Destroy Your Idols: Captains of Industry Edition

It is almost unassailable doctrine among conservatives and mainstream libertarians that the powerful industrialist of the late 19th and early twentieth century were, great men who pulled themselves up by their boot-straps, and enriched themselves by improving the lives of others.  Above all it is believed that they created their massive fortunes all by themselves, with no help from the government whatsoever.

I tend to find this nonsensical and less than honest.  Generally speaking massive concentrations of wealth usually need the of a government to develop.  As I pointed out in my previous post, the late 19th and early 20th centuries were times of cronyism, in which what is now called corporatism was quickly evolving.  That said, I previously pointed out that many of the big industrial of the time benefited from land grants and railroad subsidies and many actually made their first fortunes as government contractors during the American Civil War.  As I mentioned before these include Andrew Carnegie, J.P. Morgan, Philip Armour, Clement Studebaker, John Wanamaker, Cornelius Vanderbilt, and the Du Ponts.

If government involvement, tarnishes the reputation of the supposedly self made men listed above, there are still a few other names that get thrown around like Henry Ford or John David Rockefeller. Ironically, Ford is probably as bad an example of a self-made industrialist as one could think of.  His entire, success was largely made possible by an expansion of government infrastructure, which if I remember correctly, he was involved in lobbying for. This is not to mention his raving anti-semitism and violent managment practices (which are interesting, but admittedly beside the point). Additionally Rockefeller, as I understand it he benefited from tariff protection and patent protections.  Furthermore, I suspect, that in his oil exploration he probably did a great deal of damage to the private property of others as well shared resources, like rivers and streams, that he was exempted from having to pay for (I could be wrong about this though).

In the more modern context the same I hear the same arguments made about Bill Gates and Steve Jobs, who joined the ranks of the world’s richest humans due largely government granted patent protections, which I would argue are simply government granted monopolies.  Both of these men have advocated the state expand these government imposed monopolies to foreign markets that do not recognize them.

My overall point is that while it may be easy on a hypothetical free market to support one’s and live comfortably, it would probably be difficult to amass the enormous concentrations of wealth and power we have seen over the last couple centuries without the help of the of the state.  Absent government funded infrastructure, subsidies, intellectual property rights, licensing, competition crushing regulation and government granted limited liability protection, I suspect the economy would be generally dominated by firms that are smaller, more numerous, more localized and less hierarchical than we currently see.  This is because long distance transportation is a diseconomy of scale, and large concentrated hierarchical firms are vulnerable to the same sort of calculation problems Mises attributed to state socialism.

So despite the pro-big-business bias of mainstream libertarians and the fact that some conservatives literally believe that the great industrialist and financiers of the past were hoisted to their positions of power by God, himself (yes, I had one actually tell me this), I suspect that the government actually had a lot to do with their success, and that an actual free society would be more egalitarian.


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