This to me just seems untrue. What is your basis for this claim? There is plenty of research privately funded by corporations, some of which is very influential. Often this work is published by university researchers. Ask any university researcher about the numerous compliance courses we all have to take about funding and conflict of interest.
It is true that the biggest funders (NSF, NIH) are not market-focused, but for good reason. The market does not prioritize the public good. I know first hand -- my son has a rare disease (1 out of 20,000 people). There are many drug companies putting vast resources into drug development in the hopes of a huge payoff. In reality this benefits a small number of people (I remain grateful for how improvements have helped us). I'm grateful our major scientific funding bodies are not swayed entirely by market influences because it would lead to us focusing on a narrow set of scientific problems which would ultimately limit the way it helps the public good.
Im any event, I work in biomedical research. I think your diagnosis (incentives, process) is correct, but the way you discuss the attitudes and motives of researchers is wrong-headed.
You say:
> Their reputation is tanking but they just don't seem to care and why should they? They'll get grants from the NIH anyway because they're all as bad as each other, and nobody in politics is talking about a total defunding of the sector yet.
You're talking about hundreds of thousands of researchers as if they're all psychotic citation fanatics with no care for truth. That is not reality. I think the kind of psychotic, data-manipulating researcher who would put people's health and lives at risk for citations -- or fabricate data sets out of thin air -- are vanishingly small. We can point to a handful of them -- the author of this paper, and the Daniel Ariely's and Francesca Gino's of the world -- but there are tens of thousands of people in every field working on research in good faith, with utmost care. The vast, vast majority never have any scandal, never get caught up in data manipulation, and so on.
No field I know of out-right tolerates fraud (and I follow all the retraction stories fairly closely). I think the closest we get to "toleration" is researchers dealing with scientific problems who more or less say "we're not going to publicly flay you but behind your back we're all going to know what you did and your future is limited when it comes to big grants, prestigious invitations, and so on." People who are credibly accused of fraud become pariahs and often targets of scorn not only within the research community but in the press and wider community.
The most serious issue IMO is not outright but poor norms around scientific practice, leading to p-hacking, harking, and other "forking paths" problems. Calling that type of behavior "fraudulent" is perhaps justifiable under some ways of thinking, but I think the word fraud mischaracterizes what is going on. There are, in fact, many serious efforts to root out this type of behavior and put in transparency rules to open up research to scrutiny, including among funders like the NIH.