Government Made the Market Economy

Without government policies, there would have never been a market economy. This video shows how government made the market economy through a series of policies at the local, state, and federal level that fostered larger markets, industrialization, corporatization, and wage labor. Before the market revolution, markets existed at the margins of human society. Few people worked for wages, production occurred primarily within households, and households mostly consumed their own production or traded within confined communities. Some commodities were traded over large geographical areas, such as cotton and tobacco, but few Americans participated more than sporadically in these economies. Only after government interventions did a market economy emerge in the nineteenth century. This insight contradicts our tendency to equate government policy with socialism and supposedly free markets and private property with capitalism. There is no such thing as “the market" or natural property. Rather, government policies and rules create different kinds of markets with different effects on economic concentration, labor conditions, land use, and wealth distribution. The same goes for property.

Further Readings

On water laws and manufacturing growth, Thedore Steinberg, Nature Incorporated: Industrialization and the Waters of New England

On the Market Revolution, John Lauritz Larson, The Market Revolution in America: Liberty, Ambition, and the Eclipse of the Common Good. Also, Daniel Walker Howe, What Hath God Wrought: The Transformation of America, 1815-1848, and Charles Sellers, The Market Revolution: Jacksonian America, 1815-1846.

On the expansion of the corporate form of economic organization, Alfred Chandler, The Visible Hand: The Managerial Revolution in American Business

On the expansion of American infrastructure, John Lauritz Larson, Internal Improvement: National Public Works and the Promise of Popular Government in the Early United States

For a discussion of the growth of capitalism and commercialization into American, and particularly rural, life, Allan Kulikoff, "The Transition to Capitalism in Rural America." The William and Mary Quarterly 46, no. 1 (1989): 120-144.

For a detailed account on the imposition of market society and how it became globally dominant, Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time

For a more broader survey on the relationship of markets to human society, David Graeber, Debt: The First 5000 Years

[brennahallaran]

Hi! Very interesting! I’m a long way out of school and kept thinking how much more I would have gotten out of my standard public education had they wanted to teach all the “whys” as you went over. Thanks for your efforts!

[richardballstein]

Households also only pay taxes on their profits. When you start paying taxes, you will learn about a thing called a deduction.