Historians Naomi Oreskes (Harvard University) and Erik Conway (Caltech) talk to Rob about their just released book, The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market.
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Rob Johnson:
Welcome to economics and beyond. I’m Rob Johnson, President of the Institute for New Economic Thinking.
I’m here today with two extraordinary scholars, Erik Conway, who’s from Caltech and does history of science and technology, and Naomi Oreskes, who is at Harvard University. They’ve written books in the past. A very powerful one, which I would encourage everyone to read, is called Merchants of Doubt. They’ve also talked about Western civilization in the future in another book, but the book right now, and it’s creating a big stir among all of my colleagues and friends, people like Gus Smith, people who’ve been on this podcast. Gus Smith, Nancy MacLean and others are all stepping forward. And I think, how would he say it? Let’s ring the bell and we’ll have a nice conversation today. Their new book is called The Big Myth, How American Business Taught Us to Loathe the Government Loath the Free Market. Thank you for joining me.
Naomi Oreskes:
Thanks for having us.
Erik Conway:
Thanks for having us.
Rob Johnson:
It’s my pleasure. So let’s begin. I’ll say, Eric, I’ll start with you, but either of you can chime in. What inspired you to write this book? You’ve made very powerful points. I mentioned Merchants of Doubt earlier but what brought this one to the surface right now?
Erik Conway:
Well, so when we wrote Merchants of Doubt, that book was basically about four physicists who spent their retirement years helping to cast doubt on a variety of environmental problems. And we ended that book with an argument that what they were motivated by was market fundamentalism. They were cold warriors who had grown to loathe the government that they had served and worked in and worked to, instead, constrain it, under the argument that markets were a superior form of organizing economic life, that markets were the only way to protect political freedom and that concerned them. So, The Big Myth, we sat down to think about what do we do next? We decided we should tell the history of market fundamentalism. And so that’s what we’ve tried to do in our, admittedly, rather big and expansive The Big Myth.
Naomi Oreskes:
Yeah, no, that’s just right. I mean, it’s really an attempt to understand the history of an ideology. An idea that’s been really powerful, not just among climate change deniers, but among Americans broadly, and to understand why people have come to hold this set of views when the facts of history and many of the facts of economics don’t actually support them.
Rob Johnson:
Well, I think, in our work at INET, we’ve had the impression that people suggest that when a free market capitalism is embedded in a democracy, it’s morally legitimate. But some of our scholars, Tom Ferguson, our research director in particular, said, there’s too many markets. When you’re spending a lot of money on campaign contributions, when you’re spending a lot of money on university endowments and they pick who the experts are, or when commercial media is receiving advertising revenue, they may decide what to talk about and what to silence so that the financial incentives are taking that, what you might call, idealistic sense of what a democracy does and how it governs. And I think your work really plays powerfully into that.
I often cite the Bob Dylan song ‘One Too Many Mornings’, and I change it to ‘One Too Many Markets’, and I often refer people to the Louis Powell memo that was provided to the Chamber of Commerce before he became a Supreme Court Justice, about how, why are they putting up with all of this turmoil from the sixties and the civil rights movement? They can influence the universities. So I see those pathways, we might call, is consistent with the work that you’re offering. Let’s start. Through the book, there’s various themes, foundations, the marketing, the mainstream, and beyond the myth, are the four segments of the book. But let’s, how do I say, talk our way through the story. What is the section ‘foundations’ illuminating for us?
Naomi Oreskes:
So the book is a [inaudible 00:05:17] book. It tries to explain the arc of market fundamentalism, where it comes from, how it was supported and sustained and propagandized by a diverse group of business interests throughout the 20th century, and then brought into mainstream American politics by Ronald Reagan. So we begin the story with a set of discussions, a set of arguments that took place in the early 20th century about market failure, about the reality that markets were not actually serving the American people well and in the way we needed. And those market failures were involved in a number of different things. And we focused, in the early part of the book, on three major market failures. So one is the problem of child labor. That children as young as two years old are working in textile mills here in Massachusetts, in factories and mines across this country, and many people thought that was not a good thing, that children should not be working in factories, children should be in school.
