The blogger, Lord Keynes, in his article entitled Government Intervention, James J. Hill and the Great Northern Railway presents a reasonable thesis about the right wing libertarian attempt to turn James J Hill, the railway tycoon, into a shining historical example of how an “economic” entrepreneur can outperform a “political” entrepreneur, to use language redolent of that used by Thomas J DiLorenzo in his book How Capitalism Saved America (111). Lord Keynes’s thesis is simply this:

James J. Hill is often invoked as a hero by apologists for extreme laissez faire, because his railway was allegedly built completely privately, without any government subsidies or land grants. Unfortunately, there [are] some inconvenient facts the free market ideologues leave out when they discuss Hill and the Great Northern Railway.

When I first learned about this material pertaining to an alleged successful railroad built entirely privately, I was an anarcho-capitalist myself and so I had read books such as Thomas DiLorenzo’s Hamilton’s Curse, The Real Lincoln, How Capitalism Saved America; Murray N Rothbard’s The Origins of the Federal Reserve; Wall Street, Banks, and American Foreign Policy; The Case Against the Fed; Hans-Hermann Hoppe’s Democracy: The God that Failed; A Theory of Socialism and Capitalism, just to name a few. I was really a totally addicted anarcho-capitalism; I was voraciously reading as much anarcho-capitalist literature as I could at the time. I hated the State and authority (still do with a passion), but I thought socialism was tyrannical while capitalism was economic salvation. My economic views at the time were influenced by the fact that my family on my dad’s side came to Canada from the Ukraine, back when it was still part of the Soviet Union. So I just assumed that socialism was the tyranny of Lenin and Stalin. Consequently, I think that blogger Lord Keynes’s thesis is a fair representation of the anarcho-capitalist position. I know that I used to believe it.

But then doubt slowly crept into my mind. The first thing that bothered me is how anarcho-capitalists like to cite the historian Gabriel Kolko for history pertaining to government regulation during the Progressive Era. One of the earliest examples for me, when I think back about how I learned my anarcho-capitalism, is from DiLorenzo’s Hamilton’s Curse. I can remember it is page 140 of this book just from memory because I used to cite it all the time (oh, I guess my memory was slightly off, it is page 141 not 140):

In fact, nearly a century later scholars still clung to the theory that increased federal government Imageregulation of business was a response to “market failure.” But in the important and influential 1963 book The Triumph of Conservatism, the historian Gabriel Kolko meticulously documented how American businesses, far from resisting political control, sought such regulation because they could use it to their advantage. (141, emphasis in the original)

I thought this was great! Here was historical evidence to demonstrate that the anarcho-capitalist scheme could work in the real world. Being very interested in this, I bought two of Kolko’s books, The Triumph of Conservatism: A Reinterpretation of American History, 1900-1916; and his book Railroads and Regulation 1877-1916. The first thing that struck me from the back cover is that it states that “Gabriel Kolko is Professor of History at York University.” I received my Bachelor’s degree from York University in Toronto and I was a bit shocked that an anarcho-capitalist historian would come from York. York University from my experience is a pretty left wing pro-union school. I was in my second year as an undergraduate the year of (one of) their notorious labor strikes. Here is a picture of me getting my Bachelor’s degree wearing nice anarcho-syndicalist colors of black and red!

ImageWhen I looked up Gabriel Kolko on Wikipedia, he certainly does NOT appear to be an anarcho-capitalist. In the Wikipedia entry, Kolko is mentioned as a leading thinker of the New Left. Maybe this is the product of Murray N Rothbard’s shifting alliance partners. Roughly from memory, Rothbard originally worked for a right-wing conservative journal but then he had this big blow up with the owner. This caused him to leave (I think Rothbard got fired from his job), and then Rothbard found a new alliance with some from the New Left. This all happened in maybe the late 1950s or early 1960s. So maybe that is why the anarcho-capitalist version of Progressive Era history draws upon the work of the New Left. Nevertheless, I found it somewhat strange for anarcho-capitalists to be in bed with the New Left.

Then when I got Kolko’s books, a few more doubts crept into my mind. One of them in particular that bothered me was the inconsistency between Gabriel Kolko and Ludwig von Mises. It made me wonder whether Rothbard and company were selectively quoting from Kolko’s book. Let me give you the Mises passage first and then I will provide the contradictory evidence from Kolko. First consider Mises’s book Bureaucracy in which he writes

Highbrows turn up their noses at Horatio Alger’s philosophy. Yet Alger succeeded better than anybody else in stressing the most characteristic point of capitalist society. Capitalism is a system under which everybody has the chance of acquiring wealth; it gives everybody unlimited opportunity. Not everybody, of course, is favored by good luck. Very few become millionaires. But everybody knows that strenuous effort and nothing less than strenuous effort pays. All roads are open to the smart youngster. (76)

