The Implicit Market Fundamentalism of Interventionists

Abstract

The conventional wisdom in economic thought labels the Austrian School of Economics as “market radical,” while portraying other schools avs more nuanced or realistic. This article challenges that view, arguing that the Austrian School, rather than endorsing market fundamentalism, highlights the complexity and institutional fragility of markets, cautioning against uncritical interventions due to their potential to cause unintended disruptions. In contrast, interventionist schools may acknowledge market imperfections but otherwise maintain an unwavering confidence in the market’s ability to adapt and coordinate perfectly in response to policy measures. This implicit assumption reflects a robust form of market optimism that underpins many interventionist policies, revealing a paradoxical form of market radicalism often overlooked. By exposing this dynamic, the paper calls for a reconsideration of widely held perceptions and emphasizes the need for a more balanced understanding of the market’s capabilities and vulnerabilities with regard to interventionist policies. The paper can thus be understood as advocating for a revival of ordoliberalism, emphasizing the crucial role of institutional frameworks in sustaining market function and shaping prudent economic policy.