But the business community fought back against that saying that it was the prerogative of the owner of the factory, the owner of the mill, or of the father, and there’s a patriarchal and gendered quality to this argument, and that the government should not interfere with the rights, the privileges, the freedom, and the prerogatives of factory owners and fathers. And so, in that argument, we begin to see the kernel of the central, or one of the central tenets of market fundamentalism, was this claim that if you allow the government to step into redress market failure, even a serious market failure, it undermines freedom. And so, trying to link capitalism and freedom, this is a central part of this argument.
A second place we see the argument taking place is in debates over workman’s compensation. Today, most Americans take workman’s compensation for granted. We assume that if we get injured or killed on the job, that we will receive compensation or our survivors, but that was not always the case. In the early 20th century, one in 1000 workers was killed or seriously injured on the job every single year. That would be the equivalent of 1.5 million people today. And so, again, a big debate developed about, well, should the government intervene to do something about this? It was such a big problem, it actually had a name, it was called the Accident Crisis. So people experienced this as a crisis, but again, the business community, by and large, fought back and said, it’s not for the government to tell a factory owner how to run his factory.
And then the third place we see this has to do with electricity, which, in some ways, is the most conspicuous market failure of all because we like to believe that if people want something, if people need something, then the private sector will provide it to them. And electricity was something that people really liked. The rhetoric around electricity in the early 20th century is just gushing about how fantastic, what an incredible advance it is to have electricity in people’s homes to light up their lives, quite literally. But the private sector was not providing electricity to rural customers because they claimed it was too expensive to run lines and they wouldn’t make sufficient profits. And they claimed that it couldn’t be done at a profit. Again, this led to a big debate. Well, rural customers wanted electricity and many of them were farmers who, people argued, deserved it, that they really deserved to have their lives improved. And again, a big fight.
So in all these arguments, we see the beginning of this argument about capitalism and freedom being made, but here’s where we see it goes really nasty because the industry, led by their trade organization, the National Electric Light Association, launches a massive propaganda campaign. And it’s really a kind of prequel to merchants of doubt. They hire experts, basically experts for hire, to write reports claiming that private electricity is working fine even though it’s not, claiming that when the government steps in, it’s more expensive, even though the evidence showed that it was not, propagandizing people through lecture series, through press releases to journalists and the most pernicious of all, a campaign to rewrite American textbooks, to pay academics to rewrite textbooks to promote free market capitalism and the argument that government involvement in the marketplace threatens personal freedom.
Rob Johnson:
Erik?
Erik Conway:
Nope. Neil is where I was going to go too. If anything, you then added…
Naomi Oreskes:
Yeah, I saw you nodding…
Erik Conway:
Because the NELA story is really fantastic, the National Association story, because it shows the involvement of an industry, of trying to make sure that the public school system tells their story.
Rob Johnson:
You mentioned, at the outset, that Ronald Reagan played a large role in what you might call acceleration of this type of thinking or this type of promotion. Can you tell me a little bit about why you underscore that and what was taking place in America at the time he came into power or what role he played?
Naomi Oreskes:
Do you want me to take that, Erik, since I wrote most of the Reagan chapter, and then I’ll give you the next one? So one of the challenges in this book is to explain how an argument that is false, that is heavily based on propaganda and that is clearly self-serving, nevertheless, somehow, succeeds in persuading millions of Americans of its truth. And what we show is that in the first part of the book, the whole section we call foundations, the industry doesn’t really succeed. For example, during the New Deal, the federal government does step into electricity markets and does build the rural electrification administration to deliver electricity to rural Americans. So they don’t really win the argument for the whole first half of the 20th century, but they don’t give up. And so, after World War II, they do a number of things, and one of the key parts of the story is to explain how they begin to succeed and who begins to work for them as a messenger. And a key part of the answer to that question is Ronald Reagan.
