Capitalism in America: A History
Alan Greenspan, Adrian Wooldridge
Economics, history
Capitalism: Alan Greenspan is for it!
No, that's not the whole review. For the first half of Capitalism in America I thought that it might be, though. That's the half that's purely descriptive. It's stuffed full of statistics, sure enough, and not badly written, but it's a fairly standard economic history of the U.S. into the early 20th century. I already knew that railroads were important, that slavery was bad, that Standard Oil was big; Capitalism in America added only some numbers to my knowledge, which I have since largely forgotten.
The book gets more interesting when the authors finally start constructing an argument, instead of a play-by-play. Thank the reformers, such as Theodore Roosevelt, who put the brakes on the laissez-faire free-for-all. Greenspan and Wooldridge have to come to grips with what they did, which forces them to assess the system's successes and failures. The result is a pretty good argument for capitalism, broadly speaking, as an engine for innovation and as a proven way of lifting people out of poverty.
That's not to say that I think their analysis is a complete success. On the contrary, I think it's open to some fairly serious criticism. For example, Capitalism in America rightly contains some ringing denunciations of the slave economy. Good for you, gentlemen! But nowhere--literally nowhere--does it acknowledge that this country's 19th-century prosperity was based on spending down a metaphorical trust fund, consisting of land that had been looted from its native inhabitants. It's easy to make one group (white settlers) prosperous by making another group (Native Americans) poor. How much should we credit that to the success of capitalism vs. the profits of theft? Greenspan and Wooldridge are silent.
Similarly, G&W are decidedly . . . let's say "myopic" . . . when it comes to their critique of the New Deal. They make a fuss, several times over, about the fact that the New Deal recovery under FDR was interrupted by a second downturn in 1937. They do not see fit to mention that many other economists blame that downturn on FDR's premature decision to end a lot of New Deal spending in favor of balancing the budget. They also fall into the classic trap of saying that "It wasn't government spending that ended the Depression; it was World War II." Okay, and World War II did this how? Hint: who paid for all of those tanks, airplanes, salaries, jeeps, Liberty Ships, prophylactics, bullets, cans of Spam, uniforms, etc.? Could it have been the U.S. government? Why, I believe it could!
Perhaps the most telling small indicator of this myopia comes near the very end of Capitalism in America. "There were good reasons for complaining" about the effects of industrial capitalism, the authors concede. . "Deaths from industrial accidents in Pittsburgh per 100,000 residents almost doubled . . . between 1870 and 1900." Then, in the very next sentence, "Politicians such as Teddy Roosevelt and Woodrow Wilson whipped up all this discontent into successful political movements" (emphasis added). Note that verb phrase. Now, "whipped up" is a dismissive phrase. The strong implication is that those people who were complaining about the doubling of the death rate were a bunch of slow-witted hoi polloi malcontents, who--instead of being property grateful for the beneficence of their betters--were so crass as to actually agitate for a larger share of the fruits of their labor. The nerve! What right did they have to interfere with the process of accumulating wealth, by questioning the purposes for which the wealth was accumulated?
What's particularly ironic is that it's a version of an argument that southern slaveholders used. Chattel slavery (they avowed) made the country richer as a whole. If some people were the losers in that process, well, too bad for them. Greenspan and Wooldridge would surely have no truck with that version of history; but when it comes to more recent developments they are blind to the parallel.
In the end, Capitalism in America is what I'd call tactically convincing. Its final argument--in favor of "creative destruction" (a cliche that the book rather overuses), and against the growth in entitlements and regulation--is well put, and well-supported by facts. I'm not unsympathetic. It's easy to close the book thinking, "well, that makes sense." But I've read other books that take the same facts, put a different slant on them, and evoke the same reaction towards a quite different set of policies. It's worth reading, but not worth accepting uncritically.
One of the best books on finance out there is Liaquat Ahamed's The Lords of Finance, focusing specifically on the role of central bankers and the gold standard in bringing on the Great Depression. Broader, and also excellent, is Nicholas Wapshott's Keynes/Hayek: The Clash That Defined Modern Economics.
Also, G&W refer several times to Richard White's The Republic for Which It Stands. I didn't like the latter book much, but I have to say that future historians could be pardoned for thinking that it was describing a completely different country than the one in Capitalism in America.
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