of allowing markets to operate with minimal interference. They believe that voluntary exchanges between buyers and sellers, without excessive regulation, lead to optimal outcomes.
2. Limited Government Intervention:-
Market fundamentalists argue for reducing government involvement in economic activities, asserting that government intervention can distort market mechanisms and hinder economic efficiency.
3. Individualism:-
The ideology often places a strong emphasis on individual freedoms and choices. Market fundamentalists believe that individuals acting in their self-interest contribute to overall economic prosperity.
4. Laissez-Faire Capitalism:-
The concept aligns closely with laissez-faire capitalism, advocating for an economic system where the government's role is restricted to maintaining law and order, enforcing contracts, and protecting property rights.
5. Distrust of Government:-
There is often a deep-seated scepticism of government intervention among market fundamentalists, as they believe that such interventions can lead to unintended consequences.
Critics of market fundamentalism argue that it oversimplifies the complexities of real-world economic systems and can lead to social and economic inequalities. They highlight instances where unregulated markets may fail to address issues such as environmental concerns, worker exploitation, and financial market instability.
It's important to note that the term "market fundamentalism" is frequently used in a critical or derogatory manner, and those labelled as such may not necessarily identify with the term themselves. It has emerged in the context of debates about the appropriate role of government in economic affairs.
The myths of Market Fundamentalism include:-
The market is the only source of innovation and it must be left alone if we want to accelerate technological change.
Governments will always spend money less productively than private citizens; this is why tax cuts are almost always a good idea.
Regulation of business is wasteful, unproductive and usually unnecessary.
Financial markets thrive when regulation is kept to a minimum.
Private firms will always produce a good or a service more efficiently than the government.
It is wrong to regulate wages or executive compensation because markets always get prices right.
Government assistance always ends up hurting the people it is supposed to help.
Market Fundamentalism has dominated public policy debates in the United States since the 1980’s, when financial markets started to become globalised and the US started to run a current account deficit, serving to justify huge Federal tax cuts, dramatic reductions in government regulatory activity, and continued efforts to downsize the government’s civilian programs. While Republicans and conservatives have embraced Market Fundamentalist ideas, many Democrats and liberals have also accepted much of this mistaken belief system.
The concept of the "Myth of Market Fundamentalism" challenges the unwavering faith in unregulated free markets and minimal government intervention. Critics argue that characterising this belief as a "fundamentalism" can be misleading, as it implies an almost religious devotion to the infallibility of market forces. Detractors of this economic ideology highlight several key points of contention. They point out instances where markets may fail to efficiently allocate resources, citing externalities, imperfect information, and public goods as examples. Social and economic inequality is another focal point, with critics contending that unchecked market fundamentalism may exacerbate disparities in wealth and opportunities. Environmental concerns, the neglect of social safety nets, and the potential for financial market instability are also raised as issues that an uncritical adherence to market fundamentalism might overlook. In essence, the critique of the Myth of Market Fundamentalism underscores the need for a more nuanced and balanced approach that acknowledges the complexities of real-world economic challenges and advocates for targeted government interventions where necessary.
Example of Market Fundamentalist:-
An example of a figure often associated with market fundamentalist beliefs is economist and Nobel laureate Milton Friedman. Friedman was a prominent advocate for free-market principles and limited government intervention in the economy. His views, often aligned with classical liberal and neoliberal economic ideologies, emphasised the efficiency of free markets in allocating resources and promoting individual freedom.
Milton Friedman's notable contributions include:
1. Monetarism:
Friedman was a key proponent of monetarism, which advocates for the central bank controlling the money supply to achieve stable economic growth. He believed that a steady and predictable increase in the money supply was crucial for preventing inflation and economic instability.
2. Free to Choose:
In his influential book and television series titled "Free to Choose," co-authored with his wife Rose Friedman, he argued for the benefits of limited government intervention, free markets, and individual choice. The work became a cornerstone of the neoliberal movement.
3. School Voucher System:
Friedman advocated for the use of school vouchers as a way to introduce market forces into education. He believed that allowing parents to choose where to send their children to school, including private schools, would improve the overall quality of education through competition.
4. Negative Income Tax:
Friedman proposed the idea of a negative income tax as a way to address poverty. The negative income tax would provide financial assistance to those with incomes below a certain level, offering a market-oriented approach to social welfare.
While Milton Friedman's ideas have had a significant impact on economic thought and policy, he is also a subject of criticism. Critics argue that his market fundamentalist approach oversimplifies the complexities of real-world economic systems and may not adequately address issues such as income inequality, environmental concerns, and social justice. Nevertheless, Friedman's influence persists, and he remains a notable example of a figure associated with market fundamentalist beliefs.
Conclusion:-
Market fundamentalism perpetuates a mistake in categories, conflating capitalism, which is an economic system, with democracy, which is a political system. We think that the properly framed choice is not capitalism versus tyranny; it is democracy versus tyranny, and well-regulated capitalism versus poorly regulated capitalism. Whether its advocates were cynical or sincere, market fundamentalism has hobbled our response to a host of problems that face us today, threatening our wellbeing and even the prosperity that markets are designed to deliver. The rhetoric of the magic of the marketplace made meaningful alternatives disappear. (Tong and Tamagawa)
References:-
Baker, Dean. “Ending the Myth of 'Market Fundamentalism' - Center for Economic and Policy Research.” Center for Economic and Policy Research -, 6 April 2010,
https://cepr.net/ending-myth-of-market-fundamentalism/. Accessed 24 November 2023.
“Market Fundamentalism | Comparative Studies 1100: Introduction to the Humanities, Spring 2020.” U.OSU, 6 April 2020, https://u.osu.edu/introhumanitiesonline/tag/market-fundamentalism/. Accessed 24 November 2023.
Tong, Scott, and Emiko Tamagawa. “'The Big Myth' explores the belief that free markets are a fundamental American right.” WBUR, 28 February 2023, https://www.wbur.org/hereandnow/2023/02/28/big-myth-book-business. Accessed 24 November 2023.
Wolff, Richard D., and Pragya Singh. “‘Market Fundamentalism’ is an Obstacle to Social Progress.” NewsClick, 19 May 2023, https://www.newsclick.in/market-fundamentalism-obstacle-social-progress. Accessed 24 November 2023.
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