As a matter of fact, I I didn’t flunk Econ 101, because I never took it! So what? To quote Mel Brooks, I’m an old man and I’ve got a right to talk. And, to quote another old man, Richard Nixon, “I am not an intellectual, but I do read books!”
Well, I do and I’ve pretty much read my weight, figuratively if not literally, in a wide variety of economic tomes in recent times, including Walter Scheidel’s Escape From Rome and The Great Leveler (economic inequality through the ages), Kyle Harper’s The Fate of Rome Climate, Disease, and the Fate of Empire and Plagues Upon the Earth Disease and the Course of Human History, as well as Fritz Bartel’s The Triumph of Broken Promises, Alan Binder’s A Monetary and Fiscal History of the United States 1961-2021, Adam Tooze’s Crashed How a Decade of Financial Crises Changed the World, and Brad DeLong’s Slouching Towards Utopia An Economic History of the Twentieth Century, along with Paul Volcker’s autobiography Keeping At It, not to mention Joseph Henrich’s The Weirdest People in the World How the West Became Psychologically Peculiar and Particularly Prosperous, Chip Miller’s not always convincing Chip War, Martin Wolf’s The Crisis of Democratic Capitalism, and Jeffrey Garten’s Three Days at Camp David, recounting Richard Nixon’s decision in 1971 decision to take the U.S, off the gold standard. So, clearly, I have an autodidact’s bellyful of ill-digested “learning” that needs, one way or another, to be discharged.
I have, in many ways, already written this post back in April of this year, when I called it Q: Why did neoliberalism replace social democracy? A. Because social democracy failed. Next question!, written in response to a post by Brad DeLong, No, I Do Not Think þe Microprocessor Doomed Social Democracy,1 in which I ridiculed Brad’s adolescent (in my opinion) desire to return to the days of “heroic’ liberalism during the New Deal. Basically, I want to amplify my rejection of “DeLongism”, also heavily advocated by fellow New Dealer Paul Krugman, whom I’ve repeatedly beaten up in the past, as I have Brad.
It was DeLong’s new book, Slouching Towards Utopia, that largely touched off the mega-reading jag of mine. One of the professor’s most admirable qualities is his wide knowledge of past thinkers, most particularly, in this case, John Stuart Mill. Back in the day, Brad ran a post, quoting from the first edition of Mill’s Principles of Political Economy (1848), in which Mill noted the Industrial Revolution’s sad failure to improve the condition of life for the great majority of Britain’s population. The great changes in economic processes, Mill said,
have enabled a greater population to live the same life of drudgery and imprisonment, and an increased number of manufacturers and others to make fortunes. They have increased the comforts of the middle classes. But they have not yet begun to effect those great changes in human destiny, which it is in their nature and in their futurity to accomplish. Only when, in addition to just institutions, the increase of mankind shall be under the deliberate guidance of judicious foresight, can the conquests made from the powers of nature by the intellect and energy of scientific discoverers, become the common property of the species, and the means of improving and elevating the universal lot...
More than 20 years later, DeLong states, Mill’s updated 1871 edition left that sentence unchanged. But, as DeLong also notes, the validity of that statement was about to change. The point of DeLong’s book, Slouching Towards Utopia, published 10 years after the post I just quoted, was to record both the astonishing improvement in the material aspects of the human condition despite the many horrors of the 20th century, and to ask why, more than 20 years into the 21st, we see stagnation—and, in many cases, disturbing regression—that threatens the political stability of modern democratic states—something that, prior to the Great Recession that began in 2008, we very largely took for granted.
