Debunking the Politically Correct History of the “Robber Barons”
The following is most
of the Foreword, written by Forrest McDonald, in The Myth of
the Robber Barons: A New Look at the Rise of Big Business in
America, by Burton W. Folsom, Jr. (Young America’s
Foundation, 1991). While neither the Foreword nor the book is
explicitly Biblical, it 1) corrects an historiography that is
false, 2) shows the power of capitalism to benefit everyone in a
free society (not just the “big businessman), and 3) illustrates
Biblical principles of limited government and free enterprise.
(For a longer discussion of this issue, see internet reference
at the bottom of the page.
Folsom shows that
the “Robber Baron” school of historians of American business
enterprise was partly right and partly wrong…. There are two
kinds of business developers… “political entrepreneurs” and
“market entrepreneurs.” The former were … comparable to
medieval robber barons, for they sought and obtained wealth
through the coercive power of the state, which is to say
that they were subsidized by government and were sometimes
granted monopoly status by government. Invariably, their
products and services were inferior to and more expensive
than the goods and services provided by market
entrepreneurs, who sought and obtained wealth by producing
more and better for less cost to the consumer. The
market entrepreneurs, however, have been repeatedly -- one
is tempted to say systematically -- ignored by historians….
Folsom’s study has
profound implications for American historiography beyond the
immediate subject to which it is addressed. It is commonly
held that the Whig Party of Clay and Webster and its
successor Republican Party of Abraham Lincoln and William
McKinley were the “pro-business” parties, and that the
Jacksonian Democrats were anti-business…. (Actually) the
Whigs and Republicans engaged in a great deal of
pro-business rhetoric and in talk of economic development,
but the policies they advocated, such as subsidies, grants,
of special privileges, protective tariffs, and the like,
actually worked to retard development and to stifle
innovation. The Jacksonian Democrats engaged in a great deal
of anti business rhetoric, but the results of their policies
were to remove or reduce governmental interference into
private economic activity, and thus to free market
entrepreneurs to go about their creative work. The entire
nation grew wealthy as a consequence.
Folsom’s work… has
a powerful relevance to current political discourse…. In the
last decade or two, many corporate businessmen have joined
with leftist ideologues to clamor for a “partnership”
between government and business that would involve central
planning, protective, tariffs, and a host of restrictions
upon foreign competitors…. Political promotion of economic
development is inherently futile, for it invariably rewards
incompetence; if competence is rewarded, incompetence will
therefore be the product; and when incompetence is the
product, politicians will insist that increased planning and
increased regulation if the appropriate remedy.
Adam Smith warned
us more than two centuries ago. “The statesman, who should
attempt to direct people in what manner they ought to employ
their capital, would not only load himself with a most
unnecessary attention, but assume an authority which could
safely be trusted, not only to no single person, but to no
council or senate whatever, and which would nowhere be so
dangerous as in the hands of a man who had folly and
presumption enough to fancy himself fit to exercise it.”
For further reading on
this same issue, see
http://www.mises.org/story/2317.
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