So many Americans know that before Reagan became a politician, he was a Hollywood actor. He had starred in a bunch of B grade movies, some of them with chimpanzees, but most people don’t know how he segued from being a sort of second rate actor, to being one of the most successful politicians of the 20th century. And a large part of the answer to that has to do with his job at the General Electric Corporation. So in the late 1950s, Reagan goes to work for GE. GE had a television show called General Electric Theater, which they hired him to host. And each week, this television show, which was extremely successful, it was one of the three most successful television programs in the late 1950s, presented didactic stories of individual success, of people pulling themselves up by their bootstrap and succeeding by the dint of their own hard work, of boys learning to be a man by standing on their own two feet, and Ronald Reagan was the host of this series.
So he would introduce the show each week and at the end, thank everyone for watching. And so, through this, his voice, his face was beamed into millions and millions of American homes every week for several years. So he became one of the most well-known people in the United States at that time. But in addition, hosting GE Theater was only half his job, the other half was serving as a public spokesperson for GE. And he went on the lecture circuit, particularly in GE communities, going to GE factories, manufacturing plants, giving talks in schools, in communities where there was a GE factory, doing a dinner at the Rotary or the Lions Club. And then all of this would be covered in GE publications. So GE had a whole set of magazines and newsletters where they would feature Reagan’s speeches and then these would be distributed broadly in GE communities. And in doing this work, he also was given a reading list.
So GE had a massive propaganda campaign, an internal campaign, designed to persuade its managers and its workers of the virtues of free enterprise and also deeply, deeply anti-union, to try to persuade GE workers not to join unions. And they engaged in a lot of union busting tactics for which they actually were cited by the National Labor Relations Board.
So, Reagan becomes part of this deeply anti-government, deeply anti-union ideology at General Electric, and he becomes the spokesman, the public spokesman for those views. And what we see is that by the time he finishes his tenure at GE, he now has accepted those views. So he comes out with a completely transformed ideology, having previously been a pro-union Democrat, he comes out an anti-union, anti-government Republican, but he also leaves GE with one other really crucial resource, and that’s a set of backers, of wealthy corporate backers who finance his campaign for governor in California and also help him hire a kind of kitchen cabinet, a team of experts who then advise him on a whole set of issues that he previously knew nothing about. And this enables him to make this transition from second rate actor to first rate politician.
Rob Johnson:
So Eric, what concerns me a little bit is I hear this, what you might call, side by side of what is freedom and freedom is only eligible when it goes through a market system, as if the market system’s going to create wonderful things and you can’t get in its way. I get a little unnerved, I’ve lived in Connecticut at the time of Sandy Hook, where the freedom to have a gun does not move alongside the freedom not to be shot by someone else. It seems like we’re, how do they say, creating a subset of the freedoms. We’re not listening to, what was it, Isaiah Berlin, the two types of liberty. How do we, what you might call, inoculate society from this one-sided way of seeing what freedom is. Is there a pathway you envision?
Erik Conway:
I hate it when historians are asked for the solution to the problem because that is not… I don’t have a crystal ball for that. And I wish there were some way I could convince my fellow Americans that all of these problems are issues of conflicting freedoms. And what we’ve seemed to have at the moment is a pathological information environment, almost, that only credits one set of freedoms and promotes them in a very extreme way without any discussion of the freedoms that are being suppressed by over-exaggeration of, as we were just talking about, gun ownership.
The freedom to live free of fear of all the of the gun people is not a freedom, I guess, in the United States at the moment. At least it’s not one we talk about. And what’s the solution to that? Well, a more responsible media that is not so deeply invested in just simply neutrality in the bothsidesism we see all the time, but that would require them to take sides and they’re really allergic to that. And another thing, I don’t have any idea of how to bring about it. I actually think a lot of this stems back to both the two party system and, you mentioned earlier, about the privately financed aspect of the political system because it allows certain wealthy groups greater access to the media to get their stories and their preferred liberties promoted to the detriment of those without the resources.
