George H. Blackford, Ph.D.

 Economist at Large

 Email: george(at)


It ain't what you don't know that gets you into trouble.

It’s what you know for sure that just ain't so.
Attributed to Mark Twain (among others)


Economic Papers
Political Essays


The Utopian Capitalist's Grand Delusion

George H. Blackford, 2013

Free-market ideologues have a fundamental belief that free markets work to protect our individual freedoms and that government interference in free markets leads to totalitarian socialism.  As part of this belief they are convinced that whenever the government interferes with a market it does more harm than good.  They are also convinced that if markets are left free they will self regulate to eliminate whatever problem the government thinks it is trying to solve without threatening our freedom, and they believe that the only way to provide economic growth and prosperity and to protect our freedom is to get the government out of the way and let the free-market system function to solve all of our problems.  (Hayek Mises Friedman ACU Amy

In their minds they know that all of this is true, and in knowing that all of this is true they also know that whenever there is a problem in a market it must be the government’s fault and in the name of freedom it is their duty to find out where the government went wrong and to explain it to the public to protect our freedom.  As a result, in their minds today’s financial crisis is a wonderful example of the harm that is done by government regulation, and it is their job to figure out how the government caused this problem and explain this to the world so that others can know what they know and the world can be made free.  And virtually nothing can shake this belief in what they know to be the inalienable truth about the government and markets. 

If you try to debate these fundamental beliefs with them the argument never ends because they have a logical answer for any possibility you might bring up.  Why?  Because they live in a delusional world in which the government is the source of all evil and markets are the source of all redemption, and in that world anything that goes wrong must either be the government's fault because it interfered with free markets or the individual's fault because he or she didn't abide by the rules of free markets.  Since they start with this assumption they can always prove their point by going back to this assumption in the same way that if you start by assuming a circle has three sides you can prove that a circle has all of the properties of a triangle by continually going back to the assumption that a circle has three sides.  When you point out that real world economic circle does not have three sides they respond, with righteous indignation, either that real world economic circles are enough like a triangle that the fact it does not have three sides is unimportant or that, if it is important, the way to fix the problem is to make real world economic circles more like their delusional world's economic triangle!  (Friedman)

It is of no consequence to them that the three-sided economic circle from which their theories flow are static and assume perfect markets where no actor has economic or political power, everyone is perfectly informed as to the nature and consequences of the choices available to them, and the economy is always in perfect equilibrium with no unemployment, whereas, the real world economic circle is dynamic, markets are not perfect, actors do have economic and political power, only a select few have the information necessary to be adequately informed as to the nature and consequences of their choices, the economy is not always at full employment, and it is impossible to transform this real world circular economy into their delusional world triangular economy.  These are all trivial details in their minds that obscure, but do not refute, the ultimate truth of their beliefs.  (Amy Dowd Fox Kuttner Phillips Smith Taleb)

There is simply no way to defeat this kind of logic.  In trying to do so the argument never ends because there is a logical answer for any possibility you might bring up as the discussion evolves into an endless circle, and no amount of empirical evidence that contradicts their triangular view of the world can shake their faith in it or defeat the tautological reasoning with which they defend this world. 

Assuming the government is the source of all evil and markets are the source of all redemption tells us nothing about the role of government and markets in the real world, just as assuming a circle has three sides tells us nothing about the nature of circles in the real world, and it is patently absurd to believe that it does.  But if these arguments are so patently absurd why aren't they drowned out in the free marketplace of ideas?  The answer is quite simple: The free marketplace of ideas is not free! 

Much of the success of the Conservative Movement in the United States over the past forty years can be attributed to a network of well funded right-wing think tanks that are dedicated to advancing the ideological views of Ayn Rand, Friedrich von Hayek, Ludwig von Mises, and the Chicago School of Economics.  The ideological views promoted by these think tanks provide the intellectual foundations for what has come to be known as Neoconservatism in the United States and Neoliberalism in the rest of the world.  (Harvey)  The most well known of these think tanks are the Heritage Foundation, Cato Institute, Ayn Rand Institute, Ludwig von Mises Institute, and Scaife Foundation, but there are literally hundreds more listed on the Heritage Foundation's website

