Nov 3, 2007

Burton Folsom on the rise of big business and deficiency of historians

One reason for studying history is to learn from it. If we can discover what worked and what didn't work, we can use this knowledge to create a better future. Studying the rise of big business, for example, is important because it is the story of how the United States prospered and became a world power. During the years in which this took place, roughly from 1840 to 1920, we had a variety of entrepreneurs who took risks and built very successful industries. We also had a state that created a stable marketplace in which these entrepreneurs could operate. However, this same state occasionally dabbled in economic development through subsidies, tariffs, regulating trade, and even running a steel plant to make armor. When the state played this kind of role, it often failed. This is the sort of information that is useful to know when we think about planning for the future.

The problem is that many historians have been teaching the opposite for years. They have been saying that entrepreneurs, not the state, created the problem. Entrepreneurs, according to these historians, were often "robber barons" who corrupted politics and made fortunes bilking the public. In this view, government intervention in the economy was needed to save the public from greedy businessmen. This view, with some modifications, still dominates in college textbooks in American history.

~ Burton W. Folsom, Jr., The Myth of the Robber Barons, pp. 121-122

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