I looked forward to Slouching with great impatience, and found much of it a great read, most of the time, but also quite disappointing, for several reasons. First of all, DeLong largely pretends that he was the first to recognize that the “real” Industrial Revolution didn’t begin until 1870, and in fact in many of his writings appearing on his current blog, Brad DeLong’s Grasping Reality, “suggests” that he was first to understand the whole pattern of economic development from the neolithic to the present, even though he is, well, “forced”, occasionally, to admit that other thinkers have also contributed. In fact, in an excellent book, The British Industrial Revolution in Global Perspective, far slimmer than Prof. DeLong’s, Robert C. Allen has a very convincing (to me) explanation of why the first Industrial Revolution could only have occurred in England, where coal was cheap—and in ever-increasing demand for home heating—and labor dear, and where there was an extensive supply of sophisticated metal workers capable of turning out large numbers of smoothly working, long-lasting, hand-made mechanical gears at a “reasonable” price, thanks to the widespread use of mechanical clocks and watches. According to Allen, early steam engines were so bulky and power-hungry, and hand-made machinery so expensive, and human labor was so cheap in comparison, that the supposed wonders of the first Industrial Revolution didn’t make economic sense in many areas of the world other than England. In 1870, however, the development of such things as cheap, high-quality steel, more efficient steam engines, and the screw propeller for ships—followed, of course, by many other innovations—created an “Industrial Revolution for Everyone”, almost.
DeLong also neglects, I think—along with, again, “almost” everyone else—the role of “science” in the Second Industrial Revolution. For example, DeLong repeatedly acknowledges, both in Slouching and his blog pieces, the immense transformation in the lives of women thanks to the SIR—the stunning decline in infant and child mortality, in the number of women’s deaths during or after child birth, in the number of pregnancies, and in the number of years spent either in pregnancy or nursing, for example—but he never explains why. The contributions of “science” are simply bundled up in the recurring reference to the rise of “corporate laboratories”, as if that explained everything, with no discussion, for example, of the whole “discovery” of what was then called “hygiene”, thanks to the efforts of men like Joseph Lister, and then the development of the germ theory of disease, thanks largely to the efforts of men like Louis Pasteur and Robert Koch, which finally explained where diseases came from and how to avoid their spread—much more fully discussed, of course, in Kyle Roberts’ Plagues Upon the Earth. The triumph of modern medicine got another huge boost in the 1940s with the discovery of first penicillin and then additional antibiotics—and of course continues unabated to the present.
The third and, I think, most significant weakness of Slouching is DeLong’s unthinking assumption that economic growth can be explained by examining “top down” economic policies that are chosen, either consciously or unconsciously, at the national level. This is, in fact, the explicit assumption of the great majority of economists, whether libertarian, Keynesian, socialist, communist, “populist”, or whatever. This sort of thinking was effectively countered, I think, in Robert Gordon’s well known study, The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War, arguing that we more or less emptied Mother Nature’s cupboard with the industrial development of electricity and the internal combustion engine—along with, okay, a few other things—so the great jumps that occurred from 1870 to 1914 and then from 1945 to 1970 (dates are approximate, of course) are just never going to occur again—though the current furor over “AI” suggests that Bob might be, you know, wrong.
Bob illustrates his point by asking us to compare a middle-class American’s life in 1870 versus 1940 and then comparing the same dude, more or less, in 1940 versus 2010, though I’m willing to bang it up to 2023. I see Bob’s point, but I think the comparison is less striking than he thinks. Yes, having indoor plumbing, electric lights, a gas stove, and central heating are huge, but how about traveling and communication? Jet travel versus train or boat? “Long distance” versus free international and “Zoom”? GPS versus “maps”? How about computers, giving you a library at your fingertips, a library not only of books but of music, film, and art, one available almost anywhere in the country? How about home theater versus an AM radio? How about health care? In 1870, average life expectancy was 39 years; in 1940, 62 years; in 2022, 79 years. Yes, 23 is more than 17, and a 55% increase is much more dramatic than a 22% increase, but both differences are still substantial, and when you consider such things as air conditioning, pain medication, etc., etc. we not only live much longer, but in much greater physical comfort.2
Okay, that is more than a quibble, but another thing that bugged me about Slouching3 is that Brad also assumes (“naïvely”, I would say), that not only can “proper” (that is to say, neo-Keynesian) top-down economic policies ensure continued increases in economic productivity “forever”, the same economic policies can be applied with the same economic effect anywhere on the globe, even though he repeatedly, both in Slouching and his blog, exclaims dismay over the fact that that simply doesn’t seem to be the case. But why, he asks? Why? Why didn’t the “tricks” (my word) first discovered in the “Dover Circle-Plus” spread rapidly around the world?
