Greetings,
I am a first-time poster here on Mises. In looking over the comments and articles here, it looks like I will fit in!
I am currently a non-traditional student and I am taking a history class, 1865-present. I am having a lot of trouble reconciling what the textbook authors write with my libertarian viewpoints. It seems to me that my text is skewed, that is, the author's interpretation of why history happened rather than just a straight account of what happened.
We are going over parts of the Industrial Revolution and Guilded Age right now. This is what I can sum up so far as the author's views:
My problems with this train of thought are numerous. All comments of clarification and help are welcomed!
First, it seems like the authors mix up what "equality" is defined as. Perhaps they are only reflecting the general outlook of people back then, I am open to that. But it seems to me that what workers were demanding by comparing themselves to their employers and not to their next-best-alternatives was equality of outcome and not equailty of opportunity. I never understood why someone being rich meant that I must be poor. Is this how people felt back then and thus inspired the Labor movements?
Second, the idea that government is the answer to better working conditions seems to me to be the logical fallacy of "false alternative." The authors of the text allude that they and the workers during that time felt that government was the only way to improve their conditions. Am I wrong to conclude that free-markets would have led to these changes without government? Were the industrialists so "greedy" and corrupt that they did not care about the "suffering" of the workers?
I will start with these two thoughts.
All informative comments are welcome. If you can, please refer me to material that I can research to find out if my assumptions measure up to the facts or if my textbook's interpretation is more correct.
Cari Beth
Welcome, welcome, welcome! There is much to learn!
I am a Gilded Age enthusiast myself. Boy, oh boy will you need to relearn a lot about the Gilded Age.
1) It is the other way around. The free market spurred the growth of the Industrial Revolution.
2) People lived in squalor before the free market existed. It is the free market which allowed them to come out of mere subsistence farming and to have more productive jobs that eventually led to the luxury of not working backbreaking work from dawn to dusk alongside your children.
3) It is true that there were a lot of unhappy people. Who wouldn't be unhappy seeing a bunch of people getting rich? Basic human jealousy. However, to say that the poor were getting poorer is a basic mistake that simply goes against all of what economic historians teach. Economists are near unanimous that the IR was essentially one of the best things to happen to mankind.
4) Well, yeah.
5) They did look to government, yes. I am not sure what evidence the author is using to support the idea that it was because they couldn't make the change happen themselves.
6) Government was very useful giving the big business what the big business wanted. Also, at pleasing special interest groups. But because society nowadays has a fascination with laborers and feminists it neglects the fact that both movements were used to deprive other people of liberty. Special interest frequently lobbied to make other people worse off and themselves better off, examples of this to soon follow.
Here I shall take the opportunity to quote a post of mine that is relevant:
You've bought into the idea that the Gilded Age was a time of laissez-faire! This is far, far from the truth. Laissez-faire means not only no regulations, but no interference. That includes subsidies! The Gilded Age was ripe with favoritism by government! That's how many of the companies got that big! If interested, check out these articles: http://www.thefreemanonline.org/columns/tgif/no-laissez-faire-there/ http://www.thefreemanonline.org/featured/the-many-monopolies/ http://www.thefreemanonline.org/columns/the-robber-barons-and-the-real-gilded-age/ http://www.thefreemanonline.org/featured/the-gilded-age-a-modest-revision/ Those articles give you just a taste of how the Gilded Age was not laissez-faire. In fact, there was a lot more going on that is easily shown as anti-free-market. Eugene Debs (socialist) correctly points out that government was used to break union strikes. Unions as they were in the beginning, were quite capitalistic constructs, in fact. Powderly, leader of the Knights of Labor, wanted to buy the means of production and have the workers operate them. He wanted to work within the system to change it. But the government prevented him being successful, because of its hostility to unions. Furthermore, note the burdensome tariffs in the US at the time. The tariffs decreased competitive pressures on the home industries and allowed them to become lazy and increase prices. Furthermore, the government had a monopoly on land. This is not so under the free market. Unowned or abandoned land may be homesteaded. Gabriel Kolko (another socialist) correctly points out in his Triumph of Conservativism that the history of government regulation of big business has been the history of big business using government to its advantage, especially in the Gilded Age. Hardly laissez-faire. Big business likes government. There is almost always the unholy alliance between the Bootleggers and the Baptists. The Baptist do-gooders want to outlaw alcohol because it's "sinful" (analogous to "liberals"), while the Bootleggers want to outlaw it so they make more money. The same thing happens with Big Business. The more regulation, the higher the burden on the competition, the less competition. This link shows just a taste of that:http://www.cato.org/research/articles/cpr28n4-1.html
You've bought into the idea that the Gilded Age was a time of laissez-faire! This is far, far from the truth. Laissez-faire means not only no regulations, but no interference. That includes subsidies! The Gilded Age was ripe with favoritism by government! That's how many of the companies got that big!
