As we all know and have been indoctrinated from kindergarten on, and see in popular culture and mainstream media, capitalism is fundamentally unfair, and if it wasn’t for the benevolent hand of government protecting us, we’d all be screwed. One of the myths perpetuated by our cultural elite is that the American robber barons of the late 19th and early 20th Century showed us how much we needed the protective oversight of government to keep us safe from the red in tooth and claw of unbridled capitalism. I’ve always known this was of bunch of typical progressive-Marxist excrement, but learning the actual historical facts of the development of industrial America makes it all the more stinky.
If you want a more accurate and balanced look at the age of the so called robber barons than you get in your average high school or college text book, Burton Folsom, Jr.’s “The Myth of the Robber Barrons: A new Look at the Rise of big Business in America” is a great place to start. One day when the liberal-left hegemony of American culture is broken (I know, I’m an insufferable optimist), this little book may be seen as a classic in the war on progressive lies about capitalism.
I would categorize Professor Folsom’s book under “the more things change . . . .” He starts with the story of Cornelius Vanderbilt, a “robber baron” if ever there was one, right? Actually Vanderbilt was a hero fighting early American crony capitalism. According to Wikipedia, “Robert Fulton (November 14, 1765 – February 24, 1815) was an American engineer and inventor who is widely credited with developing the first commercially successful steamboat . . . . In 1807, Fulton and [Robert] Livingston together built the first commercial steamboat, the North River Steamboat (later known as the Clermont), which carried passengers between New York City and Albany, New York.”
What Wikipedia doesn’t tell us, and Prof. Folsom does, is that Fulton had a monopoly enforced by the state that brings our young hero into the economic history of the United States:
The New York legislature gave Fulton the privilege of carrying all steamboat traffic in New York for thirty years. It was this monopoly that Thomas gibbons, a New Jersey steamboat man, tried to crack when he hired young Cornelius Vanderbilt in 1817 to run steamboats in New York by charging less than the monopoly rates. . . . Vanderbilt was a classic market entrepreneur, and he was intrigued by the challenge of breaking the Fulton monopoly.
Somehow this gets left out of the accepted historical record, that Robert Fulton had a government enforced competitive advantage. Cornelius Vanderbilt with daring and cunning broke this monopoly much to the satisfaction of steamboat riders who enjoyed dramatically lower prices as a result.
There are many other such stories of enterprising business people looking for advantage in a government handout, and other enterprising business people who believed that that free market was a much better advantage. In every instance government intervention distorts the marketplace and leads to higher prices and lower quality. He contrasts throughout the book two kinds of entrepreneurs:
[W]e need to divide industrialists into two groups. First, were market entrepreneurs, such as Vanderbilt, Hill, the Scran-tons, Schwab, Rockefeller, and Mellon, who usually innovated, cut costs, and competed effectively in an open economy. Second, were political entrepreneurs, such as Edward Collins, Henry Villard, Elbert Gary, and Union Pacific builders, all of whom tried to succeed primarily through federal aid, pools, vote-buying, or stock speculation. Market entrepreneurs made decisive and unique contributions to American economic development. The political entrepreneurs stifled productivity (through monopolies and pools), corrupted business and politics, and dulled America’s competitive edge. (p. 131-132)
This really was kind of a depressing book to read, because we have been lied to for so long and so successfully, which is documented thoroughly in chapter seven, “Entrepreneurs vs. the Historians.” The latter paint a picture swallowed in hole by average Americans that it was the former that created economic dislocation and harm, when exactly the opposite is the truth most of the time. The left-liberal cultural elite, in the media and entertainment, as well as education, has controlled this false narrative for so long and so well we sometimes wonder if the truth will ever win out on a larger cultural level. If the Soviet Union couldn’t suppress the truth with dictatorial totalitarian state power, I’m confident that American progressive culture warriors (they are the ones who started the culture wars) won’t be able to either.