According to John Quiggin, the standard features of "economic fundamentalist rhetoric" are "dogmatic" assertions and the claim that anyone who holds contrary views is not a real economist. John Ralston Saul claims this is simply a form of bullying. This approach flows from evidence that neoclassical economics provides us with a scientific explanation of economic phenomena, an explanation that economists state represents the status of scientific truth (if, and only if, all the assumptions involved in deriving the economic analysis are simultaneously satisfied). However, as Kozul-Wright points out on his book The Resistible Rise of Market Fundamentalism, this "ineluctability of market forces" neo-liberals and conservative politicians tend to stress, and their confidence on a chosen policy, rest on a "mixture of implicit and hidden assumptions, myths about the history of their own countries' economic development, and special interests camouflaged in their rhetoric of general good".
A full description of the origins of the free market economics dating as far back to the conception of natural laws as mathematical, eternal and absolute — a reflection of some perfect mathematical form — derived from ancient Greek philosophers Pythagoras (569–500 BC) and Plato, and reinvigorated by the Enlightenment is way beyond the scope of this article, but can be read on Chapter 4, A Brief Account of the Historical Origins of Economic Fundamentalism, in Dr. Lee Boldman's book (2007) . The expression is now used by various authors writing on economic topics to signify an allegedly unjustified belief in the ability of markets to solve all problems in a society. The term has been used, pejoratively, to criticize some groups which are mainly viewed as advocating strongly against "any" state regulation and defend a "totally" free market. It is also used to disparage the arguments of the proponents of "the virtues of radical free-market economics" or, in Soros' own words, against the "ideology" which "has put financial capital into the driver's seat."
Joseph E. Stiglitz used the term in his autobiographical essay in acceptance of Nobel Memorial Prize in Economic Sciences to criticize some International Monetary Fund policies: "More broadly, the IMF was advocating a set of policies which is generally referred to alternatively as the Washington consensus, the neo-liberal doctrines, or market fundamentalism, based on an incorrect understanding of economic theory and (what I viewed) as an inadequate interpretation of the historical data."
While the term market fundamentalism is relatively new (the use of word "fundamentalism" itself is recent. Until 1950 there was no entry for "fundamentalism" in the Oxford English Dictionary; the derivative fundamentalist was added only on its second 1989 edition, with the meaning: "an economic or political doctrinaire" ), the concept of economic liberalism is not: the ideas were re-born in the 18th century, with the works of Adam Smith and Jean-Baptiste Say . It was only in the 20th century that the relative sophistication found in Smith’s work would be reformulated by economists such as Friedrich Hayek, Joseph Schumpeter, and Milton Friedman (of the Chicago School of economics of the 1960s and 1970s), resulting in a recipe for a free market economy: deregulate business and trade, restrict state intervention, and let the energies of entrepreneurship and free-flowing capital generate wealth for all of those who participate in the economy.
After the influence of Friedman and the Chicago boys (University of Chicago-educated Chilean economists) on the Miracle of Chile under the Augusto Pinochet regime in the 1970s, similar models were adapted by Prime Minister Margaret Thatcher of the UK (Thatcherism) and President Ronald Reagan in the U.S. (Reaganism) in the early 1980s.
In the late 1980s the Bretton Woods Washington-based financial institutions, (International Monetary Fund and the World Bank) and the U.S. Treasury Department embraced the Washington Consensus, a standard set of policy prescriptions for crisis-wracked nations which include measures such as eliminating state subsidies, redirecting social spending into infrastructural development and reducing taxes., or as Stiglitz summarized, promoted the proselytism of a universal set of economic policy recommendations: "stabilise, liberalise and privatise" (Stiglitz, 1998:21-22).
Along the last couple of decades, in the United States, every time the credit expansion ran into trouble the financial authorities intervened, injecting liquidity and stimulating the economy . This system of 'asymmetric incentives' (also known as "moral hazard"), encouraged ever greater credit expansion . Since 1980, financial regulations have been progressively relaxed until they have practically disappeared . According to George Soros, "The system was so successful that people came to believe in what former US president Ronald Reagan called the magic of the marketplace and I call 'market fundamentalism'," "Fundamentalists believe that markets tend towards equilibrium and the common interest is best served by allowing participants to pursue their self-interest. It is an obvious misconception, because it was the intervention of the authorities that prevented financial markets from breaking down, not the markets themselves."
Richard Kozul-Wright and Paul Rayment: The Resistible Rise of Market Fundamentalism: Rethinking Development Policy in an Unbalanced World.(Book review)
Oct 01, 2011; Richard Kozul-Wright and Paul Rayment The Resistible Rise of Market Fundamentalism: Rethinking Development Policy in an...