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00;00;10;10 - 00;00;40;14
David Sirota
Hey there. And welcome to another episode of Lever Time, the flagship podcast of The Lever, an independent investigative news outlet. I'm the host, David Sirota. On today's show, we look at one of the biggest and most pernicious myths in all of American history, the myth of the so-called free market. We talk to Harvard history professor Naomi Oreskes about her hugely important new book called The Big Myth How American Business Taught US to Loathe Government and Love the Free Market.

00;00;40;29 - 00;01;01;16
David Sirota
This week, we're not doing a bonus segment for our paid subscribers, as I'm taking a few days off with the family for spring break. Don't be mad at me. We'll be back with bonus segments when I get back, I promise. One quick programing note if you like the podcast that we do here, go over to Lever News.com slash podcast and see our entire podcast network.

00;01;01;29 - 00;01;34;21
David Sirota
We've got a couple of other shows that you can subscribe to, as well as shows that I really recommend. For instance, Movies versus capitalism every week. The hosts go over a movie of the past oftentimes a classic movie, and go deeper with the movie. Looking at what kind of economic message is baked into that movie. There was just a few weeks ago a terrific episode with Academy Award winning director and writer Adam McKay, discussing why Office Space is one of the most important labor movies of all time.

00;01;34;26 - 00;02;06;28
David Sirota
Also, if you go to Lever News.com slash podcast, you'll find the audit, which is where the hosts audit a class, an online class or a book, an audio book or the like, so that you don't have to listen to it. They've done one on George Bush's masterclass as an example. George Bush Yes. Did a masterclass oftentimes in part of that class about the Iraq war, which is we're now on the 20th anniversary, 20 year anniversary of that threat of that Iraq war being launched.

00;02;07;15 - 00;02;33;18
David Sirota
They go over what George Bush is now saying about the Iraq war. In the season, the mini season about George Bush's master class. And I should mention the audit has a new season coming out very soon. So go over to Lever News.com slash podcast and go subscribe to those podcasts. In your podcast player, you go over to that website, you can click one button and bam, you are subscribed in your podcast player to those podcast.

00;02;33;29 - 00;03;01;07
David Sirota
So go there again. Lever News.com slash podcasts. Okay, stick around. After the short break, we're going to go into the secret history of the biggest myth that dominates American politics. Welcome back to Lever Time. Did you ever wonder how we arrived at this moment in history where the private sector is worshiped and the government is constantly berated? It wasn't by accident.

00;03;01;17 - 00;03;33;26
David Sirota
It happened because of a deliberate campaign by giant corporations and conservative politicians to create the myth of the so-called free market. Of course, we don't live in a free market. We live in a market that's rigged for the rich and powerful. But that rigging has been done under the guise of freedom. I discussed all of this with Harvard's Naomi Oreskes, who's the coauthor of the fascinating new book, The Big Myth How American Business Taught US to Loathe Government and Love the Free Market.

00;03;34;10 - 00;03;38;24
David Sirota
It just came out in February. Here's our discussion. Naomi, how are you doing?

00;03;39;03 - 00;03;40;11
Naomi Oreskes
I'm doing thanks. How are you?

00;03;40;20 - 00;04;13;24
David Sirota
I'm good. Thank you so much for taking some time with us and for writing this book. It's a topic that I'm I've been obsessed with for a long time. The whole talk about the the so-called great free market. Of course, we're talking in the week where we saw the the opposite of the free market operate in in the financial sector, where the biggest of big government swooped in to the to the so-called free market to do some rescuing of financial institutions and deposits.

00;04;14;18 - 00;04;29;08
David Sirota
Before we get to that. Let's let's first start with the name of of your book, The Big Myth. Why don't you explain what myth you're talking about and tell us how you came up with the idea of doing a book on this specific topic.

00;04;30;15 - 00;04;54;16
Naomi Oreskes
Well, the big myths, in our view, is the myth of the free market. The idea that there is even is such a thing as a free market, as opposed to the reality that markets are human institutions. Their tools for doing things are created by people. They've been around since time immemorial. I mean, markets, well, predate the rise of capitalism, and they've always had rules and regulations for how they operate.

00;04;54;22 - 00;05;07;13
Naomi Oreskes
So the question that we should be addressing is not, you know, do we approve of the free market or do we want to support the free market or just the free market? The question is what should the rules and regulations be under which markets operate?

00;05;08;23 - 00;05;36;13
David Sirota
The myth that we live in a purely free market, how how much or how long has that taken to develop? Where did it come from? Where did the effort start to kind of pretend? Because that well, that's what's really going on here. We're pretending there's folks who pretend that that America has a so-called free market. Where did that effort to create that myth start?

