Free Enterprise: An American History is Cornell historian Lawrence Glickman’s 2019 contribution to a growing body of research called the “new history of capitalism,” which is an often-critical look at race, gender, and the power dynamics within capitalism. Glickman assembles a lot of interesting facts, but the book, and particularly its chapter on Leonard Read’s essay “I, Pencil,” would have benefited from pre-publication feedback from someone with a deeper appreciation of the economic thought behind capitalism. As published, it calls to mind George Mason economist Peter Boettke’s description of Nancy MacLean’s 2017 Democracy in Chains as “a poignant lesson to us all about how ideological blinders can subvert even the sincerest effort to unearth truth in the social sciences and the humanities.” Had Glickman workshopped his chapter on “I, Pencil” with economists who use the essay regularly in introductory courses, he could have avoided a serious misunderstanding of Read’s project.

Enthusiasm for intervention / Glickman is right that businesspeople are inconsistent and even hypocritical when they bash “big government” on one hand while reaching out for special privileges, subsidies, and other goodies with the other. This is something that market-friendly economists have criticized for quite some time, of course. Milton Friedman famously argued that businesspeople believe in free enterprise in every industry except their own, which must be regulated and protected in the name of the “common good” or “national security.” My academic work and personal observations find plenty of support for economist Steven Horwitz’s First Law of Political Economy: “No one hates capitalism more than capitalists.” Businesspeople pay lip service to free markets as long as those markets are threatening someone else’s bottom line.

Glickman is also quite right that free enterprise enthusiasts of the mid-20th century were given to apocalyptic, hyperbolic rhetoric when describing the effects of government intervention. That is true of many social movements, though, and perhaps the free marketers can be forgiven for responding to the rise of fascism and communism in Europe and Asia—not to mention the enthusiasm some New Dealers had for totalitarian experiments. Rexford Tugwell, the economist who was probably the most prominent member of Franklin D. Roosevelt’s Brain Trust, admired the order and purpose of Mussolini’s Italy and wrote that “the future is becoming visible in Russia.” And a free-market supporter listening to Roosevelt denounce “economic royalists” or reading about his assistant U.S. attorney general (and, later, his solicitor general, attorney general, and Supreme Court appointee) Robert H. Jackson’s 1937 address on “The Menace of Free Enterprise” to the American Political Science Association (later published with the much less incendiary title “The Philosophy of Big Business”) might be forgiven for thinking himself threatened by very powerful political forces.

Nowhere in the book does Glickman show an appreciation for thoughtful defenses of free enterprise. Rather, to him such defenses are always pietistic projects. He begins discussing “faith” in free enterprise pretty much right off the bat, and he doesn’t mean it as a compliment. From the introduction:

I discovered that the idea of free enterprise is also a myth in another, more important sense: a set of assumptions, narratives, and attitudes that has guided our common sense and, regardless of empirical accuracy, has dramatically shaped how Americans have understood and engaged in politics. [My emphasis.]

Yet, Glickman himself is given to narrative over analysis, such as when he offers the standard progressive catechisms about capitalist exploitation: “debt peonage, labor exploitation, Jim Crow segregation, and violent repression of the labor movement,” “unregulated and violent capitalism of the Gilded Age,” and “unsavory practices of the new class of business titans” in the Progressive Era. With reference to “empirical accuracy,” he offers no discussion at all of empirical research on the effects of the New Deal specifically or of (for example) the “ratcheting” of government intervention that Robert Higgs identified in his 1987 classic Crisis and Leviathan. Nowhere in the book does the reader get the sense that there is any possibility the New Deal might have been fundamentally flawed. To his credit, Glickman acknowledges some of the problems with the New Deal, but its overall wisdom is simply assumed—an article of faith, one might say—and the rest of the book reads as a breathless effort to offer devious reasons for why some people oppose it. Nowhere does he show any familiarity with the empirical work of Price Fishback, Jennifer Roback, H. Gregg Lewis, Richard Vedder, or Lowell Galloway on the narrow issues of labor economics specifically, to say nothing of the empirical work by Higgs, Harold Cole and Lee Ohanian, or even Friedman himself on the Great Depression and the New Deal. There is also no acknowledgment that I can find of the spectacular effect of “free enterprise” on standards of living. Might its advocates be onto something? It is hard for the reader to tell.

