The importance of teaching the mainstream - and refuting it

Economics Political Theory
1

Up until today I had been confident in my critique of the critiques of Standard Oil. It appeared to me that in general both history and logic were on the libertarian side.

However, digging through newspaper records of the era, I came upon important critiques of Standard Oil that I found difficult to counter without more facts. Simply learning the libertarian philosophy and logical argument can’t reject reality.

After some more searching, I found a great article countering all of the critiques I had managed to find.

After I decide that I have reviewed a considerable amount of the literature on the subject, I will put together arguments for both sides and post them here, but for now I want to say that I have learned the importance of learning the mainstream argument before countering it.

Concluding, learn what the government feeds you. Then figure out whether it’s wrong or not.

2

Did you take a look at the sources Rothbard cites on the “Standard Oil myth” in MES, Chapter 10?

Leeman, “The Limitations of Local Price-Cutting”

Sears, “The American Businessman at the Turn of the Century”

McGee, “Predatory Pricing: The Standard Oil (New Jersey) Case”

On another note, I agree wholeheartedly with you. You can’t expect to have given an argument a fair hearing if you’ve only taken a look at its critics. You haven’t refuted the other side until their case has been stated at its best.

3

But at the same time:

If you keep an active mind, you will discover (assuming that you started with common-sense rationality) that every challenge you examine will strengthen your convictions, that the conscious, reasoned rejection of false theories will help you to clarify and amplify the true ones, that your ideological enemies will make you invulnerable by providing countless demonstrations of their own impotence.

You will not have to keep your mind eternally open to the task of examining every new variant of the same old falsehoods. You will discover that they are variants of attacks on certain philosophical essentials – and that the entire, gigantic battle of philosophy (and of human history) revolves around the upholding or the destruction of these essentials. You will learn to recognize at a glance a given theory’s stand on these essentials, and to reject the attacks without lengthy consideration – because you will know (and will be able to prove) in what way any given attack, old or new, is made of contradictions and ‘stolen concepts’.

-Ayn Rand

4

I have not yet looked at those sources, and I have not read MES either, but I will add those to my list. I already am reading another one by McGee.

5

Do you have in writing your critique critique? Or would you care to write them down? I’m interested to see them. Mostly what I have is a nebulous notion on Rockefeller’s relationship with the railroads which were federally regulated and subsidized.

6

Not yet. I will definitely write it down and post it here one I have this a bit more complete.

For now I leave you with this:

Beginning with this:

http://mises.org/daily/2694#4

We have a suspicion that Standard Oil is misunderstood.

So we look it up some more, and we find this:

http://mises.org/daily/5274

We become suspicious of the claim of predatory pricing. Does it make logical and historical sense? He says no (very good case):

http://www.scribd.com/fullscreen/31267845

Indeed, there is some historical evidence (and good strategy in there) if you read this:

http://en.wikipedia.org/wiki/Predatory_pricing#Criticism

  • where you see how predatory pricing worked out in Bromine.

I have more stuff to read over, but these are generally the good ones on Standard Oil. Now, as part of my project to shed light on the Gilded Age, I present some links which support my thesis that we did not have laissez faire, but actually active government intervention in the economy, which I assume, after more reading, I will be able to show caused malinvestment and bubbles.

I begin with a very unconventional source: Eugene Debs. Read his thoughts on the government-private alliances (corporate welfare:

http://query.nytimes.com/mem/archive-free/pdf?res=F60A15FD355517738DDDAC0A94D9415B818DF1D3

Now, some more general evidence on the nature of the era:

http://www.thefreemanonline.org/featured/the-gilded-age-a-modest-revision/

http://www.thefreemanonline.org/columns/tgif/no-laissez-faire-there/

Now, remember that we also have tariffs on imports, which prevent foreign competition from keeping domestic markets honest, leading to unnatural monopoly:

http://www.fff.org/freedom/0592c.asp

Which leads us to ask, were there tariffs on oil? Newspapers of the time say yes:

http://query.nytimes.com/mem/archive-free/pdf?res=F2071EFA385F12738DDDAC0894D0405B898CF1D3

Concluding, I am trying to put together a clear and coherent case for

  • Standard Oil being 1) Not all evil 2) Not all free-market

  • The Gilded Age being crony capitalism

Along the way, I have also found out that many of the early so-called progressives may have had some other motives too:

http://www.thefreemanonline.org/featured/eugenics-progressivism%E2%80%99s-ultimate-social-engineering/

7

Yeah I’m currently reading Triumph of Conservatism because I’m interested in refuting Gilded Age misconceptions but find that it starts too late in the period to satisfy that goal. Have you read Railroads and Regulations, or another book to that effect? I agree though that it’s of utmost importance to be well equipped against the typical Gilded Age ‘laissez faire’ arguments. It’s incredible how much there is to contradict the popular narrative of destructive free markets at the turn of the century and the workers paradise of the progressive era.