If interested, check out these articles:
http://www.thefreemanonline.org/columns/tgif/no-laissez-faire-there/
http://www.thefreemanonline.org/featured/the-many-monopolies/
http://www.thefreemanonline.org/columns/the-robber-barons-and-the-real-gilded-age/
http://www.thefreemanonline.org/featured/the-gilded-age-a-modest-revision/
Those articles give you just a taste of how the Gilded Age was not laissez-faire. In fact, there was a lot more going on that is easily shown as anti-free-market. Eugene Debs (socialist) correctly points out that government was used to break union strikes. Unions as they were in the beginning, were quite capitalistic constructs, in fact. Powderly, leader of the Knights of Labor, wanted to buy the means of production and have the workers operate them. He wanted to work within the system to change it. But the government prevented him being successful, because of its hostility to unions.
Furthermore, note the burdensome tariffs in the US at the time. The tariffs decreased competitive pressures on the home industries and allowed them to become lazy and increase prices.
Furthermore, the government had a monopoly on land. This is not so under the free market. Unowned or abandoned land may be homesteaded.
Gabriel Kolko (another socialist) correctly points out in his Triumph of Conservativism that the history of government regulation of big business has been the history of big business using government to its advantage, especially in the Gilded Age. Hardly laissez-faire.
Big business likes government. There is almost always the unholy alliance between the Bootleggers and the Baptists. The Baptist do-gooders want to outlaw alcohol because it's "sinful" (analogous to "liberals"), while the Bootleggers want to outlaw it so they make more money. The same thing happens with Big Business. The more regulation, the higher the burden on the competition, the less competition. This link shows just a taste of that:http://www.cato.org/research/articles/cpr28n4-1.html
Next, you say
Am I wrong to conclude that free-markets would have led to these changes without government?
Well, yes. The free market for example would not have forcibly made some companies break up and the free market would not have allowed the government to use force to break up unions.
As to education, improvement in labor conditions, and an increase in the standard of living, yes, the free market would have improved those.
The authors of the text allude that they and the workers during that time felt that government was the only way to improve their conditions
I partly addressed this in my large quote up there (^). I mention the part about Powderly wanting to work within the system to fix it. Furthermore, there were cooperative movements like the Grange at the time.
Were the industrialists so "greedy" and corrupt that they did not care about the "suffering" of the workers?
The whole idea of greed is a fallacious twisting of logic. The basic reality is that everyone acts in his own self interest in a world of scarcity. As such, we are all "greedy", or utility maximizing. The good side of this, however, is that we often realize that to improve our lot we have to improve that of others. Indeed, trade is the ultimate and fundamental manifestation of that. Whenever a voluntary trade occurs, it is because this makes both parties better off. Otherwise it wouldn't happen.
As Milton Friedman says, you can be the greediest person on the planet and not make a penny more. In the market there exist the laws of supply and demand which determine the allocation of resources. You may very well want to pay your workers no wage, but that goes against the laws of economics and the reality of the system. This will simply not last.
