The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market

The claim that restraining capitalism to protect workers threatened freedom was bogus, but the men advocating it had more money, power, and social position to deploy to propagate their views than their adversaries did. And so their arguments began to take hold. The competition between the rights of business and the needs of workers would never be a level playing field. (p.36)

"Both liberty and equality are among the primary goals pursued by human beings throughout many centuries; but total liberty for wolves is death to the lambs, total liberty of the powerful, the gifted, is not compatible with the rights to a decent existence of the weak and the less gifted." (p.36) [Isaiah Berlin quote]

NELA (National Electric Light Association) may have lost the battle over rural electrification, but it won the war of what would be taught in American business schools. (p.67)

In just a few years' time, NAM [National Association of Manufacturers] and its allies would literally import foreign theories and theorists—the Austrian economists Friedrich August von Hayek and Ludwig von Mises—as part of their effort to convince the American people that capitalism and freedom were two sides of the same coin. (p.104)

NAM put forth the "Tripod of Freedom" concept … in constitutional representative democracy, in free enterprise, and in civil and religious liberty … (p.112)

By 1950, American business leaders had constructed an intellectually coherent—if historically and logically misleading—framework for market fundamentalism. Led by NAM, business leaders had fought child labor laws and workmen's compensation as unfair limits on business freedom. NELA enlisted academics to help portray American business as efficient, even where it patently was not, and insist that anything less than total business freedom was a step on the road to socialism or worse. The American Liberty League added the fetishization of freedom, and NAM pulled it all together under the indivisibility thesis and the Tripod of Freedom. (p.118)

NAM members didn't just manufacture cars and carpets; they manufactured a myth. They would spend the ensuing decades bolstering its intellectual credentials and embedding it in the bedrock of American culture, to the point where the myth would be mistaken for age-old truth. (p.120)

... the words "free enterprise" appear in neither the Declaration of Independence nor the Constitution. (p.122)

What, then, did Mises add? Hülsmann offers a credible answer: Mises's benefactors "needed intellectual leadership from people who were conversant both in the world of business and in the world of ideas. By February 1943, they had discovered what they were looking for in Ludwig von Mises." Thanks to Mises, campaigns that in the 1930s had been exposed as unprincipled propaganda now could be reconstructed as a credible intellectual program. (p.135)

... 1944 work The Road to Serfdom, a book that would make Hayek a hero of the American right and the patron saint of free-market doctrine.
The thesis of The Road to Serfdom is that capitalism and freedom are linked, and so if we wish to preserve political freedom, we must preserve economic freedom. Conversely, if we abandon economic freedom to centralized planning, whether in the name of fairness, efficiency, or equity, it is only a matter of time before we lose political freedom as well. (p.138)

If market fundamentalism is a religion, its bible is The Road to Serfdom. (p.145)

In her nonfiction book Payback, Margaret Atwood concludes that somewhere in the twentieth century "people began substituting something called 'the Market' for God attributing the same characteristics to it: all-knowingness, always-rightness, and the ability to make something called 'corrections,' which, like the divine punishment of old, had the effect of wiping out a great many people." In this framework, it was easy to see the "invisible hand" as the hand of God. Though sometimes inscrutable, "The Market," like God, had the power to achieve good ends out of what on the surface might seem like bad means. (p.160)

... so ideas that suit the rich are more likely to thrive than those that suit the poor. In this way, patronage by exceptionally wealthy individuals or organizations may act as a kind of unnatural selection, ensuring that the ideas they select come to the forefront of a cultural conversation, regardless of their actual fitness to explain the world. And it was this process—not survival of the fittest, but selection by the richest—that helped to ensure that neliberalism would be expressed in America primarily as market fundamentalism. (p.161)

Children's literature and middlebrow television were two avenues through which the myth of the free market could reach Americans, but the Little House franchise was hardly the only instance of individualistic, antigovernment ideas spreading surreptitiously through trusted channels. The Sunday sermon was another. Over the course of the 1940s and '50s, business leaders would infuse certain strains of Christianity with libertarian ideas. Their efforts would fundamentally transform the faith in America. (p.185)

For their laissez-faire argument to be effective, business conservatives needed to find a way to counter its incompatibility with the teachings of Jesus. Having already done some heavy lifting to change how Americans thought about capitalism, their next step was to change how they thought about Christianity. (p,186)

The promoters of the Mont Pelerin Society and FEE overlapped with a movement called Spiritual Mobilization, designed to convince Christian clergy that unregulated capitalism was not merely compatible with Christian values but founded upon them. Spiritual Mobilization was led by a Congregational minister named James Fifield, but its biggest donor was Sun Oil president J. Howard Pew—a leading figure in NAM—who also backed Billy Graham and Norman Vincent Peale. (Peale's parishioners included Fred and Mary Trump.) (p.7)

By embedding capitalist propaganda into American Christianity, they ensured that millions of Americans heard their message weekly, in church, from their ministers and lay leaders—which is to say, from people the parishioners thought they could trust.
In his 2012 book Masters of the Universe, economic historian Daniel Stedman Jones refers to neoliberalism as "faith-based policy," because it has often proved impervious to evidence. In its Christian libertarin expression, neoliberalism was not just metaphorically faith-based. It was literally so. (p.210)