Brad is quite familiar with the arguments, à la Jared Diamond, that disparate conditions across the continents set significant boundaries for the sort of economic development that was likely to occur—that, in particular, the development of the classical civilizations of Eurasia—and then the “post classical” civilization of the “Dover Circle-Plus” was due, not to top down “genius” but to such factors as geographical setting—“maps over chaps”, as Ian Morris, author of Why the West Rules—for Now, might say. (It was, in fact, a defense of Diamond by Brad that put me on Jared’s case.) Yet, when he wrote Slouching, Brad seems to have forgotten all about Jared.
For example, Brad is puzzled by the “fate” of Argentina:
Consider Argentina, for example. In 1913, Buenos Aires was among the top twenty cities of the world in telephones per capita. In 1929 Argentina had been perhaps fourth in density of motor vehicles per capita, with approximately the same number of vehicles per person as France or Germany. Yet after World War II it rapidly fell from the ranks of the First World to the Third.
First of all, Brad is only looking at Buenos Aires, which is like trying to judge the economy of the American South circa 1860 by the number of carriages or hoopskirts per capita for the city of Charleston, SC. Argentina’s major exports in 1913 were agricultural—beef and wheat. According to Wikipedia, in 1914, 30% of Argentina’s population was foreign born (and surely almost all of them were from Europe), which “suggests”, I would say, that at least 50% were “indigenous”, coming from pre-literate cultures and subjected to an exploitive peonage similar to the slave economy of the ante-bellum American South. Saying that Argentina was “prosperous” merely by looking at its GDP in 1913 is like saying that the American South was “prosperous” in 1860—which was true enough as long as you were white.
Despite heavy immigration, in many respects Argentina was a “typical” colonial society in 1913, rather than an emerging industrial power. The country’s agricultural products found their markets overseas, largely dependent on modern technology—steam ships and refrigeration, for example—supplied for the most part by the country’s trading partners, Great Britain in particular. The country’s educational system was entirely in the hand of a fiercely anti-modernist Catholic hierarchy dedicated to serving the social interests of the latifundia.
The demographic makeup of present-day Argentina is difficult to parse (in my opinion). Argentinians like to say that “los argentinos descienden de los barcos”—“we’re all immigrants” (that is to say, “white”). But, again according to Wikipedia, looking at the “Argentine mitochondrial genetic gene pool by region”, we see that the central region, where over half the population lives—centered, of course, around Buenos Aires—the European contribution is 56%, while the Amerindian contribution is 41%. In the South and North, the Amerindian contribution is 66-70%. I’m not saying that Amerindians are less intelligent than Europeans. They aren’t. I am saying that integrating such radically different cultural traditions was inevitably “fraught”, that when the oppressive, traditionally colonialist rule was broken, as it inevitably was, it is not surprising that a long period of radical social instability would follow.
Brad is quite familiar with the numerous scholarly theories as to the sources of the “European Miracle”, but then he assumes that, once we understand these “tricks” (my word again), we can apply them anywhere and achieve the same results as in the “Dover Circle-Plus”. But we can’t. The fallacy, I would say, goes back to Adam Smith, though of course Brad’s “guiding hand” differs in kind from Adam’s invisible one. In a celebrated passage, Smith explains how easy it all is:
Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things.
Frankly, this is absurd. Consider Smith’s native Scotland, which was slowly transforming itself into something resembling a functional nation state by that classic civilizing force, war, over a period of several centuries, beginning sometime around 1100, that unity leading, of course, to a long series of larger wars against England. The Act of Union finally united the two countries in 1707, occasioned largely by the decline in Scottish population due to famine in the 1690s, the threat of British invasion, and the failure of the “Darien Scheme”, a colony to be established in Panama, which imposed substantial financial losses on virtually the entire Scottish landowning class. And we certainly can’t forgot the brutal “confessional” strife throughout the 1500s and 1600s, whose rivalry ultimately resolved itself via mutual self-refutation into the secular synthesis of the Scottish Enlightenment—two wrongs, a skeptic might say, making a right.4 The progress of Scotland from barbarism to the “highest degree of opulence” involved anything but peace, and surely easy taxes, and a tolerable administration of justice were in a similarly short supply.