Creepy authority / One also gets no sense from the book that people might have been wise not to trust Roosevelt and his Brain Trust with unchecked power. We don’t read anything about the internment of Japanese-Americans during World War II, for example, and the book is silent on important Supreme Court decisions that variously struck down or upheld parts of the New Deal. Roosevelt’s “court packing” scheme is not mentioned. The Schechter decision of 1935 invalidating the National Industrial Recovery Act is nowhere to be found, nor the momentous 1942 Wickard v. Filburn decision that expanded federal regulatory authority under the Commerce Clause or the 1945 United States v. Alcoa decision that created the “relevant market” interpretation for antitrust. That Schechter had to go all the way to the Supreme Court and that Wickard and Alcoa were decided as they were suggest that Glickman might not be wholly correct in claiming that “Free enterprisers fought a New Deal that existed largely in their imaginations.” Moreover, someone going on YouTube and watching the “NRA Official Featurette Patriotically Contributed by the Motion Picture Industry,” in which Jimmy Durante sings worshipfully about Roosevelt and the New Deal, might be surprised by the creepy feeling it provokes.

Some of Glickman’s sourcing is curious. In discussing the free marketer lament that taxation is slavery, he quotes not Robert Nozick (who made this argument explicitly) or the economic historian Deirdre McCloskey but an anonymous comment by “Chris from NJ” left on the philosopher Gregory Ransom’s blog. I don’t mind the use of unconventional sources of evidence, but it seems like Glickman could have found a better and more credible interlocutor.

He mentions Friedrich Hayek just a couple of times, which is perhaps understandable given that Hayek was European and not really American until he left the London School of Economics for the University of Chicago. He mentions Ayn Rand but doesn’t go into much detail on her work, her influence, or her strident criticisms of communism precisely because she fled the system that so many (like Rexford Tugwell) thought was “the future.” Perhaps he didn’t want to retrace the steps of Rand biographers Jennifer Burns and Anne Heller, but at the very least a little bit of context would have been useful.

I was struck, though, by his criticism of businesspeople who in turn criticized “bureaucracy” and “omnipotent government” without mentioning or engaging with Ludwig von Mises’s 1944 books Bureaucracy and Omnipotent Government. In Glickman’s discussion of “I, Pencil,” he explores Read’s idea that planning would lead to chaos without, again, noting that in 1947 Read’s Foundation for Economic Education publish Mises’s short book Planned Chaos, which was then included as an epilogue to the 1951 edition of Mises’s Socialism: An Economic and Sociological Analysis. The phrase “free enterprise” appears nine times in Omnipotent Government and 23 times in Bureaucracy, which is a little over a hundred pages. These are not Mises’s most notable works, but they are hardly obscure texts: all were published in some form or fashion by the same prestigious academic press—Yale—that published Free Enterprise. These, I think, would be more worthy adversaries than anonymous blog commenters, Fox News talking heads, and op-eds in obscure newspapers—particularly given that Mises fled Europe for the United States in 1940 to escape totalitarianism. Perhaps he knew what he was talking about. We wouldn’t know that the ideas being expounded had any meaningful intellectual provenance apart from a footnote that mentions Quinn Slobodian’s Globalists.

Speaking of Mises, one of my favorite quotes from him summarizes the broadly leftist and specifically Marxist or Marx-inspired form of argument that seems to be the method of modern progressivism and much of the New History of Capitalism scholarship: “The enemy is not refuted. Enough to unmask him as a bourgeois.” Mises wrote this with reference to 20th-century Marxism, but it applies to the leftist–progressive methods of today. Free Enterprise is very much not an exercise in refutation; it is an exercise in unmasking, with the assumption that the critics of the New Deal arrive at their flawed conclusions because they are bourgeois.

