Matt Zeitlin: Impetuous Young Whippersnapper

Over at Postive Liberty, in a discussion of Brink Lindsey’s new book, Jason Kuznicki comes up with an interesting point on American views of the 19th century:

Inded, one of the book’s others strengths is that it gets the nineteenth century just about entirely right: In its first chapter, it addresses the old canard about the Gilded Age as the great American experiment with laissez-faire. Put simply, it wasn’t. The great majority of people were miserable, and they were miserable from both economic realities (you have to make wealth before you can have it) and from political inequality (Jim Crow and the legal inequality of women, for starters). The few who got rich mostly did it by squeezing favors out of the government or by engaging in outright fraud against their customers. Libertopia this isn’t.

Yet the stereotype remains that the nineteenth century was the age of unbridled capitalism.

Kuznicki is formally right, the ways various railroad tycoons got rich by basically manipulating and playing off the government are hardly what many libertarians imagine as what happens in a capitalist society.  What makes the 19th century so unappealing to American liberals is not that it was laissez faire, per se, but that to the extent there was any government intervention, that intervention was on the behalf of the powerful and wealthy.  Government was happy to step in for union busting or to subsidize railroads.  There was also widespread fraud, as Kuczinki mentions, in the financial markets that allowed for even greater concentrations of power.

I think that Kuznicki is underestimating the legal restraints on government power, especially regulatory power, in the 19th and early 20th century.  A big part of the libertarian intellectual movement is rolling back anti-trust and regulatory laws if not to their 19th century antecedents, to their pre-New Deal forebears.  This movement can be seen as a movement to a more Laissez Faire set up.  I bet if you buy enough drinks at the reason happy hour for any Cato legal scholar, you’d get him to admit that he thinks the Sherman Anti Trust act is unconstitutional and that insider trading is illegitimate government intervention in the financial market.

But more importantly, what marked the Progressive Era from the Gilded Age was not so much the extent of government power, but for whom that power was used for.  Though corporate and business interests still have large influence in our political process, the residual effects of Progressive and New Deal regulatory institutions provide a countervailing power.  Thus Kuznicki misdiagnoses the public’s apprehension of laissez faire capitalism and the Gilded Age, it’s not so much that the post civil war period up until the ascendancy of Teddy Roosevelt was “libertopia,” most of the public and lefties who talk about the Gilded Age don’t have that sophisticated an understanding of the history, it’s that the government explicitly existed to serve the interests of the powerful.  And parts of the libertarian project, like Richard Epstein’s quest to break down the federal regulatory apparatus and Robert Bork’s reinterpretation of some anti trust statutes,  though part of a genuinely laissez faire ideal, would, if enacted, move the government back towards that 19th century vision.  And that’s why people are scared of the Gilded Age.