My buddy Mike wrote a great post comparing Free Market ideology to Christian ideology (ultimately making a convincing argument that Free Market Conservatism is a form of idolatry). I liked his analogy so much that I wanted to make a contribution. Please read Mike's blog post first, so that you understand the context.
The left, at its best, does not claim access to Truth. “There is no big Other,” as Lacan said. Instead, the left-at-its-best only points out that which is not Truth (which is essentially everything). The left-at-its-best tears down ideology; while, conservatism, at its purist is an attempt to maintain the dominant order—an order built on ideology. The left tears down (the critique), and the right builds-up and reinforces (the apology). (Perhaps I’m not perfectly capturing the right-left dynamic, but I think it fits this discussion of this particular political divide quite well.)
Mike used the acronym TFM for The Free Market, “because acronyms are sexy,” so I’m going to adopt his terminology.
The central difference between conservative and leftist economics right now, is that conservatism has faith in TFM (the God of the Market); whereas, the left has doubts. And there is good reason to doubt TFM. Because TFM has never and will never exist. It is a utopia, a construct, a dream. Like mercury, it combusts as soon as it is taken out into the air. This is because if ever there is a single government involvement in the market, the tiniest “distortion” and the market is no longer TFM. This is useful to conservative ideology. When markets fail--and they have a tendency to collapse spectacularly--Conservatism can always shield its faith in TFM by blaming government. The market never fails because of TFM; if the market fails it is because TFM was driven away by the unholy presence of government. If TFM is the Holy Spirit, then “government” is Satan’s presence on Earth.
So for conservatives in 2008, it was not the derivatives market that failed, instead it was government intervention in the housing markets that caused the biggest credit crunch since the Great Depression. (Never mind that the derivatives market was the primary driver of the housing bubble, and never mind that the derivatives market was expressly exempted from regulation by the CFMA). When the God of the Market fails them, conservatives see it as a test of their faith in TFM’s principles.
There is another factor complicating my analogy, however, because anyone who has read Coase should also know that the markets rely on governments to provide a basic structure—rules that allow a market to function. Without police, “property rights” become empty. Mob rule, and violence can take the place of voluntary market transactions if there is not a strong regulatory structure. As a result, without government, the market devolves into a Hobbesian state of nature. Government is a necessary condition for efficient markets.
“Government,” TFM says, “can’t live with it; can’t live without it.” This puts us humans in a double-bind--no intervention, and the market falls apart; some intervention (such as subsidizing the rich by paying for the enforcement of their property rights) and suddenly there are distortions that get rid of perfect TFM. We can't win.
Perhaps, the reason we never seem to be worthy of TFM is because we live in a carnal and fallen state. Our only hope, is to give ourselves entirely to TFM, devote our lives to it, and hope that TFM will make-up the difference. Hence, Free-Market conservatism is idolatry.