'The Big Myth' exposes the costs of blind faith in free markets
How much faith do you have in “The Free Market"? Do you think you, your family and your community will be well served if the free market is allowed to run without government oversight or interference?
For over a hundred years Americans have been told that free market economics is superior to an economy with controls, regulations and concerns over public safety. The dogma is that free market prices, production, and distribution of goods and services are determined by the interactions of buyers and sellers, without interference from the government or other external forces. We should have devotion to Adam Smith’s “Invisible Hand” which is virtually a divine power that flows from individuals and businesses when they are free to make their own economic decisions based on supply and demand.
The free-market system is characterized by voluntary exchanges between buyers and sellers, with the goal of achieving mutual benefit. In this system, competition is seen as a positive force, as it encourages innovation and efficiency.
Proponents of the free market argue that it leads to greater prosperity, individual freedom, and economic growth, while critics argue that it can lead to inequality and instability, and that government intervention is necessary to protect the public interest.
A free market is a miraculous thing when it works. But a free market can easily fail and collapse. For instance, if a single company or a cartel of few companies dominate the market, they can set prices at an unfair level, leading to a lack of competition and a reduced incentive to innovate. This can lead to market failure as consumers are left with few choices, and the dominant companies may become complacent.
A free market may fail when the costs or benefits of a particular activity are not fully borne by those engaging in it. This is known as an externality. For example, pollution can have a negative impact on the environment, but those responsible for the pollution may not bear the full cost of their actions. This can lead to market failure as the true cost of the activity is not reflected in the price.
An economic shock can shatter a free market such as recessions, a pandemic, natural disasters, or unexpected events. These shocks can lead to a lack of demand or supply, leading to market failure.
Without government involvement the collapse of the free market will lead to mass unemployment, skyrocketing poverty, large scale hunger and displacement along with uncontrolled crime and social unrest.
Yet, many Americans have been taught that markets work best without government participation. This is despite the long history of crooked business dealings, Ponzi schemes, contaminated food products, quack medical cures, exploitations of workers, manipulation of markets and the rejection of the common good.
The new book “The Big Myth” explains how the creation of a cynical view of government restrictions on free markets is a part of a deliberate campaign of propaganda for the benefit of the modern robber barons and economic elites.
Naomi Oreskes, co-author of The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market. She is the Henry Charles Lea Professor of the History of Science and Affiliated Professor of Earth and Planetary Sciences at Harvard University. A world-renowned earth scientist, historian and public speaker, she is the author of the best-selling book, Merchants of Doubt (2010) and a leading voice on the role of science in society, the reality of anthropogenic climate change, and the role of disinformation in blocking climate action.
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*This interview will be recorded on Monday, March 27.