The problem, as I see it, is that Kolko does NOT share Mises’s sanguine view of capitalism. In fact, Kolko dismisses this entire line of argumentation by dismissing the entire philosophy of Horatio Alger. It creates an inconsistency, and I fear that the anarcho-capitalists might be “cherry picking” Kolko’s history to fit in with their ideological story of “good guy” laissez faire capitalism versus “bad guy” socialism. I am certainly not the first person to notice this simplistic view of “good cop” versus “bad cop.” In fact that was one of the points of the Pilkington article I wrote about in my last entry. Mises does it too in Bureaucracy on page xv where he divides the world into “socialist” central planning versus “consumer sovereignty.” But this all stinks of special pleading. I know you can find Rothbard arguing against consumer sovereignty in Man, Economy, and State with Power and Market (631) when he begins with the line “the metaphorical shibboleth of ‘consumers’ sovereignty’ has misled even the best economists.” Post Keynesians would argue that the consumers do not have sovereignty because of how administered pricing works. And of course many socialists would object to Mises’s claim that socialism means central planning, i.e., “people are anxious to substitute all-around planning by a central authority–i.e., socialism–for the supremacy of the consumers as operative in the market economy” (xv). Anarcho-communists, anarcho-syndicalists, and mutualists, for example are socialists and none of them support centralized planning. Read Bakunin, for instance, and the whole idea of collectivist-anarchism is to arrange the world from the bottom up, not the top down. So I do fear that the anarcho-capitalists might be trying to cherry pick in order to create a “good cop” versus “bad cop” view of history.

Now let me pull out Gabriel Kolko’s The Triumph of Conservatism: A Reinterpretation of American History, 1900-1916 and Kolko’s rejection of Mises’s views on Horatio Alger:

It is, of course, true that the economic and industrial mobility described does not warrant a belief in the Horatio Alger myth which has been so thoroughly analyzed, and largely disproven, by William Miller and his associates….the burden of Miller’s work has been in critically examining the oversimplified notions of apologists of the status quo on the social origins of the business elite. (55)

Yet somehow Kolko’s book is supposed to be a foundational book of anarcho-capitalist historical revisionism. There are other reasons that suggest that maybe Kolko isn’t the best source for anarcho-capitalism, when it comes to this James J Hill as the apotheosis of the “market entrepreneur” (the initial thesis from blogger Lord Keynes at the start of my entry). My concern is that when I look up James J Hill in Kolko’s books, he does NOT sound like the perfect little anarcho-capitalist after all. He seems to support government regulation of the railroad industry. So maybe there are multiple versions of James J Hill–and early version and a later version of the man. Maybe his views changed over time. Maybe the anarcho-capitalists and right wing libertarians are wrong in holding James J Hill up as a shining example of the “market entrepreneur.” I don’t know for sure. But what I do know is that when you look up James J Hill in Kolko’s books, he doesn’t seem to be spouting off anarcho-capitalist ideology.

Using Kolko’s book Railroads and Regulation 1877-1916, Kolko mentions James J Hill in the context of promoting more government regulation of the railroad industry. Kolko writes

The great incentive to railroad advocacy of federal legislation in earlier years had been declining rates and cutthroat competition. In a period of relative prosperity the railroads were less interested in legislation, even though Cassatt, James J. Hill, and others were said by some Congressmen to favor stronger legislation. (117, bold emphasis mine).

Then on pages 167-168 James J Hill seems to be openly supporting government regulation of the railroad industry:

The reason: since 1906 the states have been setting rates and imposing regulations “in a degree unparalleled in any previous period.”  “…the operations of our railroads should be regulated properly by wholesome and fair laws; and quite as necessary that they should not be regulated improperly,” James J. Hill concluded in the mildest verdict of all. (168, bold emphasis mine)

My general impression at this point is that maybe I need to investigate James J Hill further. For someone who is sold to right wing libertarians as a beautiful textbook example of right wing libertarianism in action, such support of government regulation seems to be a glaring inconsistency. Specifically, I wonder about the validity of DiLorenzo’s comment, for example, in How Capitalism Saved America when he writes:

James J. Hill detested politicians and politics and paid little attention to them (118)

But that doesn’t fit too well with Kolko describing Hill as wanting stronger legislation especially when it sounds like Congressmen specifically know Hill’s position on future legislation. If Congressmen know his personal position, then Hill must have had at least some contact with political decision makers. Then the question becomes, how much? How much was legislation being influenced by Hill?

So my official position is agnosticism at this point. I am not sure what to make of it all, but my suspicion is that maybe our right-wing libertarians and anarcho-capitalism are engaged in a bit of “myth making,” i.e., making a beautiful myth of James J Hill as the poster boy of how “free markets” beat “government interventionists” in the economy. The reason why I suspect that maybe the solution will be found by looking for possible right wing libertarian “myth making” is due to a very critical article by Tony Endres. It is a review of Murray N Rothbard’s methods of historical economic research. It is called An Austrian Perspective on the History of Economic Thought in History of Economics Review.

Now Endres concludes with this rather scathing summary of the non-historical procedure being used by Rothbard:

Rothbard establishes an ideal type economic doctrine from the outset of the first volume. The hallmark of his approach to the history of economic ideas is a remorseless search for approximations to the ideal type. The outcome is a form of non-history which is almost entirely given over to pointing out earlier ‘anticipations’ of later ‘Austrian’ doctrines. (bold emphasis mine)

Endres dismisses the entire Rothbard approach to history as “the mythology of doctrines.” And I wonder if that is what is going on with James J Hill. Are we seeing this “mythology of doctrines” process in action? Are we reading the right wing libertarian’s “myth” of James J Hill? Is James J Hill being squished into the Rothbardian “ideal type”? I will look into it, and write another article with my findings someday!