What Smith is doing, of course, is assuming that the “correct” policy of his own time is equally applicable to any other—which, to my way of thinking, is absurd. A nice example of “Smithian” thinking appeared recently in Reason magazine by Edward Stringham, Thank Dutch Merchants, Not a Strong State, for Capitalism, a review of Marten Prak and Jan Luiten van Zanden’s Pioneers of Capitalism: The Netherlands 1000–1800. After chuckling over a few “wrong” answers to questions regarding the origins of capitalism—whether, for example, a “strong, centralized state” is necessary for its existence, Stringham goes on to praise Prak and van Zanden’s new study, to wit:
Maarten Prak and Jan Luiten van Zanden, two economic historians who do not have an obvious political agenda, tell a different story in a deeply researched and well-written new book, Pioneers of Capitalism. Differentiating small-scale markets from capitalism, they argue that a capitalist economy features advanced specialization and trade, the widespread use of wage labor, and financial markets. This sort of economy, they show, was neither invented in 1776 nor inseparable from a strong state. It evolved, from the ground up, over centuries, and Dutch merchants were some of its most important pioneers.
After summarizing Pioneers in what I would (and will) call rather simplistic terms, Stringham concludes his review as follows:
So don't credit a strong centralized state for inventing capitalism. Credit the Dutch merchants, laborers, sailors, whalers, fishermen, peat diggers, cheese jenever distillers, financial innovators, and brewers, all led by an invisible hand.
Actually, there’s a lot more than an “invisible hand” to the Netherlands’ story as the birthplace of capitalism, as Prak and van Zanden tell it, and their analysis is impressive, but it’s also “interesting” that, perhaps because they are Dutch, they miss the “first” reason for the Netherlands’ success, perhaps because they see it every day. “Egypt,” Herodotus tells us, “is the gift of the Nile.” Similarly, the Netherlands are the gift of the Rhine, and the Scheldt, and the Meuse5—three of Europe’s largest rivers form a delta that (more or less) divides what is now Belgium from the “Kingdom of the Netherlands”, though for much of Europe’s history the combined area was often referred to as “the Low Countries” (which is what “Netherlands” means), with a north/south, Protestant/Catholic split having a large impact of the eventual fissioning, which did not become permanent until after the Napoleonic Wars, producing the now separate states of the Netherlands and Belgium.
The command of the three rivers made the Netherlands the inevitable entrepot to western Europe of all manner of imported goods, from the Baltic countries, the North Sea fisheries, the British Isles, the Mediterranean, and, ultimately, the entire world. Prak and van Zanden, in effect, overlook the most obvious factor of all. But, speaking from ignorance, I would say they miss little else.
Among other things, the soil of the Netherlands is more useful as pasture than for growing grain, leading Dutch farmers to specialize in a “market economy”, producing butter and cheese for sale and buying imported grain for bread, far back in the Middle Ages. Frequent flooding encouraged cooperative efforts at the local level. The Catholic Church, often correctly identified as a “foe” of capitalism—opposing the charging of interest, for example—generally reflecting the interests of a landed aristocratic elite—nevertheless had a beneficial influence on society overall for several reasons. For example, the Church ultimately halted what was once a booming slave trade between Christian Europe and Islam—Christians enslaving fellow Christians and selling them to Muslim traders. Islam prohibited Muslims from owning Muslims, and the Catholic Church managed to enforce a similar prohibition among Christians, with the effect that by around the year 1100 Europe was essentially slave-free—unlike Moslem countries, they did not simply continue to use slaves who were not co-religionists—at least, not in Europe itself. Once the age over overseas empires began, of course, the situation was far different, and European employment of slaves expanded mightily, though not in Europe itself.
