How Free Market Mythology Denies Us Freedom

The headline of this column makes a big claim, but I’ll go even further. Free-market mythology denies us not only political and economic freedom, but psychological liberty as well.

In his 1980 inaugural address, Ronald Reagan declared: “Government is not the solution to our problem: government is the problem.” Soon, in the Reagan White House, neckties sporting an image of 18th century philosopher Adam Smith—oft touted as the founding father of free market ideology—became all the rage.

Reagan’s message was clear: Lower taxes, minimize government regulation, cut social programs, and the outcome will be a strong economy with more jobs. With less government intrusion in our lives, we’ll all be free to do better.

Unfortunately, Smith’s insights were oversimplified to the point of distortion. His 1776 The Wealth of Nations was used to justify the premise that a society works best when we each act solely in our self-interest. What’s virtually never noted is Smith’s judgment that “subjects of every state ought to contribute towards the support of the government, as nearly as possible…in proportion to the revenue which they respectively enjoy under the protection of the state.”

Free-market mythology prepares the ground for polarization, often at the expense of those already struggling to stay afloat.

Contrary to the view that acting for self is only “natural,” Smith noted in The Theory of Moral Sentiments that it is the “precept of nature to love ourselves only as we love our neighbor.”

And today studies confirm that humans enjoy giving more than receiving.

Yet, blind allegiance to a myth that puts innate selfishness at our center still undergirds the almost sacred notion that unimpeded-market competition is not only superior, but natural. For believers in the free-market myth, public involvement in the market is a grievous sin.

The consequences are harsh.

For one, we are made to doubt the essential, positive role of democratic governance in enabling and protecting widespread economic prosperity, as well as in achieving many essential public goods—from healthcare and education to environmental protection.

Market mythology ignores the fact that all markets have rules, even if unwritten. In a capitalist market like ours, what is the unspoken “rule”? It’s simple: The more you have, the more you accrue. The pursuit of wealth thus becomes not merely a means to an end, but the end—the sole aim justifying personal enrichment at the expense of others.

The result is wealth inequality in the United States that does not comport with our self-image as a beacon of fairness. Of 200 countries ranked from the most extreme wealth inequality, we come in 28th from the worst, between Peru and El Salvador. Here, the top 1 percent control about a third of household wealth, the bottom 50 percent—over 165 million Americans—control a meager 2.5 percent.

Moreover, such a market ensures tightening corporate power, undermining the very competition touted as a prime goal. Between 1985 and 2017, yearly corporate mergers jumped almost sevenfold. So today the top five healthcare companies enjoy 99.4 percent of market revenue. Three companies control over 94 percent of carbonated soft drinks. Coca-Cola and PepsiCo alone account for 69 percent of the retail market.

The harms from such concentrated wealth show up in citizens unable to afford decent housing as well as in deprivation of essential public goods. No surprise, therefore, that in both access and outcomes, our healthcare ranks last among “high-income countries.”

Sadly, market mythology also leads to self-blame. Once swallowing the myth that—regardless of circumstance, anyone in America can make it if they work hard—self-doubt and shame become unavoidable.

And that’s a big problem for any society. Shame is among the most painful of human emotions, which we often fight by seeking others to blame. Maybe it’s immigrants who will take our jobs. Maybe it’s those liberals who want to reward the lazy. In any case, free-market mythology prepares the ground for polarization, often at the expense of those already struggling to stay afloat.

Thus, to build a strong democratic culture, let us challenge the pernicious mythology of a “free market” purporting fairness but thwarting opportunity.

How?

We can start by facing the sad truth that the United States ranks 60th among the world’s nations in political rights and civil liberties, between Panama and Samoa, according to Freedom House—co-founded by Eleanor Roosevelt. And, as we have in the past, we can create rules that break up monopoly power and strengthen the labor movement. We can expand social services to right the shortcomings of the “free market” and bring us closer to the standards of our peer nations.

Once debunking disempowering free-market myths, we are free to embrace our empowering, widely shared values—those putting human and environmental wellbeing first.