Capitalism and the Morality of the Business Person

In this episode, Erik M. Conway discusses his new book The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market, coauthored with Naomi Oreskes.

(PDF transcript)

(Active transcript)

Text transcript:

David Roberts

In 2010, historians of technology Erik M. Conway and Naomi Oreskes released Merchants of Doubt: How a Handful of Scientists Obscured the Truth on Issues from Tobacco Smoke to Global Warming, a book about weaponized misinformation that proved to be extraordinarily prescient and influential.

Now Oreskes and Conway are back with a new book: The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market. It's about the laissez-faire ideology of unfettered, unrestrained markets, which was invented and sold to the American people in the 20th century through waves of well-funded propaganda campaigns. The success of that propaganda has left the US ill-equipped to address its modern challenges.

On March 8, I interviewed Conway at an event for Seattle's Town Hall, where we discussed the themes of the book, the hold free-market ideology still has over us, and the prospects for new thinking. The organizers were kind enough to allow me to share the recording with you as an episode of Volts. Enjoy!

Megan Castillo

Good evening, everybody. My name is Megan Castillo. I'm Town Hall's program manager. On behalf of the staff here at Town Hall Seattle and our friends at Finney books, it's my pleasure to welcome you to our presentation with Eric Conway and David Roberts. Conway's new book, "The Big Myth," is the subject of tonight's talk. Please join me in welcoming Eric Conway and David Roberts.

David Roberts

Hey, everybody. Thanks. I'm just going to jump right in. Several things I'd like to get into, but just to start, one of the things that really the book really gets across well, I thought, which I don't know that I fully appreciated, is the extent to which this idea of unfettered, unregulated free capitalism is an invention of the 20th century. It's not what capitalism ... the founders and architects of capitalism, it very much goes against their larger philosophy and their larger kind of moral sentiments. And the way it does this is by elevating property rights, basically trying to they call it the "indivisibility thesis" that property rights and political freedom are one and the same.

And any limitation on property rights is de facto a limitation on political freedom. That's new, that was not original to capitalism. So maybe talk a little bit about property rights and how they sort of what the pivot these groups did with that concept in the 20th century, in the early 20th century.

Erik Conway

Okay, so that's a jump forward from a book that starts with child labor laws in the 19th century. What I think you're bringing up is the tripod of freedom that the National Association of Manufacturers concocts in the late 1930s as part of their effort to undo the New Deal of the Roosevelt administration. And the idea of the tripod of freedom was, if you think about a three-legged stool there's what they would call industrial freedom or business freedom, religious freedom, and political freedom are the three legs of the stool. So if you remove industrial freedom, businesses freedom to do what they want, then the stool falls.

This is a slippery slope argument that equates business freedom with the other two first amendment freedoms. That's what they spent a decade and millions of dollars, 1930s dollars, promoting through billboard campaigns and materials made for schools and movies and so forth in order to try to convince the public that that's the American way, even though it is a pure invention. In the 19th century, of course, lots of business was regulated and the corporate form itself was primarily a tool used by states. States would create a corporation to accomplish a thing like the Erie Canal Corporation to build and run that canal system for the state.

And roads were done this way and so forth. And through a whole complicated process, the corporation sort of slowly gets disentangled from the state in the 19th century so that by 1935, we can imagine corporations that are no longer state functions.

David Roberts

Yeah, one of the wild things is learning that early corporations had to go to states and say, "Can we be a corporation?" And the states would be like justify why? Like tell us why. What public good are you serving? It's just a wild inversion of things. And also another piece of this is, and maybe this doesn't come into it as much until the Austrian economists that get brought over, and I guess this would be in the 60s, kind of 50s and 60s, Hayek and the other one whose name is not coming to my mind. Yeah, but this idea that not only is business freedom core to American freedom but the role of the business person, businessman, I guess they always said back then, is explicitly not to be decent, not to be good, solely to make money.

So the idea is that if you have these like purely self-interested actors, the magic of aggregating them produces social good, but the individual not only has no obligation to do public good with their business or their corporation, in a sense they're sort of like violating the spirit of capitalism if they do it. Which again is like would send Adam Smith rolling in his grave. Only if you could just say a little bit about how they conceive of the morality of the business person or the morality of business and how that changed from what Adam Smith laid out.

Erik Conway

So that invention of what we now call shareholder value we can trace really back to Chicago school economist. It's mostly popularized by Milton Friedman, though he didn't concoct the term. The idea is, in his 1962 book Capitalism and Freedom he takes a more extreme view of that than the Austrian economist did. Hayek, for example, actually thought there was grounds for workmen's rights of some kind and that there were some justifiable kinds of social mitigations of industrial freedom, as did Adam Smith. Yet Friedman's ideals are what take over in the course of the early eighties. I think it's in the 1980s that the idea really takes off around General Electric Corporation.

