The ideology of the free market and its social consequences

The economic policy orientation of the past decades was largely shaped by the way of thinking that the market sees as a superior mechanism for the distribution of resources. This world of ideas has not only changed the academic landscape, but also determined the real actions of governments and international corporations. originally developed as a theoretical concept,this current developed the enormous political penetration and shaped the global economic structures according to their image. The consequences of this paradigm shift are omnipresent today in the form of growing inequality and recurring economic dislocations. It is a profound transformation that affects the coexistence of people and the distribution of prosperityhas changed sustainably.

The academic roots of market-based dogmas

The theoretical foundations of this economic philosophy are made up of different academic currents, each with different priorities. The Freiburg School of Denk emphasized the need for the strong state, which creates the ordering framework for competition in order to prevent monopolies. At the same time, the direction of thinking from the United States developed, whichregarded the control of the money supply as a central instrument of economic policy. The further influential school of thought from the European area focused on the absolute development of the individual and emphasized the quality of man to increase prosperity through independent action. These diverse intellectual sources unite to the comprehensive world view thatBoth real goods production and financial flows are explained.

The political attraction of the promise of freedom

Beyond pure theory, this thought unfolds the enormous attraction to political decision-makers and business representatives. The central promise of this teaching is freedom, which is particularly popular with conservative forces and parties who carry this term in their name. Advocates of this direction are convinced that the stateIntervention free market automatically leads to the well-being of the whole society as a result of the rational decisions of the parties involved. From this perspective, individual striving for one’s own advantage inevitably leads to collective and global progress. Rational action on the market is understood as liberation from irrational constraints and state paternalism.

Reality refutes the theoretical assumptions

On closer inspection, however, this doctrine turns out to be a pure ideology, the basic assumptions of which have long been refuted by modern behavioral research. The reduction in regulatory reductions in the financial sector has by no means led to more freedom, but rather to extreme undesirable developments and to increasing economic crises. The model of the rationally controlled economic operator is thatArtificial thought model that has nothing to do with actual human decision-making behavior. In addition, the modern financial markets in their total networking are more like virtual trading rooms, in which manipulation and targeted mood-mongering set the tone. The reality of economic activity is represented completely distorted by these theoretical models.

The ignoring of power and market power

In this ideological building, the power factor is consistently hidden, although it dominates economic reality. Large corporations and in particular financial companies have such market power that they can shape political framework conditions in the countries of their activities according to their own wishes. This unbridled freedom action is also reflected in the exploitation ofInformational advances in the creation of overly complex financial products. Abstract securities are created that are completely decoupled from real goods production and are based solely on the bundling of loans. Trading becomes even more abstract if only the likelihood of credit defaults is bet instead of creating real economic values.

The decoupling from the real economy

It is hardly understandable that such bets on the failure of other economic operators are firmly anchored in the business models of the financial institutions. Nevertheless, this corresponds to the reality of the deregulated financial world, in which uncontrolled sales of products that are useless in real economy are possible without sanctions. However, supporters of this market theory see no connection between theirsworldview and the rise of pure financial capitalism. When it comes to evaluating real economic processes, they stay stubborn on their line once in a row. Theoretical justification serves to protect one’s own privileges and to ward off criticism of the systemic risks.

The impact on global economic policy

When advising countries that are considered economically weak, the principle of so-called offer orientation is shown in its entirety. This policy aims to improve investment conditions, which in practice leads to massive wage and price reductions. The direct consequence is the targeted expansion of the low-payment area, whileat the same time the capital side is disproportionately rewarded. The compulsive adherence to state austerity measures in times of economic hardship also bears the clear stamp of this ideology. The affected populations must bear the costs of this policy, while the theoretical promises of the blooming landscape remain unfulfilled.

The historical classification of market radical ideology

If one looks at the historical development of this economic philosophy from the overarching perspective, the system that has become a purpose for itself is revealed. The original idea of generating prosperity for society as a whole through free competition was replaced by the practice in which financial elites skim off social wealth. the refusalQuestioning one’s own dogmatic principles means that necessary reforms are blocked and social tensions continue to increase. True economic stability and social cohesion cannot be achieved by absolating individual profit interests. It is necessary to return to real value creation and the clearsocial regulation of markets to ensure the future viability of the global economic system.