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.
– Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism
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.)
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?
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 not the cause of the economic calamity of 2008, whose effects we still experience today. Instead, they double-down. The problem was too much bungling regulation of the market. Get out of the way, they say, and let the market do its job.
In other words, “Thy kingdom come!”