The Cult of the Market

The Cult of the Market: Economic Fundamentalism and its Discontents

Copyright Date: 2007
Published by: ANU Press
  • Cite this Item
  • Book Info
    The Cult of the Market
    Book Description:

    The Cult of the Market: Economic Fundamentalism and its Discontents disputes the practical value of the shallow, all-encompassing, dogmatic, economic fundamentalism espoused by policy elites in recent public policy debates, along with their gross simplifications and sacred rules. Economics cannot provide a convincing overarching theory of government action or of social action more generally. Furthermore, mainstream economics fails to get to grips with the economic system as it actually operates. It advocates a more overtly experimental, eclectic and pragmatic approach to policy development which takes more seriously the complex, interdependent, evolving nature of society and the economy. Importantly, it is an outlook that recognises the pervasive influence of asymmetries of wealth, power and information on bargaining power and prospects throughout society. The book advocates a major reform of the teaching of economics.

    eISBN: 978-1-921313-54-7
    Subjects: Political Science

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Introduction
    (pp. ix-xiv)

    There are many others who are much better equipped than I am to write this book. Many sympathetic social theorists and economists schooled in philosophy and economics could have unravelled the complex issues underpinning economic fundamentalism and its perverse influence on public policy. While there is a huge literature critiquing libertarian philosophy and mainstream economics in great depth from every possible angle, I found few texts that provided an overview that addressed my needs as a policy analyst and none that covered the field as I would have liked. I am therefore writing my own broad-ranging multi-disciplinary account to explain...

  4. Chapter 1: Setting the Scene
    (pp. 1-38)

    In this book, I dispute the value of the shallow, all-encompassing, dogmatic economic theories advanced by economic policy elites in recent public policy debates, along with their gross simplifications and sacred rules. Economics cannot provide a convincing overarching theory of government action or of social action more generally, and should not be used for that purpose. Nor can economics define an ideal form of social or economic organisation against which to measure our institutional and organisational arrangements.

    This critique should not be taken to mean that I believe that markets, prices and property are unimportant economic institutions. Rather, these institutions...

  5. Chapter 2: The Creation of Social Order is Irreducibly a Moral Project
    (pp. 39-72)

    In the first chapter, I argued that recent public policy debates have been impoverished by the failure of policy makers—under the influence of economic fundamentalism—to appreciate the extent to which the market system depends on, and is a sub-system of, the broader social system. Famously, it was Margaret Thatcher who claimed that there was no such thing as society. She had failed to notice that, by the very same peculiar logic, there was no such thing as a nation, an economy or a market, either. Rather, civil society, the political system, the market system and the broader culture...

  6. Chapter 3: The Relationship Between the Economic System and the Social Order
    (pp. 73-102)

    The previous chapter began an examination of two key, but buried assumptions, which have underpinned much recent public policy formulation: the ideas that the economic system is autonomous and that the economic system has priority over the social system. These two assumptions have allowed economics to become the dominant methodology and vocabulary for the evaluation of public policy choices in our society. As a consequence, ʹeconomic efficiencyʹ—defined in neoclassical terms—has become the dominant value to be served by government policy.

    The discussion so far has centred on the question of how social order originates. It has been shown...

  7. Chapter 4: A Brief Account of the Historical Origins of Economic Fundamentalism
    (pp. 103-124)

    At the conclusion of Chapter 3, it was argued that the proposition that self-interest was the fundamental ordering principle operating in society could not be sustained. This conclusion is inconsistent with the beliefs of many economists, who claim that the existence of social groups and of social order can be explained by voluntary contracts between individuals who have made the rational calculation that cooperation is in their long-term self-interest. This view begs the question of whether real individuals are capable of determining what is in their long-term self-interest—a question that, in practice, has often been settled in the negative....

  8. Chapter 5: A Critique of the Conceptual Foundations of Economic Fundamentalism
    (pp. 125-152)

    In the previous chapter, I provided a brief historical account of the social-contract tradition on which economic fundamentalism rests. In the next three chapters, I propose to extend that critique by looking at the epistemological foundations of that tradition in the cultural and philosophical movement called ʹthe Enlightenmentʹ. I will criticise its belief that reason and the scientific method can provide us with certain geometric knowledge of the natural and social world, concentrating in particular on the grossly exaggerated claims of rationalism and its tools. In the next chapter, I will extend that critique to positivist scientific beliefs, pointing out...

  9. Chapter 6: The Privileged Status of ʹScienceʹ
    (pp. 153-180)

    In the previous chapter, I critiqued the Enlightenment and the more extreme claims made for human reason in that tradition. In particular, I rejected the proposition that it was possible for human beings to possess certain objective knowledge. This chapter explores the implications of those insights, looking in particular at the status of those activities going together under the rubric of ʹscienceʹ and of the knowledge they produce. The chapter is not intended to decry the enormous achievements of scientists in the past several centuries in throwing light on the natural world and the contribution that those achievements has made...

  10. Chapter 7: What, Then, Can We Say of the Status of Economics?
    (pp. 181-202)

    In the previous two chapters, we looked at the critique that has developed of the Enlightenment project and the implication of that critique for the status of science in general. That critique challenges also the right of reason and philosophy to be the final arbitrators of moral issues.² The Enlightenmentʹs utopian search for epistēmē in moral, political, economic, legal and social theory more generally has failed and will continue to fail. It is now time to turn towards a more detailed application of those ideas to economics. This is necessary because most practising economists retain positivist methodological beliefs that philosophers...

  11. Chapter 8: The Critique of Neoclassical Economics and its Influence on Policy Decisions
    (pp. 203-244)

    Until now, I have confined my account to a critique of the historical, philosophical and scientific foundations of economic fundamentalism, pointing to general concerns about the practical value of economic theorising and the tradition of political and moral theorising of which it forms part. It is now time to turn more directly to the content of that theorising and its impact on economic policy. In this chapter, I propose firstly to make some further preliminary remarks about the influence of mainstream economics on economic policy settings. I then propose to draw attention to the long-running critique of neoclassical economics and...

  12. Chapter 9: The Doctrine of Freedom of Contract
    (pp. 245-268)

    Contract law is one of the fundamental institutions that underpin the market system. It is not often understood that the religious and governmental regulations that underpin agreements have a very long history. Therefore, it is not often realised that the above quotation from the Ten Commandments refers not to the uttering of obscenities, but to the process of oath taking in ancient Israel, which—among other things—helped enforce contractual arrangements. A rigid view of contract law in the form of the doctrine of freedom of contract is a central element in economic fundamentalist rhetoric. It is desirable, therefore, for...

  13. Chapter 10: Some Normative Reflections
    (pp. 269-290)

    This book has—like Gilmore above—been highly critical of the ʹabstract impersonal values, the universal solutions and the logical imperativesʹ being relied on by contemporary governments and international economic organisations to formulate economic policy.³ Human knowledge narratives—including economic theories—like human laws, should not be seen as mystical absolutes but as tentative and imperfect social constructs, open to challenge and change. In particular, economic and social theories and laws—like the classical law of contract—cannot be understood independently of their social and historical contexts, and of the traditions of thought of which they form part.⁴ Therefore, the...

  14. Bibliography
    (pp. 291-316)