Demystifying the “free market”

Ideology: a system of ideas and ideals, esp. one that forms the basis of economic or political theory and policy. 

Jeffrey Nealon & Susan Searls discussed the two faces of ideology, a grinding dialectic of competing tendencies. That is to say, an ideology (or network of interconnected ideas) can often serve the purpose of both mystifying and demystifying our assumptions about the world. Where an ideology becomes grounded, accepted, and taken for granted as a new “common sense”, it is the latter tendency whereby ideology revolts against itself, revealing its own inconsistencies and contradictions. One ideology usurps another ideology. Or re-molds it. Why? Because certain conceptions of “freedom” and “equality” realized at one historical juncture and in one society cannot be timeless – there is no grand model that can perfectly describe social realities across time. Our social and concrete realities are always in flux! And as social relations change, so must our models and our assumptions – or ideological frameworks. This point may seem rather obvious. And it owes to our discussion about how texts and ideologies will be relevant in one historical context, and re-interpreted or discarded in another.

But it is also evident that powerful interests exist to maintain the dominance of certain ideological models – and these forces reproduce and ground them further. We cannot easily unseat or alter what, at any given time, enjoys the privilege of being the “common sense” ideology, in the same way that it is difficult to shake a bad habit. Or even come to perceive it as a habit.

So it is with the “free market”. We worship it. It can do no wrong. It is so firmly grounded, that critics stutter when asked for viable alternatives (socialism? an un-free market?)

Inspired by liberal ideals of individualism, democracy, and freedom – the “free market” is a powerful ideology. But there are a host of contradictions inherent in the “free market model”, which has been audaciously applied and imposed throughout the world.

The 7 basic premises of this ideology are as follows, but simplified:

1. Individualism the key agent in society is the freely acting, independent, and rational individual

2. Supply & demand  – the sum of individual choices/preferences in the market

3. Monetization & exchange –  important for comparing and establishing values of items in the market

4. Material gain –  predominant motivation for individuals  (above social, religious, and moral objectives)

5. Mobility – everything in the market should be free to move and be used where it can provide the most material value, most efficiently 

6. Competition – Multiple sellers should compete and individuals will make choices based on price and quality only. No producer controls the price.

7. Role of government – minimal; government protects property rights, provides necessary infrastructure, and safeguards competition.

According to neo-classical economists, if these rules are followed and if a country also eliminates tariffs and trades “freely” according to its comparative advantage – the result will be the optimum allocation of all resources and services. Happiness results. Everyone simply buys and sells things in this indiscriminate marketplace; work hard and you’ll be fine – regardless of race, sex, or …(wait no, class doesn’t exist). You’ll obviously see a lot of problems with this, mainly because neo-classical economists wrote this up as the ideal model – what we should strive towards. But its premises are descriptive too.

Here are some timeless critiques: When we make decisions, are they always motivated by material gain? Is our market competitive when in most industries, less than 10 corporations are “competing” and actually striving to have a monopoly by buying out smaller companies? How do companies use advertising and branding to mete out competition? Do individuals all start on an equal playing field? Do countries start on an equal playing field, or are some mired by a history of colonial dependencies? Recall Marx’s commentary on value and commodity fetishism, too – is “value” really so objective? Where does labor fit in? Is the outcome of this system equitable – even desirable, or does it stratify society? And are we, the individuals, always acting rationally?

There are many other critiques to be made, but that’s not the point. What intriques me is how this ideology has been so engrained that critics become “socialists” or appendages of “big, wasteful government”. Naomi Klein, to justify her critique of the current manifestation of global capitalism, went back to school for economics. To challenge the system, we have to be versed in its framework of accepted ideas. But to demystify the market, we can’t have a binary of capitalism-socialism. We have to speak of capitalisms, in the plural.  The market is a great thing, but it’s certainly not “free”. There are still power hierarchies – both within society and globally. If your “comparative advantage” is dictated to you by the IMF and it happens to be cashew nuts, how do you expect your people to prosper based on these trade terms? And yet, “free market capitalism” has nearly become a label that countries use to brand themselves, so as to be considered legitimate partners in the global economy and eligible for loans and foreign aid.

Foucault reminded us that power relations are always at play, often seeking to maintain the status quo – keep particular ideas dominant as the overarching framework for understanding our world. Sometimes we need to demystify these narratives in order to see the real picture again (the way things are, empirically), and prescribe an altered version of the dominant model or a new ideology entirely.

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