00;05;37;04 - 00;05;57;08
Naomi Oreskes
Well, this is exactly the topic of the book. So the book tries to answer that question, and it does so in two ways. The first is to say it does not start with Adam Smith. If you actually read the Wealth of Nations, you find a much more nuanced and much more interesting perspective in which Adam Smith explicitly says certain things need to be regulated.

00;05;57;08 - 00;06;23;23
Naomi Oreskes
And one of the specific things that he discusses is banks. So this is extremely timely this week. But he also talks about the need for adequate wages for workers. He talks about the need for workers to be able to create collaboration, to stand up to the power of their managers who have all the power in the relationship. And he talks about the need for taxation to support the appropriate functions of government, including fulfilling needs like common goods, like roads and bridges and schools.

00;06;24;04 - 00;06;49;04
Naomi Oreskes
So it didn't come from Adam Smith. So then the question is, where did it come from and why do we think it came from? Adam Smith. So in the book we answer that question and what we show is that starting in the early 20th century, there was a big debate that developed both in Europe and the United States, but we focused on the United States about the limits and failures of capitalism, about what we call the social costs of capitalism, or what economists would sometimes call the external costs.

00;06;49;14 - 00;07;25;26
Naomi Oreskes
And in this debate, which begins in the early 20th century over issues of child labor and workplace injury, we see the beginnings of the creation of the myth of the free market that should just be left alone. And what we show in this book is that a group of business conservatives linked to Herbert Hoover, linked to trade organizations like the National Association of Manufacturers and link to the electricity industry, begin to develop this story, this myth that markets are powerful, that markets are wise, that markets are efficient, and that we just need to leave them alone and everything will be great.

00;07;26;23 - 00;07;42;05
David Sirota
So this myth of a free market, this this idea that the United States we have a completely free market or a near free market. Where did it start? Where did it come from? Who were the players that helped manufacture it in the public psyche?

00;07;43;09 - 00;08;01;04
Naomi Oreskes
This is exactly the question that we answer in the book. And one of the things we show in the book is that it didn't come from Adam Smith. So a lot of people have the theory or they think that Adam Smith promoted an idea of capitalism as a free market, unregulated, unrestricted by government. And the book showed that that's just not true.

00;08;01;23 - 00;08;28;10
Naomi Oreskes
In fact, if you read the Wealth of Nations, you find an extensive discussion of the need for regulation and very specifically a discussion of the need for the regulation of banks. You find a discussion of the need for adequate wages for workers, the appropriateness of workers forming collectives to stand up to managers who have all the power in that asymmetrical relationship and the need for taxation to support public goods like roads and bridges.

00;10;07;24 - 00;10;42;16
David Sirota
So the question of where American public opinion is then becomes relevant because there's this idea being pumped into the into the public discourse, as you describe it. 80, 90 years ago about the free market, free market fundamentalism, free market triumphalism. American public opinion was not always as anti-government or as skeptical of government when it comes to these issues as it seems to be now.

00;10;42;23 - 00;10;43;18
David Sirota
Is that fair to say?

00;10;43;26 - 00;11;18;14
Naomi Oreskes
Absolutely. In fact, I would put it more strongly on the evidence that we have from that time period shows that the vast majority of Americans supported reasonable reforms, regulations and the Progressive Era. A majority of Americans supported reforms like child labor, supported reforms like workman's compensation. And that becomes even more the case after the stock market crash of 1929 in the Great Depression, where the vast majority of Americans rejected Herbert Hoover's voluntary model and say, No, we need the government to do something to address this crisis.

00;11;18;22 - 00;11;46;10
Naomi Oreskes
And so public opinion was strongly behind FDR when he in when he created Social Security, when he implements rural electrification, when he implements the FDIC to protect depositors from cell banks. So the vast majority of people at this time saw the government as their ally and saw big business as the culprit that the poor most of the blame for the Great Depression.

00;11;46;22 - 00;12;08;07
Naomi Oreskes
One of the things we showed in the show in the book is that the people we studied made a conscious effort to change that. And one of the things they did was to promote the idea to contrast big business with, quote, big government and to make big government into the enemy. And we actually have documents where they explicitly say that we they say we need to make the villain in this story big government.

00;12;08;15 - 00;12;24;19
Naomi Oreskes
And how are they going to do that? Well, the facts are not really on their side. So they create the story about big government being a threat to freedom and that the free market, they argue, is not just economically efficient, but it protects the freedom of American individuals.