Along with their corporate sponsors, these think tanks are funded by ideologically minded, wealthy individuals such as Richard J. Stephenson, Peter G. Peterson, Robert Mercer, Roger Hertog, Bruce Kovner, Richard Mellon Scaife, Peter and Joseph Coors, Charles and David Koch, Walton family, DeVos family, and the American Enterprise Institute to name but a few.  Combined with right-wing Political Action Committees, these think tanks hire thousands of individuals to do research and to write papers and books to propagate their views.  They flood television interview shows, talk shows, and news programs with their representatives to put forth their arguments.  (Dolny)  They dominate talk radio and literally control Fox News.  They pay for marketing research to sell their ideas and use focus groups to find the best way to present their ideas and when necessary to find the best ways to conceal their views when their views are rejected by the public.  They come up with and distribute talking points to coordinate their presentations and arguments.  They run educational seminars to train political candidates on what to say and how to say it so as to focus the debate on divisive issues such as gay marriage or gun control or racial prejudice or abortion or whether Obama is a Muslim or controlled by William Ayres in order to avoid issues of substance.  They flood the internet with slanderous emails and bogus websites designed to further their agenda.  They function as a huge Right-wing Propaganda Machine to implant their ideas and their utopian view of reality into the mind of the body politic in an effort to attain their ends.  (Westen Lakoff Hartman Frank Kuttner Domhoff

The onslaught from the operatives of this movement is so massive that it has virtually dominated the political and economic debate in this country and throughout much of the world for over forty years.  All you have to do to see how effective this movement has been at selling its distorted view of reality is to note that a substantial portion of the American electorate believe that the source of all of our problems is a bunch of liberal politicians in Washington in spite of the fact that there hasn’t been a liberal president in this country since Lyndon Johnson, and virtually all of the liberals in Congress were purged in the 1980s and early 1990s to the point that Liberals have represented an insignificant minority in our government since then.  Even President Obama, who conservatives hold out to be a flaming liberal, modeled his healthcare plan on a proposal put forth by the ultraconservative Heritage Foundation back in the 1990s and can be considered, at most, a moderate on the basis of any objective criteria. 

During the last forty years a right-wing, free-market ideological bias has been instilled in the mind of the American body politic to such an extent that right-wing conservative political leaders have brought into being a series of free-market economic policies that have led to utter chaos and an unmitigated disaster, not only for our own society, but for the entire world.  And in spite of this, a very large proportion of the American electorate believes that somehow all of this has been brought on by the policies of liberals!   

The ideologues who fuel the ideas of this movement are extremely powerful, and they are dangerous.  (Frank N Klein Mayer Altemeyer MillerThey are doing everything within their power to destroy our government—to “drown it in a bathtub” in the metaphorical language of Grover Norquist—and, in so doing, are in the process of destroying our country.  

The free-market ideologues who find a home at the Ayn Rand Institute, Heritage Foundation, Ludwig von Mises Institute, Cato Institute, Scaife Foundation, American Enterprise Institute, and at many other right-wing think tanks as well as at innumerable Political Action Committees have provided the ideological basis for the ideas that have fed the Right-wing Propaganda Machine in our country.  This machine has shifted the political spectrum dangerously to the right, and has had a profound influence on the world in which we live.  Most of the individuals that have provided the ideas that feed this machine have spent their entire lives proving with irrefutable, a-circle-has-three-sides logic that the government creates all problems and cannot solve problems.  It should be no surprise that when their surrogates gained complete control of the government in 2001 they were unable to make it work.  Why would anyone think they could make it work?  After all, their mentors had spent their entire lives proving to themselves and others that government can’t work. 

