He had a profound insight that neoliberal economists do not share. He realised that markets, just like the rest of us, often have little or no clue at all about what is going on. That might sound like a statement of the obvious, but as I will explore in this book, neoliberal economics – and all that follows on from it, including the crashes we have had and are facing – is built on a very different logic. Neoliberal economics assumes that there is nothing markets do not know, and therefore nothing they have not already built into the prices that they charge.
No, not at all.
The assumption rather is that what is known is already incorporated into prices. This is why new information moves markets.
Neoliberal economists assume – quite extraordinarily – that markets know everything but that as mere human beings politicians are error prone and therefore are bound to get things wrong.[v] Which is why, neoliberals say we must trust markets and not politicians. And despite the absurdity of this claim – for that’s all it is – the politicians of the cowardly state think this is true.
The importance of this difference being that if anyone, markets or politicians, could in fact know everything then we could in fact have a planned economic system. Advocacy of a market system is based absolutely on the point that we do not, cannot, know everything and thus we cannot plan in detail.