Rob Johnson:
One of the concerns that I experience from many of my guests, and I’ll cite one of my recent podcasts, was with the Financial Times writer, Martin Wolf, who’s written a book recently called The Crisis of Democratic Capitalism. And what bothers me is, and Martin underscores this, when there is a constant barrage of indoctrination and it doesn’t feel like the world you live in, people become alienated and become despondent. And then what I would say is, for instance, I’ll cite David Sirota and Alex Gibney made a podcast on Audible, it’s called Meltdown. And it wasn’t about the meltdown of the financial markets, it was about when they, as Joe Stiblet said, paid the polluters, and we mailed out the people who made the mess, the despondency, occupy on the left, tea party on the right, house shifting to Republican, senate going Republican, Donald Trump being elected. I’m from Michigan, Trump was marketing that the system is rigged and there’s despair.
And I guess what I would say is, he may have seduced and abandoned people once he got the job as president, but that despair, or what I will call Donald Trump’s candidacy, is a symptom of the kind of things you’re diagnosing where things are off course. And I think it’s very dangerous when one looks at, what you might call, the history of societal breakdown and authoritarian response. We could go from, what you might call, bad marketing and neglect to something even more violent if we’re not careful. That’s why I asked the question, how do we restore, how do we bring back the balance that we need?
It’s haunting to me to read Franklin Eleanor Roosevelt’s speeches or listen to some of his radio broadcasts because they had so much balance. And it’s almost like politicians… I’ll give Joe Biden a little credit, you can critique me, but his latest state of the union address, many people say, are we going to practice what we preach? But at least he preached some things that we needed as a society. But you see, like you mentioned Reagan, and you see these things, what issues, right now, haunt you? What is most off course and most dangerous for society in either of your views?
Naomi Oreskes:
Well, we came to this book because of our work on climate change and climate change denial because that’s where all of these issues really came to the fore, that people in the private sector and climate change deniers, I mean, why were they denying climate change? Well, as Erik explained earlier in the discussion, because they were afraid that if the government became involved in fixing this giant market failure, and it is a giant market failure, that we would be on a slippery slope to totalitarianism. And so, we wanted to better understand why anyone would think that because most slippery slope arguments are kind of silly because we’re grownups, we can make decisions, we can make choices, but we also saw that it was a much bigger question. And so, in this book, one of the things we did was deliberately try to background the climate change question because we didn’t want people to think this was a book about climate change because it’s not. It’s a book about a kind of rainy ideology that has foregrounded the primacy of economic freedom at the expense of everything else.
So the freedom to buy and sell guns trumps the right to life, liberty and the pursuit of happiness, right? And to partly answer your previous question, I think we have tremendous resources in American culture to recapture the notion that economic freedom is one freedom and probably not even the most important one. I mean, we stress this in the book, it’s not something that the founding fathers actually really stressed. I mean, property, obviously, is part of the story, but it wasn’t their main concern. Part of what the market fundamentalists have done is to flip the script, to put economic freedom on top, and to say that that has to have primacy and that has to trump everything else, and that’s where we get a society where people can pollute with impunity, run dangerous trains that wreck and destroy livestock and crops and possibly people’s health.
So there’s a whole set of issues that arise, then, from inadequate governance, inadequate regulation, and part of what we’re trying to do in this book is to open up a new conversation to say, look, the balance is off here. We’re not calling for a communist revolution. We’re calling for a kind of rebalancing of our society to better accept what Erik just said. These are really questions of competing freedoms. And that’s an old, old question. People have been worrying about that, probably, going back to Play-Doh. But how do we address them? And the balance is way, way off in American society today. And we think our book partly explains why it’s off because we have been bombarded, we’ve been saturated with this message of economic freedom at the expense of a lot of other really important considerations.
Erik Conway:
Right. So Robert, you said one thing that struck my mind, and that is that there’s this concern with democratic capitalism. So in that balancing, I think that what we are calling for is more of the emphasis on the democratic over the capitalist because it’s the democratic portion of this that’s really failing under the onslaught of propaganda.
