The Big Myth About “Free” Markets That Justified History’s Greatest Heist

A recent book details how the top 10 percent stole $47 trillion via intellectual warfare.

RAND Corp. experts, panelists, and other guests attend the ribbon-cutting and dedication ceremony at the new RAND Corporation headquarters, in Santa Monica. Panels of RAND Corporation experts and others held discussions for "A Day of Dialogue." The $100 million, 300,000 square foot office building, constructed by DMJM Design in a shape of an ellipse, helps to maximize synergy between the office building and the environment. (Photo by Ted Soqui/Corbis via Getty Images)

RAND Corporation experts, panelists, and other guests attend the ribbon-cutting of the new RAND Corporation headquarters in Santa Monica, Calif., on April 14, 2005.

Photo: Ted Soqui/Corbis via Getty Images

The bank robber John Dillinger is one of history’s most famous thieves, absconding with the equivalent today of about $7 million. You’d think that if someone had stolen $7 million on each of 7 million separate crime sprees, you would have heard about it, right? But you would be wrong.

In 2020, the RAND Corporation, a think tank in Santa Monica, California, released a study with the humdrum title “Trends in Income From 1975 to 2018.” RAND itself resides at the center of America’s establishment. In the decades following its founding after World War II, it was largely funded by and served the needs of the military-industrial complex. Daniel Ellsberg was working at RAND when he leaked the Pentagon Papers, which he had access to because RAND possessed several copies.

Incredibly enough, this dreary-sounding paper describes what might be the largest material theft since human civilization began. It examines a simple question: If U.S. income inequality had remained at its 1975 level through 2018, how much more money would the bottom 90 percent of Americans have made during these 43 years? Put another way, how much additional wealth flowed to the top 10 percent during this time, thanks to increased income equality?

If you have a butt, you should hold onto it, because the answer is 47 TRILLION DOLLARS.

This is a number so large that it surpasses human understanding. There are only a few hundred billion stars in the Milky Way; $47 trillion is about twice the size of the annual U.S. gross domestic product.

This raises an obvious question. Traditionally, this kind of upward concentration of wealth has required mass slaughter. How did America’s elites pull this off without needing to mow thousands of us down in the streets?

The answer can be found in the new book “The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market.” It was written by Naomi Oreskes, a history of science professor at Harvard, and Erik M. Conway, a historian at Caltech’s Jet Propulsion Laboratory, who previously collaborated on “Merchants of Doubt: How a Handful of Scientists Obscured the Truth on Issues From Tobacco Smoke to Global Warming.”

As Oreskes and Conway explain, “The Big Myth” grew out of their previous book. While writing “Merchants of Doubt,” they discovered that the groundwork of global warming denialism had been laid in the 1980s by prominent scientists who understood the reality of the situation quite well. However, these scientists were convinced believers in what Oreskes and Conway call “market fundamentalism” (borrowing from George Soros, one of market fundamentalism’s loudest critics). This is a system of belief that holds that political and economic freedom are indivisible. They quote the physicist Fred Singer, who wrote that “if we do not carefully delineate the government’s role in regulating … dangers there is essentially no limit to how much government can ultimately control our lives.” 

In other words, government interventions in the economy — such as laws removing lead from gas, carbon taxes, or mandated cooling-off breaks for people working in 100-degree heat — not only make us all poorer, but also put us on the road to Stalinist tyranny. Hence it’s crucial to head them all off at the pass, even if that requires a vast misrepresentation of observable fact.

This worldview is such incoherent drivel that it’s hard to believe anyone with a functioning brain stem can buy into it. Meanwhile, market fundamentalists are oddly unconcerned with government intervention that’s profitable for large corporations. If you’re an entrepreneur who boldly tries to manufacture and sell any of the pharmaceutical industry’s patented products in a free market, you will quickly encounter the suffocating hand of the administrative state. Yet there are no Wall Street Journal op-eds decrying this injustice. (This doesn’t mean there’s no justifiable rationale for patents, but that there are rationales for other government regulations too.)

