This is a long post, and some of what it says may seem hard to believe. Do not dismiss it until you have read the UK Government Cabinet Paper cited at the end of the post.
What do Market Fundamentalists really want?
Philip Hammond is one of many former leading Tories who say that the Conservative Party has been taken over by extreme right-wing radicals. As another former Tory, Anna Soubry, put it, ‘The right wing… are now running the Conservative Party from top to toe. They are the Conservative Party.’
Here is Hammond responding to a former colleague:
As he wrote in The Times,
‘The radicals advising Boris do not want a deal. Like the Marxists on the Labour Left, they see the shock of a no-deal Brexit as a chance to re-order our economy and society….That is manifestly not the will of the people.’
This is a hugely important change politically: the most successful vote-winning machine in British politics is now being run by market fundamentalists: an extreme right-wing group with a radical agenda to reorder society. But what is that agenda?
To answer the question, we need to see what they believe and who they follow. And the answers are deeply disturbing.
Market Fundamentalists have an alternative morality
The Oxford Dictionaries define morality as follows:
Morality (noun) 1. Principles concerning the distinction between right and wrong or good and bad behaviour. ‘the matter boiled down to simple morality: innocent prisoners ought to be freed’
1.1 A particular system of values and principles of conduct. ‘a bourgeois morality’
1.2 The extent to which an action is right or wrong. ‘the issue of the morality of the possession of nuclear weapons’
For most people, this definition makes sense. Morality has to do with right and wrong, with good and bad. It is connected with values and principles. A moral person makes judgements – sometimes difficult ones – about what is right and wrong, based on values and principles.
But not everyone sees it this way. In Oscar Wilde’s play, Lady Windemere’s Fan, when Lord Darlington defined a cynic as ‘a man who knows the price of everything, and the value of nothing,’ Cecil Graham replied, ‘And a sentimentalist, my dear Darlington, is a man who sees an absurd value in everything and doesn’t know the market price of any single thing.’
Graham is not alone in thinking that any value other than the market price is absurd. Many proponents of free markets think this way. This line of thought has an engaging clarity and simplicity: if a willing buyer and a willing seller agree on a price, what right has anyone else to say that this is not the fair value? (of course, in the real world many transactions are not between willing buyers and sellers freely assessing the value of the transaction. Most smokers buy cigarettes, not because they have assessed the value and found it worth the price, but because they are addicted. Workers being paid below the living wage accept it, not because they agree it is fair, but because they have no other choice).
Why bring subjective notions of right and wrong, good and bad into the question? Why complicate matters with systems of values and principles? Why not simply say that the market price is the moral price? As soon as this point is accepted, often as a near-religious tenet, most of morality can happily be left to the market. In the words of George Soros:
‘This idea was called laissez faire in the nineteenth century… I have found a better name for it: market fundamentalism.’
Is Mark Lore, the CEO of Walmart, really worth US$236 million per annum? Let the market decide. Should there be more low-cost housing? Let the market decide. How much should a nurse be paid? Let the market decide!
This line of thinking produces results that most people find bizarre. In the US, an oncology nurse can expect to earn between US$74,000 and US$118,000. But each of the key executives of the tobacco company Philip Morris is paid more than US$5 million. If we accept that the market price truly reflects their moral value, we must conclude that each one of these executives does more good for society by producing, marketing and selling (carcinogenic) cigarettes than fifty oncology nurses do in tending those with cancer.
Most people would reject that explanation and say that, while the nurses clearly do far more good for society, their skills are not so scarce, their bargaining power is lower and so they are paid less.
Market fundamentalists view this rejection as absurd sentimentalism. If the nurses really were worth more, they would be paid more; if the executives really were worth less, they would be paid less.
When these people say, ‘markets are the best way to allocate resources’, they don’t simply mean best as in easiest: they mean best as in most moral.
Market fundamentalists view taxation as theft
A fundamentalist defines a market transaction as one between a willing seller and a willing buyer. By this definition, therefore, there is no coercion. (Athough, as we saw above, many commercial transactions are not really free exchanges). Tax, they say, is often not willingly paid: people pay only when they are legally obliged to do so (and not always even then). For a market fundamentalist, this is simply wrong: it doesn’t matter how much good the taxes will do – even how many lives they will save – or how frivolous the taxpayer’s alternative use of the money might be, the fact is that the money was effectively taken by force. That is theft.
