The Big Myth: How deregulation was sold as an economic freedom, while benefiting only few?

T​he free-market favoring of deregulation, which demeans governmental regulatory efforts to govern and keep in check corporate behaviors that are not in the public interest, has gained significant traction in modern times, especially in the U.S. The consequences of decades-long strategic demonization of regulation in the U.S. are gaining momentum in 2025 as Donald J. Trump launches a massive 10-to-1 deregulation initiative. While criticizing government intervention in autocratic regimes may seem reasonable, the problem arises when citizens adopt a misguided ideology of economic freedom that encompasses deregulation mechanisms in democracies. This ideology promotes the belief that free markets thrive through deregulation and minimal government intervention, which allegedly benefits society as a whole, regardless of social class. Today, this ideology has led to the normalization and global acceptance of market-based solutions and “multistakeholderism” as a governing philosophy (Haggart & Keller, 2021), where citizen participation is at risk under a political paradigm that shifts governance from political institutions to the regulatory bodies of private and semi-private entities (Robertson, 2015).

As Robertson (2015) observes, matters that were previously under formal “political scrutiny” are now subject to market-driven regulation, leaving those impacted with few opportunities to participate or provide consent. Considering that every legitimate democratic society depends on “input legitimacy”, defined by wide social acceptance and support, the legitimacy of these market-driven solutions in today’s neoliberal democracies is deeply questionable. For instance, citizens’ voices are largely excluded from decisions about Facebook’s policies, which affect billions globally. Similarly, Big Oil companies continue to avoid accountability while influencing laws and policies that impact the entire planet and the future of generations to come. 

The favoring of market-driven solutions that often silence citizen voices and participation, all while supporting deregulation, can be traced back to the early 20th century. While Americans were deeply skeptical of large corporations in the 20th century, this began to shift by the 1980s to 1990s, with skepticism now directed at big government.

In The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market, Naomi Oreskes and Erik M. Conway investigate how and why this shift had occurred. They reveal how market fundamentalists embedded their values and narratives into American culture, politics, religion, and academia, fostering widespread belief in the supremacy of deregulation and anti-government sentiments.

At this point, you are probably asking yourself, but "What does deregulation have to do with climate change deniers?" The answer lies in the book Merchants of Doubt.

After writing Merchants of Doubt in 2010, Naomi Oreskes reasoned that climate change deniers were not motivated by questions about science. Instead, their denial stemmed from political concerns, questions about the appropriate role of government, often fueled by anxieties that regulation was a backdoor to communism. This left the authors, Oreskes and Conway, to question: Why would intelligent people accept what we call market fundamentalism? (The Harvard Gazette, 2023). As an answer to this, The Big Myth emerges.

The Construction of Market Fundamentalism

Oreskes and Conway investigate how the concept of the free market was constructed and ingrained in the collective imagination. They reflect on foundational doctrines used by market fundamentalists, such as Adam Smith’s The Wealth of Nations. Surprisingly, the issue emerges, as DeSmith argues, not in Smith's original ideas, but in edited versions of his work, where critical passages advocating for regulation and taxation to protect societal welfare were simply excluded and omitted. For example, George Stigler’s widely distributed edition excluded nearly 1,000 pages of Smith’s original text, omitting Smith’s arguments that “markets sometimes need to be constrained”, that taxation is necessary for public goods, and his concerns about businesses suppressing wages to maximize profits (Smith, 1776, Book II, Chapter II). 

Besides omitting Smith's thoughts, organizations like the National Association of Manufacturers (NAM), as facing the opposition from the unions that advocated for safer working conditions and fair wages in the 20th century, framed these demands as 'attacks against the American way', propagating the idea that big government, rather than big business, was perhaps the real threat.

These narratives were further deepened by the businesses resisting the New Deal policies introduced by President Franklin Roosevelt, labeling these reforms as communist and anti-freedom. Organizations like the Volker Fund took the lead in promoting free-market and libertarian ideologies, funding influential economists such as Ludwig von Mises, F.A. Hayek. While the most well-known member of the University of Chicago/Viennese school of thoughts was Milton Friedman, whose free-market capitalism teachings are consistently quoted today by anti-government and anti-ESG advocates as Keith Forman writes for Harvard (2023). The efforts of these organizations gave arguably academic legitimacy to anti-regulation and pro-deregulation rhetoric.  

Deregulation’s Consequences

Deregulation was bipartisanly embraced, as seen through President Jimmy Carter’s energy reforms and President Bill Clinton’s deregulation of financial markets. These policies eroded regulatory safeguards established in the post-Depression era. Oreskes argues that the deregulation of financial markets directly contributed to the 2008 financial collapse. She also highlights the connection to climate change which is often widely regarded as a “classic market failure”. Indeed, the former chief economist of the World Bank, Nicholas Stern has called climate change the largest market failure in history. According to the International Monetary Fund, climate change costs the world over $1 trillion annually in property damage, health impacts, and other adverse effects, costs ultimately borne by taxpayers and citizens (Harvard Gazette, 2023).

Fossil Fuel Companies: Deregulations & Regulations

The collective deregulation idea still ceases to persist and can still be echoed in the 21st-century U.S., where deregulation, market-based solutions, and prevention of government regulations emerge as the favorable system for many Americans. Interestingly enough, one of the biggest fans of deregulation are think tanks that are lobbied by the fossil fuel companies, such as The Heritage Foundation, which, as early as 1993, claimed that regulations were destroying American jobs (The Heritage Foundation, 1993), while advocating against the Clean Energy Plan in the U.S. (DeSmog, 2017). DeSmog argues that their proposals could be read like an advertisement for the deregulation of fossil fuels and the cessation of clean energy research and support. According to DeSmog, The Heritage Foundation has taken in large donations from individuals such as the billionaire Koch brothers, ExxonMobil, and two foundations of the late Richard Mellon Scaife, heir to the Mellon banking and oil fortune. 

In 2023, according to Global Witness, Big Oil companies like Shell, BP, TotalEnergies, and ENI, represented by lobby groups such as BusinessEurope, FuelsEurope, and IOGP, lobbied against a law to reduce gas emissions, securing numerous high-level meetings with key policymakers over the past two years. On the other hand, in the same year, according to Amnesty International, fossil fuel companies have funded think tanks to draft and propose laws to clamp down on or criminalize climate and environmental protesters. Rishi Sunak admitted that oil-funded think tanks helped write anti-protest laws targeting climate activists, as first revealed by Open Democracy.

A Guardian investigation has found a growing number of countries passing anti-protest laws as part of a playbook of tactics to intimidate people peacefully raising the alarm. For instance, in Australia, Human Rights Watch has found that the authorities “are disproportionately punishing climate protesters in violation of their basic rights to peaceful protest”. In the U.S., 21 states have passed critical infrastructure protection laws. Much of the state legislation shares language drafted by the American Legislative Exchange Council (ALEC), a right-wing group funded by fossil fuel companies. 

Market Myths and Public Consequences

Reflecting on market fundamentalism, Naomi Oreskes and Erik Conway examine how business-sponsored propaganda campaigns reframed public opinion to favor deregulation and oppose government intervention. This legacy persists in policies that prioritize corporate interests over public welfare. Oreskes argues that deregulation has repeatedly led to crises, from the 2008 financial collapse to climate change, which remains an ongoing, catastrophic market failure. Addressing these failures requires confronting the myths of market fundamentalism and advocating for more equitable and sustainable policies.