The Myth of the Market

A myth is a widely held but false belief or idea that serves to explain the status quo in a society. The function of a myth is to justify an existing social system and to account for its rights and customs already in practice. A myth provides people with explanations that enable them to direct their own actions and understand their own surroundings. The ideas behind the myth supporting neoliberal capitalism are articulated by Tim Harford in Adapt (2011), “the economy itself is an evolutionary environment in which a huge variety of ingenious profit-seeking strategies emerge through a decentralized process of trial and error… what emerges is far more brilliant than any single planner could have dreamed up.”1 The function of a mythological order is to validate and maintain a certain sociological system – a shared set of rights and wrongs, proprieties and improprieties, on which social units depend for their existence.

Darwin was not the first naturalist to propose that species change over time to a new species. In 1809 Jean-Baptiste Lamarck (1744-1829) described a two-part mechanism by which change was gradually introduced. The first part of Lamarck’s theory claimed species start out simple and consistently move towards complexity and perfection. The second part dealt with the inheritance of acquired characteristics. He believed that changes in environment or the conditions of life react upon organism in the direction of their needs or functions. This Lamarckian inheritance (mechanism of evolution) involved the inheritance of acquired traits. He believed that the traits changed or acquired over an individual’s lifetime could be passed down to its offspring. That is, when environments changed organisms had to change their behavior to survive. If a giraffe stretched its neck for leaves, for example, a ‘nervous fluid’ would flow to its neck and make it longer. Its offspring would inherit the longer neck and continued stretching would make it longer still over several generations.

Fifty years after the publication of the ideas around Lamarckian inheritance, Charles Darwin published his Theory of Natural Selection. The predictive power of Darwin’s theory rests on its specification of systemic selective forces, based on the algorithm of variation, selection and retention. Darwin never came to any satisfying conclusion about how traits were passed on from parent to offspring. Within a couple of decades of the publication of Darwin’s ideas most scientists accepted that evolution and descent of species from common ancestors were real. Natural selection had a harder time finding acceptance. By the late 19th century many scientists who called themselves Darwinists actually preferred the Lamarckian explanation for the way life changed over time.

Herbert Spencer (1820-1903) was a Victorian biologist and philosopher best known for developing and applying evolutionary theory to philosophy and the study of society. In Spencer’s view progress was a direct consequence of adaptation. He believed in Lamarckism inheritance of acquired characteristics in both biological and social evolution. This meant that populations can be modified by the actions of their members much more rapidly than if the process has to wait for the appearance of favorable characteristics by chance variation. He replaced Darwin’s natural selection with survival of the fittest. The concept survival of the fittest allowed Spencer to believe that the rich and the powerful become so because they are better suited to the social and economic culture of the time. He believed it was natural or normal that the strong survived at the cost of the weak. The belief that what was natural was morally correct was used by Spencer’s followers to justify opposition for support for the poor as it was believed welfare programs corrupted morals, as well as fitness.

John Cairns, Director of Cold Spring Harbor Laboratory (1963-1968), reported on an experiment in 1968 that suggested gene mutations were not solely the result of random chemical events as is currently perceived. In the experiment bacteria were slowly killed and then were given a chance to respond to the stress. The organism his team used was a strain of Escherichia coli that lacked the enzyme to use lactose as a metabolite. Into the organism they inserted scrambled code for the enzyme necessary to grow. Initially there was no growth, then two days later colonies appeared on the agar. Cairns called this process adaptive mutation – proposing they were mutations, or genetic changes that were much less random and more purposeful than traditional evolution. He claimed the results are consistent with Lamarckian inheritance of acquired characteristics. Some social scientists who were applying evolutionary theory began analyzing problems from the Lamarckian inheritance perspective.

