Market participation and rulemaking are two different functions. It would be a mistake to equate the profit motive that guides individual participants with the social considerations that ought to guide the setting of rules... How can [market fundamentalists] get away with it? Their first line of defense is that they are simply modelling how people behave: "People may talk about right and wrong, but when the chips are down they act according to their interests."...Soros questions both the existence of equilibrium and claims that "it is not the tendency to equilibrium that creates wealth, but the release of creative agencies... [which] does not ensure social justice." Emphasis added, because I am not sure what he means.
But... they are not modeling actual behavior; rather, they are building models on a peculiar assumption of rationality. Second, values are reflexive, and market fundamentalism tends to reinforce self-serving behavior in politics... Third, even if their models corresponded to reality, that would not make their argument right. Economic actions have social consequences that cannot be dismissed on the grounds that people are selfish.
That is where the market fundamentalists' second line of defense kicks in: "Markets tend toward equilibrium, so the pursuit of self-interest also serves the public interest." ...
He points out that markets take existing distributions of wealth as given; that common interest does not find expression in market behavior; and that financial markets are inherently unstable. Therefore political processes, despite their flaws, are necessary.
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