Prak and van Zanden also discuss another contribution of the Church—its ultimately salubrious efforts to weaken the ability of powerful families to accumulate wealth and power and to bring instead this wealth and power under its own control, both to provide for the monks and nuns who had followed Christ’s command to abandon their families and follow Him and to maintain the Church hierarchy’s independence from princely power. In this they follow Jack Goody’s arguments in The Development of the Family and Marriage in Europe (which I have not read), which are also touched on in Francis Fukuyama’s The Origins of Order and discussed extensively in Joseph Henrich’s The Weirdest People in the World mentioned above—the struggle of both “the state” and, in Europe’s case, the Church, to trump the “natural” loyalty to family and to instead command the ultimate loyalty of their “subjects” for themselves.6
Despite the current fashion for describing the traditional European patriarchy as uniquely heinous, in fact the Church had circumscribed the power of the “father” in numerous ways. The pagan Hellenistic society had already officially committed to monogamy, in striking distinction to both Islam and classical China. The Church added to that by strongly discouraging any sexual activity out of marriage, banning “concubines” and other forms of open toleration of non-marital sex—though sexual abuse of the poor by the “well-born” was of course rampant until well into the late 20th century.
A central preoccupation of powerful families throughout history is the control of property. In classical China, and several other cultures, marriages were always arranged, frequently between cousins, and even “uncle niece” marriages, to ensure that property did not move out of the family. When a couple married they lived with the man’s family.
In Catholic Europe, the Church forbade marriage of cousins, not to mention uncles and nieces, encouraged separate households, and even “encouraged” the right of women to choose their husbands (since marriage was a sacrament, it should be entered into voluntarily). There were, of course, a great number of arranged marriages in Europe well into “modern” times, and there is no question that the official policy of the Church, and all of European “society”, was that women should be subject to male authority.
Still, in non-western cultures, the position of women was significantly worse. In such cultures, when a married man died, his widow was in a very precarious position. If an unmarried brother of her husband was available, then she was to marry him. If not, then death was often the preferred solution, particularly if there was no son available to rule over her, to eliminate the danger that she might now marry outside the family, or simply manage the property left to her for her own benefit rather than the family’s. In Hindu India, of course, widows were often burned alive, to “purify” them—the “sati” or “sutti”, banned by the Islamic Mughals when and where they had power but tolerated by the British until the mid-nineteenth century . In traditional Korean culture, a widow from a prominent family who committed suicide would earn her husband’s family a reward from the government. According to Geoffrey Parker’s account in his massive study of the seventeenth century, Global Crisis, “Confucian teaching encouraged virtuous women to commit suicide in two circumstances: those who had been raped or otherwise ‘dishonoured’ should kill themselves immediately to ‘avoid the shame’, while a virtuous widow should ‘follow her husband’ to the grave as soon as he died”—although I should point out that this language is not found in the Analects of Confucius himself, at least in the edition that I consulted.7
In classical China, the horrific practice of “foot binding” (actually, first breaking the bones of the foot and then binding it) first arose around 1000 CE and then spread widely throughout the culture, only diminishing in the late nineteenth century, due to pressure from Christian missionaries and a general “western” influence—the “Century of Humiliation” proving to be, in both China and India, the “Century of Enlightenment” as well.
In Catholic Europe, women could not be divorced, as they could in Islamic cultures. The Church’s absolute ban on suicide—and murder—protected them from that fate as well. Furthermore, the Church, far from fearing widows, loved them. The seventh sacrament, the “Last Rites”, which held out both the promise of eternal salvation and the threat of eternal damnation, gave the Church enormous emotional leverage over believers, and there is ample evidence throughout European history of the power of belief. Thanks to the doctrine of Purgatory, a wealthy widow facing death could think of others as well as herself through the purchase of Indulgences for her family, both living and dead, to shorten their years of penance in Purgatory, conveniently (for the Church’s purposes) estimated at about 10,000 years for the average sinner. Widows could also obtain additional spiritual credit by investing in chapels, altars, and memorials of other kinds within an existing church.