For example, those of us of a certain age remember Neutron Jack just dismantling General Electric and removing the basic ideas that the company had served in the 30s and 40s, for example, of investing in its community in order to have healthy communities around its plants and so forth. And all that goes away in that era of the 80s. So you can see, for example, in the movie "Wall Street," if anybody remembers that from the 80s, there's a great speech about Teldar paper by Michael Douglas and how it exists only to serve its shareholders. And that's where all the profits should go, and its only social good should be ensuring the continued flow of finance to the shareholders.

And all other good things are supposed to fall out of that, except what else actually fell out of that is workers livelihoods and so forth. It's a fascinating reinvention. In fact, as we begin to bring those Austrian ideas into the US in the 30s and 40s, they become simplified, and they become oversimplified as they're put through the businessmen cycle. Because the businessmen in the United States were simply unwilling to accept even the social protections that Hayek and Adam Smith and so forth had thought were necessary in that decade. And so they commissioned economists to essentially rewrite Hayek.

David Roberts

Globalization goes with this too, because the more you're a multinational company, the less pretense or need you have to pretend like you need to nurture a particular community, right? If one falls apart, you just go find cheap workers somewhere else. Another thing the book really brought home that I did not fully appreciate... I mean, I guess I knew just from being a journalist that business is out there advocating for leave us alone. But I don't think I appreciated the scale and how long that's been going on. I mean, your book sort of describes waves starting in the late 19th century of government would try to do some decent thing.

There'd be a huge propaganda effort against it. Finally, government would win some new protection for workers. Then business turns around, claims moral credit for the protection against workers, and argues against the new thing that's about to happen via billions of dollars of propaganda over and over. There's like three or four waves of this. So maybe just talk a little bit about how extensive this effort was. Like they're going after schools and libraries, morning cartoons. I mean, they really thought it through about how to go wide.

Erik Conway

Well, so we started the book with child labor laws in the 19th century because it's the beginning of the conversion of the National Association of Manufacturers from what had originally been a very protectionist organization. They were founded not at all for free markets, they were founded to promote tariffs, the idea being that tariff walls would protect American manufacturing during the period in which the United States developed. And they begin turning against the idea of government itself around the issue of child labor and workplace safety because those things both threatened to cost the money in various ways. They used child labor in order to reduce wages, and they used well, frankly, they managed to convince the courts that workplace safety problems were actually the fault of the workers and not themselves.

And so there's a long fight by reformers in the United States to both provide better workplace protections and to eliminate child labor that ultimately businesses lose and then basically change their tune and decide that, well, we supported removal of child labor all along. That's sort of the first wave of the story. And that first wave takes it set in in the 1930s and then NAM changes actually kind of fundamentally in the 30s for a very internalist sort of reasons. The National Association of Manufacturers had originally largely represented small businesses, not large. They have a leadership change in the 30s in which essentially they're taken over by large manufacturers.

And then those large and much wealthier manufacturers begin to believe that it's in their interests to try to change the political tone of the United States. And World War II really helps them show how the Roosevelt administration engaged in an enormous public propaganda campaign to support the war. And our manufacturing friends learn a whole lot about how to spread messages. And we don't get into it a great deal in the book because there's so much material. But for example, I pick up with a story of a congregationalist minister in los Angeles becomes quite famous nationwide for setting up an organization known as Spiritual Mobilization.

Spiritual Mobilization's idea was to try to reconvince Americans of the moral basis for free market capitalism and to spread that through the churches. He was a minister. He attracted, of course, the interest of the National Association of Manufacturers, very key to our story. And in particular, one of their leaders by the name of J. Howard Pew, who is president of Sun Oil and Pew, becomes Fifield's biggest backer for spiritual mobilization. Spiritual mobilization operates throughout World War II, actually and into the 1950s. And they tried to develop curriculum to push out into seminaries as well as putting materials out into churches and so forth for free market ideals.

Now, it's important to understand that as a congregationalist, Fifield was a theological liberal and J. Howard Pew was not. He was very much a theological conservative. So he takes that idea in 1946 and he starts founding new organizations to do the same thing but into the conservative churches. And so the Christian Freedom Foundation was one of his creations. Magazine Christianity Today is one of his creations. He attracts Norman Vincent Peale from the first marble church and so on. And he becomes an enormously successful entrepreneur of the idea of shoving free market capitalist views into American religion.

And that's just one thread of the propaganda story that we tell.

David Roberts

Yeah, I was going to say it's creepy enough trying to sort of conflate free market capitalism with America, with America's founding and America's founding values, but then it gets conflated with Christianity. They get merged in a way that only has gotten creepier and creepier over time. I frequently look around today at various and sundry propaganda campaigns still ongoing and wish to myself that the institutions we have set up to seek truth and accuracy, namely academia and journalism, would be more stalwart in their resistance to propaganda campaigns. And it's tempting for people in the present day to say, oh, what's happened to the media?

What happened to the old media? But you read through your book and you sort of realize, like academia and journalism were never particularly they didn't put up a very good fight, let's say, against all this stuff.