Naomi Oreskes:
And also, crucially, thanks for raising that, Eric, that the propagandistic argument is that you have to protect capitalism to protect freedom and democracy, but what we’re seeing is that that’s not true. That capitalism run amuck is a threat to democracy for precisely the reasons you just said, Robert, when there’s too much concentration of wealth in too few hands, that has a corrupting force. And of course, that shouldn’t come as a surprising argument. That’s something that people recognized in the late 19th century, we say this in the book. One of the reasons that the Sherman Antitrust Act was passed, it was passed primarily to protect competition in the marketplace and therefore protect market-based capitalism. But it was also passed because people recognize that the massive concentration of wealth in the hands of a few was bad for democracy.
And to me, one of the most interesting things we write about in the book was something that Erik found, which was how Robert Bork, who played a big role in promoting the idea that courts should not enforce the Sherman and Clayton Antitrust statutes. He writes a paper about the Sherman Antitrust Act, which is incorrect, in which he misrepresents the intention of that act, and even misrepresents what Sherman himself, the author of the act, said about it. Now, whether he did that because he was stupid, lazy or dishonest, we leave that to the readers to decide for themselves, but it’s pretty telling that one of the key architects of the anti-antitrust argument, in our lifetimes, misrepresented what that statute was designed to do historically.
Rob Johnson:
I guess it’s, how you say, part of the side effect of being a father. I have a son who’s involved in venture capital in his mid thirties, and he and his cohort and I often talk and they are, which we’ll call wanting to be protective of their right to innovate in a digital world. But I see this is a dilemma, again, because I see some of these big platforms and what the Danish scholar, Vincent Hendricks, calls the info storms and the monopolistic control and so forth. And so, if you will, if Silicon Valley has unrestricted freedom, they would argue that it’s propelling creativity innovation and that rising tide will raise all boats. Others are saying, we’re not thinking about, what you might call, the externalities and the public good nature of these platforms, and as a result, people are doing wealth extraction platforms, not something that’s of broader interest. Eric, you’re affiliated with Caltech, you’re much closer to ground zero than I am in all of this. What would you tell my son and his colleagues about the freedom of technological R and D and implementation?
Erik Conway:
Well, this has nothing to do with Caltech, but I simply point out that there’s actually not a great deal of, at least not visible change or innovation, going on, not really in social media, right? Facebook has been allowed to essentially buy up and eliminate any competition that might have been a better service. And so, that’s corporate freedom, but it’s not one that benefits innovation in any kind of meaningful way. And yet, that is… The Silicon Valley ideology is that we should allow that to exist, whereas the Antitrust mentality would be that we shouldn’t have one or two companies that completely dominate a sector, industrial sector or information sector or et cetera, because there will be no competition. And without competition, you don’t have the greatest efficiency, you don’t get future innovations because big companies are notoriously less innovative than small ones, et cetera. So I don’t think that that unlimited freedom argument actually works the way many of the social media folks, the Silicon Valley folks, think it does.
Rob Johnson:
And I sense there’s a tension, also. I do a lot of international work, and I want to come back to this with regard to climate change in a moment, but in the digital realm, particularly when I’ve been in Asian countries, they tell me, watch the movie The Social Dilemma in America because they say they provide you a service, but you are the product. And when they talk about, what I say, commercial platforms like an amazon.com, something like the leadership in the Chinese government, and this is years ago that they were talking like this, not just in recent months with all the tensions between US and China, they’d say, we’re not going to allow you a window in to build an intelligence agency, that is, what you might call, cohabitation with your platform for commerce. So they want to control their own base. The Europeans have a different view of digital things than either the Americans or the Chinese who are arm wrestling over who gets to be the founder slash controller.
So I see, what you might call, the pervasiveness of these, we don’t call, multi-dimensional externalities in the digital world requiring, what I would say, a lot more wisdom than has been said at the table. Though I’ll give my son Nicholas some credit. He wrote a book called Modern Monopolies and talked about these challenges in relation to, say, the oil steel companies of the earlier monopolies. But at any rate… Going towards climate change, again, you talked about, what I will call, or economists will call, the pervasiveness of externalities, and the fossil fuel companies don’t want to acknowledge that. And then you would talk about how the government might play that role of creating the balance. But what do we do in the era of globalization, where companies can go to different places in the, what you might call, the sovereignty of any given country, particularly with regard to climate change, when we’re talking about cumulative planetary carbon.
