Since the 1970's policy makers and economists have been enamoured with the 18th century musings of Adam Smith.
The Chicago School under Milton Friedman's tutelage led this revival. It has been enthusiastically embraced by Republican politicians and operatives from Ronald Reagan though Grover Norquist to George W. Bush.
Even new Democrats, motivated by ideological confusion or political opportunism, have gravitated toward market fundamentalism.
The neoclassical theory they promote is little more than a regurgitation of Smith's idea that "no one intends to promote the public good." Rather they are ''led by an invisible hand to promote an end," the public good, "which is no part his intention. "
Despite the fact that Smith's seminal work, An Inquiry into the Nature and Causes of the Wealth of Nations, was primarily a critique of mercantilism, the 17th century state monopoly trading system, and a celebration of the dynamism of emerging capitalism and competitive markets, US urban and international development policy have been based on free market libertarian ideas for almost thirty years.
A new World Bank report demonstrates that "free market mechanisms" have largely failed to promote economic growth or prosperity in impoverished African nations.
The New York Times reported this weekend:
"In the 1980s, in the era of Ronald Reagan and Margaret Thatcher, the World Bank increasingly withdrew its support from agriculture and expected private markets to spur growth through competition. Bank officials even thought profit-seeking companies would build toll roads in remote parts of Africa.
But, as the recent internal evaluation found, private markets often failed to deliver a range of goods and services farmers needed, including improved seeds, fertilizer and credit. "
The World Bank report concludes that market mechanisms have failed to generate investment in "scientific research, rural roads, irrigation, credit, fertilizer and seeds — the basics of an agricultural economy — crucial to helping Africa’s poor farmers.
That this is newsworthy suggests how dominant libertarian policy has become.
If market mechanisms haven't generated sufficient investment to rebuild America's central cities, maintain our transportation infrastructure, build a dynamic, high speed information highway, stimulate biotechnology research, or provide affordable healthcare to our citizens why should we expect competitive markets to work any better in poverty stricken African countries?
Read the entire NYT article here.