By Michael Lind
592 pages, $16.99
Students of American political history have argued that, despite the formal continuity of its political institutions, the United States has gone through two or three regimes or informal "republics." In earlier works, I have made the case for three American republics, each originating in a prolonged crisis—the American Revolution and its aftermath, the Civil War and Reconstruction, and the Great Depression and World War II. It remains to be seen whether the global economic crisis that began in 2008 will mark the end of the Third American Republic and the gradual construction of a fourth republic by the 2020s or 2030s.Ever since the beginning of the Great Recession, I've been gravitating toward routinely reading up on economics, doing my best to try and understand the root causes of the crash. For a while I focused on the immediate lead-up, with terrific books like Winner-Take-All Politics: How Washington Made the Rich Richer--and Turned Its Back on the Middle Class by Jacob Hacker and Paul Pierson. Lately, I've been pursuing the plot more deeply—going further back in history—and finally ended up a this point, reading Michael Lind's Land of Promise: An Economic History of the United States, which came out in paperback early this month after hardback publication a year ago.
Now there's a caveat: I'm a reasonably well-educated American citizen, but I tend to have trouble with economic theory. I'll grasp it, briefly, while it's being clearly explained to me—and then it slips away when I try and apply it or explain it to someone else. (I have this same problem with Einstein's Theory of Relativity as well … initial brilliant flash of comprehension, followed by dull and thumping fade within hours.) Also, I suspect a little voodoo in all economic explanations since they are grounded in often-competing schools of thought, like politics. And as we all know, statistics can be selected (and narrowed or broadened) to make nearly any point one wishes—as we learned just this week with what could be considered the Big Oops of all Excel sheet problems, which just happened to be what all the insistence on austerity was based on.
Thus, I came to Land of Promise thirsty for a good, solid historical overview of the development of U.S. economic policy and politics. Thankfully, it more than delivered, exploring American economic history through the lens of the three republics—and how we're on the verge of the fourth—that he outlined in the blockquote that opened this review. Aside from being a good general backgrounder, it also makes some thought-provoking points, which you can explore with me below …
Hamilton versus Jefferson
As we all learned in American History 101, Hamilton was a federalist, Jefferson was not. Jefferson loved the yeoman farmer, Hamilton loved the rich guy. Hamilton wanted big national banks and corporations, Jefferson wanted to foster small local financial entities. Hamilton was Amazon, Jefferson was the local indie bookstore. (My heart's with Jefferson, my head is with Hamilton on this one, and always has been.) Lind goes over this ground, but adds some more insight, coming down square on the side of Hamilton in a persuasive way:
What is good about the American economy is largely the result of the Hamiltonian developmental tradition, and what is bad about it is largely the result of the Jeffersonian producerist school. To the developmental tradition of Hamilton, Washington and Roosevelt, Lincoln and Clay, we owe the Internet and the national rail and highway and aviation systems, the single continental market that allows increasing returns to scale to be exploited by globally competitive corporations, the unmatched military that defeated the Axis powers and the Soviet empire and has generated one technological spin-off after another, and, not least, the federally enforced civil rights laws and minimum-wage laws that have eradicated the slavery and serfdom that once existed in the South and elsewhere.Big is Good.
To the Jeffersonian tradition, even if it is exempted from blame for slavery and segregation, the United States owes the balkanization of the economy by states' rights and localism, underinvestment in infrastructure, irrational antitrust laws and anti-chain store laws designed to privilege small producers, exemptions for regulations and subsidies for small businesses (defined for many purposes as those with fewer than five hundred employees), the neglect of manufacturing in favor of overinvestment in single-family housing, and a panic-prone system of tiny, government-protected small banks and savings and loan.
As a proud Big Government liberal, obviously I have no problem with Lind's insistence that a large federal government with real regulatory teeth in it is a good and great thing. Ditto on his points about Big Unions, as when he says:
If labor unions cause unemployment, by raising the cost of labor, then the 1930s should have been prosperous, because unions were weak and included few workers, and the 1950s, when a third of the workforce was unionized, should have suffered from a depression.However, Lind's also a big fan of Big Corporations and/or Big Cartels, arguing that in some industries—telecommunications, energy, railroads (industries that require huge capital investment in infrastructure)—the efficiency of large scale/large investment firms, if overseen closely, is the best system of all when coupled with Big Unions and Big Government: "The American middle class enjoyed its zenith under a system of highly regulated, partly cartelized capitalism, and suffered under the less regulated capitalism that preceded it and followed it."
Jimmy Carter was responsible for starting the Great Dismantling. Not a Republican.
Lind came up with a great term for the age of deregulation: "The era between the 1970s and the bubble economy that followed the end of the Cold War has yet to find a name. The most appropriate is the Great Dismantling."
And he has quite the take on when it began and who began the process:
Richard Nixon is often thought of as a precursor of Ronald Reagan, but that honor belongs to Jimmy Carter, whose administration first adopted economic neoliberalism and began the large-scale dismantling of the New Deal system. Nixon was the last New Deal president. The policies of the Nixon administration can be understood as an attempt to deal with the problems caused by the contradiction between the New Deal order at home and the blogal economy by sacrificing America's post-1945 hegemonic grand strategy in favor of a more overtly nationalistic US foreign military and economic policy....We forgot how bad it got. So we discarded protections and went there again.
The New Deal came to an end in 1976, not 1980. The Age of Reagan should be called the Age of Carter. Carter, not Reagan, pioneered the role of the fiscally conservative governor who runs against the mess in Washington, promising to shrink the bureaucracy and balance the budget. Early in his administration, Carter even wrote a newspaper column entitled "Give Carter a Chance." The most conservative Democrat in the White House since Grover Cleveland, Carter fought most of his battles with Democratic liberals, not Republican conservatives.
Lessons from the early 20th century had to be relearned all over again in the early 21st.
In hindsight, the neoliberal cure was far worse than the New Deal liberal disease. The maturity of the New Deal's system of regulated, managerial capitalism coincided with the post-World War II boom and the greatest expansion of the middle class in American history. Consumer advocates, however, blamed it for stifling diversity, libertarians and conservatives claimed it choked off economic progress, and political scientists denounced it for spawning "interest-group liberalism."Between Lind's specific insights on size, regulation, and private-public hybrids, and his ability to provide the Big Overview, one can begin to see the contours of how a workable Fourth Republic could come into being as we find ourselves in the midst of convulsive global change. Land of Promise is an invaluable tool in exploring where we've been, how we arrived at the perilous economic place in which we stand now, and how we can find our way back to more income equality and stability in the years ahead.
To the applause of liberal Democrats and conservative Republicans alike, the New Deal system of regulation was dismantled in one sector of the economy after another in the late 1970s and 1980s. The result was not the flourishing diversity hoped for by liberal consumer activists nor the solid, sustainable economic growth promised by free-market ideologues. Instead, the result was the collapse of unions, the decline of private R & D, three decades of wage stagnation, and an economy driven by financialization, speculation, and rising debt rather than by productive industry and rising wages.