Market mysticism and the misinformation that dudded Australia

Australia didn't just embrace market economics; it embraced the myth that efficiency alone could deliver fairness, prosperity and the common good, writes Dr James Schuurmans-Stekhoven.

IN THE SCHEME of modern public policy, “efficiency” has been elevated from a technical economic metric to a sacred moral virtue.

We are conditioned to take it as a tenet of faith that if a market can do it, it should do it and that any mechanism slower, more deliberate, or more equitable than the the holy ghost… sorry, invisible hand… is an unwelcome friction in the gears of progress.

Yet, this blind devotion to market-led efficiency is not a law of nature; it is a profound, often unexamined, value judgment.

Since 1980, a swathe of economic evangelists such as Milton Friedman led a pseudo-spiritual revival, proselytising that our economic end was nigh without a salvic market renewal. The converts, in their “come to Jesus” moment, awakened and anointed with the spirit of market-driven efficiency, frequently fell victim to the novelty fallacy — the seductive but flawed belief that anything modern or “disruptive” is inherently superior to the stable, time-tested structures inherited from our ancestors.

Make Australia fair dinkum again

Rising inequality, not immigration, lies at the heart of the nation's growing social and economic tensions.

The market as a value choice

“Efficiency” was declared sacrosanct: the ultimate and supreme goal being speedy resource allocation to consumers who, supposedly immune to advertising, always know what is in their best interest. The dignity of the process or impacts on cultural capital was not even an afterthought.

Yet even when efficient, markets are not supernatural. At their core, markets are merely voting systems, albeit lacking political equality. In unfettered variants, the cashed-up get a greater say-an immutable truth that the economic elect conveniently withheld from the congregants.

In accepting markets as our primary allocation mechanism, Australians were defrauded in two ways: cynically by this crucial information being held asymmetrically (which, ironically, even the priesthood admits undermines the efficient market hypothesis) and by the outright falsehood that the market blesses all its adherents via trickle-down. A promise emptier than a 2007 Goldman Sachs derivative.

The market’s “manna from heaven” never materialised. Collectively, we naively swallowed the hope that the market would bestow all its blessings while, ironically, the very same faith-healers chanted “there's no such thing as a free lunch”.

The arcane truth guarded deep in the inner sanctum — efficient markets disproportionately privilege the haves. Those with the resources. We, like sheep, were led astray. The miraculously “innovative market” was sold with the zeal of a charismatic preacher. Australians filled with the spirit of market revival were conned. And many established, community-based traditions – which prioritised social cohesion over transaction speed – were wholesale dismissed as quaint relics.

This novelty fallacy led to the rejection of the wisdom inherent in the ancestral practices of stewardship and mutual aid. They were heretically condemned as “inefficient” simply because they were not written in the holy neoliberal scriptures.

However, this 20th-century economic reformation masked the reality that efficiency is rarely neutral. It is always efficient in relation to a set of starting conditions. If those conditions are characterised by vast inequality, the market will efficiently grow that inequality, labelling the result “optimal”.

Capital Gains Tax reform could spell the end of neoliberal Australia

Australia’s debate around tax reform challenges a system that has driven inequality and locked a generation out of housing.

The WWII precedent: Allocation beyond profit

The vacuous fragility of the “sanctity of the market” argument is best exposed by moments of existential crisis, such as the Second World War. During the 1940s, Western nations, including Australia, faced resource scarcity on a scale that would have collapsed a pure market system. The market mechanism, which relies on price signals to manage demand, was deemed too slow, too cruel and too prone to failure during a national emergency.

Instead, societies turned to explicit, non-market mechanisms: rationing, price controls and state-directed production. These systems were not designed to maximise profit or “efficiency” in the shareholder sense; they were designed to ensure survival and social cohesion. They relied on a communal recognition of the common good. We did not leave the allocation of rubber, fuel, or steel to the highest bidder; we allocated them based on a collective agreement about what was necessary for the war effort and the subsistence of the population.

WWII proved that when the stakes are high enough, we instinctively recognise that markets are insufficient. We prioritise justice and stability over speed. Modern discourse often treats these wartime measures as historical relics, but falling for the novelty fallacy prevents us from seeing them as valid, high-stakes tools that prove human cooperation can often outperform market competition.

The necessity of constraints: Law as the moral frame

If markets are the economic engine, then laws and regulations are the steering wheel. Proponents of total market freedom often view regulation as “distortions”, yet this is a misunderstanding of what a market is. A market cannot exist without the legal infrastructure of property rights, contract enforcement and commercial law.

Social mechanisms – laws, labour standards, environmental regulations and universal public services and cultural mores – are the ways a society asserts its values. They are the mechanisms by which we define what is off-limits to the market. When we ban child labour or mandate pollution controls, we are essentially saying that there are human and ecological values that must not be traded for efficiency gains.

These regulations are the “friction” that prevents the market from racing toward a result that society deems morally repugnant. These rules codify ancestral lessons about the dangers of unchecked greed, lessons we are currently tempted to discard because they appear “old-fashioned” compared to the sleek, new promise of unregulated markets.

Australia’s real economic challenge isn’t welfare dependency — it’s inequality

Economic inequality in Australia is the worst it's been in 20 years — if the goal is to improve living standards, our leaders should be addressing it.

The erasure of equity

Why, then, is equity so often left out of the policy equation?

The exclusion of equity is a feature, not a bug, of the neoliberal canonical tenets. By stripping the conversation down to the divinity of “efficiency”, we strip away the moral complexity of the human experience. Equity is difficult to measure; it requires value judgments, political struggle and empathy. Efficiency seems easier to measure; it requires only a calculator.

By framing social issues as “economic” problems, the neoliberal clergy successfully depoliticised them. These theologians turned questions of justice, such as “Does everyone have a right to a home?” into questions of optimisation, such as “What is the most efficient way to manage housing supply?”

This shift allowed the acolyte policymakers to avoid the difficult work of addressing systemic power imbalances. If an outcome is “efficient”, it is protected from moral critique.

Reclaiming the future

To move forward, we must stop treating efficiency as the transcendent end-state of human progress. A society that functions solely on the logic of the market has forgotten how to be humane — it is a-communal. We must acknowledge that our preference for market allocation is a choice — a choice that often comes at the direct cost of those who cannot compete on market terms.

Efficiency has its place, but it must always remain the servant of equity, never its successor. We must resist the novelty fallacy – the urge to replace every time-tested social institution with a new market-based model – and instead recognise that the most resilient societies are those that balance market tools with robust, often ancient, values of fairness and collective care.

Dr James Schuurmans-Stekhoven has a career defined by high-level academic rigour, a polymathic approach to research and a commitment to strategic optimisation across multiple disciplines.