There’s also the reality that markets are a human creation, not a phenomenon like gravity that would exist whether or not people ever came along. And since markets are created by us, it is legitimate and within our power to alter them to better serve our needs.

Finally, there’s the historical fact that no country has ever gone communist gradually, starting with minimum wage laws and ending up with gulags. Rather, it happened in various fell swoops in places with glaring injustices and vicious capitalistic inequality, and even then generally has required contemporary wars. As the renowned Soviet expert George Kennan put it in 1946, “communism is like malignant parasite which feeds only on diseased tissue.” Therefore, Kennan believed, “every courageous and incisive measure to solve internal problems of our own society” was a victory over communism. 

Markets are a human creation, not a phenomenon like gravity that would exist whether or not people ever came along.

This equanimity about using democratic power for the common good was common among U.S. potentates in the decades following World War II. Averell Harriman, the son of a 19th-century robber baron who later became secretary of commerce and governor of New York, believed that “Our social and economic system is working perhaps toward Swedish socialist concepts but not toward Soviet Communism. The government in Sweden has overcome poverty, achieved decent housing and medical services for all, but Sweden has in no way compromised the principle of representative government and concern for civil liberties.”

The story of how we got from there to here is shocking even if you consider yourself a wised-up malcontent, and “The Big Myth” tells it in granular detail. It’s a sweeping tale of what must be one of the most successful propaganda campaigns ever, one that transformed the intuitive common sense — what everyone “knows” without thinking about it — of both American elites and regular people. 

You know the drill. Lowering taxes on billionaires will unleash their wondrous creativity and make us all richer in the long run. Minimum wage laws make regular people worse off and must stop going up. (Incredibly enough, the federal minimum wage has not increased in real terms since 1968 and, adjusted for inflation, is now worth less than in 1950.) Stultifying environmental regulations are the reason your boss can’t give you a raise. Social Security was a mistake and is destined for extinction. 

The funniest part is that this indoctrination into the glories of the “free” market could never have happened via free markets. Rather, as Oreskes and Conway illustrate, it required enormous subsidies from corporate America, much of it going to tenured professors working at nonprofit universities. 

The book is an incredible work of scholarship, and every page has at least one sparkling, fascinating fact. Adam Smith’s 1776 book “The Wealth of Nation” is now seen as the key text proving the virtues (economic and political) of unregulated capitalism. This is not true at all: Smith argues that bank regulation is crucial; that workers should unionize; that businesspeople have often “deceived and oppressed” the public; and that any political proposal they make should be viewed with the utmost suspicion. George Stigler, a prominent economist at the University of Chicago and colleague of Milton Friedman, produced an edition of “The Wealth of Nations” that dealt with Smith’s inconvenient views by quietly excising many of them.

Also striking: Corporate funders realized that another book central to their cause, “The Road to Serfdom” by Friedrich von Hayek, was just too long and complicated for most people to get through it. So they paid for a simplified version that appeared in Reader’s Digest in the 1950s, where it found a devoted reader in Ronald Reagan.

“Ideas do not exist ex nihilo. They are developed, sustained, and promoted by people and institutions.”

And there is just so, so much more. It’s all enough to make you paranoid about what other thoughts were put in your head on purpose by people without your best interests at heart. The most important lesson of “The Big Myth” is a meta one. They write convincingly, “Ideas do not exist ex nihilo. They are developed, sustained, and promoted by people and institutions. [This] is the history of the construction of a myth.”

Speaking of, the RAND study was funded by the Fair Work Center in Seattle, which in turn is largely funded by the foundation of Nick Hanauer. Indeed, the question the paper answers was itself thought up partly by Hanauer, who’s a venture capitalist and early investor in Amazon — but one has with views much more in tune with the views of 1950s U.S. elites. Preposterous myths can be successfully promulgated with huge gobs of cash, but even getting the truth out there takes a lot of money.

Update: August 7, 2023

A previous version of this article stated that the federal minimum wage has not increased since 1968. It been updated to make clear that this refers to the fact it has not increased in real terms since 1968; it has been adjusted upwards on several occasions in nominal terms.

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