And they believe that far too much is taken. As the American investor James Dale Davidson and William Rees-Mogg, the former editor of The Times, explain in their book, The Sovereign Individual:
… with the top 1% of taxpayers paying 30.2% of the total income tax in the United States (1995), it is not a question of the rich failing to repay any genuine investment the state may have made in their education or economic prosperity. To the contrary. Those who pay most of the bills pay vastly more than the value of any benefits they receive.
Market fundamentalists believe that, like a business, governments should view their taxpayers as customers, and charge them only for the services they receive, in a non-coercive transaction. As Davidson and Rees-Mogg put it:
Yet when you think about it, when customers really are in the driver’s seat it would be considered outrageous that they should not get what they want. If you went into a store to buy furniture and the sales people took your money but then proceeded to ignore your requests and consult others about how to spend your money, you would quite rightly be upset.
You would not think it normal or justifiable if the employees of the store argued that you really did not deserve the furniture, and that it should be shipped instead to someone whom they found more worthy…
The terms of progressive income taxation, which emerged in every democratic welfare state during the course of the twentieth century, are dramatically unlike pricing provisions that would be preferred by customers.
The answer, they believe, is for government to start acting like any other business. Of course, this will mean that taxation will fall dramatically, and with it, public spending.
Market fundamentalists view normal people as a burden
With income distribution at current levels, roughly half of the working population in both the US and the UK would be unable to survive without external help. Most people regard this as a sign that the system isn’t working properly, and they view providing the help as an intrinsic part of a civilized society.
To a market fundamentalist, though, these people are simply not worth what it costs to keep them alive. Their existence is not cost-effective, and being forced to sustain them is an unjustified burden.
Market forces, they say, are meritocratic – and the problem is that these people have too little merit.
Ira Sohn, Professor of Economics at Montclair State University, has pointed out that with technological advances, many of these people (i.e. people who have to work for a living) will no longer be needed at all:
The prospects for adopting labour-saving technologies in many of the labour-intensive sectors in the economy are improving annually: self-checkout at supermarkets, self-check-in and -out at hotels, self-ordering and bill settlement in restaurants, self-administered health diagnostic tests and so on all translate into a reduced need for workers per dollar of gross domestic product on the one hand, and fewer total workers along with higher levels of GDP on the other.
Horses were used extensively on the farm and in transport in eighteenth- and nineteenth-century America and Europe, but once mechanization and electrification were implemented, and the railroad, automobiles and buses became commercially viable as transport alternatives, owning horses became a hobby of the rich, and the horse population declined quickly and dramatically.
The same can probably be said about humans in the 21st century: we just don’t need that many of them – and, in the rich countries, they are expensive to ‘produce’ (prenatal and postnatal care), ‘assemble’ (nurture and educate), and ‘maintain’ (from adolescence to death). As technology continues to become ever more capable and most humans, frankly, do not, there is less and less need for workers to produce the goods and services required by society.
Most people today, Sohn believes, are like horses at the end of the nineteenth century. There will shortly be no need for them. And Chapter 5 of 99% shows that he may well be right.
This should give us all pause for thought.
For the market fundamentalists, there is a choice here: the more hard-nosed think that the redundant people should simply sink or swim; the more compassionate think that the most deserving should receive (voluntary) support from charities or wealthy individuals – but not, of course, at the levels that they have been used to.
And only if they appear deserving.
Mitt Romney, the US presidential candidate, explained to his potential donors his view that 47 per cent of Americans take no personal responsibility and make no contribution to society – and so his job is not to worry about those people:
There are 47 per cent of the people who will vote for the president no matter what… These are people who pay no income tax. Forty-seven per cent of Americans pay no income tax… And so my job is not to worry about those people – I’ll never convince them that they should take personal responsibility and care for their lives.
Davidson and Rees-Mogg explain their thoughts on what should replace government support for the roughly half of the population who depend on it:
The collapse of coerced income redistribution is bound to upset those who expect to be on the receiving end of the trillions in transfer programs. Mostly these will be ‘the losers or left-behinds’, persons without the skills to compete in global markets.