Misreading Read / Chapter 6 of Free Enterprise is dedicated to a “close reading” of “I, Pencil.” Unfortunately, Glickman completely misunderstands the essay.

He makes much of Read’s use of the word “miraculous” to describe the workings of the market and infers from this—indeed, states explicitly—that, according to the free enterprisers, no one can know exactly how markets work. In this he misses the point, and badly. We certainly can and do know how markets work, and we’ve had a pretty good idea of this for quite some time. Read’s point is that voluntary, market exchange allows each of us to harness knowledge we ourselves do not have for purposes other people need not know. I cannot, for example, describe the chemical composition of the plastics that went into my noise-canceling earbuds or the science behind how, exactly, they muffle the sound of the nail gun being used by the roofing contractor next door. I am able to make use of this knowledge, however, because it is embodied in a product I wanted at a price I was willing to pay—and a product that helped me solve the very particular problem of continuing to get my work done during the COVID-19 epidemic.

Glickman’s understanding of the origins and influence of “I, Pencil” is also incomplete. He seems not to recognize its similarity to the “woollen coat” Adam Smith discusses in The Wealth of Nations, and while he mentions its prominence in a 2010 TED talk by science writer Matt W. Ridley, he doesn’t pay any attention to artist Thomas Thwaites’s 2010 TED talk on his Toaster Project, which drew much more directly on “I, Pencil.”

To Glickman, “I, Pencil” is missing something because it doesn’t make mention of the corporations or corporate power that goes into its production. “His ode to the Eberhard Faber pencil strikingly overlooked the part that the Eberhard Faber Pencil Company played in contributing to its creation.” “In cataloguing the nature of the free enterprise system, Read, like most free enterprisers, rendered corporations invisible.” “This occlusion of the corporation in ‘I, Pencil’, then, was not atypical.” One can almost hear Glickman saying “Checkmate, free enterprisers!” But again, this is one of the ways in which the chapter misses the forest for the trees. First, Read’s exercise is one in exploring how something as mundane as a pencil emerges from a process that is “the result of human action, but not the execution of any human design,” as Adam Smith’s contemporary Adam Ferguson put it. Second, corporations are incidental to the analysis as they are neither necessary nor sufficient for wealth-creating voluntary cooperation.

In any event, the question of the firm is something that economists have dealt with in quite considerable detail, with the classic contribution coming from Ronald Coase’s “The Nature of the Firm.” The most memorable statement of the problem comes from the economist Dennis Robertson, who described firms memorably as “islands of conscious power in an ocean of unconscious cooperation, like lumps of butter coagulating in a pail of buttermilk.” Read, I think, would agree that it is the “ocean of unconscious cooperation” that is most striking and important. The “islands of conscious power,” while interesting, are beside the point.

In “I, Pencil,” Read is also capturing in the context of a simple story something that blows my mind every time I teach comparative advantage to my introductory macroeconomics students: two people can enjoy consumption possibilities in excess of their individual production possibilities simply because of specialization and exchange. If they can specialize and exchange, Britney and Miley trading apples and oranges can each get more apples and more oranges. They can get more output with given inputs, or they can get the same output with fewer inputs. In short, they can each deploy the other’s knowledge without actually having that knowledge themselves, and they can care for one another without caring very specifically about one another. Asking “What about corporations?” misses these simple but profound points.

Conclusion / When all is said and done, Free Enterprise will not convince libertarians (or people sympathetic to the work of Mises, Hayek, Friedman, and others) that they’ve been had. But that’s not Glickman’s aim, nor are we his audience. Free Enterprise is intellectual comfort food for progressives who are already wholly convinced by the rightness of their cause. Rising enthusiasm for “free enterprise” may very well have happened because businesspeople were scared by the New Deal, but we should at least think it possible that maybe they had good reasons to be afraid.