Erik Conway

No. Another of the stories we tell again about the breadth of these campaigns, it's around the National Electric Light Association, which doesn't exist anymore. It folded after its propaganda campaign was exposed. This is an organization that existed into the 1920s, like the National Association of Manufacturers. It took up the effort to prevent regulation of the electrical utility industry. And one of the ways they did it was by paying academics to author studies that they could use to prove, quote unquote, "that privately provided electrical power was cheaper and more reliable than publicly provided and produced power." Except there was lots of evidence that that wasn't true for both Europe and Canada, which not only tended to have cheaper electricity rates, but also much more widespread electrification.

One of the things that we've all forgotten by now, because we were almost all, maybe all of us, were born after electrification is completed. But in the United States, electrification stalled at the city borders and it stalled at the city borders for decades because utilities figured it simply wasn't profitable for them to string lines across rural America.

David Roberts

Europe beat us to rural electrification. I don't think I really knew that before I read ...

Erik Conway

Yeah, well, most people have forgotten, but they beat us to rural electrification because they saw it, well, in a couple of different ways. One was program of improvement, but another big one was, remember, there really was a threat of the communists and socialists taking over in Europe, and that was, of course, used as a foil here in the United States, too. But what the European politicians did was they simply decided, well, we're going to take on some of the claims of the reformers and actually do them in order to forestall the revolution. Bismarck was actually pretty successful for a while, and many other of the European countries were successful at more than a little while.

And we kind of tell that story, too. But to answer your question is there were paid academics then as well who were not only not attempting to get at the truth, but were fairly well, I would say that they had already been indoctrinated. They already believed that free market, if you couldn't even say such a thing existed, was the proper way. I would say the better way to say it really is private enterprise is a better way to do it. It's a better frame. One thing I haven't said yet, but I want to make sure I do, is that Naomi and I don't believe there's such a thing as a free market.

Markets are constructs. They're social constructs. Birds and bees and so forth don't have them. We all regulate markets in some way, either by law or by the guys that break your knees if you don't pay up. They're all forms of market regulation, and some are preferable to others.

David Roberts

Yeah, and they bought off so many editors and newspapers, too, in just like the chintziest ways. They just mail them a pamphlet or take them out to dinner and boom, they got great press coverage. It's very disheartening.

Erik Conway

But I would even say that they didn't have to be bought off, necessarily. Partly that's social pressure you're talking about, which we've all experienced, being invited to the right parties and so forth, and we don't really get into that because sociology is not our subject. But it's also the case that many of these editors were raised in the same propaganda, especially nowadays were raised in the same propagandaized malu that everybody else was. And it's hard to decide that all these things you've been taught for most of your life are wrong. It's very hard to decide that.

I'm sure that most of what I've been taught through most of my life is sort of true, at least. But I'm not always sure, and I have to think hard about it nowadays.

David Roberts

One thing that comes across also is big business has been organized and at this for a long time, well over a century now. But they weren't really successful for a while. Like, they fought and fought and fought against the New Deal. But the New Deal mostly went forward and mostly remained popular. And it's like wave after wave of propaganda until around, like, the 70s Carter era and Reagan era. So what converged there in history to allow this to break out from basically being kind of a fringe view to it's common sense now, sort of common wisdom, meddlesome bureaucrats and government inefficiency and picking winners.

These are all phrases that ordinary people know now sort of sifted down into the popular consciousness now. So what was it that allowed it to finally overwhelm resistance and win?

Erik Conway

Well, I think the first thing we've already said we've had this decades long propaganda campaign that helped lay the groundwork, and that's the main subject of our book. And then part two is the 70s. We have a whole series of intersecting crises in the United States. And we talk about the inflation of the 70s from the economic perspective being that big crisis. And the advantage that the free marketeers had was that they had an answer that was different than the standard answer. And Naomi and I are not the first to think about it this way. They had a different answer than the economics of the last 40 years, which had been successful, maintained a relatively growing and prosperous economy, much more prosperous for how do I want to put it more equitable prosperity than what we have now or prior to World War II, frankly.

And yet that seemed to be breaking down in the so that's the way we see it. And because they had an answer and because Carter then has, of course, a great foreign policy crisis as well. And honestly, I think Jimmy Carter believed some of the free market mantra in that his administration really launches the era of deregulation, right? It's the Carter administration that undoes airline regulation and trucking regulation and begins undoing rail regulation. And there's even banking deregulation in the Carter administration. And so they begin getting rid of a lot of, in fact, the leftover artifacts of the New Deal in the Carter administration.

And what Naomi and I do is we discuss that, what was done, what effects they began to have. And honestly, to some degree, we are supporters of it. Except there's one place that we think they went wrong, really, and that is they didn't apply labor protections that had existed under the New Deal laws. So trucking, for example. And that's they're kind of the poster child for deregulation because ten years after the trucking deregulation law, most of the trucking unions had collapsed. Most of the trucking businesses that had existed collapsed and they'd been reformed into new nonunion trucking organizations.

Wages collapsed and so on. And so deregulation helped reduce the inflationary period. Trucking is a major expense to move stuff around, but at the same time it also crushed wages, which benefits inflation, but not the workers and so on. So that's our story of the conversion. And I'm sure you could write others because in the couple of chapters we had, we could barely scratch the surface of what it was, I think, a very complex and challenging period.