Hence, even if the wealthy capitalists of the time (and as I've already pointed out in the listed articles, many of these actually used government) were the greediest people of the world, in a system of private exchange this wouldn't make a bit of a difference. That's what the market is for. The workers would go to another job, and if all the workplaces are evil, then they'd form their own co-op.
Furthermore, I would like to note that a lot of the capitalists did care. I think Ford was one and I've read that Rockefeller was as well.
There is toooooons of material to relearn about the Gilded Age. Two other big ones you'll have to reconsider are Standard Oil and the meatpacking industry which scare everyone.
I've written articles dispelling these myths here:
http://wiki.mises.org/wiki/Standard_Oil
and
http://wiki.mises.org/wiki/Meat_packing
There are other things you will be interested in. Things such as child labor, which is covered well here:
http://www.thefreemanonline.org/columns/ideas-and-consequences/child-labor-and-the-british-industrial-revolution-2/
http://eh.net/encyclopedia/article/whaples.childlabor
The essence is that child labor existed because of low productivity of the society they live in. The situation in the US before the IR was not roses and ice cream. It was a tough life of subsistence farming. Parents had many children in the hope that some would survive. The children did backbreaking labor. Dangerous work with sharp objects and animals. When the factories came, the children began work there because it was an improvement in their lives. Despite the dangerous conditions, they were better off that way, because they weren't dead from starvation. When the productivity of society improved enough, the parents could afford to not send their children to the factories.
One of the above links explains that child labor laws passed in the US were not what ended child labor.
On the issue of education, a good place to begin with is this: https://www.mises.org/daily/1425/media.aspx?action=author&ID=369
On the issue of the evil railroads: yes, they were! Those government-subsidized and regulated railroads were evil! The one which was a free market railroad was the one which constantly cut rates and built the best possible routes with the sturdiest materials. Read about it here: http://mises.org/daily/2317#1
Finally, to tie it up, the very important idea of the Bootleggers and the Baptists. This is the ever-present alliance between big interests and do-gooders which works to make society worse off. Read about it here: http://www.cato.org/research/articles/cpr28n4-1.html
Oh my, I hope I haven't scared you off...
Wow! This is what I was hoping for! Thank you. It will take me a day or two to read/watch it all and soak it in.
I will get back to you and I hope we can continue this dialogue. Is that ok with you?
NO. IT MUST BE DONE NOOOOOOOOOOW!!!!!!!!!!!!!!!!!
Yeah, it's fine :P
I make a few unsubstantiated claims in the beginning for which I'm hoping someone can provide more substantial backing.
To go with Wheylous' excellent post, I'll recommend a series of classroom lectures by Rothbard which goes indepth on these topics and covers most of your concerns.
American Economic History 1870-WWII
Probably my favorite Rothbard recordings on any subject.
Wheylous is so happy for finding a girl with the same interests he has. The beginning of a beautiful friendship.
Haha. Let's not jump to conclusions based on avatar. We don't want another BP incident :P
We need a thread on how to turn our girlfriends into anarchists. So far I've failed miserably.
Wheylous' post was quite comprehensive so I'll condense my comments.
#2. Besides asking the obvious question, "Squalor compared to what?" we can note the fact that historians generally agree that real wages rose during most of the 19th century, particularly after the 1830s. They might well have risen faster had England not been at war with revolutionary France. (See the article at EconLib.)
Some might be inclined to attribute this to union activity; this great article makes mincemeat of that claim, noting that the industrializing countries had puny unionization rates overall. Also see F. A. Harper's great little book Why Wages Rise. The Libertarian Alliance has an Industrial Revolution reading list.
More resources of interest: this article from Cato detailing how government interventions into the housing market propped up the tenement system in New York after market forces had started to erode it, and Soft Coal, Hard Choices: The Economic Welfare of Bituminous Coal Miners by Price Fishback, which shows that many workers were free to move between so-called "company towns" and workers in dangerous jobs were paid compensating wage differentials.
