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As Oreskes and Conway point out, deregulation really began under Jimmy Carter, Reagan’s predecessor. Carter, sometimes with the support of the arch-liberal Edward M. Kennedy, deregulated the airline industry, railroads, and trucking. Deregulation continued after Clinton was elected, in 1992. “The era of big government is over,” he famously announced. “Self-reliance and teamwork are not opposing virtues—we must have both.” In the United Kingdom, Tony Blair’s government took the same approach. Together, Blair and Clinton promoted a neoliberal approach to international trade, the beginnings of what we now call globalization.
In 1993, Congress ratified the North American Free Trade Agreement (nafta). In 1996, it passed the Telecommunications Act, opening up the communications business. And in 1999 it repealed part of the Glass-Steagall Act, a Depression-era statute that prohibited commercial banks from joining together with securities firms (“investment banks”).
These policies were undertaken in the belief that freeing markets increases productivity and competition, lowering prices, and that markets regulate themselves more efficiently than administrators can. But some of their unintended effects can still be felt today. nafta had a net-positive impact on the economies of the signatories—Canada, Mexico, and the United States—but it also made it easier for American manufacturers to relocate plants to Mexico, where labor is cheaper, inflicting severe social and economic damage on certain areas of the U.S. It is probable that many Trump voters were people, or the children of people, whose lives and communities were disrupted by nafta.
The Telecommunications Act included a clause, Section 230, immunizing Web operators from liability for third-party content posted on their sites. The consequences are well known. And the weakening of Glass-Steagall, along with the Federal Reserve chairman Alan Greenspan’s relaxation of bank oversight, has been blamed for the financial crisis of 2008 and the Great Recession that followed, a crisis that Oreskes and Conway estimate cost the public twenty-three trillion dollars.
Yet the neoliberal era was hardly a triumph for Friedman’s approach. Pro-market policies were generally mixed with state funding and government direction. Clinton may have subscribed to many neoliberal principles, but one of the first initiatives his Administration attempted was a reform of the health-care system where the government was to give every citizen a “health-care security card”—which sounds a lot like socialized medicine.
Both nafta and the Telecommunications Act contain plenty of regulatory requirements. The government is overseeing how business is done, not simply stepping aside. As with the freedom of speech and the freedom of religion, it’s the state that creates the social space in which economic freedom can be exercised. Without government, we are in a state of nature, where coercion, not freedom, is the norm.
There is a strange blind spot in “The Big Myth.” The authors are exhaustive in debunking the fundamentalist view of the “magic of the marketplace” (although fundamentalisms aren’t hard to debunk, and a lot of their criticisms are familiar). But what especially exercises them is the equation pro-business propagandists made between free markets and political liberties—“the claim that America was founded on three basic, interdependent principles: representative democracy, political freedom, and free enterprise.” Oreskes and Conway call this “a fabricated claim.” Is it?
As they point out, there’s no mention of free enterprise in the Constitution. But there are mentions of property, and almost every challenge to government interference in the economy rests on the concept of a right to property. The Framers were highly sensitive to this issue. They not only made the concept of private property compatible with the concept of political rights; they made property itself a political right. And vice versa: rights were personal property. “As a man is said to have a right to his property,” James Madison wrote, “he may be equally said to have a property in his rights.”
Thus the Fifth Amendment provides that “no person shall be . . . deprived of life, liberty, or property, without due process of law.” Like the rest of the Bill of Rights, this was originally understood to apply only to the federal government, but the Fourteenth Amendment, ratified in 1868, applied it to the states as well, and courts have invoked that amendment’s “due process” clause to protect all sorts of fundamental rights that are unspecified in the Bill of Rights—such as the right to privacy, which is the constitutional basis for the decision in Roe v. Wade. This is the judicial doctrine known as “substantive due process.”
Pro-business lobbyists were therefore completely correct to define free enterprise, by which they meant the freedom to do as they liked with their property, as a political liberty. In the early decades of the twentieth century, the Supreme Court used substantive due process to strike down government acts and programs that impinged on the right to property and on what the Court called “the liberty of contract”—including minimum-wage laws, worker-safety regulations, and a number of New Deal programs. The treatment of private ownership as a political right was not something dreamed up by Friedrich Hayek or the National Association of Manufacturers. It is, for better or worse, part of the fabric of American society.
But this political liberty is not absolute. The Framers were adept at balancing one grant of authority with a countervailing one. When the Supreme Court—under pressure from Franklin Roosevelt, who threatened to pack the Court—did an about-face on the New Deal, in 1937, it had another legal mechanism at its disposal. Article I of the Constitution gives Congress the power “to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” This is the “commerce clause,” which has, since the time of John Marshall, been broadly interpreted to give Congress the power to regulate virtually everything related to interstate commerce.