David Roberts

I know you're a historian, so history is your thing. But as you look around now, maybe you and Naomi have talked about this. Do you feel like the hold of kind of the free market mythology is loosening? Do you think we're heading in another direction now? What's your take on the current state of this? Because it seemed to sort of hit its peak in sort of like Bill Clinton. When you got a Democratic president saying the era of big government is over, you've sort of, like, won at that point. You've won the argument. Where do you think we are now with all this stuff?

Erik Conway

Boy, I wish I knew. Being a historian, we're bad at crystal ball kinds of things. It's certainly interesting to me that the current president and his predecessor are not free marketeers, neither of them, but in quite different ways. Right. Trump is still backers of kind of Reagan style deregulation gutting environmental agencies and that sort of thing. He did those kinds of things but at the same time was almost doing the 19th century idea of tariff protectionism.

David Roberts

Really old school.

Erik Conway

Really old school. I know some people have called it neo-feudalism, but I don't see it that way. But then again, since I'm a 20th century guy, there wasn't a lot of feudalism for me to study. So maybe I'm wrong. But I do find it intriguing that it's no longer the default position of either party, that the idea of unregulated markets are to continue to be dominant. But what comes next? I don't know. That's the challenging and terrifying part to some.

David Roberts

And neither of them seem to get much internal pushback from their own party over that.

Erik Conway

No, exactly.

David Roberts

There doesn't seem to be like an organized presence for it anymore.

Erik Conway

Right. And instead it's patchwork. But that's not the word I want. It's more a matter of what they perceive to be immediate self interest at the party level. And so there's lots of discussion now of big-tech regulation and to some degree I would support it depending on the details, but it's not clear to me what that would be. For example, it's an interesting political moment to live in.

David Roberts

Antitrust is sort of poking its head up again.

Erik Conway

Yeah, we might actually enforce antitrust statutes for the first time in decades, maybe.

David Roberts

Final question, and this is my plaintive question I ask everyone, and especially when I spend a lot of time talking about the media environment, the sort of epistemic environment and Fox and the right wing media and all of this misinformation and stuff. But one thing I'm constantly lamenting or wondering about is why, when you look back over this 150 year period almost, and you see these repeated waves of propaganda against government, basically against government as such, not against this or that in particular, but just government is bad. Like government's inefficient and bad, wave after wave. Why do liberals or progressives or whatever you want to call them, why does the left, why do the people who believe that government can improve people's lives as it demonstrably has many times through our history?

Where are their propaganda campaigns? Where is the think tank that's just devoted to arguing that government is good? I can name ten on the right that are devoted purely to the subject of how government is bad. Is there one on the left that's just government is good as opposed to this immigration group and this crime group, whatever? Why does the side of social democracy, mixed capitalism, the stuff that seems to work, why does it not have a propaganda arm or effort? Or why does it never seem to fight for itself as such? Do you have an answer to that question?

Erik Conway

I don't have a good answer. The usual joke you get is that they just don't have the money. And maybe that's true, but I think there's actually a better argument in another book, and I'm really hoping the name of this author comes to me. But unfortunately, I read this. It was published after we'd finished our manuscript. But there's an argument about back in the 1970s that the Consumers Rights Movement undermined precisely that argument because the government was so complicit in allowing itself to be used by corporate lobbyists because the corporate lobbyists had been so successful in ensuring regulations were written in ways that benefited the incumbents right.

The existing big three carb manufacturers and so forth. And I can remember when we were doing the book tour for what little book tour we had for Merchants of Doubt. I was up in, I think, Alberta province in Canada, and I wish I knew who this was, but I was talking to an economist over a beer who told me a great story about one of the Carter administration's economists. And the person I was talking to was saying that really, it's not that he believed in free markets, it's that he believed that corporations could rig government to do essentially whatever they want to use the government to build and sustain their own monopolies.

And the only solution to this was to sweep away all the rules. The problem with that is that then you have to keep doing that, right? Because every generation of corporate titan gets the rules written again to protect itself. And I mean, that was the only fly I could see in that argument. But to go back to your question, the problem that liberal activists would have is that because a lot of people on the left, I think, actually agree with that. And I even think that there's merit to it because I've seen it so often in my own research career.

Corporations do get state and federal governments to write rules that benefit them. And so that undermines the whole notion of a pro government propaganda campaign, right? Because maybe it's just that all of the leftists have very mixed feelings about it. And honestly, I think we should I don't want to say one of the things I hope you will get out of our book is that we're not saying that all corporations are bad or that the government is always good because neither of those positions are true. They're not.

David Roberts

Okay, well, I'd love to hear from the audience. Let me just say this is a subject about which I feel many people will be tempted to have more of a comment than a question. And I just want to get out ahead of that and say, if you have comments, save them for afterwards. You can talk to us afterwards. People came to hear Eric talk, so try to keep your questions concise. Yeah, just come on up to the podium if you have questions, or if not, I'm going to keep asking them.

