Of Myths and Markets: Moving Beyond the Capitalist God That Failed Us

It would be under [President Dwight] Eisenhower’s watch that the nation would add the phrase “under God” to the Pledge of Allegiance and would offer “In God We Trust” as the country’s first official motto—one that would be added to US currency to remind the citizenry of the divine nature of the free market.

Kevin Musgrave, Persons of the Market: Conservatism, Corporate Personhood, and Economic Theology, 2022 (106). 

In the early days of the Cold War, a set of essays that sold hundreds of thousands of copies was published under the title, The God That Failed. The “god” in question was Communism. Seven decades later, though, a growing number of writers are questioning a different god that has failed us—capitalism.

How has capitalism failed, and what can be done about it? The story is multi-faceted. Three recent books address this question. One, by Kevin Musgrave, a Southeast Missouri State University communications professor cited above, focuses on attempts to fuse economic and religious thought. Another, by Naomi Oreskes of Harvard and Erik M. Conway of Caltech, titled The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market, examines the role of corporate propaganda. A third, by Alissa Quart of the Economic Hardship Reporting Project, is titled Bootstrapped: Liberating Ourselves from the American Dream and focuses on the role of economic stories in popular literature.

Among all three books, one finds many areas of overlap and common threads. In particular, all trace the roots of neoliberalism back decades before it became dominant in the 1980s.

But what is meant by neoliberalism? Orestes and Conway offer a conventional answer. It’s about shrinking the state—or its social programs, at least rhetorically. Musgrave offers a more satisfying answer, writing, “I understand neoliberalism as a governing rationality that directs state action in favor of the market” (177).

In other words, according to Musgrave, neoliberalism is not concerned with shrinking the state—something which, data show, clearly has not happened over the past 40 years. Instead, neoliberalism favors large corporations over working people by outsourcing services to private contractors; supporting tax, trade, and regulatory policies that maximize corporate earnings; and using the state to limit the rights of unions and working people.

These policies have real-world effects. Federal Reserve data show that labor’s share of US total income over the past 40 years has fallen by nearly three percentage points of gross domestic product—an amount that exceeds $600 billion annually, or about $4,000 a year per employed worker.

Authors also disagree about just what the “big myth” is and its impact on US society. According to Orestes and Conway, this myth posits, mistakenly, that markets are more efficacious than government. They argue that the country faces a crisis in capitalism, one that politics rooted in more generous social programs and greater market regulation could correct.

To understand the rise of contemporary US capitalist ideology, it is important to understand just how threatening the New Deal was to many corporate leaders.

In contrast, Musgrave and Quart argue that this myth affects not just people’s attitudes toward business and government but our way of being. They contend that too many Americans have become the economically “rational,” self-centered, homo economicus that economists describe, at our peril, undermining the cooperative muscle that is so essential for collective thriving. The “American dream,” Quart notes in the title of her book, is not something to aspire to—but rather be liberated from. The crisis the country faces, in other words, may be not just a crisis in capitalism, but a crisis of capitalism.

From the New Deal to New Deal Backlash

You used to write an awful lot about the workingman…He’s turning into something called organized labor. You’re not going to like that one little bit when you find out it means that your workingman expects something as his right, not as your gift!

Jedediah Leland, speaking to Charles Kane, in Citizen Kane (1941)

To understand the rise of contemporary US capitalist ideology, it is important to recognize just how threatening the New Deal was to many corporate leaders. Shaken by mass unemployment that at one point reached nearly 25 percent, Americans’ faith in business leadership faltered, leading to an unprecedented range of federal intervention in economic life.

This is not to deny that New Deal reforms were, in many respects, modest. Indeed, the New Deal often fell painfully short of its economic justice rhetoric. For example, by supporting White but not Black homeowners, New Deal homeownership policy helped widen the racial wealth gap. The interstate highway program, often praised as an achievement of New Deal liberalism, displaced hundreds of thousands of Black families.

But the New Deal also limited corporate privileges and expanded the rights and power of labor unions, most notably passing the National Labor Relations Act in 1935, which established the obligation of companies to recognize unions that had the majority support of workers and negotiate with them in good faith.

In 1925, President Calvin Coolidge said, “The chief business of the American people is business.” With the New Deal and the rise of unions, that attitude changed, and a panoply of programs—from rural electrification and Social Security to Wall Street regulation through the Securities and Exchange Commission—became, at least for a time, the revised “chief business” of government. From 1933 and 1945, union membership in the United States quintupled from three to 15 million. A sign of increasing labor power, these rising union numbers felt just as scary to the real-life business tycoons as the dialogue in the movie Citizen Kane suggests.