How do we even imagine governing in a globalization world where carbon emissions in Africa can hurt people in Cincinnati or vice versa? How do we put this all together? With the kind of propagandistic preaching that your book talks about, how, in climate, can we rise above?
Naomi Oreskes:
We don’t really like to talk about the government because in a way, that’s part of the rhetoric that the people we study have created, that there’s the government on one side and there’s the market on the other side. And we want to argue that that’s a false dichotomy, that there are markets, many different kinds of markets, they function in many different ways. Some markets function very well. I mean, I really love this very cool and pretty green water bottle that I just bought on sale. So, sometimes markets are great. They provide people with goods and services that they want at competitive pricing, that’s capitalism working as it should. But sometimes, markets fail. They create big external costs, they hurt people, they exploit workers, they wreck the environment, they destroy biodiversity. And when that happens, then you need solutions. And those solutions, I prefer to use the word governance, to emphasize that those solutions can operate on many different levels.
So it could be international governance. And again, a lot of people, the kind of people we study, are very hostile to international governance because they see it as a threat to freedom, and it could be. We [inaudible 00:32:15] that there’s a risk there. But if you look at the solution to the ozone hole that we wrote about in Merchants of Doubt, that was successful international governance. Countries, the world, got together, agreed to ban the chemicals that were causing the ozone hole and it worked. I mean, sadly, we have some new problems. I was just reading how the Australian wildfires are damaging the ozone layer. So this is sad because it’s how climate change ramifies into lots of other things but the important point is that we have a successful model for global governance in the case of the ozone hole. But we wouldn’t argue that international governance is, necessarily, the solution for all problems. So it might be that the federal government should take a stronger stand on an issue like the reckless use of firearms in the United States, or it could be states.
I mean, a lot of climate action can take place on the state level or even cities. One mistake that I think some people in the climate space has made, and maybe it comes out of the early development of the UN framework Convention on Climate Change, which was modeled after the ozone protocol. So we understand, historically, why that seemed like a good idea at the time, but the reality is that most economic activity takes place in cities, and most cities are progressive. I mean, the red blue split in the United States is not really a split between red states and blue states, even though that’s how we always talk about it, it’s actually a split between [inaudible 00:33:37] and rural. And even if you go to a very conservative state like Montana or even Utah, the cities are progressive and democratic, and that’s where most economic activity takes place, which is where most carbon pollution is generated. So if you could mobilize cities to act on climate change, even through, say, an urban carbon pricing system or other solutions, you could remedy a big part of the climate problem.
And then there’s corporate governance. And one of the things that’s been so interesting to me, in the last couple of years, is how we have seen the private sector stepping up to the plate with a deeper, more thoughtful discussion of ESG, the Environmental, Social and Governance Principles, and what is the right wing sector, the people we write about, what do they think of that? You might think they would embrace it because after all, it’s a market-based private sector solution. But no, they are all over trying to block it. They can’t even bear the idea of governance like that, which I think kind of gives the game away, that it’s not actually a principled position about market-based mechanisms, it’s actually an attempt to protect the prerogatives of big polluters.
Rob Johnson:
One of the recent challenges is the Covid 19 experience. We’ve seen a lot of work at INET on, where did the research for the vaccines and stuff come from and largely paid for by the taxpayers. What’s happening in the collaboration cooperation between countries? What’s happening in the dissemination to people throughout the, what you might call, wealth or income distribution. How are you seeing the Covid challenge in relation to the work you’ve done and the difference between marketing for profit versus public health, I guess, is the dichotomy I would bring. What has been your awareness or observation with regard to that challenge and that environment?