Audience Member

I have a process rather than content question. So I'm a retired oceanographer. I'm familiar with your co-authors work in the scientific field. So it's kind of a dual question of, you guys seem to be stepping out of your area of technical and scientific expertise into the economic world, and I'm curious about the process of how the two of you work together on this?

Erik Conway

Okay, so we did the book because we wanted to follow up "Merchants of Doubt", in which, if you're not familiar, was really a history of four physicists and how they spent their retirement careers working to cast doubt about the truth of environmental problems. And what we concluded was that they were believers in market fundamentalism, the idea that only free markets could protect political freedom. In other words, basically a 1980s version of the Tripod of Freedom from 1935. And so in this book, we wanted to tell the history of market fundamentalism, so that's why we did it.

Audience Member

Can you tell us who we is?

Erik Conway

Oh, sorry. Naomi Oreskes. She's the lead author in the book, and I'm Eric. Process, so I guess I'm the one who had spent a lot of time or a lot more time in economic history initially because I'm a historian in technology, and you really can't separate technology from business and economics to a lesser degree. So I guess to some degree, you can blame me for the initial ideas. And then once we had sort of gotten the book proposal sold, process was we separate the chapters, figure out who's doing what, whose expertise more aligned to one idea or the other.

And then it's a whole lot of researching and writing and mailing chapter drafts, back and forth and so on. Kind of the early core of the book is built around material from the Hagley archives, which it's a business history library and archives on the Dupont family estate in Delaware. The Dupont family did History of the United States enormous favor, frankly, in turning over some of their original powder factory buildings to be a business history archive. And that's how I can tell you exactly what J. Howard Pew was doing and setting up these organizations, because he was proud of it.

He wrote to people about it. He helped get a textbook by an economist by the name of Tarshis removed from university curriculum on grand claims to trustees and so forth, that the guy was a communist when actually he was just a Keynesian economist. And that prepared the way for Paul Samuelson's textbook to become the dominant textbook in American economic education for most of our lifetimes. But Samuelson, seeing what happened to Tarshis, revised it to make it satisfactory to the market fundamentalists who'd gone. After Tarshis and Samuelson told us that story. But we can know these things because archives exist.

And sometimes even the people that we criticize are the people that made it possible for us to know that.

David Roberts

Yeah, they don't come across in the book as any of them as particularly bashful or embarrassed about the fact that They're ...

Erik Conway

They're proud of it.

David Roberts

Waging massive propaganda campaigns.

Erik Conway

No, they're proud of it because they believe in what they're doing.

David Roberts

I have another question, which maybe is more philosophical, but this is something I've gone back and forth over the years too, which is at no point from the late 19th century forward, really, at no point ever are any of these business titans who are waging these propaganda campaigns acting consistently according to free market principles. All of them happily welcome subsidies. When subsidies are available, all of them will happily tax their competitors. None of them ever in history have turned down something that would benefit them on the basis of free market principle. So you could make the argument that what's going on here is about power.

They have power and the microphones and the money. They don't even really believe the arguments. So in a sense, the only thing that can counteract that, insofar as you view it as a bad thing, is counterpower. And in a sense, arguing as though sincere ideas are in the driver's seat here is kind of like a bait and switch. I feel like they just laugh when we go off and write arguments and research things and care about facts like they're just playing us. They don't care about the facts. They're just exercising power. How central is the argument to all this?

And how much of it is just a cover for corporate power that can only be sort of restrained by power?

Erik Conway

Well, first off, self interest is fundamental to their depiction of free market capitalism, right? One thing they certainly internalize is that everyone acts in their own self interests, including themselves, and they happen to be in a position to use their power to maximize their self interest, even if it harms others. So you can argue that they are actually acting according to principle. It just isn't a very satisfactory answer, right?

David Roberts

Well, it's not a free market principle, right?

Erik Conway

It's not a free market ...

David Roberts

Principle of self interest.

Erik Conway

Yes, that's right. It's not really a free market principle. So you can see, for example, in the paper of J. Howard Pew, and he's writing to Rose Wilder Lane, the daughter of Laura Ingalls Wilder. He goes through some contortions at times to defend his own or what she perceives to be his own violations of principle because, whereas J. Howard Pew is willing to compromise to improve his standing, in a lot of ways, Lane wasn't, she really was an ideologue. Well, she kind of drives herself out of the movement, in a sense, because she's more extreme than they were and continue to be.

So it gives you an example that there actually were people even inside, for a while, even inside this conservative movement, who were principled and would actually manage to drive themselves away because they wouldn't make those compromises. But they're not the ones that had power, or rather that retained power, as you say, because they were acting in the those that remained were acting more in the interests of power than in pursuit of the free market principles. So, again, I keep saying that there's no such thing as a free market. There's always a regulated market. And it's just how and by whom that we're talking about.

David Roberts

Well, to this day, I think there are like seven true libertarians somewhere in DC. Who are constantly pained by their betrayal by the Republican Party, which is coming up on 150 years now. You'd think they would see the next one coming, but still .. Hi.