The Campaign for “Free Enterprise”

The Great Depression did not just cause mass unemployment; it also wiped out many businesses. The National Association of Manufacturers, for example, saw its membership fall from over 5,000 businesses to fewer than 1,500. NAM, however, found a successful rebuilding and rebranding strategy in the mid-1930s as it became a central organizing arm of a movement to re-legitimize business in the eyes of the public and discredit the New Deal. Its early innovations included replacing the term “private enterprise” with “free enterprise,” since the word “private” connoted “selfishness,” according to an internal NAM memo (89–90).

Oreskes, Conway, and Musgrave also detail the work of right-wing foundations, intellectuals, and think tanks during this period. After World War II, NAM was joined by the Foundation for Economics Education and the Mount Pelerin Society, named for the community near Geneva, Switzerland, where the group was founded in 1947. These groups bankrolled right-wing economics authors, such as Ludwig von Mises (Human Action) and Friederich Hayek (The Road to Serfdom), that argued in favor of limiting government’s economic role. They also supported the work of the Chicago School of Economics, including that of Milton Friedman, who published Capitalism and Freedom in 1962.

The title of Friedman’s book is telling. As Oreskes and Conway explain, “capitalism” and “freedom” often conflict. After all, capitalism runs on “one dollar, one vote,” while democracy is based on “one person, one vote.” However, Friedman and his counterparts presented them as “indivisible” (114).

Like Musgrave, Oreskes and Conway highlight business efforts to promote links between religion and capitalism. The authors write that “The Market” (capital letters in original) became “revered as a godlike force: powerful, mysterious, and omniscient, an entity whose will must necessarily be done, whom mere mortals should not attempt to second-guess” (160).

But the link with religion was not merely metaphorical. It was also strategic. One initiative that the Foundation for Enterprise Education favored in the 1940s and early 1950s was called Spiritual Mobilization, an organization that sought to persuade Christian clergy “that unregulated capitalism was not merely compatible with Christian values but founded upon them” (7). The group also promoted a Southern Baptist minister named Billy Graham (190–201), who argued that Christianity and capitalism went hand in hand.

Though the scope of these efforts was impressive, NAM and its allies did not always prevail. For decades, the New Deal policy framework remained dominant. But NAM and its allies had considerable influence—and reach—within institutions (universities, churches, and corporations, among them) and the public.

As Oreskes and Conway explain, while right-wing economists’ books rarely achieved mass sales, popularized versions of them often did. For example, The Road to Serfdom, in its original US run, attracted 17,000 readers, but the condensed Reader’s Digest version of that book arrived in the homes of nine million subscribers (149). More broadly, NAM and its allies “reached tens of millions of Americans—almost certainly half the population and possibly more—with billboards, brochures, lectures, films, and radio [and later television] programs celebrating ‘free enterprise’” (117). Future neoliberal enthusiast Ronald Reagan honed his message in the 1950s as the host of General Electric Theater, one of those funded programs, nearly three decades before he would be elected president.

Little Myths on the Prairie

As Quart points out, the stories children read influence the values they enact as adults. Quart offers several examples of how US literature has crafted myths of individualism and “self-reliance,” reinforcing a capitalist worldview. Her most powerful analysis focuses on the eight-book Little House on the Prairie series, which has sold over 60 million copies (26).

Laura Ingalls Wilder—and her daughter, Rose Wilder Lane, who edited the books—were staunch libertarians, Lane especially. Lane not only edited the Little House series but was also an early biographer of future president Herbert Hoover; so close was she to Hoover that her papers now reside at the Herbert Hoover Presidential Library and Museum.

The stories told by Wilder in Little House celebrate individual “pioneer” resourcefulness while eliding the actual history of the West—both the genocide of Native Americans and the government’s free land grants to White families like the Wilders. Simply put, the Wilders did not make it on their own. As Quart writes, “Whether this omission was conscious and sneaky or such a universal form of falsification that Wilder didn’t need to actively suppress anything is unclear” (33). Either way, the myth of a beneficent market was upheld.

