From Bloomberg

Commentary by Caroline Baum

Nov. 25 (Bloomberg) -- It is the tradition of this column every year at this time to recount the story of Thanksgiving. This year, with capitalism under attack from all quarters, it’s more important than ever to revisit the history of the Pilgrims’ early years in America and appreciate the message.

Whether you think the government’s response to the financial crisis was necessary or unwarranted, too-little-too- late or a case of overreach, there is no disagreement that the free-market system has gone on the defensive.

What the fall of the Berlin Wall did for communism, the financial crisis did for the free-enterprise system. It lifted the curtain and exposed the rot underneath, especially foreclosed houses, a product of the Federal Reserve’s artificially low interest rates and government policies designed to promote homeownership.

That’s where the analogy ends. Central planning was always ill-equipped to provide the goods and services consumers wanted at the prices they were willing to pay. Capitalism can do that well. The question is, will it be allowed to in an environment where capitalists are held in such low esteem.

For source material, I rely on the accounts of William Bradford, governor of the Plymouth Bay Colony for 30 years between 1621 and 1656. Bradford’s history “Of Plimoth Plantation” was first published in 1856.

First Famine

Most Americans think of Thanksgiving as a day off from school or work, a time to gather with friends and family and celebrate with a huge feast. If children know anything about the origins of this national holiday, declared each year by presidential proclamation, it’s that the Pilgrims, grateful for a good harvest in their new land, set aside this day to give thanks.

Adults aren’t any better informed. They may know something of the hardships encountered by the Pilgrims, a group of English separatists who came to the New World to escape religious persecution. What they probably don’t know, since it’s not part of the politically correct high school curriculum, is how these immigrants overcame obstacles and prospered in the New World.

The Pilgrims landed at Plymouth Rock in 1620 and established the Plymouth Bay Colony. The first winters were harsh, and crop yields were poor. Even so they celebrated the autumn harvest of 1621.

Half the Pilgrims died or returned to England in the first year. Those who remained went hungry. In spite of their deep religious convictions, the Pilgrims took to stealing from one another.

Then Incentives

Finally, in the spring of 1623, Governor Bradford and the others “begane to thinke how they might raise as much corne as they could, and obtaine a better crop than they had done, that they might not still thus languish in misery,” according to Bradford’s history.

One of the traditions the Pilgrims had brought with them from England was a practice known as “farming in common.” Everything they produced was put into a common pool; the harvest was rationed according to need.

They had thought “that the taking away of property, and bringing in community into a common wealth, would make them happy and flourishing,” Bradford recounts.

They were wrong. “For this community (so far as it was) was found to breed much confusion and discontent, and retard much imployment that would have been to their benefite and comforte,” Bradford writes.

Young, able-bodied men resented working for others without compensation. They thought it an “injuestice” to receive the same allotment of food and clothing as those who didn’t pull their weight. What they lacked were appropriate incentives.

Finally Feast

After the Pilgrims had endured near-starvation for three winters, Bradford decided to experiment when it came time for spring planting in 1623. He allocated a plot of land to each family, that “they should set corne every man for his owne perticuler, and in that regard trust to themselves.”

The results were nothing short of miraculous.

Bradford writes: “This had very good success; for it made all hands very industrious, so as much more corne was planted than other waise would have bene by any means the Govr or any other could use, and saved him a great deall of trouble, and gave far better content.”

The women now went willingly into the field, carrying their young children on their backs. Those who previously claimed they were too old or ill to work embraced the idea of private property once they could enjoy the fruits of their own labor. Eventually they produced enough corn to trade the excess for furs and other desired commodities.

Happy Ending?

Given the proper incentives, the Pilgrims enjoyed a bountiful harvest in the fall of 1623, and set aside “a day of thanksgiving” to thank God for their good fortune.

“Any generall wante or famine hath not been amongst them since to this day,” Bradford writes in an entry from 1647, the last year covered by his history.

Their good fortune had little to do with God. In 1623, they were responding to the same incentives that, almost four centuries later, are accepted as necessary to the functioning of a free and prosperous society.

Skewed incentives were a major driver of the global financial crisis. Realigning those incentives, without discouraging innovation and entrepreneurship, is the task going forward.

(Caroline Baum, author of “Just What I Said,” is a Bloomberg News columnist. The opinions expressed are her own.)

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