When the hope of aid for those falling behind is based primarily upon appeals to private individuals and charitable bodies, it will be more important than it has been in the twentieth century that the recipients of charity appear to be morally deserving to those voluntarily dispensing the charity.
The only barrier to making this happen is that the law would have to change, and both the UK and the US are democracies, at least for now.
Market fundamentalists view democracy as tyranny
Peter Thiel, the billionaire co-founder of Palantir and PayPal, stated in 2009: ‘I no longer believe that freedom and democracy are compatible.’ He explained his reasons:
The higher one’s IQ, the more pessimistic one became [after leaving college] about free-market politics – capitalism simply is not that popular with the crowd… For those of us who are libertarian in 2009, our education culminates with the knowledge that the broader education of the body politic has become a fool’s errand. Indeed, even more pessimistically, the trend has been going the wrong way for a long time… Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women – two constituencies that are notoriously tough for libertarians – have rendered the notion of ‘capitalist democracy’ into an oxymoron.
Davidson and Rees-Mogg agree:
Mass democracy leads to control of government by its ‘employees’. But wait. You may be saying that in most jurisdictions there are many more voters than there are persons on the government payroll. How could it be possible for employees to dominate under such conditions?
The welfare state emerged to answer exactly this quandary. Since there were not otherwise enough employees to create a working majority, increasing numbers of voters were effectively put on the payroll to receive transfer payments of all kinds. In effect the recipients of transfer payments and subsidies became student employees of government who were able to dispense with the bother of reporting every day to work.
The answer, of course, is to do away with mass democracy.
So the short answer to the question is that they want to end progressive taxation and redistribution and therefore the Welfare State, the NHS, etc. And to achieve that, they would like to restrict democracy, so that the masses cannot vote for these things to continue.
Is this really plausible?
None of this is yet openly declared. And it may seem frankly incredible to imagine a British Government thinking this way. But the national archives contain cabinet papers from 1982 showing that some of these ideas were being discussed confidentially even then. You can download the papers at no charge on https://discovery.nationalarchives.gov.uk/details/r/C13318082
Here is the passage on health care, for example.
‘As living standards rise, individuals are likely to demand more and better healthcare. There is some social gain from improved healthcare, but it is mainly a matter of individual wants and choices. Hence it is arguably not appropriate for public finance, and puts a strain on the Exchequer by distorting choices and shifting the burden from consumer to taxpayer. Public health services also tend to be led by producers rather than consumers.
It is therefore worth considering whether, over a period, the provision of healthcare for the bulk of the population could be shifted from the state to privately owned and run medical facilities. Those who could not afford to pay would then have their charges met by the state, via some form rebating reimbursement.…
This would mean leaving to individuals how far they insured against facing high costs of healthcare, and it would be important to monitor the growth of private health insurance over the intervening period. Given that the state would in the last resort meet the costs of necessary healthcare, there could be a danger of underinsurance by a large part of the working population, and thought therefore might have to be given to a scheme for compulsory private insurance.’
And the passage on education:
‘This demand for education, as for health, is likely to be “income elastic” as living standards rise, people will want to spend a higher proportion of their income on more and better education for their children, and will be increasingly frustrated by the lack anyway of making this choice effective within the state primary and secondary system. In addition, however, there is a social interest, arguably greater health, in the quality and quantity of education, because that these will determine the capacity and versatility of the next generation of working people. Hence in our judgement it is probably not realistic to envisage, even as a long-term option, the wholesale privatisation of provision for education in schools. However it may well be desirable to make higher education more market oriented, giving more choice to consumers and making the system more responsive to the needs of both students and employers.
We therefore assume that the state will continue to provide universal facilities for children of primary and secondary school age, and to be concerned about quality. But the parallel system of private sector schooling will remain and may expand with increasing prosperity.
More parents should be encouraged to choose the private sector, at the margin, by schemes for vouchers or tax relief; but if such schemes simply relieved parents of part of the cost of education, they are bound to be expensive for the taxpayer. Hence as radical options for schools education, ministers may wish to consider a substantial reduction in the resources going to the public sector, or compulsory charging for schooling.‘
And on social security:
‘The present system indexes most benefits to prices, and a very large number of beneficiaries (9 million pensioners, 3 million unemployed, et cetera) have the real value of their benefits preserved, even at times when the working population suffered a cut in living standards. The government probably cannot avoid recognising preservation of real value to benchmark (as for tax thresholds). But it could avoid any commitment to prolong the link between benefits and prices, and take the first legislative opportunity to break the link.’
