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'The Big Myth' explores the belief that free markets are a fundamental American right

"The Big Myth" book cover. (Courtesy of Bloomsbury Publishing)
"The Big Myth" book cover. (Courtesy of Bloomsbury Publishing)

Naomi Oreskes and Erik M. Conway know a provocative subject. Their best-selling 2010 book “Merchants of Doubt” explored how four physicists laid the groundwork for climate change denial by arguing against government regulation and in favor of the free market.

The idea of a pure, unadulterated free market and how it came to be is the story in their new book, “The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market.” The book acknowledges a useful nature of market forces to set prices and reward work. The myth referenced in the title is market fundamentalism, says Oreskes, a science historian at Harvard Univeristy.

“What we’re trying to show in the book is how an ideal of the free market in the singular was put forward by business interests in the United States,” Oreskes says, “as a way to fight back against regulation of the workplace, to fight back against people who are trying to limit child labor and to persuade the American people that government regulation of the marketplace was not in our interest.”

Market fundamentalism plays out in Republican opposition to action on climate change and regulation of drugs like opioids, Oreskes says, as well as tax cuts for the rich and income inequality. The latter come from the idea that letting the rich do business will benefit everyone, but evidence shows that’s not true.

“Not too many people today would stand up in public and say greed is good. But people do continue to say that self-interest is good, that self-interest drives entrepreneurs, it drives people to invent things and be creative,” she says. “And that’s true up to a point. But we also know that self-interest has to be tempered against the common good, and that when we have inadequate regulation of markets and workplaces, people get hurt.”

Naomi Oreskes co-authored “The Big Myth” with Erik M. Conway. (Kayana Szymczak)

Book excerpt: ‘The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market’

By Naomi Oreskes and Erik M. Conway

Over the past several decades, American business has manufactured a myth that has held us in its grip: the idea of “the magic of the marketplace.”

Some people call it market absolutism or market essentialism. In the 1990s, George Soros popularized the name we find most apt: market fundamentalism. It’s a quasi-religious belief that the best way to address our needs—whether economic or otherwise—is to let markets do their thing, and not rely on government. Market fundamentalists treat “The Market” as a proper noun: something unique and unto itself, that has agency and even wisdom, that functions best when left unfettered and unregulated, undisturbed and unperturbed. Government, according to the myth, cannot improve the functioning of markets; it can only interfere. Governments therefore need to stay out of the way, lest they “distort” the market and prevent it from doing its “magic.” In the late twentieth century, market fundamentalism was cloaked in the seemingly ancient raiment of received wisdom.

Classical liberal economists—including Adam Smith—recognized that government served essential functions, including building infrastructure for everyone’s benefit, and regulating banks, which left to their own devices could destroy an economy. They also recognized that taxation was required to enable governments to perform those functions. But in the early twentieth century, a group of self-styled “neo-liberals” shifted economic and political thinking radically. They argued that any government action in the marketplace, even well intentioned, compromised the freedom of individuals to do as they pleased—and therefore put us on the road to totalitarianism. Political and economic freedom were “indivisible,” they insisted: any compromise to the latter was a threat to the former—any compromise at all, even to address obvious ills like child labor or workplace injury. Why did we ever come to accept a worldview so impervious to facts? A worldview Smith himself, often thought of as the father of free-market capitalism, would have rejected?

Between us we have been to all fifty states and lived in twelve, including wilderness Alaska and a dying mill town in northern New Hampshire. On our travels, we have found that market fundamentalism is widespread in “blue” and “red” states alike, and that some version of it underlies most climate change skepticism. Many people seem to take Ronald Reagan’s view that “the government” is the problem, as it stands ready to steal both their money and their freedom. When asked why they hold these views—why they are skeptical that climate change is man-made or that government can do anything about it—they often point to articles they read in Fortune, Forbes, or the Wall Street Journal. As one of our students put it, the most common answer, whether in Massachusetts or Montana, was “markets, markets, markets.” Thus emerged the question that we have spent the past decade studying: How did so many Americans come to have so much faith in markets and so little faith in government?

Market fundamentalism is not just the belief that free markets are the best means to run an economic system but also the belief that they are the only means that will not ultimately destroy our other freedoms. It is the belief in the primacy of economic freedom not just to generate wealth but as a bulwark of political freedom. And it is the belief that markets exist outside of politics and culture, so that it can be logical to speak of leaving them “alone.”

