A National Association of Manufacturers billboard promoting free enterprise. Dubuque, Iowa, circa 1940.
Source: Library of Congress Prints and Photographs Division
A National Association of Manufacturers billboard promoting free enterprise. Dubuque, Iowa, circa 1940. Source: Library of Congress Prints and Photographs Division

Mitt Romney, the presumptive Republican nominee for president, regularly invokes free enterprise, which he has called “one of the greatest forces for good this world has ever known.”

Representative Paul Ryan, Romney’s recently announced running mate, uses the phrase even more frequently. In his very first speech as Romney’s selection, he called for a return to the founding principles of “liberty, freedom, free enterprise.”

According to Romney and Ryan, this traditional, deeply American system is under assault. Free enterprise, according to Romney, is “on trial.” According to Ryan, it faces a “dangerous moment.”

In using this language, the two are part of a long tradition, one that helps explain how Americans have frequently mythologized the role of the “free market” and downplayed that of government in our dynamic economic system.

Ever since the term “free enterprise” was popularized by the National Association of Manufacturers in the 1930s, critics of the New Deal and its legacy have been issuing urgent warnings. Lacking a positive definition, the idea of free enterprise has been expressed largely through a language of fear and loss.

‘Frontal Assault’

In 1945, Ira Mosher, NAM’s leader, lamented the “unmitigated warfare that has been waged for a decade against the free competitive enterprise system.” A pamphlet issued by the association, called “The Eleventh Hour for American Enterprise,” declared that 1946 was “the year of decision…if the American way of life is to be preserved.”

Even long after the exigencies of the New Deal and World War II, business leaders charged that free enterprise was “barely hanging on,” (1974) and “is dying” (1976, 1977). The famous “Powell Memo,” prepared by the soon-to-be Supreme Court Justice Lewis Powell for the NAM in 1971, described a “frontal assault” on free enterprise. In 1987, the economist Walter Williams claimed that “for the last half century, free enterprise and what it implies have been under unrelenting attack.”

The language of crisis and climax has been part of this discourse from the beginning. “We’re on the last mile to collectivism,” declared former President Herbert Hoover in 1949. “It is past midnight,” said Ruth Alexander, the libertarian columnist, in 1952. “We have already made the transition from Constitutional Government to Socialism, sometimes called the ‘Welfare’ state. I use the terms interchangeably.”

As the last comment suggests, supporters of free enterprise have often posited a “one drop rule” -- that is, any expansion of regulation or the welfare state threatens to destroy the political-economic edifice of the nation. They believed that free enterprise was, notwithstanding its centrality, a highly fragile institution. Even at the height of the Cold War, advocates were quick to note that the real danger to free enterprise didn’t come from the external threat of Soviet communism but from the internal acceptance and expansion of the New Deal.

Free enterprise was thus an either/or doctrine -- “Freedom or Socialism,” as the slogan of the Republican Party had it in 1952. The idea that “there is no middle road” between freedom and a “planned economy,” and between a planned economy and socialism, enabled them to conflate liberal reform with totalitarianism. As Donald I. Rogers of the New York Herald-Tribune wrote in 1962, “There is no essential difference between an absolute monarchy, a dictatorship, a fascist form of government and a Welfare State.”

Such rhetoric enabled them to narrow the spectrum of the politically acceptable. If even mild measures inevitably lead us down a slippery slope toward dictatorship, such reforms can easily be depicted as radical.

Blog-Age Dualism

To read conservative blogs in the age of President Barack Obama, or to listen to many Republicans in Congress, is to find the same dualism repeated. Any change in the degree of the government’s involvement in the economy (more regulation, an expanded safety net, stimulus spending) marks, in this view, a change in kind. Critics of Obama’s health-care overhaul, for example, regularly describe the law not only as socialistic but as an abandonment of our constitutional heritage.

Many free enterprisers thought the legacy of the New Deal would culminate not just in socialism but in servitude. Even before Friedrich Hayek’s “The Road to Serfdom” was published in 1944, advocates of free enterprise equated the welfare state with slavery. As Indiana Representative Samuel B. Pettengill said in 1937, “this may well be the last generation of Americans to receive and cherish the legacy of liberty.” Before becoming governor of California, Ronald Reagan gave a speech on the dangers of Medicare in which he famously said that unless health-care reform was defeated, “one of these days we are going to spend our sunset years telling our children and our children’s children, what it once was like in America when men were free.”

Pointing out the excesses of this rhetoric can help reclaim another meaning of free enterprise -- one promoted by presidents from Franklin D. Roosevelt to Dwight Eisenhower to Obama. This view celebrated the mixed economy that has characterized the U.S. since the era of “internal improvements” -- state-sponsored canals and railroads -- in the early years of the Republic, and that has continued to nurture new industries ever since. Invoking the history rather than the myth of free enterprise would help avoid the misleading and binary rhetoric that has characterized so much of our political discourse -- from the “Eleventh Hour” to “You didn’t build that.”

(Lawrence B. Glickman is professor of history at the University of South Carolina. He is the author most recently of “Buying Power: A History of Consumer Activism in America.” The opinions expressed are his own.)

Read more Echoes columns online.

To contact the writer of this post: Lawrence B. Glickman at glickman@mailbox.sc.edu.

To contact the editor responsible for this post: Timothy Lavin at tlavin1@bloomberg.net.