As Chapter 4 of 99% points out: we should take these ideas very seriously, especially if we disagree with them. Or else we may find ourselves living in a world where, as Rees-Mogg put it:
“The new Sovereign Individual will operate like the gods of myth in the same physical environment as the ordinary, subject citizen, but in a separate realm politically.”
If you would rather not let them build such a world, please sign up and join the 99% Organisation.
32 comments so far
Blimey. Fundamental right wing views fully detailed and explained. Frightening that the ERG cabal, which I thought was just Europe “not centric”, is in fact much more frightening in its long term intentions. I could not understand how removing social rights and diminishing the economy could be a sensible strategy. I have misread the deeper strategy toward a 15 century society with lords and serfs.
Thank you for the insight, hopefully I won’t become to paranoid.
Deeply troubling. What they ignore however is the social unrest that would follow from any such ‘morally meritocratic’ approach. People (not the people they think matter, of course) genuinely believe that a developed society needs safety nets for those who cannot keep up. In addition, the widening gap between those who can and do, and those who cannot and don’t, is already causing massive resentment which can only grow. The route to the type of structure suggested here is nowhere near as simple as they imply. This thinking is a perversion of humanity.
Where is the humanity in all of this ? ????????????
I think it’s worth analysing carefully what specifically those believing in market fundamentalism gain for their selves, within their own sense of being. This can allow us to begin to unravel and challenge their position on human terms.
Specifically, like all belief systems, market ideology helps the believer in almost religious terms. It helps them place themselves within something permanent, something almost ethereal, something they can trust and something which will have a permanence beyond the grave.
This sounds absurd – but it really is the case with these people. To them their market is their God, their permanence, their guarantee against the meaninglessness of death. And we must both draw out the absurdity of that (like Wilde) and offer rival visions of meaning and purpose and the ethereal if we are going to challenge with that.
Second, these people get moral satisfaction through their beliefs. By believing in the market they are reinforced in the sense that they are good people. Again this sounds absurb – how can that be? But it is true that they interpret this in moral ways, as the article shows so well. They honestly believe that by reducing government, paying the right price for something, letting the market take its course – that all of these things make them better as people, and that by participating in the laissez-faire they are making a positive moral choice.
The absurdity and nihilism of these positions is where we can begin.
The nutters you see are backed financially and otherwise by big money interests.
The recent triumph of the Blairites in the Labour Party represents a coup by allied market fundementalists (even though they are remainers). In fact the EU and the West all seem to be securely in their hands.
This ideology has been recognised for decades under the term ‘Neo-liberalism’. Which is vague and confusing compared to ‘market fundamentalism’ (especially when there are newer and more mainstream forms of liberalism) but reinventing terms obscures previous work done on the subject. Introducing terms without even mentioning related terms seems like a pretty big oversight.
All who have read Naomi Klein will be familiar with the idea of the Shock Doctrine and know that the true purpose of Brexit is to create just such a shock in order that the UK economy and institutions of the state can be reordered along the lines favoured by neo-liberals, or, if you prefer, Market Fundamentalists. You only need look at the composition of the present Cabinet to see its members have been carefully selected to be willing participants in the transformation of our society.
This article seems to sum up succinctly the direction of the present government.
Market fundamentalist are right. For how long should we be abused by these career politicians. Do a simple comparison between politics of command economies and the politics of those that are more pro markets. Your guess is right, societies that are pro command economies have politicians that have big bellies and poverty stricken electorate. If some decides to spend his money on internet let it be its his/ her choice. Why should someone choose for an adult? Leave me to chose what I want as long as it does not negatively affect someone.
@godfrey We are a fact-based organisation. The book 99% looks in some detail at the facts behind the assertions you have just made — and finds there are none.
Market fundamentalism has driven mass impoverishment. That is the fact we are most concerned about.
If you want to see what sort of government does well for its people, read Chapter 13. There you will find the facts.