Erik Conway:
Well, I guess I have to say, I haven’t paid as much or enough attention, really, to the international aspects of it, largely due to lack of good information. When the vaccines first became available, I was pleased to see the administration not initially taking the free market, “everybody will just ask for these” approach, rather, they really pushed them out into… Here in California, we had these large scale vaccination… Clinics, isn’t even the word. They take over parking lots at the Great Western Forum and others and so forth to process thousands and thousands of people. It wasn’t a market approach at all. It was a mobilization approach. The idea of… It’s kind of like wartime mobilization to solve this problem. And of course, since then, we’ve stopped doing it and they’ve gone back to distributing it through private means. Mostly you get vaccinated now at Rite Aid or CVS or Walgreens or one of those.
And the state has largely withdrawn from that, and I think that’s partly normalization. They wanted to get away from the emergency measures, and to some degree, that makes sense. I know there’s also been some efforts by, I think, Moderna, to remove the federal research scientists from patents in order to stake a free and clear legal and financial claim in order to… I guess, that’s intended to maximize their profits on the vaccines. But that’s disturbing because as you said earlier, Robert, the vaccines were largely developed on federal dimes anyway, even if those federal dimes in dollars went to private manufacturers in order to solve a world emergency, you know what I mean?
Naomi Oreskes:
Yeah. I think one thing I would add is, I mean, I think what’s good about the Covid story, when we see the emergence of the vaccines from Moderna to Pfizer, Biontech, in a way, it’s a good model of a public private partnership because the private sector does have the capacity to mobilize, distribute, market in a way that would be hard for the federal government to do, and that’s a good thing. But if you think about the scientific basis for those vaccinations, particularly the messenger RNA vaccines, which are developing some pretty new technologies based on a deep scientific understanding of how RNA works in our bodies, that scientific foundation is based on decades of fundamental research, most of which was financed by the US federal government and also by federal governments in Europe and elsewhere. So without that scientific foundation, there’s no way that those corporations would’ve been able to produce, manufacture and distribute those vaccines so quickly. So again, it’s not an argument against the market. It’s an argument for different roles that the markets and governance need to play.
And without that scientific basis though, there’s no way Moderna and Pfizer and these other companies could have done what they did. And that gets back to the question about innovation. One of the things that drives me and Erik most nuts about Silicon Valley, and I don’t know if they’re hypocritical liars or just ignorant of their own history, but when all these Silicon Valley people, especially someone like Peter Thiel, go on and on about the free market, but the very foundation for the existence of Silicon Valley was government funded research. And if you go back to say, Hewlett Packard, some of the early Silicon Valley companies, so much of that research came out of stuff that was funded during World War II, by the US federal government. Huge amounts of grants and contracts that flowed to Stanford, which then led to Hewlett Packard being spun off from Stanford. And then, of course, the internet. We wouldn’t be talking to each other today on this platform, if we didn’t have the internet. And Silicon Valley didn’t invent the internet, scientists and engineers, funded by the US government, did that.
Rob Johnson:
The energy that is surrounding all of these questions, I guess, if I were to say, what would an economist summarize our conversation by saying is that externalities are pervasive. They’re not a special case. You look at some textbooks and they’re a little part of chapter 37 as opposed to front and center. And I think that it’s very, very haunting right now because they’re hiding. The externalities are so pervasive, they’re hiding in plain sight. They’re not really hiding, I’m saying they’re being masked through these other types of arguments. As you…
Naomi Oreskes:
If I could just jump in, I think…
Rob Johnson:
Please.
Naomi Oreskes:
That’s exactly right. And as the saying goes in Silicon Valley, it’s a feature and not a bug. And so, part of, I think, what we would hope that our book would do, would be to help facilitate a bigger conversation about that. That externalities, market failures are part of capitalism, and especially for the people who want to defend capitalism, it’s essential to figure out, well, how do we really look at that more closely and figure out better mechanisms to address the external costs of capitalism?
Rob Johnson:
If I was the young, brilliant potential billionaire right now, I would want to abide by what you just suggested because I think the biggest risk to someone who’s really creative is that the backlash from a despondent public… We’re having people talking about seceding from the union, even presidential candidates suggesting that might be a good thing. And if that were to unfold, the disintegration of the institutions we have built and so forth, would set existing billionaires, but potential billionaires, back, quite profoundly. And I think having a sustainable platform is, what you might call, complements the genius that a creative individual might be able to develop on behalf of his wallet and society at the same time.
