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'Idolatry of the market'

This is an interesting critique:

A regime under the curse of a demonic ideology
By Alejandro Lichauco
(The Daily Tribune, 11/17/2008)
In the history of ideologies, that of the free market occupies a singularly unique role. Unique because it is the only ideology whose devotees claim that the elemental forces behind it can possibly do nothing wrong. And because free market forces can do nothing wrong it will be a mistake and a sin for governments to regulate them. Those forces are like the forces of the gods.

No wonder then that in his world-selling book, Go In Peace, the saintly Pope John Paul II, speaking against the free market ideology, warned against what he called its “idolatry.”

While conceding that market forces and mechanisms have their positive side, he warned that there are things which these forces and mechanisms can’t do and that there are matters which shouldn’t be entrusted to them.

John Paul II, to repeat, warned against what he called the “idolatry of the market.” Idolatry means the worship of earthly things as if they were gods.

It is in fact a satanic ideology. It claims that because the free market is all-supreme and all infallible, even governments and nation-states must give way to it. In fact, the forces behind that ideology claim that the sovereignty of nation-states must go and the entire global community should be run by the handful of men and women who make up the community of Chief Executive Officers of global corporations.

Well, if there’s one positive thing that the global meltdown has brought about, it is the admission by the free market ideologues — chief among whom is former US Central Bank chairman Alan Greenspan — that the free market ideology is flawed after all and that the free market forces should have been regulated and controlled by the State in the first place.

But the confession comes too late. The damage has been done. The curse has been let loose and it is working itself out with an impact and repercussion so devastating as to be without precedent in the economic history of the world.

Literally every nation who embraced that ideology and the premise that it can do nothing wrong has been devastated and the devastation is just beginning. But the most devastated of all, of course, is the United States which, at the height of its global power, used that power to literally con the entire global community into accepting it. There were., of course, a handful of nations whose leaders had more sense than that. Nations such as Vietnam and China and to a certain extent, Malaysia under Mahathir. And these two nations have been comparatively spared the global havoc.

But among the most ardent devotees of the free market ideology in Asia has been the Philippines. In fact, this country easily ranks as the most fervent devotee of the free market ideology in the Third World.

Gatt and the WTO as you know are the global embodiment of the free market ideology. And it was GMA, as chairman of the Senate committee on economic affairs, who pushed down Gatt and the WTO the throat of a docile Senate who then idolized the presidency of FVR. Between FVR in Malacañang and GMA in the Senate as chairperson of the economic committee, this country simply didn’t have a chance. Under the force and pressure of their joint sponsorship, this only “Christian nation in Asia” swiftly and fervently embraced an ideology which elevated market forces to the status of the gods.

Of course, the whole world now knows that those gods weren’t gods after all. They were plain demons, and the greediest, most corrupt of demons at that. And it is that demonic greed and corruption that have been let loose upon the world. The Philippines most specifically and most particularly included.

GMA should realize by now that her real enemy isn’t the opposition.

The opposition isn’t the real destabilizer, the real destabilizer is the hunger that has been let loose by the gods of the free market, the globalists as they call themselves. If the masses weren’t hungry, GMA won’t be in trouble. Corruption is a universal attribute and you will find that most rampant in the Vatican and even within the ranks of the bishops. This regime can be as corrupt and corrupting as Lucifer himself, but if the people had food on the table, GMA needn’t fear. They have more corruption in communist Vietnam, but the authorities in that country didn’t commit the mistake of idolizing the free market. And so you don’t hear of hunger in corrupt Vietnam, or in corrupt Malaysia.

If this regime is so very hated, that hatred has its primal roots in the hunger that now stalks and is rampant in the land... Corruption is only a minor root behind that hatred. The principal root, to repeat, is hunger. It is rampant hunger that will drive the hungry masses berserk and when they do go berserk, as they eventually will, there isn’t any power, money and cunning in the world that can save this regime from being torn literally apart.

The best thing that GMA can do for country — and herself — is to turn her back on the free market. As she turned her back on Iraq. That is perhaps the only thing she can do now to save her regime from being torn apart.

Posted by: Lawrence P. Villamar
Date posted: Apr 01,2009
Replied by: emil_samaniego | Date replied: Apr 25,2009

It is not idolatry and satanic because free market is not a matter of faith but of fact...

Friedrich Naumann says... | Date replied: Mar 31,2009

The problem with Mr. Lichauco’s analysis is that he attacks a straw man – "free-market idolatry." It is never quite clear what exactly that means. He praises countries like Vietnam, China and Malaysia under Mahatir for not subscribing to this "Idolatry," but then goes on to criticize GATT and the WTO as the embodiment of that despised ideology. This is odd, since China strove mightily to join the WTO a few years ago, and all three countries built their economic strategies around exports to the world market which is precisely what the WTO is supposed to safeguard. China, Vietnam and Malaysia have indeed been cautious about liberalizing their financial markets, but that does not amount to a total rejection of the market. Let us clarify.