00;12;25;15 - 00;12;52;03
David Sirota
So there's this ongoing battle over the size of government. What government should do, what a free market is. I think the the broad strokes of it are the New Deal comes along after the excesses of a of laissez faire deregulation and like the New Deal comes along and puts in a lot of, quote unquote, big government programs that are actually quite successful, quite popular.

00;12;52;18 - 00;13;22;06
David Sirota
But there is a turning point in the 1970s that and I don't know if it's one event or a series of events, but I just want to hear you explain what the turning points were to take a few decades of of relative popularity, of the idea of the government intervening in society, in the market, and how that was popular, how that entered into the 1970s and pretty quickly started to turn.

00;13;23;00 - 00;13;45;25
Naomi Oreskes
Well, let me first of all say that we reject the word intervening, because the whole notion of the government intervening in a way is what these people are trying to make us think, right? They want us to think that the market exists independently of us and that when the government intervenes and that's a distortion, it's a problem as opposed to governance, economy, political economy being intertwined, issues and activities.

00;13;46;03 - 00;14;08;00
Naomi Oreskes
So so as you say, what we argue in the book is that for the most part in the twenties, thirties, forties and into the fifties, these propagandists don't succeed. They don't win the argument and they partly don't win it because the facts don't support it. But in response to that, they continue to proselytize, to propagandize, to try to get this message to break through.

00;14;08;06 - 00;14;27;02
Naomi Oreskes
And even in the fifties, it still doesn't. One of my favorite quotations in the book is a quotation from Dwight Eisenhower, who says, Well, you know, if any party ever tried to get rid of Social Security, you'd never hear from that party again. And then he says, I mean, there is a small minority who believe that, but their numbers negligible and they're stupid.

00;14;27;11 - 00;14;45;25
Naomi Oreskes
It's just a beautiful quote. Right. But then things begin to change. And so how and why do they change? And this is what we try to address in the second half of the book. And we think there's it isn't just one thing, but there's a couple of things. So in the 1970s, the United States and many European economies as well do face a problem.

00;14;46;03 - 00;15;12;20
Naomi Oreskes
Economic growth slows dramatically. The whole post-world War Two boom more or less comes to an end. And then we get this problem called stagflation, stagnation of the economy with high unemployment, but also high inflation. And that's pretty lousy. No one likes it. And also, no one really understands it because the traditional Keynesian view of the economics was that there was a tradeoff between inflation and unemployment.

00;15;12;28 - 00;15;32;28
Naomi Oreskes
You wanted to have a robust economy with full employment. You had to have low interest rates, but that could lead to inflation. Higher interest rates could slow inflation like we're seeing the Fed trying to do right now. That would risk high unemployment. And so the part of the job of the Fed was always understood to be to try to tweak the knobs to find that right balance.

00;15;33;08 - 00;15;56;14
Naomi Oreskes
But when we get stagflation, that really throws a lot of people into into a bit of a dilemma. What do we do now? And so people are looking for an answer. And the right wing, the business conservatives that we've been tracking are ready with an answer. And their answer is overregulation. And they've been cultivating this argument for a long time.

00;15;56;14 - 00;16;09;15
Naomi Oreskes
And now they say this isn't the answer to our problem is we need to deregulate the economy. And so we begin to see that happening already in the Carter administration. And then when Ronald Reagan becomes president, he absolutely runs with that.

00;16;10;06 - 00;16;43;06
David Sirota
We're into the 19 into the 1970s. There's this popularization of the so-called free market, the so-called New Deal consensus starts to break down. Where do you see the biggest policy implications for starting at that point, moving into the into the modern day? Where do you see the biggest policy implications for the success of the big myth? In other words, there's the big myth that's out there that's kind of burrowing its way into the American psyche.

00;16;43;20 - 00;16;48;19
David Sirota
What are the policy expressions of that myth that come come to pass, come to be?

00;16;49;12 - 00;17;09;05
Naomi Oreskes
Well, this is where Ronald Reagan, of course, plays an important part of the story. But it's he's important in a way that I think many people have not entirely understood. So one of the things we show in the book is how Ronald Reagan then brings these ideas into the mainstream when he's elected present United States, but leaves this interesting question Where do Reagan comes from?

00;17;09;06 - 00;17;28;11
Naomi Oreskes
I mean, Reagan was an actor, and when he was in Hollywood, he was a Democrat and he was the president of a union, the Screen Actors Guild. So he's a pro-union Democrat in the forties and fifties. But later, as he emerges into the political scene, first as governor of California and then as president, he is this extremely strident anti-government Republican.

