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

by Naomi Oreskes

tolerably well fed,

cloathed and ...

A little more than a year earlier, the great American historian Richard Hofstadter had reviewed this history, reminding readers that Congress had had three goals in passing the Sherman Anti-Trust Act: one, an economic goal of fostering competition; two, a political goal “to block private accumulations of power and protect democratic government;” and three, a social goal built on the belief that competition built moral character.

The intent of these acts was clear: to prevent corporations or other private groups from undermining capitalism by undermining competition, but also, and crucially, to prevent them from undermining democracy.

philanthropy is a game of winners where wealthy individuals buy outsized influence while common folks struggle to make their voices heard

Eisenhower not only supported Social Security, but expanded it. He wrote to his brother that “should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again … There is a tiny splinter group, of course, that believes you can do these things,” but “their number is negligible and they are stupid.”

(Or, as the theorist of ideology Louis Althusser put it, quoting Pascal: “Kneel down, move your lips in prayer, and you will believe.”)

Goldwater and Reagan would always deny racial animus, but Reagan nevertheless reprised the implicit racist themes of the American Liberty League: that property rights necessarily entailed the right to use and dispose of property however its owner saw fit.

What Reagan carried forward from Mises, Hayek, and other twentieth-century neoliberal thinkers was an unfalsifiable reverence for markets and hostility to government.

Until the 1970s, there had never been more than two years in a row when the program had to draw on the Treasury.

The Republican desire to dramatically decrease benefits—or even to privatize the program—was, if anything, rooted in this success, because it refuted Reagan’s core claim that government was dead weight. His administration had to insist that Social Security was “broken,” when—like any fifty-year-old thing—it just needed some maintenance and repair.44 Many people know Senator Daniel Patrick Moynihan’s quip that “everyone is entitled

to his own opinion, but not to his own facts.” Fewer know that he coined it during this debate over Social Security.

Wall Street had been lobbying for this for years, but according to law professors Lissa Broome and Jerry Markham, the impetus for the act was in part to legalize something that had already happened: the merger between Citicorp and the Travelers Group to form Citigroup.

As with Smith and Hayek, Williamson’s nuanced analysis was flattened by the cheerleaders of deregulation into the suggestion that markets could be stripped of protective regulations.

The Washington Consensus was not a brief for minimal government, but it was mobilized as one.

As Williamson noted, “[o]ne does not have to be some sort of market fundamentalist who believes that less government is better government and that externalities can safely be disregarded in order to recognize the benefits of using market forces to coordinate activity and motivate effort.”109 Quite so, and Bill Clinton is best understood as attempting to do just this.

Actually, history suggests the opposite: developing countries’ performance was generally better when

their development was state-led, and worse when they undertook market-oriented reform.

crucial arguments are asserted or assumed rather than tested and confirmed.

With a degree of candor rare in economics, Williamson admits that the belief among nearly all contemporary economists in the “benefits of using market forces to coordinate activity and motivate effort” is more of an axiom than a tested and proven theory. “This proposition is such a basic part of economic thinking that it is actually rather difficult to think of a work that conclusively established its truth.”118

But here is one of the world’s leading economists frankly admitting that he cannot think

of a work that establishes the truth of economists’ most basic foundational belief.

“Pigouvian tax”—after the Cambridge economist Arthur Pigou, who in the early twentieth century had helped develop the concept of negative externalities. (Pigou also suggested it would be reasonable for governments to subsidize activities that had “positive externalities,” such as education.)

The notorious Global Climate Coalition, a network of fossil fuel producers and users that in the 1990s successfully prevented the U.S. Congress from ratifying the Kyoto protocol to the U.N. Framework Convention on Climate Change, was originally established as a committee of the National Association of Manufacturers.

A 2021 study published in the Lancet—the world’s premier medical journal—concluded not only that the policies and actions of the Trump administration actively contributed to the viral spread, but that 40 percent of American Covid-related deaths could have been prevented had the United States adopted policies more like those of other wealthy, democratic nations.

Philosopher José Medina puts it this way: it is “not uncommon for members of unjust societies to have distorted images of themselves as knowers … interiorizing a superiority complex … with negative epistemic consequences.”68

Her caveat is that “[f]ree markets only work their magic when prices reflect all available information, when there is genuine freedom of opportunity, and when the rules of the game support genuine competition.”20 Which is precisely never. There has never been a time in human history when markets met these conditions, and there is no reason to think that such conditions ever could exist.

In strictly financial terms, he argued, it is rational to be indifferent to the consequences of one’s business or behavior to others so long as the direct consequences are profitable for oneself; the problem is that those indirect consequences can severely hurt others, as they did with financial deregulation. “Government has a duty,” Posner concluded, “to do more than prevent fraud, theft, and other infringements on property and contract rights, which is the only duty that libertarians believe government has. Without stronger financial regulation than that, the rational behavior of law-abiding financiers and consumers can precipitate an economic crisis … rational maximization

by businessmen and consumers, all pursuing their self-interest more or less intelligently within a framework of property and contract rights, can set the stage for economic catastrophe.”

Our choices are not confined to oppressive communism or heartless capitalism. To suggest that they are is a dangerous failure of vision.