American Capitalism: Reflections on Its Mystery and Mythology

After our first class, I made an entry in my private journal where I answered all of our interview questions. I wanted to have a way to compare my interviewees’ answers with my own before my thoughts became impacted by class readings and discussions. I also wanted to trace my own intellectual evolution over the course of the semester. I would characterize my pre-class answers as unambiguously pro-market. I talked about how capitalism is a natural system that rewards creativity and efficiency, expressed my belief that voluntary transactions are superior to state planning, and praised the Industrial Revolution as the most important period in human history.

On the whole my answers were concurrent with my second interviewee, DR, an older man who has done well by the capitalism. My third interviewee, HE, came from a wealthy family, but she also expressed her belief that free markets yield more losers than winners — like KJ, my first interviewee. The theme of winners and losers was the central contention in my three posts.

Americans like DR, who believe that capitalism is a more just and natural system than any alternative that has been tried in history, believe that good work ethic and indefatigable determination will result in a person being a winner.

In class, we traced this Jeffersonian line of thinking back to the early days of the republic with T. H. Breen’s The Marketplace of Revolution. Early republican values emphasized thrift and hard work. However, as we discussed in class, person’s success could also be ruined by unforeseeable changes in the market, as we examined in Jessica Lepler’s The Many Panics of 1837. In other words, DR’s belief that good fortune comes to honest strivers is a myth. It is a very popular myth that is expressed in our culture frequently, as in this 2014 Cadillac commercial, which aired during the Super Bowl.

These myths stem from a lack of education about the history of American capitalism. None of my interviewees had a rudimentary knowledge of its origins. KJ admitted it was never taught to her in school; DR believed that the early settlers left England to build a capitalist society, even though the fundamentals behind the market revolution, like credit, were impaired by anti-usury laws; HE was taught in her high school history class that a group of classical economists came up with capitalism and then it was just suddenly implemented. Since American public schools do not go into great depth about capitalism’s origins or the decision that were made throughout its evolution, it is no surprise that people turn to platitudes and one-dimensional myths to explain success.

With a semester’s worth of knowledge in my head about the evolution of free markets in the United States, my own views have changed too. Karl Polanyi’s book The Great Transformation gave me a new way to look at markets; he saw the free market as a dangerous juggernaut which if left to its own devices would bring every human act into the “cash nexus,” as Viviana Zelizer would put it. After examining how nineteenth century bankers sought to manipulate currency for their own benefit, how railroad barons made their fortunes by swindling private bondholders and the federal government, and how Wal-Mart came about because of special tax favors, it is hard to see the market as a completely natural force.

Flesh-and-blood human beings made conscious decisions on how markets would change over time. As Polanyi put it, people created “counter movements” to keep the market in check and to make life in a market society livable. Government regulations, national trade barriers, and social insurance were all created to protect people’s livelihoods against market forces. Some Americans do not even recognize these counter movements. DR thought Franklin Roosevelt’s New Deal was about social issues, not about curtailing the chaos of the market.

Even though the entrepreneurial spirit are dear to many Americans’ cultural identity, my interviews and the posts of my classmates offer demonstrable proof that the market, its mechanisms, and its impact are still shrouded in mystery and myth.

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