myths Archives — Laissez FaireLaissez Faire

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Maybe you’ve heard this story. A father asks his liberal daughter, after she has spent the day studying for a test, how she would feel if her professor just decided to give everyone an A. “That would be unfair,” she says. “Why should people get the same grade as me when I worked really hard to earn it and they goofed off?” That, the father says, is why he supports free markets rather than wealth redistribution.

It’s a powerful analogy, but by itself goes only so far. Although most Americans would agree that it is wrong to deprive people of what they earn in order to give other people the unearned, they have a hard time seeing how a businessman earns vast fortunes. What’s worse, capitalism’s opponents are hard at work trying to prevent them from grasping this fact.

This, for instance, was the purpose of Marx’s labor theory of value, which says that only physical laborers are truly productive. It was the purpose of Elizabeth Warren’s rant, in which she declared, “There is nobody in this country who got rich on his own.” It’s the purpose of Warren Buffett’s declaration that the extraordinary successful “get lucky.”

You could write entire books dissecting the errors in these arguments, but if you know the stories of capitalism—of how America’s most successful producers became successful—you’ll be sporting intellectual Kevlar.

Capitalists are unproductive? I think of J.P. Morgan risking vast sums of his wealth on Thomas Edison’s electric light bulb, without which we would still be lighting candles in the darkness.

No one gets rich on his own? I think of Apple’s Steve Wozniak. While other kids were out partying, the teenage Woz spent countless hours in his bedroom designing computers, before going on to create the first personal computer, the Apple II.

Successful producers just “get lucky”? I can’t help but think of John D. Rockefeller.

When Rockefeller was sixteen he set out to find his first job. He made up a list of the companies he was interested in working for and then started knocking on doors, delivering a simple pitch: “I understand bookkeeping, and I’d like to get work.”

The first business Rockefeller approached turned him down. So did the second. But Rockefeller wasn’t discouraged. For six consecutive weeks, he spent six days a week going from business to business looking for a job and coming up empty. Once he had gone through his entire list, he simply started back from the beginning, visiting some companies two and even three times. Finally got hired and got the chance to start his meteoric rise.

The history of capitalism is filled with such stories: tales of men and women who display unmatched feats of ambition, dedication, hard work, creative thought, and commitment to learning. You need to know these stories if you want to be able to appreciate—and defend—capitalism.

Where to start? Here are a few I’d recommend:

• Burton Folsom – The Myth of the Robber Barons
• Richard Tedlow – Giants of Enterprise
• Walter Isaacson – Steve Jobs
• Steve Wozniak - iWoz
• Sam Walton – Sam Walton: Made in America
• Tony Hsieh – Delivering Happiness
• Ron Chernow - Titan

In this video I mention the research of Steven Kaplan. Here are a few examples:

If you would like to ask me a question, you can submit it here.

If you would like to ask me a question, you can submit it here.

If you would like to ask me a question, you can submit it here.