Book review of The Big Myth: How American Business Teach us to Loathe Government and Love the Free Market by Naomi Oreskes and Erik Conway
That was not always so. “The Nineteenth Century The American economy was permeated by government involvement in the market,” they write. But in the 20th century, American business leaders embarked on a campaign to construct what the authors call an “intellectually coherent – if historically and logically misleading – framework for market fundamentalism.” Led by industry bodies like the National Association of Manufacturers and the National Electric Light Association, business leaders campaigned against child labor laws and workers’ compensation as unfair restraints on business, while insisting that “anything less than full freedom of business is a step toward socialism, or worse.”
Even some of the philosophical fathers of free enterprise, such as Adam Smith, whose phrase “the invisible hand” has become capitalism’s defining cry, and Friedrich Hayek, whose book The Road to Serfdom argued that preserving economic freedom was the best The way is the key to preserving political freedom were not as dogmatic as we might think. Smith advocated restrictions on the market to “protect public safety” and even tax public goods. “We bought the myth that the invisible hand could do things that even Adam Smith did not believe could do,” write Oreskes and Conway. For his part, Hayek, while fearing that state involvement would throw communism down the wrong path, acknowledged that the “free” market is not truly free, and supported social security, workers’ compensation, and even a guaranteed minimum income. “Hayek argued that the key to deciding whether government intervention is warranted is to consider the scale and severity of the social ills or unmet social needs to which the intervention is directed,” the authors write.
The campaign to turn this into “market fundamentalism,” a belief that only markets have all the answers to everything, was both underground and sophisticated, so much so that modern corporate lobbying seems downright basic by comparison. Business interests worked to rewrite textbooks for high school and college students, to synthesize Smith and Hayek for a wider audience in a way that eliminated their nuances, to pay academics to promote pro-business ideas, and to infiltrate popular culture. The popular TV show General Electric Theater “didn’t just raise electricity, it raised capitalism.” Of course, Ronald Reagan, who hosted the program, essentially turned into a character who could have been one of the show’s heroes. The forces shaping Rose Wilder, Laura Ingalls Wilder’s radical daughter, were more diffuse than corporate interests, but they prompted her to rewrite the books “Little House on the Prairie” into paeans to “heroic individualism,” despite the true story of the Ingalls family was anything but that.
The road to this fundamentalism was paved with stones of hypocrisy. The National Association of Manufacturers was founded in the late 19th century “to advocate for the introduction of protective tariffs at the federal level and to encourage the US government to build the Panama Canal.” The business community spoke of the glory of competition but welcomed the creation of monopolies to stave off such things. From the market’s failure to supply rural customers with electricity in the 1930s to the financial crisis of 2008, those who touted the power of markets have rarely acknowledged when they were not working as intended. In particular, those who spoke the grandest of freedom usually meant their own freedom—certainly not freedom for enslaved people, for children, or for workers who had little opportunity for employment.
As the world has evolved, market fundamentalists increasingly ridiculously refuse to acknowledge what has become obvious. As Oreskes and Conway write, “Economic liberalization does not necessarily lead to political liberalization.” Hello China! Nor have the safety nets for the vulnerable in European societies destroyed democracy. (Some argue that such things might preserve democracy.) There is also an absurdity at the heart of the argument that rules are inherently destructive. As the authors write, claiming that reforms are “a step toward bondage” is like claiming that road signs, traffic lights, and speed limits are steps towards the abolition of motoring.
For the most part, the book is admirably nuanced. The authors recognize that markets play a role in generating information and allocating resources, a role that central planning has never been able to replicate. Their argument is not that capitalism is bad, but that we should recognize its limitations. “We need a more realistic view of what markets are good at and not good at, where they succeed and where they fail,” they write. As a matter of fact.
But particularly as the book progresses, the authors slip into cursory paraphrases of well-known history and other omissions which, while sometimes small, nevertheless undermine their credibility. About Paul Volcker, the former Federal Reserve Chairman legendary for taming inflation, Oreskes and Conway write that his rate hikes “hit hundreds of millions of people,” shocking them with higher interest rates, causing unemployment and financial crises in several countries – and that the hikes could not “beat inflation”. If there is to be a retelling of the Volcker-as-hero narrative, it needs to be more substantive and at least acknowledge that while healing inflation can harm the least well-off, high inflation hurts them even more. Oreskes and Conway blame unfettered capitalism for the “500,000 opioid deaths,” ignoring that it was a government agency — the Food and Drug Administration — that had the power to prevent the opioid crisis. And they write that during the coronavirus pandemic, “Things changed in America when Joe Biden was elected and mobilized federal government capacity to accelerate vaccine production.” Not mentioning the well-known role played by the Trump administration’s Operation Warp Speed may be ideologically convenient, but it has made me wonder about the truth of all the other claims Oreskes and Conway are making where I don’t already know the whole story.
Another theme in the book is that even those thinkers who have expressed skepticism about an unconstrained market have not calibrated exactly what the role of government should be. “The key question – one that Hayek never adequately answers – is how to assess the social costs and judge when government should and shouldn’t act,” they write. That is certainly the key question of our time. But instead of trying to answer it, Oreskes and Conway fall into the same trap by approaching the problem from the opposite direction. “Our most serious problems have arisen not because of too much government, but because of too little,” they write in the last two sentences of the book. “Government isn’t the solution to all of our problems, but it is the solution to many of our biggest ones.” These are terribly broad and cliche claims, especially from authors who have spent the last 425 pages exaggerating those in the eviscerate the other side.
Bethany McLean is a contributing editor at Vanity Fair and the author of “Saudi America: The Truth About Fracking and How It’s Changing the World.”
How American business taught us to hate government and love the free market
By Naomi Oreskes and Erik Conway
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