Could you point me in the direction of which cabinet papers of 1982 I should download, thankyou for this excellent article
Yes, the papers you need are these: https://discovery.nationalarchives.gov.uk/details/r/C13318082
It is the “Longer Term Options” document.
The article and the contributions above reinforce my view that going into the EU as it was in 1973 was only a temporary blip on the progress curve of the hard right. They wanted to get rid of Northern Ireland at the beginning of the 70s (the “Troubles”, ie the civil war were too much for their views as described in the article) and now they will proceed to shall we say “disengage” and leave the RoI to deal with any problems there. A sort of imposed “autonomy” for NI. I do not how they will manage this but they undoubtedly have plans. Scottish independence, “reluctantly” agreed to with promises of an equitable agreement (already prepared I am sure) which the Conservatives will go back on. Dilemma for Scotland – less than equitable share of UK assets, overload of liabilities including clean up costs of Rosyth, Faslane and nuclear power plants. Cost of using sterling for a few years. Transit fees for Scottish trucks going to Dover. And so on.
So what to do? As a member of the Labour Party – because the Lib Dems are too hopeless for words (Paddy Ashdown seems like time ago) – I can see that the way to go is a Labour and Lib Dem (and Green etc) agreement / coalition of some sort. Split votes mean that the Conservatives will win again and again (especially with 50 less Scottish seats voting against them AND a smaller parliament when NI goes). If the Conservatives were intelligent they could say to the men with money (not too many women obsessed with power and money) that they will have to put UP taxes to keep the country going and voting Conservative but, by way of compensation, there will never again be a alternative government to the Conservatives. I hope I am not giving them ideas …
I was thinking that Brexit meant the Scottish and NI ideas I express above but also keeping the tax havens (how many trillions there?) and the City of London with its 6 trillion per day of transactions. But the “taking back control” was there for us to see – taking back control of the country to the pre-EU project in 1973 and more hard right thinking. As I said above, only a 50 year blip. I have to admit to admiring their long term consistency and single mindedness.
Given that Johnson has done so much to encourage the Scots to want independence it looks like Scotland and her MPs are a brake on the market fundamentalists plans for England. Can we now expect faux reluctance leading to permission for a second indyref.?
I’m flabbergasted, it just seems like economic fascism, its not enough to have tons of money, being poor is crime, every part of your life will be affected by how much money you possess, and the system means that wealth is passed on to their children and they would in turn own the system and the politics..
It’s pure libertarianism which is at the heart of our Tufton Street Government
Very frightening but it explains a lot of what’s going on in Government, Tory Party, Brexit, Trump, Republican Party, rise of far right. God help us all.
The (average) general public have no appetite for taking in or digesting what seems like a fantastical, dystopian even, tale of fiction.
they see themselves as far removed from ‘all that’
The only way I see to combat the onslaught, is to attempt to educate that general public in the dangers of this anti humanitarian menace. Not easy I know when most of the press has been bought up by that very menace.They already have a strangle hold on most media.
The 2nd edition of The Sovereign Individual published a few months after this post has a new preface by one Peter Thiel, available in the ‘free taster’ from at least one of the re-sellers. Small world!
The trouble with Market Fundamentalism is that it is inherently unstable. Because it is easier to make money if you already have a surplus above what is required to live, than if you haven’t: then inevitably the rich get richer, gain economic power, and usually use it to make the poor poorer- with no limit other than eventual civil disorder.
If one accepts that the function of government is to maximise the total wellbeing of the populace, then, given the non-linearity of the relationship between prosperity and wellbeing (doubling your income doesn’t make you twice as happy)- the it is mathematically obvious that good government encourages equality. It doesn’t need to go as far as instituting a command economy; progressive taxation should provide the negative feedback necessary to stabilise the system.
It’s all in there, including the secrecy 👇 hence US #ieaLondon, the British American Tobacco funded Shadow(y) Govt, and attacks on public institutions started by govt undermining and underfunding.
GOP ERG via Atlantic Bridge Conservatives
Trump&Johnson FR #BannonsBoys
Thatcherism&Reaganism on steroids
Thatcher and Pinochet tried it => Failed State/ Liverpool 80s/90s unemployment riots.