With the election of Ronald Reagan neoliberal economic ideology became mainstream. In the 20th century, economics needed to catch up with the advances in science, turned to biology. Neoliberals treat the market as natural which allows natural science metaphors to be integrated into the neoliberal narrative. There is no real consensus of what the market really is, so neoliberals sought strategic interactions of the kind found in social systems which actually constitute Lamarckian evolution. The market was replaced with competition as the defining character of human relations including redefining individuals as consumers. William Davis observed the competitive principle was extended to all aspects of life, “Its advocates shifted from defending markets as competitive arenas amongst many, to viewing society-as-a-whole as one big competitive arena. To convert money into political power, or into legal muscle, or into media influence, or into educational advantage, is justifiable, within neoliberal capitalism.”2

In the 19th century, Herbert Spencer popularized the word evolution, and coined the phrase ‘survival of the fittest’, not Charles Darwin. Spencer’s reputation at the time rivaled that of Darwin. Spencer preferred the Lamarckian evolution of adapted characteristics in which he believed that societies like living organisms evolve from simple states into highly complex forms – equating evolution with progress. He saw evolutionary progress as an economic problem, worked out at the level of the individual. Today the market is considered an instrument of ‘natural selection’ that judges not on the basis of an individual’s ability to contribute to society, but on the basis of the individual’s ability to contribute to the production of surplus value and the accumulation of capital. Neoliberalism is characterized by the implementation of competition as a formal process in all kinds of management activities, and the adoption of post-benefit analysis as a measure of performance.

From the adaptionist point of view incremental adaptation and environmental selection are the cause of all characteristics, and such evolution has produced not only the optimal, but also the best of all possible worlds. Now the tendency is to equate morality and justice to fitness and adaptive value – following the erroneous assumption that evolution is progress. Each person as their own undertaking is a self-entrepreneur, existing in a series of prescribed relationships that are governed by the logic of self-improvement. It is up to us to make ourselves better, we are told, and the system simply supplies us with the appropriate tools to use – tasks to undertake and ladders to climb so that we may realize our potential. Neoliberal ideology claims the market ensures everyone gets what they deserve.

Just over a decade after Cairn’s announcement of adaptive mutation, further work in molecular genetics of bacteria imploded the Lamarckian theory that had been proposed. In order to respond to the stress of a nutrient poor environment, bacteria down-regulate their gene repair enzymes allowing a higher rate of mutation and a higher chance of a population that can overcome the challenge. In stress-enhanced bacteria, mutation is a regulated phenomenon in which the rate of mutation transiently increases several order higher than normal, triggered by stress. Similarly sub-inhibitory levels of antibiotics stress bacteria and increase the rate of mutation, which, in turn, selects for resistance. This is the result of selective advantage of induction of an error prone DNA polymerase, and illustrates the power of natural selection. The discovery of selective mutations made natural selection not just attractive as an explanation, but unavoidable.

The myth of the market as an evolutionary device serves as an explanation and a justification for, the presence of competition in all parts of social activities. For the past forty years, we believed this evolutionary process to be a source of progress, but now we realize we bought into an illusion. With a discrepancy between theory and data, the biologist will declare the theory is wrong, while the economist is comfortable with myths and develops narrative schemes to defend the myth. One specific example is the explanation following the general failure of financial markets in the global economic crisis that triggered the Great Recession. Neoliberal narrative claims markets as superior computational devices, thus the best people to clean up the crisis are the bankers and financiers who created it in the first place. Consequently there is no need to consider further regulations.

In the 19th century the doctrine of social Darwinism was promoted to justify laissez-faire economics and the minimal state, thought best to promote unfettered competition between individuals, and the gradual improvement of society through the survival of the fittest. The neoliberal insistence upon free markets has been closely associated with conceptions of evolutionary order. In 21st century the myth of the market hinges on the illusion of a supposedly natural order in the economic realm. In the so-called evolutionary environment of the market the income gap between the wealthy and the rest of society continues to grow. With the ongoing hollowing out of the middle class, this myth continues to provide a powerful ideological cover for neoliberal capitalism.

1 Roscoe, Philip. Dr Pangloss and the Best of All Possible Markets: Evolutionary Fantasies and Justifications in Contemporary Economic Discourse. https://core.ac.uk/download/pdf/20479786.pdf

2 Davis, William. (3 Aug 2016) How competitiveness became one of the great unquestioned virtues of contemporary culture. https://off-guardian.org/2016/08/03/how-competitiveness-became-one-of-the-great-unquestioned-virtues-of-contemporary-culture/

This entry was posted in economic inequality and tagged , , , . Bookmark the permalink.

2 Responses to The Myth of the Market

  1. Dragon says:

    Thanks for shirang. What a pleasure to read!

  2. All things considered, this is a first class post

Leave a Reply

Your email address will not be published. Required fields are marked *