Naomi Oreskes:
Or her wallet.
Rob Johnson:
Yeah, her, that’s right. That’s right. Very definitely. I got three daughters and one son, so three fourths of my votes are on that side. Eric, where haven’t we gone in the book that you’d like to underscore? What makes sense?
Erik Conway:
Oh, my. Well, I guess I should promote the one sound idea I had in an effort. And that was, I like to talk about spiritual mobilization in the thirties and the way it began to try to bring free market capitalist ideas into the clergy, into American clergy, so that the message would be reinforced every Sunday in church. And that’s a effort that goes on into the fifties, it’s brought into both the liberal Protestant churches as well as the Catholic churches with the help of the Sun Oil President, J. Howard Pew, who becomes a major mover and shaker in conservative politics after World War II. And we tell that story because, also, partly to underscore why we like to use the term market fundamentalism because it’s intended to have kind of a religious valence and in order to ensure it is not questioned. The essence of faith is that you don’t question it. The essence of faith in markets is that we shouldn’t question it. And they had that in mind as they are erecting this framework of organizations and institutions to ensure American clergy continue to echo the free market mantra.
Rob Johnson:
I spent several years as an adjunct professor at the Union Theological Seminary teaching a course called Economics and Theology. And it’s very interesting to me what you’re talking about there because what… I guess, you teach to learn. I learned a lot from these graduate students, and what they kept saying to me is, in the modern world, people talk as though the market is a deity. The market is a tool. It is a means to social outcome and satisfaction that can be positive, but it’s not a deity. You don’t turn society inside out to serve the market. The market is there to serve the people and their social goals.
Erik Conway:
Oh, absolutely. Absolutely. And that’s a major point we want people to take out of the book. There was an effort by James Fifield, who ran spiritual mobilization, to set the market above society, outside society, so that it would be seen as a kind of deity, and again, so that it wouldn’t be questioned. They didn’t want it presented as a tool, a social tool, because tools are human constructs and we make them. But Fifield’s goal, spiritual mobilization’s goal, was to present the market as descending from God, not from man. That was the whole point of it. And so, your students figured out that that was not right. But I’m not surprised it’s a union either, because Union was one of the big critics of what Fifield was doing.
Rob Johnson:
Well, I mentioned, at the outset, when we were talking, the Bob Dylan song, One Too Many Mornings, I thought I would rebrand it as One Too Many Markets where the market for social vision and goals, at least… I don’t mind people being in competitive discourse, but if it’s dominant for financial reasons rather than inspiring, it’s potentially quite dangerous. But Dylan’s last verse in One Too Many Mornings, I thought, was worth bringing to you. “It’s a restless hungry feeling that don’t mean no one no good, when everything I’m saying, you can say it just as good. You’re right from your side. I’m right from mine. We’re both just one too many mornings and a thousand miles behind.”
And this zany lyric of Dylan was just about social confusion and the fomenting of social confusion. And I want to thank you because I believe that you and Naomi, who had to leave, your co-author, are really raising things. Hopefully making people a little uncomfortable with what they abide by or unquestionably accept because I think we are at a critical juncture in our society now and we have to re-envision what the North Star looks like and what we’re pursuing.
Thank you for being here today, Eric, and thank you, along with Naomi, for being here. But thank you, also, for writing this extraordinary and challenging book.
Erik Conway:
Well, thanks for having us. It’s been great
Rob Johnson:
To be continued. Another chapter. I’m sure there’ll be plenty of enthusiasm from my Young Scholars Initiative to have you come be a lecture to their roughly 20,000 people around the world after they watch this podcast. I’m sure you’ll be invited to be keynotes at one of their big gatherings.
Erik Conway:
Okay. Sounds like fun.
Rob Johnson:
Excellent. Thank you, sir.
Erik Conway:
Thank you so much for your time.
Rob Johnson:
You too.
And check out more from the Institute for New Economic thinking at InetEconomics.org.
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