Ludwig von Mises Institute

Robber baron

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The term robber baron refers to an American capitalist of the late 19th century who became wealthy by ruthless and unethical means. Originally, it referred to a feudal noble who robbed travelers passing through his lands.[1]

The nature of robber barons[edit]

Historian Thomas DiLorenzo points out that most who use that term fail to make an important distinction β€” the distinction between what might be called a market entrepreneur and a political entrepreneur. A pure market entrepreneur, or capitalist, succeeds financially by selling a newer, better, or less expensive product on the free market without any government subsidies, direct or indirect. The key to his success as a capitalist is his ability to please the consumer, for in a capitalist society the consumer ultimately calls the economic shots. By contrast, a political entrepreneur succeeds primarily by influencing government to subsidize his business or industry, or to enact legislation or regulation that harms his competitors.

The American economy has always included a mix of market and political entrepreneurs β€” self-made men and women as well as political connivers and manipulators. And sometimes, people who have achieved success as market entrepreneurs in one period of their lives later become political entrepreneurs. But the distinction between the two is critical to make, for market entrepreneurship is a hallmark of genuine capitalism, whereas political entrepreneurship is not.

In some cases, of course, the entrepreneurs commonly labeled "robber barons" did indeed profit by exploiting American customers, but these were not market entrepreneurs. For example, Leland Stanford, a former governor and US senator from California, used his political connections to have the state pass laws prohibiting competition for his Central Pacific railroad, and he and his business partners profited from this monopoly scheme. Unfortunately, the resentment that this naturally generated among the public was unfairly directed at other entrepreneurs who succeeded in the railroad industry without political interference that tilted the playing field in their direction.[2]

List of businessmen who were called robber barons[edit]


References[edit]

  1. ↑ Dictionary.com. "Robber baron", referenced 2013-03-31.
  2. ↑ Thomas J. DiLorenzo. "The Truth About the "Robber Barons"", excerpted from chapter 7 of How Capitalism Saved America. Referenced 2013-04-02.
  3. ↑ Matthew Josephson. "The Robber Barons: The Great American Capitalists, 1861-1901" (Google eBook), 1934, ISBN: 0156767902. Referenced 2013-04-05.

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