The Persistence of Market Fundamentalism

Perhaps because it is used almost always in criticism, the implication of the term “market fundamentalism” has become pejorative. Few people would say, for instance, that thanks to market fundamentalism we now benefit from … well, anything. But insults accomplish little. “Market obsession” or “market addiction,” for instance, might induce guffaws from the right audience, but all they convey is disdain. “Market fundamentalism,” by contrast, is at heart descriptive rather than a normative judgment. Its power and resonance come from the truth and depth of the analogy, rare outside the religious context yet so obviously present here. Enter “define fundamentalism” into Google and the example it returns is “free-market fundamentalism.” Everyone can make sense of what it means and why it matters.

The essays from Donald Boudreaux (“Feeble Forays Against Free Trade”) and Phil Magness (“The Truth About Tariffs”) are fine examples of this fundamentalism and its two hallmarks: an insistence on strict adherence to dogma with the attendant commitment to explaining away all evidence to the contrary, and a strong allegiance to an ingroup and policing of an outgroup for insufficient purity. As with any fundamentalism, arguments in this vein have their power—but only in arousing fervor among the believers. Rarely do they persuade, how could they? Fundamentalism demands faith in an inaccessible absolute, it brooks no complexity and offers no opportunity to reason.

Boudreaux and Magness are entirely comprehensible if one takes for granted an adherence to late-twentieth-century free-trade orthodoxy and seeks only confirmation that any challenge can be safely ignored. Thus, for Magness, my observation that “the Ricardian theory of comparative advantage enjoys widespread consensus among economists … may be the only accurate claim in [Cass’s] entire argument.” The only one. Boudreaux notes that a prominent early economist could not have rejected comparative advantage, “because comparative advantage is ultimately just arithmetic.” If something is self-evidently right, any evidence suggesting that anyone has questioned it must be wrong. That someone might disagree with Boudreaux on another point is, in his view, “alone sufficient to disqualify [the person] from pronouncing on trade-related matters.” 

The premise of this forum, though, is that someone took the time to consult the sacred texts, and they don’t seem to say what their keepers say they say. Alfred Marshall was the father of modern economics. He wrote its first great textbook, and he gave short shrift to comparative advantage—not merely ignoring it, but making a point of criticizing Ricardo’s followers, who “had taken but little account of the indirect effects of free trade. … In Germany and still more in America, many of its indirect effects were evil.”