Audience Member

So I'm a little bit outside of my element here because I've not read the book, but usually in a big myth, and I look forward to it that you and Naomi arrestes have written what were the little myths? What are the little myths, and can you articulate them that are backing up that big myths? I mean, we can come to our own conclusions, but can you articulate those?

Erik Conway

Oh, they're legion. Well, I kind of told you one. There's the Tripod of Freedom. That's a set of mythologies that the National Association of Manufacturers concoct in 1935. The idea that industrial freedom has anything to do with the Bill of Rights is laughable.

It just doesn't exist there any more than the kind of maximalist interpretation of property rights. My character, Fifield, to give you another example of a myth, tries very, very hard in his campaigns to bring the clergy around to the idea that property rights are sacred, that they descend from God and not from the fifth Amendment to the Constitution, which makes them, if you ever bother to read it, modifiable by act of law, which we can't modify God by active law. So there's another myth. The individualist mythology is another one. And we don't explicitly criticize that in the book.

It's already too big a book. But rugged individualism is another area of mythology that is built into this idea of the free market in the so there are a whole network of sub-myths that go into what they are. What we don't do is we don't make give you a typology, a chart of all the different sub-myths, and we just didn't think about the problem that way. We were trying to tell you partly a story and partly a well evidenced history and less rigorous philosophical analysis, I guess you can say.

David Roberts

Yeah, well, one thing that comes across is you'd like to think there's a marketplace of ideas, speaking of myths, just a marketplace of ideas where ideas compete based on their rigor. But of course, these ideas were at every juncture, very well funded and pushed. And I always thought it's not hard to understand why rich, powerful people in society welcome a philosophy that characterizes success in a market as a matter of heroic overcoming individual effort. I mean, of course, the people who won want to believe that, right? In that sense, it's in a tradition of hundreds of years of mythologies that mainly serve to justify the place of the people in charge.

Erik Conway

Well, so I guess there's two stories built into that question. In the marketplace of ideas, milton Friedman didn't rise to the top in a free market because the Chicago School of Economics program was built on the funding of a foundation, the Voelker Foundation, which was run by a gentleman, by named Harold Luhnow. And it's their money that got the Chicago School's free market program going and supported Friedrich Hayek there at the School of Social Thought ...

David Roberts

Got us into Readers Digest, which I thought was just excellent detail.

Erik Conway

Well, yes, this is the power of money, right? Because not only could they afford to support faculty members for a decade or two to get the free market ideals built into academia, they could spread them through cartoons and so forth. Right. So none of us live in a free marketplace of ideas anyways, because money can boost the ideas that people with money want boosted. And Milton Friedman is a great example of how that came about. So marketplace of ideas? Well, it's a very rigged market, much like General Electrics, electricity markets,

Much like all markets.

Audience Member

You brought up Milton Friedman. So shock therapy, right?

Erik Conway

Yeah.

Audience Member

Right. All over the world, or especially South America. But I wanted to ask you, your historian, I mean, the more you read, you can become depressed. But one question to you about could potentially the reason why there is no thorough backlash or a fight against this propaganda is because a lot of the intellectual stuff that we learn about just they're so wrapped up in the hypocrisy of all the stuff that we've done as a society, including propaganda, capitalism, that they're just, like, useless, that they can't germinate, they can't forment this type of backlash that you're talking about.

David Roberts

Well, your colleague up here, what do you think about that?

Erik Conway

I would say that they would have a hard time selling it here. I'll take back to the idea. Remember I told you this story briefly about Lorie Tarshis being having his textbook suppressed by a propaganda campaign and aimed at trustees of universities and so forth in the 1950s, and therefore Samuelson's textbook becoming dominant. That's an American story, and it largely didn't happen in the rest of the world. So economics programs in Europe are much more intellectually diverse than they are here because that kind of story didn't happen. Right. The rigged market here resulted in one outcome, a very similar thought throughout most of American academics, which is not really so much true in Europe.

Now, the question was about the public. But ideas generally have to come from somewhere, right? And if all the economic departments in the United States basically think the same way then where do the ideas get started? In left wing think tanks. There's not very many of those, as we were discussing earlier. And they start out from a position of less credibility precisely because they're think tanks. Right. There's no independent work on that kind of going on.

David Roberts

No liberal "Little House on the Prairie."

Erik Conway

Well, there's not that either. So I would say to you that part of the problem is you start out with having fewer ideas that can be marketed and then you don't have the infrastructure for marketing them to get the change across that you might want. But again, that's beyond our subject. Other people have written about the think tank world than not us.

Audience Member

I'm curious in your research for this book whether you came across any industries where deregulation and free market ideas actually made a more equitable or efficient outcome. You talked about how the electricity market is not a good market for free market principles but I'm curious whether you researched anything where it did improve it.