#3-6 pretty much rehashes the standard Arthur Schlesinger goo-goo version of history, where the Progressive Era is painted as a popular uprising against the excesses of big business and "robber baron" capitalism. Democrat court history par excellence.
Fortunately, lots of great revisionism has been penned since by New Left scholars, showing instead that the Progressive period was the result of an attempt by industry in cahoots with unionism and the state to cartelize the American economy and suppress the vigorous competition of the 19th century. The essential reading list: The Triumph of Conservatism; The Corporate Ideal in the Liberal State; A New History of Leviathan; and Watershed of Empire.
Also interesting is this article on progressivism:
http://www.thefreemanonline.org/featured/eugenics-progressivism%E2%80%99s-ultimate-social-engineering/
The ideas presented are a bit shocking, so I just now sent an email to the author to ask for references to back-up the claims.
"NO. IT MUST BE DONE NOOOOOOOOOOW!!!!!!!!!!!!!!!!!"
Wheylous, you crazy kid! ;P
Anyway, Wheylous' superb post pretty much sums it up. Any further problems and I'll lend a hand.
Edit.
Also, something that is always important to remember is that history is useless without science. If I were writing a military history and I had no conception of military science then I'd probably get a lot of things wrong in my history. The same is true of economics. It is only through theories that we can properly conceive of history. This and the rest of what I write here, is the essence of Mises' Thesis in his book fittingly called "Theory and History". If you were an animist then you would believe that the reason that rains returned to area Y after a massive rain dance was because of the gods smiling upon the people in the area, whereas if you were a modern individual then you would consider it happenstance. By the same measure, preconceived economic ideas of historians shape the way that they view events in the past. Were living standards low because of monopolies depressing wages? Or was it because there was little capital was accumulated per capita? This depends upon preconception and its application to history, not something that is uncovered a posteriori by the historian.
This makes historians into the "masters of the social sciences", as it were, because they are the ones who write in the most prolific and classically smiled upon social science, history, and meanwhile they are also the ones who get to draw the relationship of cause and effect in history, explaining how X came to be, which then effects how people look at event Y which lead to X, specifically because economists look at theory, and ponder over models, much more than they do write history books, so their word is much more academic, and seemingly theoretical, rather than the historian whose work is supposed to be facts about the past.
Welcome to the forum
Good on you for digging into the Gilded Age. It is a fascinating time and often combined with manipulations against free-markets. Wheylous has covered it but I had to say:
Standard Oil was good! Wait what? The evil oil monopoly who drove everyone out of business? Who rebated 'unfairly' with the railroads? The one who controlled 90% of market output by 1890? Yes, the very one. Constrained by the laws of supply and demand, this explosive growth in a time of relatively free-markets could only come from one place: extraordinary entrepeneurship. By the end of its career in 1911, Standard chased the price of refined oil down to a tiny fraction of what it was at the beginning. Making oil so cheap opened up inestimable productivity to society. It allowed trains, cars, and machines to run cheaper, opening up the market.
Oil companies got a lot meaner when they found out that they could get rich by buying politics rather than selling products. This started to happen around the turn of the century when Morgan and Rockefeller realized how much cheaper congress was than the market.
Also, was there any place in recorded history where Industrialization was not a painful period? The gilded age was not a free market at all, but it was relatively free, which was conducive to a rapid accumulation of capital and end to the process of industrialization. Real wages doubled from 1880-1890.
It was certainly not a free market. Subsidized railroads used the ICC and eminent domain to cartelize, big oil used tariffs, lots of companies used government force to shut down strikes (there's nothing 'anti-free-market' about workers strikes). But it was also not as bad as class agitators would like people to think. Of course there will be overcrowding, sickness and poverty during the industrialization process. It worse in Britain with chartered corporations. Russia and China lost millions of lives trying to do it the government way. One should ask when thinking about the standard of living in America's Gilded Age "compared to what?"
The Anarch is to the Anarchist what the Monarch is to the Monarchist. -Ernst Jünger
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