But there is another, more fundamental, reason why free-market ideologues can’t make government work: There is no conceivable way in which unregulated, free-market capitalism can work.  The very concept of a free-market economy unencumbered by government is a utopian fantasy.  The only world in which it could possibly exist is in the mythical world of Atlas Shrugged where all of the free-market ideologues who imagine themselves to be the productive members of society run off to be free of nonbelievers.  In this make-believe, Randian world there is no need for a government since all the productive people just get along and everyone agrees to do the right thing.  This is a world in which there is no need for public roads, public schools, public health, judicial or criminal justice systems, police or fire departments, national defense, or social-insurance programs.  All of the problems these institutions of government are designed to deal with are magically assumed to disappear in their imaginary, make-believe world that the productive people are supposed be able to create for themselves.  But that world is a dream, a fantasy, a delusion.  That world is even more utopian and imaginary as the worlds of Thomas More, Robert Owen, or Charles Fourier

In the real world we don’t all get along, and a functioning society requires a functioning government that provides public services such as public roads, public schools, public health, judicial and criminal justice systems, fire departments, national defense, and social-insurance programs that only government can provide, and even the free-market ideologue is forced to face this fact when push comes to shove.  This is especially so in times of economic crisis. 

As Polanyi prophetically pointed out over sixty years ago, in times of economic crisis it is inevitable that, in the real world, the powers that be will turn to the government to protect themselves from being destroyed by the ravages of a free market, irrespective of ideology.  This is exactly what has been happening in Washington since the crash in 2008, and it is happening throughout the world no matter the form of government—democratic, plutocratic, or autocratic—and no matter how dedicated the powers that be profess to believe in unregulated, free-market capitalism. 

It is no accident that the very institutions most instrumental in bringing about the deregulation of the financial system—Citigroup, Bank of America, AIG, Wells Fargo, JP Morgan Chase, Morgan Stanley, Goldman Sachs—were first in line at the public troth when the TARP financial welfare program began handing out money.  (NYT Harvey Johnson)  These are the institutions that had the political clout to deregulate the financial system in the first place and whose managers and executives made billions from deregulation when the mortgage and securitization bubbles were souring—all in the name of free-market capitalism.  Is it a surprise they also had the political clout to organize a government bailout for themselves when the house of cards they created came crashing down on the rest of us?  

It is inevitable that markets will be interfered with and will in some way be regulated.  The only question is regulated by whom and to serve what ends:  Are they to be regulated by free-market ideologues to serve the ends of a plutocratic, corporate welfare state, or are they to be regulated by the people within the context of a democracy to promote the general Welfare? 

The only sensible, pragmatic way to regulate markets is to regulate them so as to prevent crises before they occur rather than allow markets to run wild and then have the government try to clean up the mess in the midst of a catastrophe.  This is the way markets must be regulated if the government is to promote the general Welfare.  This was the lesson learned from the Crash of 1929 and the Great Depression, and this was the guiding principle of regulators before the rise of the Utopian Capitalist of the Conservative Movement in the 1970s.  It is not the way markets are regulated by free-market ideologues. 

Free-market ideologues believe in making money before, during, and after a catastrophe and in using the government to protect their interests throughout the process.  They deregulate markets when it serves their interests and interfere with markets when it serves their interests, and their interests always seem to be in line with those of the plutocracy and seldom coincide with those that promote the general Welfare.  (Harvey Johnson Kuttner Amy Phillips Domhoff)  The ideological purest are, of course, appalled by this but see it as the lesser of two evils—socialism versus freedom—as is exemplified by Milton Friedman’s rationalization for his association with the Chilean dictator Pinochet

All of this should be obvious.  The difficulty arises when the arguments from the debates over these issues are fed through the Right-wing Propaganda Machine where reasoned arguments are condensed to a set of inane slogans:  Government doesn’t solve problems; government is the problem.  It’s your money and you know how to spend it better than the government does.  Taxes are a burden that must be cut to eliminate government waste.  The only way to control wasteful government spending is to cut taxes.  Government regulation stifles innovation, economic growth, and progress and must be eliminated.  We have to get the government off our backs.  The problem is the intellectual liberal elites that think they know better than you do.  These big spending tax increasing liberals promote feminism, abortion, and homosexuality.  They have taken God out of our schools and are destroying the family.  These left-wing, socialist, tax and spend, intellectual, liberal elites are bringing our country to ruin!  In the name of God, mother, country, all of humanity, and your family pet these feminist homosexuals must be stopped!  And the only way we can stop these Godless, baby killing abortionists is to cut taxes on the wealthy; cut government programs that promote the general Welfare; privatize Social Security, Medicare, and our education system; eliminate Medicaid and other welfare programs; spread freedom throughout the world; and get rid of government regulation! 

