ANNOUNCER: This is the Lew Rockwell Show.
ROCKWELL: Dr. Tom DiLorenzo is the author of or the co-author of 13 books. The one I want to talk about today is How Capitalism Saved America. It’s really a wonderful anecdote to the way that history has taught us in the American schools and at the university level that, oh, horrible businessmen are always trying cheat the public and wring the neck of the public. Thank goodness we have the government. We have this public-spirited institution in Washington that cares only for the public good, the commonweal, and it takes care of all of us. And it’s only through either Socialism or a Keynesian central direction of the economy that we have any prosperity or any freedom at all. And, of course, this is, like most of the things taught in history classes, the exact opposite of the truth.
And Tom’s book is just beautifully written and a very interesting story of how capitalism is really what America is all about — Tom?
DILORENZO: Yes. The idea for the book came actually from a former editor of mine after I wrote my first Lincoln book. And it was in the middle of the Enron accounting scandal and there were several other accounting [amazon asin=1400083311&template=*lrc ad (right)]scandals in corporate America. And our thinking was that, well, the academic left is going to take this to, once again, make the argument that this is how all capitalism operates — it’s all crooked, its all rigged and it’s fraudulent — and then call for more Socialism, more regulation and so forth. And we thought that a book about American capitalism, written from a historical perspective, not just another theoretical treatise, would be a good book to have at this time as a counter to all these books you knew were going to be published by Michael Moore and people like that. And so that’s what I did.
And so, the first chapter is What Is Capitalism? One of the main points I try to make is that we don’t really live in a capitalist regime, per se, anymore. We live in sort of a neo-mercantilistic or a neo-Fascist regime to a very large extent, not 100% but to a large extent, where, with government control of so much of what business does, it could hardly be said to be capitalist. And a lot of the people over the years who have criticized American business, they’re really criticizing, not business, per se, but the corrupt relationships that some businesses have with government, whether it’s protectionism or subsidies or military contracts, and on and on. It’s not capitalism. It’s some version of mercantilism, usually, or what I call economic Fascism. And so I wanted to set the record straight in terms of what capitalism is as private property, free markets, a voluntary exchange economy, as opposed to this crooked relationship between government and business that exists in so many industries in America.
And I have quite a few chapters — for example, there’s one chapter on How Capitalism Has Enriched the Working Class, contrary to what most Americans are taught, that the evil capitalists took the money out of the pockets of the workers. I have another chapter called The Anti-Trust Myth, the myth that American capitalism in the 19th century was becoming monopolized and government bureaucrats on big, white horses rode to the rescue and saved us from monopoly. That’s not true. The myth that Herbert Hoover was a free-market laisser-faire advocate. The late, great Murray Rothbard wrote a whole book about that, America’s Great Depression. And I tried to add to it a little bit in explaining who Hoover really was. He was a so-called progressive and an interventionist on economic policy. And his policies helped lead to the Great Depression. And then I, of course, talk about the great myth that FDR ended the Great Depression as — I even quote Newt Gingrich as saying that, that he was a great man for ending the Great Depression. But economists, like myself, know that, not only did he not end the Great Depression, but his policies made it worse, and they made it longer lasting and deeper than it otherwise would have been. And those are the types of things that I write about in this book.
ROCKWELL: And, Tom, you also defend the entrepreneur, the risk-bearing creator who is responsible for the wealth of the world, at least in a modern capitalist society or quasi-capitalist society like ours. But, of course, it’s stigmatized by the media and by the government as rotten rich people out to cheat the consumer.[amazon asin=146793481X&template=*lrc ad (right)]
DILORENZO: That’s right. That’s an old story, isn’t it? They’ve always said that. I also have a chapter on sort of the anti-industry industry, as the late Ayn Rand once called it, where I discuss the anti-capitalist mentality. I quote Ludwig von Mises’ book by that title, and discuss it at some length of why it is, for so long, so many people have been so antagonistic literally towards our source of civilization — capitalism — in America and elsewhere. And the entrepreneur certainly plays a crucial role.