00;17;28;20 - 00;17;47;02
Naomi Oreskes
And what we show in the book is that that transition, that transformation, has an explanation, and it takes place in the halls of the general Electric Corporation. So most Americans know that before he was a politician, Reagan was an actor. But what most of them don't know is that there was this transition period where he works for General Electric.

00;17;48;08 - 00;18;22;03
Naomi Oreskes
General Electric was a company that had a reputation for being extremely anti-union. They undertook many activities to try to break the power of the Electrical Workers Union, and they were cited by the National Labor Relations Board for violations of labor laws. But they pushed anti-government, anti-EU union ideology heavily in their in their corporate settings to magazines, to reading lists that they distributed, which included right wing propagandists and conservatives through a training program for their corporate executives, but also to Ronald Reagan.

00;18;22;13 - 00;18;45;09
Naomi Oreskes
And Reagan did two important things for him, and they did something important for Reagan. So part of Reagan's job was hosting a television program called General Electric Theater. Each week, this program would feature didactic big stories of people succeeding to individual hard work without the help of the government standing on their own to see stories of young boys becoming men by standing up for themselves.

00;18;45;17 - 00;19;06;00
Naomi Oreskes
Reagan was the host of this program, and it was very, very popular. It was a well-made, well-produced show. It was seen every week by millions of Americans. And so Reagan became a household name. He became famous not because of the frankly, crappy movies he made in the forties and fifties, but because of this rather good television show that he hosted in the fifties.

00;19;06;13 - 00;19;29;19
Naomi Oreskes
But in addition, he goes on the lecture circuit on behalf of GE, promoting the vision, the anti-union, anti-government vision. And he gives he starts giving speeches, in some cases multiple speeches in the day to on the shop floor, to school, in school groups, in communities where GE has factories and on the dinner circuit to Rotary clubs, to Lions clubs, things like this.

00;19;29;19 - 00;19;58;06
Naomi Oreskes
And he begins to develop the argument that becomes his mantra when he becomes president, which is that government is not the solution to our problems. Government is the problem. Now he comes out of GE with one other important and crucial thing. So he comes out with this completely new ideology, very different from the views he held previously. But also he comes out with a set of powerful and wealthy backers who then help him launch his campaign for governor to help him finance that campaign.

00;19;58;12 - 00;20;07;04
Naomi Oreskes
So he becomes governor of California and in one fell swoop goes from being a mediocre actor to a very influential, important politician.

00;20;07;12 - 00;20;36;15
David Sirota
Let's turn to the to the Democrats for a moment here. I mean, I think there's this idea that free market ideology is associated with the conservative movement, Republicans, as you just laid out. But how have these beliefs also become core among Democrats and liberals? And I mean I mean, it's not just the Republicans here. This is sort of sort of been embraced at least part of it has been embraced by some parts of the Democratic Party.

00;20;37;01 - 00;21;07;10
Naomi Oreskes
Exactly. And this is a really important part of the argument in the third third of the book that the business conservatives, Ronald Reagan, are so effective in making this case that government is the problem, not the solution, that Democrats are influenced by it as well. And many moderates, many Americans begin to believe that this is true. And so when Bill Clinton becomes president, many people may remember some people may remember that in his State of the Union speech, he declared the era of big government is over.

00;21;08;09 - 00;21;34;24
Naomi Oreskes
And that I mean, that could almost have come from Ronald Reagan. And so it shows how deeply these ideas had penetrated and influenced even center left Democrats. And in the book, we talk about some of the policy implications of that. So two very important things that Clinton does. He deregulated telecommunication and he if you in the book we talk about the speech he makes, it's all about freeing competition to deliver better goods and services to the consumer.

00;21;35;01 - 00;21;56;25
Naomi Oreskes
But, of course, that's not what happens. What actually happens is massive consolidation so that we actually have less competition in telecommunication. And we argue that that actually has pretty serious impacts for the state of our democracy in the years that follow. And the other thing that he did, which is still also around the thing today is the deregulation of the financial sector.

00;21;57;04 - 00;22;12;04
Naomi Oreskes
And many economists I mean, here we're not economists, but we rely on work that others have done. Many economists do feel that there's a pretty clear causal link from the deregulation of the Clinton years into the financial collapse of 2008.

00;22;12;18 - 00;22;52;23
David Sirota
So I want to ask one one final question about about why America seems so exceptional, putting that in quotes, but so exceptional when it comes to this kind of free market fundamentalism, at least in comparison to most other industrialized nations and advanced economies. You look at a place like Europe, it doesn't seem I mean, I'm not a, you know, Europe political expert, but it doesn't seem that the kind of 50,000 foot view that Europe and European countries have this kind of free market fundamentalism baked into their politics.