At the same time, as R. H. Tawney points out in his classic8 study, Religion and the Rise of Capitalism, the Church, rooted as it was in a strongly agrarian culture, reflected the attitudes of both the landowner and the peasant in its deep suspicion if not indeed contempt for the merchant and—worst of all—the moneylender. Any sort of “sharp practice”—for example, any alteration of price in order to profit from either a shortage or surplus—was a mortal sin. Like virtually all “classic” civilizations, the Church condemned the charging of interest out of hand, though the endless dodges invented to allow what was in fact a necessary tool of any form of commerce naturally prevailed throughout Europe.
It was not until the revival of trade in Europe, becoming manifest throughout the twelfth and particularly the thirteenth centuries that the role of the merchant became large enough to begin to challenge these prejudices. Trade began to flourish among the Italian cities, and Venice would ultimately become a model for a “thalassocracy” (“sea power”), a powerful culture based on trade rather than aristocratic land ownership, a culture that dealt frequently with the “heretical” (according to the Catholic Church) Byzantine Empire and even (on occasion) the Moslem societies of the eastern Mediterranean on a friendly, or at least non-hostile basis. The Italians are frequently given credit for introducing double entry bookkeeping, but they made a far greater contribution through the importation of the so-called “Arabic” numerals, which were really developed by mathematicians in Hindu India. It is hard to imagine that “modern” society could have developed at all without them. Not only is all of modern science dependent upon them, one wonders if “blue water” navigation, which allowed Europeans to establish their global empires and help generate the wealth that led to “true” capitalism, would have been possible without the extraordinary power and simplicity of the modern number system, quite likely the most significant creation of the human intellect.
Europe was beginning to exit the Middle Ages at the start of the 14th century, which marked by such disparate events as Dante’s composition of the Divine Comedy—the literary apotheosis of the medieval mind—and the birth of Petrarch, who would lead Europe, fitfully yet persistently, away from the cloister to the “real world”, substituting the secular persuasiveness of Cicero for the theological certainty of Aquinas. The increasing importance of trade was symbolized by the establishment of what was probably the world’s first stock market, in the Netherlands rather than Italy, the famous “Bourse”, which opened its doors in Bruges in 1309, but the dawn of this “new age” was given a severe shock when western civilization was hit the most must destructive plague in its long history, the Black Death, or Bubonic Plague. According to Prak and van Zanden, all of Europe was devastated economically by its impact, except England and the Netherlands. Even more fortunately for the Netherlands, “only” about 25% of its population died, as compared to about 40% across Europe and perhaps 50% in England.
Wages rose significantly across Europe thanks to the drastic shriveling of the workforce, but then declined as the population levels rose once more, except in England and the Netherlands. Trade revived along the three rivers. The Netherlands cities avoided the “curse” of their Italian predecessors, internecine warfare—because the Netherlands cities were cities rather than city states. They lacked the manpower to attempt to dominate/eliminate each other.
The 16th century brought two momentous changes to Europe that would push the Netherlands towards “true” capitalism—the emergence of Portugal and Spain as the sources of international trade from first the East and then the New World, much of which would pass through the Netherlands ports, accompanied by the Protestant Reformation, which would ultimately lead to political independence for the Netherlands, free from either princely taxation or papal exaction.
In 1500 the Netherlands was part of the heritage of the Duke of Burgundy, the title passing in 1506 to the man who would become Charles V, who would famously inherit title to the better half of Europe, including the crowns of both Castile and Aragon, aka “Spain”. As the Duke of Burgundy, Charles sought persistently and successfully to reduce the independence of the Dutch cities and bring the provinces under a more centralized control. Charles’ son, Phillip II, would eventually inherit the title of King of Spain in 1556, and later that of Portugal, and would also rule as “Lord of the Seventeen Provinces of the Netherlands”. In Religion and the Rise of Capitalism, Tawney attributes the wealth of “Spain” to the Spanish King’s possession of the Netherlands, which allowed him to market the goods imported from both Asia and the New World, the gold and silver largely ending up in Asia to pay for the spices and other goods.
