Iain Martin on why economists should look to Teddy Roosevelt’s attack on crony capitalism rather than FDR’s spending impetus
When the financial crisis hit and the economy went into a tail-spin, there was briefly a renewed interest in several giants of the 20th century whose reputations were forged in the aftermath of the economic disaster of the early 1930s. After our own financial crisis and sustained slump, some on the centre-left argued that Keynes had all the answers. Others pointed to FDR, citing him as the President who had shown how to deliver a stimulus, in the the form of public works and the rest. This rather overlooked the fact that many of the President’s efforts on the stimulus front were a failure. Of more value was his effort to stabilise the collapsing banking system and restore some calm.
But the other Roosevelt, a much earlier President and distant cousin of FDR, was barely mentioned in the post-crash search for answers. Although he is still celebrated in American popular culture, as the rough-riding warrior and early conservationist, his wider record is usually overlooked. In the current climate – of big finance getting even bigger, and technology
companies accumulating extraordinary power – the Roosevelt approach has much to commend it, especially to those of us who want a reformed capitalism to flourish. Conservatives and Republicans should look to Teddy.
Roosevelt was a trust-buster as President, someone who used the available legislation to challenge and break-up some of the great monopolies that dominated American industry and
commerce. It was done in the name of defending the consumer from cartels and protecting the public realm.
The original J.P. Morgan was targeted in 1902. Along with James Hill and Edward Harriman the plutocrat had formed the Northern Securities Company, a vehicle for combining secretly their railroad interests into giant holding trust. Roosevelt sued. Morgan was so shocked by this assault that he hurried to the White House to see the President. “If we have done anything wrong,” said Morgan, “send your man to my man and they can fix it up.” Roosevelt was unmoved by Morgan’s corporatist special pleading. As President he was prepared to take on powerful vested interests.
The parallels with today are not exact. Some of the latest large concentrations of interests are not old-fashioned monopolies, although they are very large indeed and they face only limited competition. But Google is so dominant in search and Amazon in retail that surely, eventually, someone will start asking proper questions. Huge amounts of information are collected, traded and exploited by the tech giants. The level of control and power they have in the marketplace and in our daily lives should, by now, be troubling conservatives who believe in competition and liberty. Instead, too often politicians have crawled to the new giants of the information age, hoping that some of their Silicon Valley cool will rub off.
Not everything Roosevelt did worked or would be appropriate now. His critics say he vested too much power in government and regulation. But his world-view, his attitude to concentrations of power, his understanding that capitalism requires consent if it is to function at its best, all that is worth rediscovering.