Erik Conway

Well, so efficiency is a difficult term because efficiency is often well, the definition of efficiency matters, doesn't it? If you're talking about cost effectiveness, for example it's much more cost effective to buy property in poor neighborhoods or near poor neighborhoods and make them dumps. Right? So efficiency often leads to inequity. And so we don't often see efficiency and equity going hand in hand at least not in the United States. But to be honest, we weren't looking for that because our story was built around a propaganda campaign by people who weren't interested at all in equity. Not at all.

In fact, they discuss and we have a little bit about this in the Christian capitalism chapter they openly discuss the idea that some people really are superior and should rise to the top and equity is simply not equity is not the American way. So following that thread we would never have found what you're asking about. So I hope it's true that at some level you can have relative efficiency and relative equity. But that's not what our actors were talking about.

David Roberts

Yeah, they very explicitly say attempts to improve equity are ipso facto going to suppress economic growth. Like they don't they don't even allow the possibility that you can do both at once. They set them up as being diametrically opposed.

Erik Conway

Yeah, which I actually which I believe, anyways is a fundamental misunderstanding of Adam Smith's capitalism. His basic idea is that the circulation of capital improved everything. But what he meant, I think, was circulation top to bottom. Right. The money has to reach the people at the bottom because that's where most people are and improve their lives and that's what drives the system. If you have the concentration of wealth at the top then it becomes not only less equitable, it becomes a less efficient and less generative economy. But that's me. I think a great many economists don't think in terms of top to bottom circulation of wealth that's more circular in their minds or something, but I don't think that's what Smith meant.

The concentration of wealth strikes me as being less effective long term and it's certainly less stable. I'm sure I've got more questions though.

Audience Member

So it's certainly easy to be cynical about corporations talking about ESG. But overall would you say that the increasing talk about and emphasis on ESG is a bit of a backlash to some of this capitalism and free market mythology? Or is it pure whitewashing?

Erik Conway

Oh, I wish I knew. But being a historian, even the present is blurry to me. It's easier to see the past in a lot of ways, but it seems to me at one level a welcome response to the shareholder value idea in which the company only has the interests of its shareholder at stake. And the EEC movement strikes me as being at least better than that, that there is some other set of interests and values at stake there. I hope it's not all whitewashing or greenwashing rather as the term goes. But like I said, I don't study the present particularly strongly.

So people ask me questions like what are the best companies for environmental things? And I have no idea, none whatsoever.

David Roberts

It's worth pointing out though that as we speak the usual suspects are mounting an enormous very well funded propaganda campaign against ESGs. Specifically like there's Republican states passing laws against it. So it's real enough to cause them to mobilize against, I guess so something.

Audience Member

Yeah. Comment question. Since 1968 I'm looking at the Gini coefficient from FRED database here. It's risen from 38.6 to 49, which is incredibly high measure of inequality. And since that time there's been six different agencies added to the federal government. And you just discussed heavily on we don't have a free market and we have a very strong governmental regulatory capture system.

How do we overcome that? And probably the biggest beneficiary we see today is the world's richest man, Elon Musk. With SpaceX, with governmental money. We've got all kinds of carbon capture systems with these batteries and his new cars. All we doing, we're just handing him money. And isn't government the problem there? I mean you talk about this okay ...

David Roberts

I think we got it. What do you think, Eric?

Erik Conway

Absolutely. We have a less and less equitable society and we don't spend a lot of the book trying to figure out what's at fault there. Personally, I would blame capital gains tax more than just Elon Musk or the expansion of or the addition of federal agencies. Don't get me started on Musk because I have always seen him as being nothing really but a successful harvester of federal dollars and also a really good propagandist, until recently.

David Roberts

He's really off his game lately.

Erik Conway

Yes, he used to be good at the whole fanboy thing, and maybe he still is and I'm just left the family, I don't know. But regulatory capture, real problem.

David Roberts

Can we throw in the Supreme Court removing all limits on campaign, on finance spending, and we throw that in there. If you don't like corporate capture, then.

Erik Conway

That's another again, we don't go there in the book. It's already too big a book. But yes, the equation of money and speech is a whole other level of corporate capture. Right. It doesn't just allow unlimited lobbying spending, but an unlimited political advertising spending. And that just reinforces the propaganda power of things. And I guess I would say back to the original question, I actually don't know how you break the cycle here. It's one of those things where historians can help you diagnose the way the world is, but not necessarily help you fix it. Because I don't know how to undo the equation of money and speech.

I don't know how you build a government that can't be captured somehow.

David Roberts

But I mean, there are governments out there in the world that are more competent, that are less wasteful, that are less captured, like there are better and worse administrative states. So at the very least, you can do better than we're doing.

Erik Conway

Yeah, that's right. And so one of the things we intended to do with the book and ultimately didn't because we decided other people were already writing about it is that the idea that there are varieties of capitalism and Europeans practice much different varieties by and large, than we do and that is wrapped up in the kinds of states they have built, right. And that just takes us back to the idea that there aren't actually any free markets. Markets are embedded in states, they're embedded in particular cultures, and those things can be changed. It's just a question of so what I posed to my audience is the question really is what kind of state versus-slash market do we want?