Government Departments moving into corporate owned buildings (UC/HMRC) and State property sold off, then all they have to do is flick a switch – Corporate Coup.
Atlantic Bridge 2006 Key Deed ‘Killing The Golden Goose’ aka The State.
It’s no longer just Left v Right, it’s Oligarchs -vs- Democracy. 1% vs 99%
‘Maximise the total wellbeing of the populace’ is pretty much the exact opposite of what the far-right, libertarian, Sovereign Individual, Market Fundamentalist types are aiming for. The only things they hate more than the welfare state and non-white people and women are the common good, kindness, co-operation and all those other things they associate with good governance/ ‘socialism’. They pronounce that word in much the same overtones as I do ‘Thatcherism’. They aren’t bothered about stability for the 99 % or civil disorder because they’re convinced they shall be insulated from it.
The part confusing me about this whole thesis is that William Rees-Mogg seemed to deeply believe he would make the transition and not immediately become a ‘loser and left-behind’ with all his ill-gotten assets confiscated. The sense of entitlement and self importance which usually comes with private [boarding] schools probably explains that. It looks like Jake The Fake either hasn’t read his father’s book, hasn’t understood it or is trying to disprove the central argument by counter-example. He’s well into all the subsidiary aspects, of course: eugenics, looting & hoarding, destroying the ‘nation state’, hiding behind perverted Christianity, etc.
Please publish your important report, on market fundamentalism, in a publication for people without access to Twitter or the internet. This would explain Jacob Fake Rees-Mogg’s entitled, self serving attitude. I am sure many Tory voters especially the low paid and state pensioners would never vote Tory again.
Great reading. Well explained.
I’m gobsmacked. Market Fundamentalism looks like economics and morality done by a computer, or a psychopath. Or an algorithm-driven psychopath.
The basic value of human life, of each individual, is not within their ken. I hope this will, in the end, prove their comeuppance.
This needs to be compulsory reading. It’s now
Oct 22; Sunak has reappointed Braverman as Home Secretary, Cleverly as Foreign Sec, brought back Raab as Dep PM, kept Hunt as Chancellor. An horrendous line-up.
These are not the actions of anyone with the best interests of the country at heart. Or any interests at all. The neo-liberal market fundamentalists are forging ahead with their Freeports and their Areas of Investment that will basically ‘sell’ huge numbers of workers as slaves to the buyers’ system. All workers’ rights will be systematically removed, wages deregulated; maternity leave, holiday pay, injury pay, negotiated wage increases, all the advances currently taken for granted will be things of the past, in the brave new world these dead-eyed money obsessed zombies envisage.
Ordinary people should be very afraid. We’re almost in the last chance saloon. The people propounding this fundamentalism are evil in every sense of the word, good needs to fight back.
Great comments, but the tone of activisms seem to be missing from these concerns
Ordinary people need to stand up for their society.
An economy is meant to serve society, and economics is about understand the best ways for the economy to discharge that duty of service.
Market fundamentalism is a theoretical framework that is designed to prevent clear understanding of the best ways a economy can serve society.
Discussion events are offered in Economic Literacy for everyone (especially members of this movement) here: https://www.meetup.com/good-world/events/zhvwvsyfccbgb/
Oh my lord. So everything is true. “Let the bodies pile high” was policy. They do want us gone. They do want us dead. Hence the outrageous lies against Jeremy Corbyn. That good, kind man frightened the right to the core. And Brexit. That the outcome of the referendum was acted upon, as the democratic will of the people, has been a tragedy for our country. How I loathe them. How I loathe them.
They kid themselves. If they didn’t inherit money, if they didn’t park money in hidden trusts to share with kin, hide property ownership from the public, create shell companies, abuse patent and copyrighting – in other words, if they didn’t rig the game, they’d be starting with nothing and very few would be prosperous. Excessive profits, bonuses, dividends have absolutely no correlation with productivity. They’re conmen hiding behind lies but wealth alone gives them virtue in their eyes. There’s a tonne of work to be done – environmental repair, river restoration, local services, which a job guarantee could fund from central government via councils. Maybe nothing can change but a cogent, radical polical economics critique and alternatives need to be put forward together with public banks, citizens assemblies and the young somehow woken up.