How big business sold America the myth of the free market

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


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