The durability of market fundamentalism

Here it is, a fateful new year.

We will emerge from recession in 2009 or fall into Great Depression II. But we’re not likely to take steps toward restoring economic democracy, though. Free market fundamentalists still man the barricades, promoting their delusions. It’s understandable that the affluent should subscribe to doctrines generally consistent with their self-interest. For non-wealthy fans, laissez-faire is religious belief, a matter of faith, resistant by definition to reason.

What’s worse — and what I find difficult to grasp — is liberals who still grovel before a god that’s failed.

We were told, back in Reagan’s time, to cut taxes, stomp inflation, deregulate, emasculate organized labor, privatize and, well, the “free market” would do the rest.

The tellers included the best and brightest academicians (economics departments violate the “all faculty are liberal” rule) and foundation scholars. Milton Friedman, Paul Craig Roberts, Jude Wanniski, Arthur Laffer, George Gilder and others channeled (they said) prophets like Adam Smith, David Ricardo and Friedrich von Hayek.

Thirty years later, their gifts have turned out to be, like so many toys from China, poisonous. We’re on the road to Third World status, with huge disparities of wealth, huge personal and national debts, rampant corruption at the highest levels. Unemployment soars, health declines, dependency on foreign lenders swells — even as our leaders play at empire.

The financial bust could mark the end. James Galbraith reports in “The Predator State” that conservative economists are disillusioned, it’s hard to find dedicated monetarists (money supply is everything!) or supply-siders. And, true, Alan Greenspan, the Ayn Rand acolyte, is on the record doubting his own dogma.

But I find free market fanaticism lingers on, like a hangover, in the print press and on the Web. Faced with the utter failure of their ideology, some fundamentalists deny, some prate about “greed,” some blame the victims. And liberals still talk respectfully of discredited doctrines.

Why? How many “free market” busts does it take?

As Arianna Huffington recently pointed out, the collapse of the communist political system killed Marxist ideology. “But while laissez-faire capitalism has been a monumental failure in practice, and soundly defeated at the polls,” she writes, “the ideology is still alive and kicking.”

It all starts with language, of course. Words never fully capture what they purport to describe, but in economics (more properly, political economy) we employ language that’s parsecs from reality.

Take “market.” Buying fruits and vegetables and chatting with folks at the Downtown Growers’ Market, I note that the City of Albuquerque provides the park (subsidy) and many growers accept WIC food stamps (subsidy). Also, I pay for what I take home, according to contract law and the police power behind it. Society makes my favorite market possible; it’s neither pure nor free.

So, too, the metaphorical “free market.” As for “free trade,” it’s a pipe-dream, that’s not how nations do business. Silliest yet is “free enterprise.” How does that describe the National Labs? Pete Domenici’s beloved nuclear industry? Federal research transferred to industries ranging from pharmaceuticals to weaponry? Well, they do “freely” use public money for private gain.

Conclusions based on these words so boldly misstate how we get and spend that we should shelve them under “fiction.”

Liberals must reject conservative myths to get at bedrock issues. Who gets what? And how? Answer: corporate America employs government, under Democrats as well as Republicans, to redistribute wealth upward.

As we tiptoe into 2009, Washington has bailed out big businesses. Obama’s upcoming stimulus package may jump-start activity, but it won’t restore economic or political democracy. To do that, we must understand how ridiculous and how dangerous free market fundamentalism remains.

And in the beginning is the word.