Capitalism Saves Us All

Email Print
FacebookTwitterShare

Contrary
to what many thought in 2000 after George W. Bush became President,
we are now living in a time of unprecedented government growth
and spending
, and it seems quite likely that the federal government
will continue to expand for the foreseeable future regardless of
who wins the election in November. That is why are fortunate that
Thomas J. DiLorenzo's new book, How
Capitalism Saved America: The Untold History of Our Country, from
the Pilgrims to the Present
, will be released shortly. DiLorenzo's
work is a pragmatic celebration of some Americans resisting big
government's siren call and embracing freedom over misguided state
intervention whenever they could. Hopefully some in Washington will
learn from its contents.

Di
Lorenzo's is not a traditional history. It is a concise work of
economic history in which the author picks and chooses historical
events that best support his theme. The ideas and arguments of immortal
economists like Adam Smith, Ludwig von Mises1,
F.A. Hayek, Milton Friedman, and Murray Rothbard provide structure
and authority for many of the author's views. By the end of How
Capitalism Saved America, it will become readily evident to
the reader than when our leaders made use of free market solutions
we thrived, but when they chose to have government answer we floundered.

Some
readers may greatly profit from the author's discussion of historical
events which are practically forgotten today. Di Lorenzo informs
us that the failure of the Jamestown settlement in 1607 (and the
accompanying starvation of its inhabitants) was largely due to an
absence of private property rights. They had no incentive to farm,
as what they harvested they could not keep, so they chose not to
produce at all. In 1611, when a "high marshal" was sent
to the colony, its fortunes immediately reversed after the marshal
allocated three acres of land for each man's personal cultivation.

What
this reviewer appreciated most about this book is the way
in which the author debunks popular myths. What is more intrinsic
to being American than having the opportunity with which to better
one's lot? Di Lorenzo illustrates that even the poorest of the poor
continue to have the chance to rise through our capitalist system,
and they frequently make use of this opportunity.

"The
critics suggest that there is little or no room for the u2018poor' to
advance, that class of people is essentially stuck in the bottom
20 percent. But this is unequivocally false. In reality, the bottom
20 percent (like all other quintiles) is constantly made up of different
people. A family in the lowest income quintile today, as recorded
by the census data gatherers, will typically move up into a higher
income category over the next five or ten years and be replaced
in the lower category by a different family…"

Readers
would be wise to remember the next time they are challenged with
the mantra, "social justice," to retort that the only
way to achieve it is through, "capitalism."

Capitalism,
through its cheaper goods and higher wages, has distinctly benefited
the working class. A hundred years ago, the fattest of the fat cats
could not purchase the same type of goods that your average retail
worker can purchase today, and the fact that such unbelievable wares
are available is strictly due to the incentives created by a capitalist
system. In a socialist economy, they would never have been invented
or discovered in the first place.

We
find as well that those dubbed "robber barons" were not
as they enriched far more often than they robbed. Men like James
J. Hill, Cornelius Vanderbilt, and John D. Rockefeller were brilliant
entrepreneurs who employed thousands and gave stability to countless
American families. The charitable organizations and nonprofits they
bequeathed remain viable today and many of their innovations benefited
all Americans–not just those they directly employed.

This
review would not be complete if it did not mention the non-partisan
nature of How Capitalism Saved America. Di Lorenzo attacks
all interventionists regardless of their political orientation.
He excoriates the Republican Hoover Administration for its part
in causing the Great Depression and then turns to examine the ways
in which the Democratic Roosevelt Administration exacerbated the
problems inherited from Hoover. The period appears to be an age
where the temptations of state intrusion into the economy appealed
to a majority of our legislators. The author views Roosevelt's New
Deal as being merely a continuation, and logical outcome, of the
policies enacted by the previous administration.

Herbert
Hoover, in contrast with his reputation, was in no way a devotee
of laissez-faire government. Here the author effectively juxtaposes
him with President Van Buren who was in many ways his presidential
antithesis. Hoover stood opposed to "destructive competition"
and believed that some people in America made far too much money.
He was one of the first to try hyperactive state solutions as a
response to economic problems. As we now know, his interference
made things infinitely worse. There were many examples of governmental
futility during the administration, such as the Railway Labor Act
where he empowered unions over employers (which would become a way
of life under Roosevelt). Hoover believed anti-trade tariffs actually
benefited American workers and nowhere was this more the case than
with his visible support of the Smoot-Hawley Tariff. He seemed to
create "more government" wherever he could as he formed
the Bureau of Aeronautics and created a policy distributing licenses
to radio broadcasters. Giant public works programs marred his presidency
in the same way they marred Roosevelt's:

"In
1929 Hoover devoted a sizable chunk of the federal budget–half a
billion dollars, or 13 percent of the total budget–to public works
spending. At the same time he pressured state governments to increase
their own public works spending. By 1931, total government public
works spending would be as high as at any other point in the decade…"

In
lieu of this fact, it is easy to highlight the senselessness of
both Roosevelt and Hoover with the hilarious words of Harry Hopkins,
"I've got four million at work [in federal jobs] but for God's
sake, don't ask me what they are doing." Only through a "don't
ask and don't tell policy" have a couple of generations of
historians been able to venerate The New Deal and the gigantic figure
who embodied it.

Specifically,
for those who have not read Jim Powell's FDR's
Folly
, the chapter, "How the New Deal Crippled Capitalism"
issues a proper indictment of the conventional wisdom that Roosevelt's
terms in office saved the country and capitalism itself. While not
as in-depth (obviously) as Powell's book-length treatment, this
author's facts, charts, and argumentation are more than enough to
dash our society's unwarranted worship of Franklin Delano Roosevelt.
Unemployment never fell below 14.6 percent between 1932 and 1940
and between "1930 to 1940 net private investment was minus
$3.1 billion." What The New Deal really represented was
masterful electioneering and showcased, once again, that while FDR
was a brilliant politician, he knew little about how to improve
the economic health of our citizenry.2
Di Lorenzo's narrative debunking the legend is brief but powerful.

Perhaps
the best quotation in the book belongs to Thomas Jefferson when
he said "that government is best which governs least."
If politicians accepted this view today then the jangling cries
of thousands of progressive activists (who confuse government programs
and meddling with moving forward) could easily be discounted. Capitalism
made America what it is and Di Lorenzo's work provides a great service
by reminding everyone of how integral free markets have been to
our liberty and advancement.

Notes:

  1. Di Lorenzo
    dedicated the book to Ludwig von Mises.
  2. The confusion
    of FDR on economic matters is nowhere more visible than in this
    exchange from FDR's
    Folly
    : "FDR imagined he could fix the world gold
    price from his bedroom. Morgenthau reported that when he visited
    FDR on Friday, November 3, he suggested a 10- or 15-cent rise
    from the previous day, and FDR decided on a 21-cent rise. Morgenthau
    asked the rationale for 21 cents, and FDR reportedly replied
    that ‘three times seven’ is a lucky number." pp. 71–72

June
14, 2004

Bernard
Chapin [send him mail]
is a writer living in Chicago who is presently writing a book about
his experiences working at a government alternative school.

Email Print
FacebookTwitterShare