Free Market Capitalist vs. Greedy Robber Barron
This is a good time to explore the concepts of Free Market Capitalism vs. that of government enhanced enterprises, which frequented the era of the Great Southern Lumber Company. Free market activities are the foundation upon which the freedom and economic success which have characterized our Nations' history were formed. It is essential to understand the difference between free market activity and government enhanced activities if one wants to understand the true enterprise which was operating in Bogalusa during the Goodyear era. The only question we have about the Goodyear Family is this---was theirs a free market venture or just another chapter in our Nations' shameful fascist robber Barron's history?
""Free-market capitalism is a network of free and voluntary exchanges in which producers work, produce, and exchange their products for the products of others through prices voluntarily arrived at. State capitalism consists of one or more groups making use of the coercive apparatus of the government… for themselves by expropriating the production of others by force and violence"".—
Murray N.Rothbard, The Logic of Action (1997)
What exactly is State capitalism?
"State capitalism is a popular term to denote the state’s encroachment on free market capitalism. In A Future of Peace and Capitalism, Murray Rothbard made this distinction between free market capitalism and state capitalism: “The difference between free-market capitalism and state capitalism is precisely the difference between, on the one hand, peaceful, voluntary exchange, and on the other, violent expropriation.” The problem is that most people do not realize the differences when using the term capitalism, and incorrectly lump all capitalism as one or the other.
Rothbard is right to denote the difference, and most people would be wise to always specify which capitalism they are referring to. Capitalism by itself is neutral and a tool employed by all forms of governments, nations and people. Whether capitalism is a force for freedom or coercion depends on whether it is free market based or state centrally mandated. Most freedom lovers when they endorse capitalism really mean the free market; others who complain of the faults of capitalism really are identifying the problems of state corporate capitalism (though they probably do not realize this).
Is State Capitalism the Best Description?
There are other terms that people use when discussing state capitalism. Some of these are: corporatism, mercantilism, fascism, corporate welfare. While all these terms are very descriptive and useful in their own ways in describing the problem, they ignore the fact that most people wrongly associate these terms with (free market) capitalism. So we end up with people using one word, capitalism, but attaching diametrically opposite meanings to its usage.
While this might seem to be a problem only for those who misunderstand the meanings of capitalism, it really is a problem for those of us who are trying to persuade people to adopt a free market approach. Most people are aware of the large bribes corporations pay to politicians to get favorable legislation passed. Not too many people are going to look very positively on our position if they think we are advocating immoral state transfer schemes to large corporations.
For too many people in the free market freedom movement, the word capitalism is a hot button that must be defended at all costs. It is similar to how socialists decry all issues with the failures of socialism as being the result of capitalism (don’t you know that Lenin, Stalin, Mao, Pol Pot, and all the other socialist failures were the product of them being really capitalists – just ask any true socialist). This is complete intellectual dishonesty, and free market advocates would be wise to avoid emulating these tactics. It is better to honestly address the problems of state capitalism and contrast them to the solutions provided by a true free market. "-
Quote from State Capitalism.
Entrepreneur vs. Political Hack
"As common as it is to speak of "robber barons," most who use that term are confused about the role of capitalism in the American economy and fail to make an important distinction — the distinction between what might be called a market entrepreneur and a political entrepreneur. A pure market entrepreneur, or capitalist, succeeds financially by selling a newer, better, or less expensive product on the free market without any government subsidies, direct or indirect. The key to his success as a capitalist is his ability to please the consumer, for in a capitalist society the consumer ultimately calls the economic shots. By contrast, a political entrepreneur succeeds primarily by influencing government to subsidize his business or industry, or to enact legislation or regulation that harms his competitors.
In the mousetrap industry, for instance, you can be a market entrepreneur by making better mousetraps and thereby convincing consumers to buy more of your mousetraps and less of your competitors', or you can lobby Congress to prohibit the importation of all foreign-made mousetraps. In the former situation the consumer voluntarily hands over his money for the superior mousetrap; in the latter case the consumer, not given anything (better) in return, pays more for existing mousetraps just because the import quota has reduced supply and therefore driven up prices.
Most who use the term "robber barons" are confused about the role of capitalism in the American economy. The American economy has always included a mix of market and political entrepreneurs — self-made men and women as well as political connivers and manipulators. And sometimes, people who have achieved success as market entrepreneurs in one period of their lives later become political entrepreneurs. But the distinction between the two is critical to make, for market entrepreneurship is a hallmark of genuine capitalism, whereas political entrepreneurship is not — it is neomercantilism.
In some cases, of course, the entrepreneurs commonly labeled "robber barons" did indeed profit by exploiting American customers, but these were not market entrepreneurs. For example, Leland Stanford, a former governor and US senator from California, used his political connections to have the state pass laws prohibiting competition for his Central Pacific railroad, and he and his business partners profited from this monopoly scheme. Unfortunately, the resentment that this naturally generated among the public was unfairly directed at other entrepreneurs who succeeded in the railroad industry without political interference that tilted the playing field in their direction. Thanks to historians who fail to (or refuse to) make this crucial distinction, many Americans have an inaccurate view of American capitalism. "Quote from The Truth about Robber Barrons
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