Customer Reviews

The Folklore of Capitalism

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These are some brief notes that I took on this book. The concept of infecting the public mind with harmful concepts, or *memes* to use the modern, possibly more accurate term is illustrated by his critique of public attitudes toward the difference between public organizations and private ones (compare Baldwin 1891 on the state delegation of authority and functions to private organizations, on the condition that they do a better job than government could do). Joe Stiglitz remarked in a 1998 paper, when many people believe things that are harmful to them, some powerful interest is making money from them. You can see why Stiglitz is not welcome in Obama's Whitehouse.
Back to Arnold mocking some relentlessly inculcated beliefs that powerful interests profit from:
Arnold, pp. 263ff: "It was also bad for men to become dependent on GOVERNMENTAL organization; but it was a good thing for employees to become completely dependent on INDUSTRIAL organization, down to the lowest worker. Everyone had a chance to become a high business official. Government employees were supposed to have no similar incentive because friendship and patronage controlled under the name "politics." These factors did not control in industrial organizations, except in bad corporations, and the thinking man refused to judge the good corporation by the bad. Another difference between government spending and the spending by private organizations was that when the government wasted, it was wasting the taxpayer's money. When a railroad, or a public utility, wasted, it was wasting its own money - which, of course, every free individual has a right to do unless you are willing to change your "system of government" and adopt "Socialism."
Of course, the great industrial organizations collected the money which they spent from the same public from which the government collected. However, in the case of a public utility, or a textile concern, or a building corporation, the collection was voluntary, since men could go without clothes, light, or houses. Indeed, they should go without them, if they had no money to pay for them because if they didn't they would become dependent on the government. . .
One method by which private organizations collected revenue was through offering opportunities for investment. Investors were supposed to be protected from losing their money due to the fact that there were always sound bankers to give them advice. If they picked an unsound banker, that was their fault and it was supposed to be a lesson to them, not a tax on their families. In such cases it was said that the investor had voluntarily "lost" his money. It was not considered good form for him to complain." colbert2422

Written in the thirties, this book is as relevant as ever. You may want to throw away what you were taught in business school or view it with a jaundiced eye after reading this classic. This book pulverizes many economic "truths". Not light reading but highly recommended.