8

I have not read those books but shall put them on my list.

Since whenever there is an argument about “laissez faire” people point to the Gilded Age as the leftist win-all against capitalism, it is, as you say, very important to show that it actually was not laissez faire.

Small quick note: Spencer was not quite the Social Darwinist that people paint him to be if you actually look it up. He was essentially an AnCap. Keynes, on the other hand "was a proponent of eugenics. He served as Director of the British Eugenics Society from 1937 to 1944. As late as 1946, shortly before his death, Keynes declared eugenics to be “the most important, significant and, I would add, genuine branch of sociology which exists.” [from http://en.wikipedia.org/wiki/John_Maynard_Keynes#Support_for_eugenics]

9

Quick link to an article describing voluntary benefits to employees by big companies in the early 20th century:

http://query.nytimes.com/mem/archive-free/pdf?res=FA0810F8355B11738DDDAA0894DC405B888DF1D3

After claiming the fact, the article goes on to some weird theory which seems self-contradictory, but is irrelevant, as it is opinion. The fact is the important part. Note that we don’t know the motive for the benefit increase (though it doesn’t appear to be government-motivated, there might have been threats involved).

Edit:

More benefits to employees (though it is an ad):

http://news.google.com/newspapers?id=TJdRAAAAIBAJ&sjid=cwoEAAAAIBAJ&pg=4047,4394860&dq=big+business+benefits&hl=en

10

Nice collection of resources! Can you please include the ones you consider relevant on the brand new wiki page? :slight_smile:

11

Oh, I shall :slight_smile: A bunch of those are already there, but I shall add the rest momentarily.

12

In fact, many of the above references are about the Gilded Age in general (my next target, in which I shall present the arguments about the lack of laissez faire, the government favoritism and protection, and examples like Standard Oil, railroads, meat packing, etc).

13

Wheylouos,

I am interested in seeing your final arguments on this matter. A bit off topic but adding to the concept of social Darwinism.

There were basically two different kinds: Darwinian Individualism and Darwinian Collectivism. The progressives, National Socialists, Fascists, Fabians were of the Collectivist brand (obviously).

I have blogged on it a bit. Some further reading on that subject.

Origins of the myth of social Darwinism: The ambiguous legacy of Richard Hofstadter’s Social Darwinism in American Thought

AN ECONOMIC MISINTERPRETATION OF HISTORY:

A Brave New World: The Left, Social Engineering, and Eugenics in Twentieth-Century Europe

14

Haha, I guess that can be my project after the above ones I mention. I would like to delve deeper into the social Darwinism claims and read some defenses of Herbert Spencer (the supposed proponent of social Darwinism who I’ve recently read was actually quite misunderstood).

By the way, which “this matter” do you mean? Standard Oil, the Gilded Age, or collectivist Eugenics?

15

I was referring to Standard Oil and the Gilded Age but I think more needs to be done on Darwinian Collectivism to distinguish it from Spencer and others. My blog has some good sources to get started on it.

BTW I used to be “Daveb” but my email expired so I had to start another account.

16

Well, as to my arguments about Standard Oil, you can find a good chunk of them on the Mises Wiki which I made yesterday. I am not yet finished completely (I am 1/3 of the way through the history of Standard Oil, and then I will be reading Ida Tarbell’s book), yet the wiki page is pretty good even now (definitely more comprehensive than any other source I’ve found, not to brag, of course ).

17

I’ve read the mises stuff on Standard Oil. Ok, they did not have a monopoly on oil, but what about refineries? Did standard oil have a monopoly on refineries?

18

It may also be useful to shed light on the flawed historiography which has contributed to the Standard Oil myth. Historians, for one, are not economists. They do not reach their conclusions based on economic theory, but are drawn to periodicals and books of the period as well as official documents. In their view, if the Supreme Court accepted the arguments against Standard Oil, then they are, by and large, presumed to be kosher. Thus the accusations, rubber stamped by the judiciary, make their way into the history books and become ingrained into mainstream history.

Point out that no historian (until DiLorenzo, I believe) bothered to actually compare the accusations with the history of Standard Oil’s pricing and production levels, market share, etc…it simply didn’t matter because, well, they lost.

19

Did standard oil have a monopoly on refineries?

I think close to 90% at their peak, but there were no barriers to entry and competition was alive and ready to pounce (as described in the article).

Furthermore, Standard Oil created superior, uniform kerosene at lower prices, and hence was not really evil.

The only evil in the story is patent monopolies and government tariffs, which undoubtedly decreased competition (note that abroad Standard Oil had to lower its prices due to foreign competition, but the 40 cents per gallon tariff in the US held back foreign competition at home).

20

Point out that no historian (until DiLorenzo, I believe) bothered to actually compare the accusations with the history of Standard Oil’s pricing and production levels, market share, etc

It’s a nice claim, but to provide a citation for this would be tough (and I’d like all claims in the article to have citations).