<p>“I think we saw in the Gilded Age just how well pure capitalism, as advocated in Capitalism: The Unknown Ideal, works.”</p>
<p>One irony of that comment is that one of the book’s main contributors, Alan Greenspan, is just finishing up 18.5 years as the Chairman of the Fed. Of course, many objectivists/libertarians would argue that his actions have not been congruent with his (former?) ideology: artificially holding down the interest rate to levels as low as 1% (clearly below the “natural” rate), causing a boom in housing prices and a subsequent rush for homeowners to take out home equity loans and go credit-crazy with a house (whose price could crash at any moment) as collateral. And that’s not even mentioning the stock/Nasdaq boom and bust of the late 90s/early 00s that was caused by the Fed’s hesitation to raise the interest rate. </p>
<p>But enough of that tirade. I’m not a Randian or objectivist myself, but I think that your idea that “we saw” (although none of us nor our parents, nor many of our grandparents were alive during the period) that the Gilded Age somehow proved that laissez-faire was the wrong course. However, I think that “our vision” is highly influenced (tainted?) by reinterpretations by historians - many of whom, like us, did not experience that period. However, there are some facts that I would like to point out:</p>
<p>The Gilded Age (1876-1914) was the period of America’s industrialization. After the Civil War, America’s economy was far less advanced than those of European powers like Britain and France. However, during the Gilded Age the U.S. developed to the point where, by the end of World War I, it had pulled about even with the Europeans (with some “help” from the destructive war, of course). </p>
<p>To do this was quite an achievement, as a few generations before the bloodiest war in American history had occurred on its own soil, destroying many cities and ending the lives of countless working men. </p>
<p>Not only did America industrialize (and well), but it also gained a transportation network that facilitated in-country commerce and migration. This allowed people to more easily travel, sell their goods in other cities, etc. It also allowed them to eat cheap steaks :).</p>
<p>A sign of America’s growing prosperity was its designation of “The Land of Opportunity” among immigrants, especially from the southern and East-Central areas of Europe. Tens of millions of immigrants flowed through Ellis Island (among other stations) to work, raise families, and build a better life in America than was possible in their homelands. </p>
<p>Finally, the “Robber Barons”, antagonized by many modern historians, weren’t so bad after all. In fact, they were very important patrons of the arts and sciences (I’m sure you know who started UChicago 
). In a socialist country, or even a modern-day welfare state where large agglomerations of wealth are looked upon suspiciously, all “premier institutions” must be state-funded - the state is the only apparatus able to get ahold of the necessary capital. Of course, this is one reason why Germany, for example, still has very few prestigious universities (Shroeder enjoyed complaining about this) and France gives government subsidies to seemingly every type of artist under the sun. </p>
<p>And the impetus behind all this: a relatively laissez-faire brand of capitalism. Of course, I wouldn’t confuse this with a “free-market” or “neoliberal” economy - the tariffs and subsidies were too high (though not suffocatingly so) for that to be a reality. However, in spite of these barriers, the U.S. still became an industrial power and thus gave millions the opportunity to rise out of poverty (Carnegie is a paragon) through capitalist incentives - invest your money, and you will be able to reap any return you can earn. This was the force behind the railways, the exponential growth in patents, the factories, the oil refineries, skyscrapers, etc. All this enriched Americans greatly, and our increased wealth spurred drives for reforms in education, welfare etc. (many of which called for government intervention, thus opening a whole new bag of worms and providing a step down the slippery slope to America’s “big government” era). </p>
<p>I’m not saying there weren’t any problems in the U.S. during the Gilded Age. Political corruption was high, some monopolies existed, and racism was definitely extant. However:</p>
<ol>
<li>Greed is an inherent human trait, and it is not “caused” by a certain economic or political system. Politicans will always seek rent (bribes and graft) and use the control they have, whether that control is relatively limited (as during the Gilded Age) or relatively unlimited (the Soviet Union or Cuba). When politicans use the incentives at their hands to benefit personally, we would not usually term it “a problem of the Gilded Age” but a “problem of the political incentives” or “a problem of the rules of the game” - the power that rests in the hands of the politicians. But as the Gilded Age was characterized by laissez-faire, the government had little chance to cause any major damage anyway; heck, the Cr</li>
</ol>