The Rise of Neoliberalism

In the preface of the 1982 edition of Capitalism and Freedom, Milton Friedman wrote, “Only a crisis—actual or perceived—produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.” Oreskes and Conway seem to acknowledge this point. Famously, the 1970s were a period of stagflation, a combination of high inflation and high unemployment that had not existed in the previous three decades. As they write, “One part of the answer to Friedman’s fame and influence is that, by the 1970s…people wanted answers to what had gone wrong, and Friedman had one” (282).

The rise of neoliberalism in the United States is also deeply connected to White backlash to the Civil Rights movement.

There was, however, more driving the shift to neoliberalism than stagflation. Musgrave writes extensively about US Supreme Court Justice Lewis Powell. Shortly before his Court appointment, Powell had written the famous 1971 Powell memo, which encouraged corporate leaders to support the creation of right-wing think tanks and university-endowed chairs. But Musgrave focuses more on Powell once he was on the Court, where he played an influential role, including casting the critical swing vote in the 1978 Bakke decision, which preserved affirmative action but, according to Musgrave, separated it from its social justice roots. As Musgrave writes, “The central concern was not about eliminating barriers to equal access—for Powell, there were no structural barriers to be found—but rather about allowing a greater diversity of voices and viewpoints within the classroom that might benefit all individuals in the educational process.” (119). Effectively, this meant that, except in very limited circumstances, affirmative action was no longer treated as a legal instrument for addressing structural racism. Furthermore, reducing affirmative action to being a tool for “diversity” made counterclaims of “reverse racism” easier to advance in the courts.

Musgrave’s discussion of Powell speaks to a larger dynamic, which Heather McGhee writes about in her 2021 book, The Sum of Us—namely, that the rise of neoliberalism in the United States is also deeply connected to White backlash to the Civil Rights movement. As has been noted in NPQ, economic data indicate that US public infrastructure spending began to fall around 1970, after the civil rights gains of the previous decade. McGhee’s book clearly shows that in cities and states across the nation, when racial barriers fell, defunding of public infrastructure and social spending followed, what she labels a “pricing up and privatization of public goods” (180).

Imagining New Stories

In domain after domain, overreliance on markets and under-reliance on government have cost the American people dearly.

The publication of three books, at nearly the same time, about the ideology of US capitalism is likely not a coincidence. It is rooted, it would seem, in growing economic unease.

Orestes and Conway are explicit about this, “The COVID-19 pandemic has shown us how expensive overreliance on the ‘free’ market can be. Yet, as bad as it has been, the failures of American political economy go well beyond it. In domain after domain, overreliance on markets and under-reliance on government have cost the American people dearly” (397).

In the preface to her book, Quart echoes this theme, citing current maladies such as “unstable jobs, unpayable college and medical debt loads…and a byzantine financial and tax system that benefits the wealthiest” (xi). Musgrave observes that “it seems the cosmic and existential levels of economic theology have come to the surface of our daily politics. As they do so, the folly of our economistic view of the person becomes clearer” (175).

It is one thing to outline the roots of myths that have supported capitalist ideology. But how does one build beyond them? That depends on one’s diagnosis of what needs to be addressed. Orestes and Conway give an easy, if perhaps unsatisfying, answer. The big myth, they write, is “that markets are efficient, and governments are inefficient. That markets work and public policies fail. It is the myth that we do best when government ‘gets out of the way’ and lets the market do its ‘magic’” (419).

They acknowledge that neoliberalism was built up over a century and that “history is not easily undone” (419). But when they write, “The inequality capitalism creates can be readily remedied through progressive taxation” (400) on the very same page where they discuss Thomas Piketty, it would appear that perhaps they haven’t read Piketty carefully enough. If they had, they would understand that capitalism has a historical tendency toward wealth concentration. Countering this tendency requires not only busting myths but considerable political organizing, which is not easy at all.

Both Musgrave and Quart are more introspective in their analysis. “What is required,” writes Musgrave, “is nothing short of what Martin Luther King, Jr. in his Riverside Church address deemed a revolution of values from a thing-oriented culture to a person-oriented one” (176). Musgrave notes that part of the significance of contemporary social movements like Black Lives Matter, Occupy, and #MeToo is that they offer “new forms of human relationality beyond ownership and contract” (188).

After sharing local movement stories, Quart calls for a similar shift in values—away from a focus on individualism and toward a new narrative rooted in solidarity, which she calls “collective support.” She adds, “The social and economic benefits can only grow, with each one of us beginning to see our lives and our country through this shared vista. We may one day look back on these years as the time we awakened to a new way of being—when looking out for ourselves and looking out for one another become one and the same thing” (221).