This is literally the level at which the Right-wing Propaganda Machine wages its war against our democratic government. 

Given the duplicity by which the Right-wing Propaganda Machine has driven these ideologues to power, it should be no surprise to find the intellectual and political hacks that have risen to the forefront of this movement are dangerous—that they ignore the Constitution in pursuit of their goals and threaten the very concepts of freedom and democracy on which our country is founded: 

  1. It is no accident that they diverted arms allocated by Congress to support Israel to Iran in order to fund a war in Nicaragua that Congress had declared it illegal to support, all in the name of freedom, and ignored the fact that the Constitution gives Congress the exclusive right to raise money and to determine how it is spent.  (GWU

  2. It is no accident that they ignored the Constitution in setting up a surveillance system that allowed them to record and listen to the communications of anyone they wish without an order by a court as is required by the Constitution.  (Dean

  3. It is no accident that they subverted the intelligence agencies of our government to provide intelligence that ‘justified’ an invasion of Iraq (Isikoff) to bring their concept of ‘freedom’ to the Middle East, namely, a free-market economy, (N Klein) to get around the intent of the Constitution’s provision that only Congress can declare war.  No matter that it completely destabilized the region and hundreds of thousands of innocent people died.   

  4. It is no accident that they ignored the Constitution when they abandoned the Geneva Convention and setup up secret prisons around the world where they can secretly hide people that got in their way as they pursued their ideological ends.  (Mayer)  

  5. It is no accident that they ignored the Constitution when they arrested people without charge, held people without trial, and denied the right of habeas corpus—the most fundamental right of civilized man—to those that got in their way.  (NYT

  6. It is no accident that they sent secret bands of men to Guantanamo, Abu Ghraib, and half a dozen or more secret prisons throughout the world to torture people indiscriminately in pursuit of their ends. (Mayer)

  7. And it is no accident that since the free-market ideologues began dominating the political debate in the 1970s, the United States has achieved the highest rate of incarceration in the world. (Mauer)   

  8. Finally, given their blatant disregard for the Constitution and the law in serving their greater good, it is no accident that the end result of the rise of Utopian Capitalism and their takeover of the American government in 2001 is the most corrupt government in the history or our country.  (Mayer N Klein Frank Chandrasekaran Isikoff Kuo Ricks Miller White Altemeyer)

Their ends are so pure, so self evident, so universal, so beautiful, so magnificent, so eternal and everlasting in their minds that they justify any means that serve their ends.  After all we are talking about FREEDOM here.  How can we possibly let a small matter like the Constitution of the United States of America get in the way of FREEDOM! 

As I have said, free-market ideologues are delusional and they are dangerous.  They do not live in the real world.  In the real world unregulated free markets lead to dangerous foods, drugs, and other goods being fraudulently or negligently foisted on an unsuspecting public; unrestrained pollution of the air we breathe, the water we drink, and the ground on which we live; increasingly dangerous and harmful work environments; an inequitable distribution of income and wealth; and fraudulent and reckless behavior in the financial markets that bring about economic catastrophes that threaten the wellbeing not only of those that participate in these markets, but of innocent people that have no direct involvement in these markets at all.  This is the history of unregulated, free-market capitalism, and this history is absolutely undeniable. 

At the same capitalism has proved to be the most powerful engine for economic growth and prosperity that mankind has ever seen.  For hundreds of thousands of years the vast majority of mankind lived in abject poverty.  Only during the last two hundred years, primarily as a result of Capitalism, have various societies been able to escape this fate.  This is also the history of Capitalism, and this history is also absolutely undeniable.  (Heilbroner Schumpeter Polanyi

But it is not free markets that has brought this about; it is regulated markets within a democratic system of government that has brought this into being.  (Kuttner Amy Phillips Lindert)  It is the intervention in free markets by democratic government that has brought capitalism to serve humane ends.  In the absence of a powerful force to intervene in free markets to serve humane ends, capitalism promises to become a cancerous growth on humanity that will devour the very planet on which we live.  The only force available to intervene in markets to constrain them to serve humane ends is a democratic government, and it is clear from the history of Capitalism that we deny this reality at our peril. 


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