As George Soros has summarized, “the doctrine of laissez-faire capitalism holds that the common good is best served by the uninhibited pursuit of self-interest.” That’s the core argument Adam Smith made in 1776 and contented capitalists have accepted ever since. Market fundamentalists, however, depart from Smith by insisting there is no “common good,” merely the sum of all the individual private goods. For this reason, they reject government’s claims to represent “the people”: there are only individuals who represent themselves, and they do this most effectively not through their governments, even democratically elected ones, but through free choices in free markets. Milton Friedman, America’s most famous market fundamentalist, went so far as to argue that voting was not democratic, because it could too easily be distorted by special interests and because in any case most voters were ignorant. But rather than consider how special interests might be mitigated or how voters could be better informed, he maintained that true freedom was not expressed in the voting booth. “The economic market provides a greater degree of freedom than the political market,” Friedman said in South Africa in 1976, as he encouraged the citizens of that country not to fuss over apartheid, but to preserve and expand their market-based economy.

Friedman’s argument works when we are talking about the freedom to buy, say, shoes of any type. But it fails when we consider the larger picture, including deceptive advertising, aggressive and misleading public relations campaigns, and what economists call “external costs”: costs that are invisible to or misunderstood by the shoe buyers, or that accrue to people who didn’t buy those shoes at all. Pollution is an external cost. What happens when the shoe manufacturer dumps toxic chemicals behind the plant and hides that fact from its workers, investors, and customers? Friedman downplayed the problem by giving it the friendly label of “neighborhood effects,” and claimed that any remedy would almost always be worse than the disease, because of the loss of freedoms or compromises to property rights typically associated with government regulations. In some cases, he may have been right. Regulations do compromise someone’s freedom in order to protect the freedom (and welfare) of others. When it comes to pollution, the “freedom” of factories to dump toxic wastes has been rightly rejected. When it comes to climate change, the “freedom” of corporations to sell oil, gas, and coal jeopardizes the rest of us. This creates a fundamental dilemma for the fundamentalists. But rather than rethink their arguments, market fundamentalists protect their worldview by denying that climate change is real or asserting that somehow “The Market” will fix it, despite all evidence to the contrary.

Like all good myths, the myth of the magic of the marketplace has a kernel of truth. As any economist could tell you, markets can efficiently allocate resources. Markets are good for getting productive uses out of the inputs that create wealth. They are also good for amassing information. Markets reveal a lot about what people want, how far they are willing to go to get it, and how much they are willing to pay for it. If efficiency were our only goal, then market fundamentalism might make sense. But efficiency is a tool, not an end.

This raises a profound question: Is capitalism itself to blame for climate change, as critics such as Naomi Klein and Andreas Malm argue? Or the opioid crisis? Or the lack of affordable housing? We argue no: the culprit is how we think about capitalism, and how it operates. The culprit is market fundamentalist ideology, which denies capitalism’s failures and refuses to endorse the best tool we have to address those failures, which is democratic government. It also fails to acknowledge the role of other tools available to us, like corporate governance. Market fundamentalism touts the benefits and virtues of deregulation and the value of economic freedom to the near eclipse of other concerns.

A group of individuals and institutions worked to make people believe they had to choose between “The Market” and “The State,” between unconstrained capitalism and Soviet-style centralized planning. But there are all kinds of alternatives, and one important one is to see governments and markets as complementary, not as opposing camps. Adam Smith and other foundational thinkers understood their field of study as one integrated discipline—political economy—yet today we (wrongly) treat politics and economics as separate spheres.

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.

This myth powers the enormous wealth gap between the top one percent and the rest of us. It has been used to justify a sharp decline in the safety and stability of the work most of us do to get by. It has blocked the efforts we must take to reverse the heating of our planet and protect the very existence of the world as we know it. The big myth’s expiration date is long past due. Our futures depend on rejecting it.

From “The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market” by Naomi Oreskes & Erik M. Conway, out now from Bloomsbury Publishing. Copyright © 2023 by Naomi Oreskes & Erik M. Conway. All rights reserved.

This article was originally published on WBUR.org.

Copyright 2023 NPR. To see more, visit https://www.npr.org.