The Origins and Growth of Free Market Ideology

A conversation with Professor Naomi Oreskes and Dr. Erik M. Conway about the National Association of Manufacturers, early utility companies, and the spread of misinformation and free market ideology

Professor Oreskes is the Henry Charles Lea Professor of the History of Science and Affiliated Professor of Earth and Planetary Sciences at Harvard. Dr. Conway is a historian of science and technology at Caltech. Together, they’re the bestselling authors of Merchants of Doubt: How a Handful of Scientists Obscured the Truth on Issues from Tobacco Smoke to Global Warming, and more recently, The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market. 

Their latter book was the subject of our conversation, which traced the influence of a few little-known propaganda campaigns orchestrated by conservative gazillionaires from the early 1900s to the 1980s. Our discussion helps contextualize just how long the right has brazenly peddled misinformation.

A transcript edited for clarity and a link to the audio recording are below. The audio includes an exploration of the racial motivations behind the propaganda campaigns, as well as a bemused interlude about economist Milton Friedman’s conception of “neighborhood effects” and climate change.

I stand by my defense of skywriting as a publicity tactic.

Ben: Professor Oreskes, Dr. Conway—thank you so much for being here.

EMC: Thanks for having us. 

Ben: Today I'd like to chip away at the central question of your book: how did so many Americans come to have so much faith in markets and so little faith in government? 

You begin with the National Association of Manufacturers (NAM), a central protagonist in the story. When was NAM founded, and how did it go from fighting for government involvement in the marketplace to insisting that the government needed to stay out of its way?

NO: The National Association of Manufacturers was created in the 19th century to argue for government intervention in the marketplace. It was organized by a group of American manufacturers who wanted the federal government to protect them from competitive foreign imports through tariffs.

In the early 20th century, in the face of Progressive Era reforms, they flipped completely on their head and made the government the enemy. Suddenly, they insisted that the government must leave the marketplace alone, a position that conservative businessmen doubled down on in the decades to come.

Ben: Their about-face was so stark, it’s kind of like my two-year-old goddaughter talking about Go-Gurt from one week to the next. 

Moving into the 1920s, how did the electricity industry build on NAM’s arguments and organize one of the largest propaganda campaigns in US history?

EMC: One of the interesting realities of electrification in the US is that, after the invention of the electric light and transmission systems and so forth, electrification happened very quickly up to the edges of cities—and then it stopped. 

And it stayed stopped for a couple of decades because private utilities did not think it was profitable for them to spread electrification, and no one made them. In the 1920s, there were proposals for various kinds of systems, including what we would now call public-private partnerships in places like Pennsylvania, to ensure that everyone could get electricity somehow in some way. 

Again, the private utilities didn’t want anything to do with it, so they embarked on an extensive propaganda campaign that included things like paying academics to write textbooks that made the case for private power without government intervention. In fact, according to the FTC, the National Electric Light Association (NELA), which represented the biggest utility companies, attempted to control the entire American educational system—from grade school to university.

Ben: The depths of the propaganda campaign are surreal. When later asked if utility companies had neglected any form of publicity, NELA’s director of public information replied, “Only one, and that is skywriting.”

NO: Right, and I think this helps to answer the question that you posed at the start of this discussion: why have so many of us come to believe these stories about private enterprise being better off without government intervention? Well, we've been so bombarded by this message that it’s seeped in. 

Even if it were written in skywriting, this myth would not be supported by the facts of history or the facts of economics. Using NAM as just one example, big companies benefitted from government intervention right until they didn’t want it.

Ben: A good point, although in defense of skywriting, I find it to be the most effective form of publicity.

NO: Don’t forget about those banners that the planes carry behind them that you see at the beach.

Ben: That's how I learned about your book, actually. 

NO: Glad to hear it. 

Ben: Dissecting this bombardment of free market ideology further, how did NAM “literally import foreign theories and theorists to convince the American people that capitalism and freedom were two sides of the same coin?”