00;22;53;10 - 00;23;10;12
David Sirota
I wonder if you think that's true. And I'm be curious to know why you think that is. Or put another way, why this is such a it seems to be such an American phenomenon, a uniquely American myth that pervades our politics.

00;23;11;04 - 00;23;42;21
Naomi Oreskes
Well, I think it is broadly true. I mean, obviously there are nuances and exceptions, but if you look at the European experience, it's extremely important, especially the postwar experience, because it refutes the market fundamentalist argument that if you have, let's say, national health care, that you're on the road to totalitarianism. Virtually all of the Western European governments after 1945 implement strong social safety networks to deal with the social costs of capitalism, to protect people from unemployment and workplace injury, and none of them become communist.

00;23;42;28 - 00;24;13;10
Naomi Oreskes
So from a factual standpoint, this refutes one of the central arguments of the market fundamentalists. So it really is important for us to compare and contrast. But why? Why do we have such a different experience here in the United States? Well, I'd say it's two things. One is that this market fundamentalist propaganda is primarily promoted in the United States by a bunch of American businesses, American business leaders, American trade organizations that for which there isn't really an equivalent in Europe, there are some equivalents.

00;24;13;24 - 00;24;34;22
Naomi Oreskes
Another part of the story is that these business leaders that we're talking about actually bring to America some of the key people in Europe who would have supported those arguments. So one part of the book we discuss how a group of business leaders, the very same people who attacked socialism as a foreign theory, actually bring foreign theorists to America to help promote market fundamentalism.

00;24;34;29 - 00;24;56;15
Naomi Oreskes
They bring two of the key founders of neo liberal politics, I should say neo liberal economics, Ludwig von Mises and Friedrich Hayek. They bring them to America and they arrange behind closed doors to get them jobs in American universities. And one of them, of course, you might not be surprised to hear is the University of Chicago. So they cultivate this worldwide shock, right?

00;24;56;22 - 00;25;23;17
Naomi Oreskes
Shock jocks, there's gambling going on. So they cultivate these ideals and they fund them and they support them and they promote them in a way that doesn't happen in Europe. Now, maybe that's just a historical contingency, but that is a fact of what happens. And then the third thing, which I think is important to acknowledge, propaganda works best when it appeals to something that people believe in, when it's not just completely ridiculous.

00;25;23;17 - 00;25;44;03
Naomi Oreskes
I mean, we're completely ridiculous. People would say no, but there has to be some kind of kernel of truth or it has to appeal to some values that people hold. And Americans do hold very dear. The values of freedom, maybe more so than some people in some European countries. And we particularly hold, Jill, the notion of individual freedom and individual choice.

00;25;44;10 - 00;26;13;27
Naomi Oreskes
America is a more individualist country than, say, Germany or France or Italy, certainly much more individualist than most Asian nations. I mean, I'm obviously painting the broad brush here. And, of course, America was founded on a kind of primacy of individual rights, which, again, is different than what you see in many other countries. And so the appeal to individual liberty, the appeal to individual choice, it builds on core American values, values which in some ways are good.

00;26;14;04 - 00;26;22;09
Naomi Oreskes
Right. We're not saying that we don't believe in freedom, but it builds on them and uses them in ways that are misleading and ultimately damaging.

00;26;23;02 - 00;26;42;19
David Sirota
Naomi Oreskes is a professor of the history of science at Harvard University. The new book is called The Big Myth How American Business Taught US to Loathe Government and Love the Free Market. It's just out. I should mention that Naomi is also the author of the book Merchants of Doubt, which is about the origins of climate change denial.

00;26;42;19 - 00;26;48;08
David Sirota
I highly recommend both of those books. And Naomi, thank you so much for taking time with us today.

00;26;48;20 - 00;26;49;22
Naomi Oreskes
Thank you. It's been a pleasure.

00;26;50;27 - 00;27;10;10
David Sirota
That's it for today's show. Thanks a ton for being a paid subscriber to the lever letter. As I've always said. We really couldn't do this work without our paying subscribers. If you particularly like this episode, consider pitching in to our tip jar. The tip jar link is in the episodes description or over at Lever news.com slash tip jar.

00;27;10;19 - 00;27;35;12
David Sirota
Every little bit helps us do this journalism. Oh, and one more thing. Be sure to like subscribe and write a review for lever time on your favorite podcast app. Until next time. I'm David Sirota. Keep rocking the boat. The Leisure Time podcast is a production of the Lever and the Lever Podcast Network. It's hosted by me, David Sirota, our lead producer is, Jared Jacang Maher and our editor is Dennis Golan.

00;27;35;29 - 00;27;43;04
David Sirota
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