Through the commerce clause, courts began giving Congress new powers, opening the way to the programs and policies of mid-century liberalism. The constitutional authority for the anti-discrimination provisions of the 1964 Civil Rights Act is the commerce clause. You can’t tell the story of business’s war on government without taking this legal context into account. Due process and the commerce clause were the weapons the antagonists fought with, and, as it generally does, the Supreme Court had the last word.
In 1993, Congress ratified the North American Free Trade Agreement (nafta). In 1996, it passed the Telecommunications Act, opening up the communications business. And in 1999 it repealed part of the Glass-Steagall Act, a Depression-era statute that prohibited commercial banks from joining together with securities firms (“investment banks”).
These policies were undertaken in the belief that freeing markets increases productivity and competition, lowering prices, and that markets regulate themselves more efficiently than administrators can. But some of their unintended effects can still be felt today. nafta had a net-positive impact on the economies of the signatories—Canada, Mexico, and the United States—but it also made it easier for American manufacturers to relocate plants to Mexico, where labor is cheaper, inflicting severe social and economic damage on certain areas of the U.S. It is probable that many Trump voters were people, or the children of people, whose lives and communities were disrupted by nafta.
The Telecommunications Act included a clause, Section 230, immunizing Web operators from liability for third-party content posted on their sites. The consequences are well known. And the weakening of Glass-Steagall, along with the Federal Reserve chairman Alan Greenspan’s relaxation of bank oversight, has been blamed for the financial crisis of 2008 and the Great Recession that followed, a crisis that Oreskes and Conway estimate cost the public twenty-three trillion dollars.
Yet the neoliberal era was hardly a triumph for Friedman’s approach. Pro-market policies were generally mixed with state funding and government direction. Clinton may have subscribed to many neoliberal principles, but one of the first initiatives his Administration attempted was a reform of the health-care system where the government was to give every citizen a “health-care security card”—which sounds a lot like socialized medicine.
Both nafta and the Telecommunications Act contain plenty of regulatory requirements. The government is overseeing how business is done, not simply stepping aside. As with the freedom of speech and the freedom of religion, it’s the state that creates the social space in which economic freedom can be exercised. Without government, we are in a state of nature, where coercion, not freedom, is the norm.
There is a strange blind spot in “The Big Myth.” The authors are exhaustive in debunking the fundamentalist view of the “magic of the marketplace” (although fundamentalisms aren’t hard to debunk, and a lot of their criticisms are familiar). But what especially exercises them is the equation pro-business propagandists made between free markets and political liberties—“the claim that America was founded on three basic, interdependent principles: representative democracy, political freedom, and free enterprise.” Oreskes and Conway call this “a fabricated claim.” Is it?
As they point out, there’s no mention of free enterprise in the Constitution. But there are mentions of property, and almost every challenge to government interference in the economy rests on the concept of a right to property. The Framers were highly sensitive to this issue. They not only made the concept of private property compatible with the concept of political rights; they made property itself a political right. And vice versa: rights were personal property. “As a man is said to have a right to his property,” James Madison wrote, “he may be equally said to have a property in his rights.”
Thus the Fifth Amendment provides that “no person shall be . . . deprived of life, liberty, or property, without due process of law.” Like the rest of the Bill of Rights, this was originally understood to apply only to the federal government, but the Fourteenth Amendment, ratified in 1868, applied it to the states as well, and courts have invoked that amendment’s “due process” clause to protect all sorts of fundamental rights that are unspecified in the Bill of Rights—such as the right to privacy, which is the constitutional basis for the decision in Roe v. Wade. This is the judicial doctrine known as “substantive due process.”
Pro-business lobbyists were therefore completely correct to define free enterprise, by which they meant the freedom to do as they liked with their property, as a political liberty. In the early decades of the twentieth century, the Supreme Court used substantive due process to strike down government acts and programs that impinged on the right to property and on what the Court called “the liberty of contract”—including minimum-wage laws, worker-safety regulations, and a number of New Deal programs. The treatment of private ownership as a political right was not something dreamed up by Friedrich Hayek or the National Association of Manufacturers. It is, for better or worse, part of the fabric of American society.
But this political liberty is not absolute. The Framers were adept at balancing one grant of authority with a countervailing one. When the Supreme Court—under pressure from Franklin Roosevelt, who threatened to pack the Court—did an about-face on the New Deal, in 1937, it had another legal mechanism at its disposal. Article I of the Constitution gives Congress the power “to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” This is the “commerce clause,” which has, since the time of John Marshall, been broadly interpreted to give Congress the power to regulate virtually everything related to interstate commerce.
Through the commerce clause, courts began giving Congress new powers, opening the way to the programs and policies of mid-century liberalism. The constitutional authority for the anti-discrimination provisions of the 1964 Civil Rights Act is the commerce clause. You can’t tell the story of business’s war on government without taking this legal context into account. Due process and the commerce clause were the weapons the antagonists fought with, and, as it generally does, the Supreme Court had the last word.
