Peter Espeut RELIGIONS COME in all shapes and sizes, and a fast-growing one with many influential members is the religion of market fundamentalism. I say it is a religion because to join that church, truly you have to have faith you have to believe that the market which you cannot touch or see is really our Lord and Saviour. You must allow the market to reign free in every situation and then everything will be right with the world.
As I have said before in this column, all religious fundamentalism is dangerous, and market fundamentalism is no different. It puts forward an ideology which is a strict understanding of the world and how it operates and how it should operate and anyone who does not comply is anathema, and various other choice epithets. What started as an observation of how people behave in certain situations, has been declared to be a natural law which prescribes how people MUST behave in every situation.
Now don't get me wrong: in certain situations the 'invisible hand' of the market is an extremely useful explanatory mechanism. It does explain the determination of prices with variation in supply and demand. It does explain how inefficiency is punished in the context of perfect competition. And there are many other cases in which the construct of 'the market' is a useful explanatory tool. The market is an excellent paradigm for understanding human behaviour in certain circumstances. Where we go wrong is when we say that humans MUST behave in all situations in the way this hypothetical construct called 'the market' says they will behave. We have now moved from description to prescription. In the science of logic, that jump is a non-sequitur, and many persons not schooled in logic have been taken in.
MARKET FUNDAMENTALISM
Let us apply the precepts of market fundamentalism to the taxi business to see how it works. Everyone who wants a licence to operate a taxicab should be allowed to get one, and taxi fares must be set exclusively by the market. What will happen is that at first the market will be flooded with taxicabs many more than the market can bear; they will scramble around for commuters, and will progressively improve their service and lower their prices; and only the most efficient taxis will survive the competition; and the inefficient cabs will lose money and eventually go out of business, providing more customers for those who remain. The consumer will benefit (cheaper fares and best service), and the efficient cabs will make money. This is a case when market fundamentalist ideas lead to a win-win situation for producer and consumer. Very few people will have sympathy for the losers - inefficient taxi operators; some may even argue that they deserve to be losers. And so market fundamentalists criticise the government for restricting the number of taxi licences, and for prescribing taxi fares.
LOW INCOMES
In the real world, however, there will be low incomes for all taxi drivers when the market initially is flooded with taxis. In an economy where there are few alternatives for largely uneducated people, inefficient operators will drop out very slowly, if at all. Yet the model seems like it might be valid, all other things being equal (like alternatives actually existing).
I have a serious problem when market fundamentalists seek to apply their doctrines to harvesting economic animals and plants (e.g. fish and Irish moss) from the wild. Let us apply free market fundamentalism to the fishing industry. Everyone who wants a fishing licence should be given one, and fish prices will be set by the free market. What will happen (especially with high unemployment) is that the sector will be flooded with fishers, competing with each other for the fish that are there. As competition increases, they will fish harder and seek to become more efficient by adopting more efficient fish-catching technology. Fish have a natural rate of reproduction, and catching fish faster than they can reproduce will lead to resource depletion. Before the inefficient fishers fall out of the fishery, the fish catch will decline, and fish prices will increase; and ultimately the fishery will collapse a loss-loss situation: fishers will lose their livelihoods, consumers will have to resort to imports, and the environment will be seriously maybe irreparably damaged.
In the manufacturing sector, the supply of commodities is determined by market-related decisions (i.e. production can be increased or decreased), and maybe here, market economics can be shown to apply; but where the commodity in the marketplace is derived from nature, where supply ultimately is not determined by market-related decisions but by environmental factors such as 'carrying capacity' and the 'rate of natural increase', the prescripts of the market towards unrestricted competition will lead to resource depletion, environmental degradation and poverty.
I could argue that that is exactly what we have in Jamaica with our fishing industry: an open-access fishery, with steadily more efficient fishing gear being employed, leading to overfishing of world-record proportions.
Surely this type of outcome is irrefutable evidence against market fundamentalism. What is required in Jamaica's fishing industry is proper management of our fishery resources: estimation of the carrying capacity of the habitat and of the maximum sustainable yield, and permitting the optimal number of fishers and efficient fishing gear which can capture the maximum possible fish catch that is sustainable over the long term; in the religion of market fundamentalism, this is a serious sin! As I have said in previous columns, scientists advise us that a managed fishery would result in a 300 per cent increase (by weight) of the national fish catch. Now, what is more efficient?
I am not seeking here to totally discredit the market ideology; I believe it has tremendous value as a descriptive tool in certain situations. I do not support inefficiencies in any economic sector, whether it is in shoemaking or bananas or sugar, and if the logical construct of 'the market' will help us to understand how to make manufacturing and agriculture more efficient, then let's use it! But to believe (as market fundamentalists do) that in every situation the application of free market principles will lead to efficiencies and rational results is misplaced faith and false religion.
Peter Espeut is a sociologist and is executive director of an environment and development NGO.
