Lately, it seems as if many conservatives, and some prominent Christian leaders, are convinced that Capitalist Theory was engraved on the Tables of Stone and carried by Moses down Mount Sinai. There's no question, according to many Christian conservatives, that God is unreservedly of the Capitalist party. Moreover, the most rabid of these proponents give the distinct impression that any regulation of the economy is virtually the equivalent of a war against God.
Now, let me hasten to assure you that I believe that for the most part, a free market is the best way of ensuring a country's long-term prosperity. Capitalism, among modern economic systems, is the system that best allows for and corrects the essential selfishness of human nature. In theory, free competition between self-interested individuals and commercial entities will balance economic power to create the most equitable distribution of resources.
And this is supposed to work without the intervention of government. That is the theory. And sometimes, it actually works. But history shows that mostly...it doesn't. History demonstrates that without a controlling hand on the helm, the "free" market will inevitably degenerate into an oligarchy dominated by a small group of monopolies. Thus, unregulated Capitalism will destroy itself.
A look at the Golden Age of unbridled Capitalism is instructive. The History Channel recently aired an excellent, informative documentary called, "The Men Who Built America." which detailed the rise of the Titans of Industry between the Civil War and the turn of the 20th Century: Cornelius Vanderbilt, John D. Rockefeller, Andrew Carnegie, and J.P. Morgan. These men clearly made essential, revolutionary contributions in modernizing building, power, city planning, transportation, communication, and developing modern technology. They made America a great economic superpower.
But there was a very dark side to their stunning successes. They achieved their economic dominance by engaging in intimidation, unfair business practices, political corruption, exploitation of workers, and other ruthless and unethical tactics.
Carnegie Steel Company ordered the violent assault on workers who participated in a strike to protest unbearable working conditions, which killed nine people and wounded many others. John D. Rockefeller engaged in many illegal and unethical anti-competitive tactics, including intimidation, underselling, and even bribery of elected officials, while building and consolidating his monopolistic Standard Oil. J.P. Morgan threatened to bankrupt his rival, George Westinghouse, by filing a lawsuit both men knew was frivolous, forcing Westinghouse to give him the patents to Nikola Tesla's revolutionary AC electric current. In 1896, the four conspired together to "buy" a sympathetic president, William McKinley.
And all these men forced their employees to work long grinding hours, in unbearable conditions for starvation wages, while amassing fortunes that are almost unimaginable today. At his death, John D. Rockefeller's estate totaled a staggering $660 billion in today's money. Meanwhile, the average working family barely survived on a mere $100 a week. Social misery and social unrest were widespread.
But these men, in their attempt to protect their empires by controlling the President, made a serious miscalculation. They arranged to have Theodore Roosevelt placed on the ticket with McKinley for his second term. Roosevelt had developed the reputation of being an incorruptible enemy to the Trusts, and they thought that making him Vice-President would be the best way of neutralizing his growing political power.
To their great dismay, shortly after his second inauguration, McKinley was assassinated by an anarchist, and Roosevelt ascended to the Presidency. That was the beginning of the end for uncontrolled capitalism, as one by one, the Titan's Trusts were "busted," with the last being Rockefeller's Standard Oil. Rockefeller was forced by a federal court to break up his empire into 34 separate companies.
What happened next was very interesting. At the same time as Rockefeller's empire was falling, a young Henry Ford was defending a lawsuit by the Association of Licensed Automobile Manufacturers, who held the patent on all automobiles. Ford believed he could make cars cheap enough that the common people could afford them, but ALAM was attempting to assert its rights to a share of all his profits. The court eventually ruled in Ford's favor, busting yet another monopoly.
Ford went on to set the tone for a new generation of industrialists. He paid his workers fairly and they worked in safe, sanitary conditions. He pioneered the 8-hour-a-day shift. The next few decades marked one of the most prosperous, innovative periods in American history. Workers who were paid fair wages were able to purchase all kinds of consumer goods, from cars to chocolates to makeup. Thus, innovative businesses sprang up all over the country. The middle class grew into a strong stable economic force, and a reliable market for goods.
And the biggest irony of all was that Rockefeller made more money from the former Standard Oil after his monopoly was broken up and he received shares of the profits from all 34 smaller companies.
Thus, after decades of uncontrolled, ruthless exploitation by a few men facilitated by government connivance, in the early 20th Century America was able to achieve unparalleled prosperity through a fortuitous combination. 1. Robust government regulation to destroy and prevent monopolies and protect free market competition; and 2. a new breed of innovative, ethical businessmen, who realized that happy and prosperous employees are the basis, not only for a sound and stable economy, but for a strong and growing business. All without sacrificing profitability. 1 Somehow, I think God approved.