The Market for Toleration: A Case Study in an Aspect of the Ambiguity of ‘Positive Economics’

Liberal apologists for the free market commonly claim for it the virtue of promoting toleration by eroding – through financial penalties – economically irrelevant ‘discrimination’. This claim is contested both by a consideration of a range of evidence from economic anthropology and by a critique of the conceptual position held to sustain it. Anthropological evidence suggests that ‘perfect’ markets frequently generate long-term non-contractual dyadic ties which undermine the one-off spot-contract constitutive of the ideal market. Furthermore, the pursuit of such ties often follows and so reinforces ethnic or religious distinction. Conceptually, the liberal argument's validity hinges on the assumption that market actors prefer to maximize money-holdings rather than express intolerance or maintain discrimination. This assertion is not only empirically false, but, if true, would ironically undermine the liberal claim that free markets are ‘neutral’ with regard to actors' preferences. Thus, libertarian claims about the effect of the operation of the market can only be sustained by violating their own theoretical premisses.