Because we're the ones that have to choose and then have to figure out how to make the politicians do what we want. And that's a tough road to haul, particularly when we have this basic problem of the equation of money and speech and therefore the richest man in the world gets to decide who gets heard. And by unabout what.

David Roberts

I'll get to your question one second. But I also just wanted to throw in that some of these big states that have huge taxes and robust welfare programs actually have the freest markets, like Finland or whatever. They have fewer regulations on business. They have enormous taxes and enormous redistribution. But the business sector itself is relatively free compared to ours. So we're not even getting the free market we're promised, much less all the rest of it. Alright, final question.

Audience Member

So I'll get historical 60, 70 years back, the straw man of communism gets beaten to death for a couple of decades. And to what role did business, American big business, play in that particular bonfire? Or was there another path? Or was that whole anti-communism deal more of an invention of the wealthy?

Erik Conway

Well, so the anti-communist crusade of the business community goes back well into the 19th century because they were terrified of the communist potential revolution of eliminating private business. So they were always leaders of the anti-communist charge, and they used that as a foil to oppose unionization.

They would use it to oppose they did, in fact, use it to oppose child labor laws because it was taking children away from their families and making them wards of the state and so on. We tell all that story. So it's been that rhetoric, that anti-communist rhetoric has been a big business rhetoric for more than a century. They were fundamental to helping spread that set of ideas throughout the United States for longer than any of us have been around.

David Roberts

Yeah, there's another thing I discovered through the book is how far back the knee-jerk response of socialism goes. They were using that from the jump. I didn't know how recent that was. It turns out that's been all the way through.

Erik Conway

It's been a universal curse. Now for conservatives for more than a century. It's lost, as far as I can see, any meaning or any relationship to what the socialists actually originally wanted or intended.

David Roberts

Alright, last question. Sneak one more.

Audience Member

I mean, there's a lot of corporations that one would argue do a lot of good things. Like Boeing has been a corporation that's provided an immense amount of jobs and pensions, and it's a lot of our economy. And then you could argue that corporations just need regulation by government to be good to create wealth. But I guess my question is, as a historian, what countries in the world have done a better job than the United States on all these things we're talking about? I mean, it's good to criticize all this stuff, and it's definitely lots to criticize, but are there any countries that stand out as an example of what we should be more like?

Erik Conway

Well, first I want to say again, I don't want to come across with the idea that all corporations are bad or that everything corporations do is bad because markets are tools, there are constructs, and they can be very powerful tools for positive things when they're well run. And the second thing I would say is that it's also a mistake to think that government can do everything. Boeing was run by engineers for about half a century and that Boeing did enormously positive things. By and large. I used to study aviation history, and they're still around because actually for a long time, they didn't have a lot of military contracts.

They managed to survive on just commercial businesses, which almost nobody in aerospace did. And that's a positive thing. And as you were saying, help really build this city. Well, that's a whole other story. Well, Boeing bought Douglas or Douglas bought Boeing with Boeing's money or something. Yeah. Anyway, where I wanted to go with that was that I wish we could also talk about corporate culture changing because in what you see in Germany, for example, is the corporations, the corporate leaders don't fight particularly hard against their unions. They have a different, completely different, really set of social contracts there in which they still are very productive and yet they don't have the very hostile labor management relationships that we do.

And that's fundamentally to me about the internal culture of corporations and also what business leaders are taught in business schools and economics departments and so forth. So again, I don't want to convince you that the government is always right or that the government is the only thing that can save us, but there are a lot of changes that that would need to be made, one of which is corporate culture. Another of course is would be a better culture of public service and in the government because a lot of the government either stopped doing its regulatory job like FERC and the California Energy Crisis in 2000, decided, well, it just wasn't going to regulate. And that's a failure of the idea of service, public service too, as well as corporate penetration of companies.

David Roberts

I mean that's a classic example of Enron out there propagandizing for markets and just rigging ...

Erik Conway

Unregulated markets.

David Roberts

... up one side and down the other, like farthest thing from a free market participant you can imagine.

The question was about what about employee-owned corporations.

Erik Conway

What I'd say is a little bit of a dodge of the question because I don't know a lot about the longevity of such companies or what kinds of goods or bads that they do. But what I would say is that again, our study was really of propaganda and we have this idea of private free markets and yet we live in a very mixed economy, as you say. There are not just shareholder owned companies, there are worker owned companies, there are nonprofit companies all over the place. I actually work for one. So that's not the free market mantra we're talking about, is not the whole story of America.

And sometimes we not just Naomi and I, but we all forget that there are other kinds of business and capitalism possible. And that's what I'd say, that there are other opportunities to build businesses that aren't shareholder valued returns to private shareholders.

David Roberts

Alright, thank you everyone. Thanks for coming. Thanks Eric for coming out. Thanks for the book.

Erik Conway

Thanks for coming.

David Roberts

Thank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please consider becoming a paid Volts subscriber at volts.wtf. Yes, that's volts.wtf. So that I can continue doing this work. Thank you so much. And I'll see you next time.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.volts.wtf/subscribe