I have a discussion of Bill Gates in there, of how Gates did so many great things in founding Microsoft and producing all these great products. And I go through chapter and verse of how the trouble he got in, with the anti-trust regulators, was all instigated by his competitors, especially the CEO of Novell Corporation, located in Utah, who got Senator Orrin Hatch involved in persecuting Bill Gates and Microsoft because they were producing products that were too good and too cheap in the eyes of Microsoft’s competitors. There’s been a whole book written about this, about how this all happened. And they even had a trial, a fake trial — I don’t know what you call it — a moot court, where they hired all these experts like Robert Bork at $1000 an hour and up to come and make the case against Microsoft. And that turned out to be pretty much close to the actual case the government used against Microsoft. And not much came of it after all those years. Microsoft was not broken up. But it’s our modern-day version of really, not the prosecution, but the persecution of an entrepreneur who has done more for humanity — I sometimes tell my students, whoever invented the can opener has done more for humanity than all the politicians in the history of the world. And this is just another example of how politicians tend to react to entrepreneurs like Bill Gates.
ROCKWELL: Yes, because, of course, we can’t know exactly what the cost to civilization are in something like the attack on Gates, but it seems like poor Microsoft has never really been exactly right ever since that. And all their top executives, of course consumed, not with serving consumers, but trying to protect the company from being destroyed by the government and its competitors through the Justice Department.
DILORENZO: Right. The hidden cost is all the diversion of management talent to fighting the government as opposed to producing better products on the market.
ROCKWELL: I remember when the “Washington Post” made fun of Gates and stigmatized him for not having any lobbyists in Washington. They sort of said, who does he think he is? He’s out there in Redmond, Washington; [amazon asin=0307338428&template=*lrc ad (right)]he’s paying no attention to the real Washington. He needs to be taken out. Well, that was the —
DILORENZO: I remember that article. I xeroxed it and handed it out to my classes there. The snobby, arrogant “Washington Post,” and they were saying, essentially, as you said, this is America; who do you think you are, thinking you can just go into business and sell products to consumers without giving us our take. It’s no different, in my eyes, to how the Mafia operates. For all those “Sopranos” fans out there, when they watch all these old Mafia shows of how the Mafia guys go around in the neighborhood and tell me, I need a taste. If you want to stay in business, and you’re a meat market, you need to give me a percentage of your weekly sales or we’ll break your kneecaps. There’s no difference between that and what the government was doing to Bill Gates and what it does to all other businesses. They demand campaign contributions, as they call them, or bribes, to leave you alone. In fact, in Washington, they even refer to some bills, legislative bills as “milker bills.” They’re threatening to raise taxes or impose regulations on an industry or a company, and they call them “milker bills” because they’re used to “milk” campaign contributions from the threatened companies.
ROCKWELL: The only thing we can say for the Mafia, Tom, is that sometimes it actually provides products people want to buy and the government is otherwise outlawed.
(LAUGHTER)
DILORENZO: That’s right.
ROCKWELL: So probably the Mafia is actually a better institution than the government.
(LAUGHTER)
Tom, I want to thank you for coming on and talking to us.[amazon asin=0307382850&template=*lrc ad (right)]
This book, How Capitalism Saved America, is an education in American history and in real economics and real history in a very short compass. Beautifully written, compellingly written. Take a look at Tom’s articles and his archive at LewRockwell.com. And at the bottom of his articles, you’ll see where you can click on and buy his various books from the Mises Institute or from amazon.com. And all of them very much repay your reading.
Tom has done a lot for Americans in telling us the truth about Lincoln, about Hamilton, about the American economy, about the FDA, many, many things in the 13 books that he’s either authored or co-authored.
Tom, for all you’ve done, thank you very, very much.
DILORENZO: Thanks, Lew.
ANNOUNCER: You’ve been listening to the Lew Rockwell Show, produced by LewRockwell.com, the best-read Libertarian website in the world. Thanks for listening.
ROCKWELL: Well, thanks so much for listening to the Lew Rockwell Show today. Take a look at all the podcasts. There have been hundreds of them. There’s a link on the upper right-hand corner of the LRC front page. Thank you.
Podcast date, July 30, 2008