As big winners in American capitalism, corporate Hollywood, GE, Alfred Sloan, and the Advertising Council had a good share of that ruling power, and they used it to mold minds and form tastes consistent with their preferred vision of American culture and their interpretation of freedom. Those had fared less well—who struggled to make ends meet in 1950s America, who lived under Jim Crow laws in the segregated south, faced systemic sexism or antisemitism, suffered from domestic violence, or watched helplessly as their local rivers became fatally polluted—might have taken a different view of matters. They might not have been so sanguine about the efficacy of individual initiative, or the glories of mass production and free markets. They might have wanted to see more "social problem films" like Grapes of Wrath, or films directed at the lives of immigrants or women or working-class people. But they did not have the resources to sponsor television shows or films or advertising campaigns, and they did not have the FBI helping them suppress dissent behind the scenes. On the contrary, if others held divergent views—and particularly, if they thought the government should do more rather than less to help, support, or protect them—corporate capitalists were determined to persuade them (and everyone around them) that those views were wrong. (p.237)

... Chicago school ... three efforts—derived from Luhnow's intervention—stand out in terms of shaping the national conversation about capitalism and the role of governments in markets. The first is George Stigler's Americanization of Adam Smith. The second is Aaron Director's development of an intellectual program to challenge the premises of antitrust law. And the third is Milton Friedman's fulfillment of the promise of a bible of American market fundamentalism. The Road to Serfdom had come out of Europe and would serve as the ideology's Old Testament. In America, Milton Friedman would write the New Testament. (p.244)

Ignoring the actual history of antitrust legislation, Bork elided concerns about inequality, private power, and the defense of democracy and told a story in which Congress had limited itself to concerns about "consumer welfare," defined solely in terms of short-run prices. (p.258)

First published in 1962, Capitalism and Freedom, [by Milton Friedman] would sell more than half a million copies, see numerous editions, be translated into eighteen languages, and be accessible to just the audience that Harold Luhnow and Jasper Crane had envisaged. The Foundation for Economic Education (FEE) has described the book (evidently without irony) as "much more accessible to intelligent undergraduates than Hayek's, which was intentionally addressed to intellectuals." (p.260)

At century's end, however, the picture was different. Deregulation was the word of the day, the federal government was in seemingly permanent retreat, and free-market principles reigned effectively unchallenged in American politics. Many people and organizations had a hand in this shift, as we will see in the chapters to come. But the person who did the most to articulate an alternative vision to the public was Ronald Reagan. (p.287)

"The magic of the marketplace" was not just a throwaway line. Reagan would use it again and again, and when he became president in 1981, it became his catchphrase. But first would come the presidency of James Earl Carter Jr., the Democrat who launched the Reagan Revolution. (p.308)

The Carter administration had focused on the deregulation of prices—ideally as means to lower them—but the Reagan administration would expand the concept to cover a much wider range of changes, from aggressive de-unionization to the weakening of environmental, health, and safety statutes. (p.332)

Supply-side economics—now referred to as Reaganomics—didn't produce an Amercan investment boom or surging tax receipts; neither did it produce the vaunted "trickle-down" effect. What it did demonstrably do was explode income inequality. (p.343)

Supply-side economics was a shell game. The theory had been tested and failed. In a rational world, this should have discredited the idea and the economists who preached it. Instead, conservatives doubled down. (p.343)

If Jimmy Carter began the Reagan Revolution, Bill Clinton completed it. Both Carter and Reagan worked to deregulate large swaths of the American economy, but Clinton in some ways went further, with dramatic deregulation of telecommunications and financial markets. In 1996, he declared that the "era of Big Government is over." (p.363)

All this may make one wonder: was this ever really about capitalism? Or freedom? Or was it all just one long, semi-continuous, shape-shifting defense. (p.392)

It is the myth that markets are efficient and governments are inefficient. That markets work and public policies fail. It is the myth that we do best when government "gets out of the way," and lets the market do its "magic." (p.419)

A key part of the manufacturers' propaganda campaign was the myth that of the Tripod of Freedom, the claim that America was founded on three basic, interdependent principles: representative democracy, political freedom, and free enterprise. This was a fabricated claim. Free enterprise appears in neither the Declaration of Independence nor the Constitution, and the nineteenth-century American economy was laced with government involvement in the marketplace. But NAM [the National Association of Manufacturers] spent millions to convince the American people of the truth of the Tripod of Freedom, and to persuade Americans that the villain in the story of the Great Depression was not "Big Business" but "Big Government." They spread this myth to weaken Americans' confidence in government institutions that reined in abusive business practices and protected ordinary citizens.(5-6)

The deification of markets and demonization of government has deprived us of the tools and the insights we need to address the challenges before us: to live long and healthy lives, to generate prosperity, and to coexists in concord with each other and with the nonhuman inhabitants of our planet. It is time we rejected the myths of market fundamentalism and re-embraced the proven tools we have at our disposal. It takes governance to address the problems that people, pursuing our self-interest, create. One does not have to be a socialist to come to this conclusion. Only an observer.

Ronald Reagan was wrong. Our most consequential problems have arisen not because of too much government, but because of too little. Government is not the solution to all our problems, but it is the solution to many of our biggest ones. 426