The market mechanism basically means that supply and demand are coordinated by the free interaction of buyers and sellers, and that the price is the outcome of this interaction. This works best if there is competition among both buyers and sellers. The market is thus a tool for allocating resources according to the interaction of supply and demand. The only systemic alternative to that is allocation of resources by political decision – a planned economy. The experiences with planned economies around the world have made it abundantly clear that this is an inferior mechanism. There is no way government can assimilate all the information about preferences and cost structures that are implicit in supply and demand, and it cannot provide the same incentives to innovation as competition does. There is a good reason why practically all countries that tried it have abandoned the planned economy, and one of the few which hasn’t, North Korea, is noted for being one of the most hunger-afflicted places on this planet.

The real debate these days is therefore not about the market mechanism as such, but about the degree of government intervention in and regulation of the market. Very few would argue that the government has no role at all to play. Defining and enforcing property rights and contracts are among the tasks usually assigned to governments. Only radical anarchists dispute that, and they have never been ruling any country. There is a real argument, even among market-friendly liberals, to what extent markets are self-stabilizing and self-regulating. The German ordo-liberal school that emerged after WWII doubted that they are. Businessmen hate competition and, if left to their own devices, might try to undermine competition. Therefore the ordo-liberals assigned the task of maintaining competitive markets to governments, mainly through strong anti-monopoly and anti-cartel legislation and institutions, as well as free trade. This is because cartels and monopolies thrive in small, exclusive markets, but are hard to maintain the bigger the market, with global cartels being almost impossible to maintain.

The US traditionally has been less proactive in keeping markets open and has relied on tort legislation to punish those who do harm to competitors. Since competitors might be bankrupt by the time the case is decided, this seems less effective. There is also a case to be made for stricter regulation based on the liability principle, one of the key principles underlying a market economy according to the ordo-liberal school. It says that those making a decision have to be held liable for their consequences. This works well when owners of capital invest their own money directly – if they make risky investments, they stand to lose their money. In modern financial institutions, people invest other people’s money but are not held liable when things go wrong. They do get rewarded for short-term success though. That is a recipe for disaster. This is one of the key factors behind the current crisis, and one that arguably does merit stronger regulation from a liberal point of view.

So Alan Greenspan and the other devotees of Ayn Rand’s philosophy can be accused of taking too rosy a view of human nature and ignoring the problems with the incentive structure of modern financial markets. But that is not the same as rejecting the market economy lock, stock and barrel. Strangely enough, Mr. Lichauco doesn’t really look at the problems of the financial markets. He complains about international trade and the WTO – even though no serious economist claims that international trade caused the crisis.

Liberals indeed believe in the benefits of the free market because it is the best way out of poverty. Numerous studies have shown that countries with freer economies develop faster and have higher per capita income.

The Philippines is underdeveloped precisely because it is NOT a free market economy. It is a complete puzzlement that Mr. Lichauco came to the conclusion that “… among the most ardent devotees of the free market ideology in Asia has been the Philippines. In fact, this country easily ranks as the most fervent devotee of the free market ideology in the Third World.” There is no factual evidence to support his statement. In fact based on the Economic Freedom of the World (EFW) reports, an annual report published by the Frasier Institute, the Philippines is lagging behind.

The EFW discusses the degree of economic freedom around the world based on a composite Index that includes: size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally and regulation of credit, labor and business in 141 nations. It statistically tracks these changes over the years and shows that there is correlation between economic freedom, or the market economy, and development. In the 2008 report, the Philippines is ranked in the 75th spot. The highest we have been is in 1995 at number 22. Hong Kong continues to dominate the list. If the Philippines was truly a “fervent devotee of the free market” as Mr. Lichauco mistakenly believes, we would be a first world country. We would have easily ousted Hong Kong from the top spot. It is quiet evident that the Philippines is nowhere near Hong Kong, and will not be because our economy is not open like theirs is.

Those interested to see the Index can do so by either downloading it from here: or requesting a free hardcopy from us here:

The reason that “hunger … has been let loose” is because our government interferes too much where it should not. Let us analyze the main components of a free market and compare it with the situation in the country. 1. Protection of private property: It is very difficult for the poor to have access to land in the country. A prime example is indigenous Filipinos who are still fighting for their Certificate of Ancestral Domain Titles. 2. Voluntary exchange of goods: In order to promote this, contracts are very important and must be safeguarded. Unfortunately, in the Philippines contracts are so easily broken because of the weakness of our institutions including our judiciary. 3. Freedom to enter and to compete in the market: This is the third thing that is wrong with our economic system. It is very difficult to compete in the Philippines. Ports and shipping are good examples – they are controlled by a few families – which is why it is cheaper to ship a container from Hamburg, Germany to Manila than from Davao to Manila. For another example, look at government bids and projects. Most often it is not the most competitive company that wins, but the company that is either closest to high-ranking government officials or the one that gives the largest kickbacks. The furor over the World Bank report on road projects is a good illustration.

Filipinos are hungry because there are too little free market policies going around. The government interferes where it should not and is lax where it should be: protection of property rights, contracts and fair competition. Blaming the problems on the WTO and the global market diverts attention from the real reformist work needed at home to give the poor a fair chance in life.

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