The Netherlands were ripe territory for the Reformation, which amounted to the secularization of religion after the Renaissance had first secularized learning. The trading cities of the Netherlands, like all trading areas, had higher literacy rates than the countryside. Increasing wealth led to increasing leisure, and a more sophisticated populace, one that would want to play an active role, beyond mere obedience, in achieving their personal salvation. The classic work of this “Devotio Moderno”, Thomas à Kempis’ De Imitatione Christi, The Imitation of Christ, was composed in the Netherlands around 1420 and became popular immediately.
Joseph Henrich, in his book, The WEIRDest People in the World,9 argues that the Catholic Church, by limiting the ability of “great” families to dominate society, discouraged the mindset exemplified by Sonny Corleone in The Godfather that only a fool risks himself for anyone other than his family, consciously promoting a society whose members’ first loyalty lay to the Church, and who did not define anyone outside their family as someone to be feared, exploited, or even destroyed, but never trusted, therefore creating the possibility of a more cohesive society overall, though certainly not guaranteeing it. The Reformation, creating a “priesthood of all believers”, unconsciously created a society whose members’ first loyalty lay to themselves. As Henrich points out, among Martin Luther’s most powerful contributions was first his translation of the Christian Bible (which “even” Nietzsche called “Germany’s best book”), and then his insistence that everyone learn to read it, laid down a foundation for what ultimately became universal education and literacy. In “refuting” the Catholic Church, the Reformation effectively “completed” its work, creating at least the possibility of a society both atomistic and capable of relying, under the right circumstances and conditions, on mutual trust to achieve larger goals, the sort of society that Adam Smith saw as “natural”, but which in fact was very “unnatural”, and even nonexistent beyond the range of Professor DeLong’s “Dover Circle-Plus”. It was this long string of fortunate coincidences that finally created the possibility of the “homo economicus” that Adam Smith assumed to be “natural”:
The natural effort of every individual to better his own condition ... is so powerful, that it is alone, and without any assistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often encumbers its operations.
In fact, there is no such “natural effort”. Even in Smith’s own time, the great majority of human beings made no effort whatsoever to better their own conditions, for the simple reason that they could not imagine that such a thing was possible. It is the “natural” complaint of employers, from Smith’s time (and before) to today, that “workers are lazy”—they don’t want to better themselves, they prefer leisure. And the notion that in Smith’s time, a Chinese peasant might imagine that he could “better his own condition” is grotesque. Smith was a very acute man, but here he is looking in a mirror and thinking he is seeing “everyone”.
In his study, Tawney claims that the Reformation alone did not destroy the pre-existing religious animus towards what would become “capitalism”. Luther in particular shared the peasant’s (and landowner’s) hatred of the merchant and moneylender. Much like Rousseau, Luther had a deep detestation of “vanity”—any device or craft a man might use to place himself “above” his fellows—and exploiting another man’s ignorance or need or (worst of all, of course) use of outright deception for financial gain was perhaps the basest form of vanity imaginable. Luthor’s ideal man was the simple, honest, God-fearing peasant, who asked for nothing more from life than the opportunity to labor for his sustenance and fear God. Such a man would be a man like Luther himself, simple and honest, entirely open and without pretense, and concealing nothing. Calvin, though not so “simple”, and accepting the charging of interest as analogous to charging rent for the use of land (a quite reasonable analogy, in fact), was also aggressively opposed to anything that could have been seen as “sharp practice”, and Tawney demonstrates that, where the Calvinist ministry exercised real power, as in Calvin’s Geneva or Puritan Boston, merchants whose tactics were deemed particularly offensive—buying up staples at low prices during plenty and charging high prices during times of shortage, for example (“hoarding”)—could be forced to make restitution, pay additional financial penalties, and engage in acts of public penance. It was, Tawney argued, the simple expansion of markets in such ports as Rotterdam and Amsterdam, where whole-sale merchants dealt as a matter of course, with one another rather than “civilians”, where a man was supposed to know his business and look out for himself, that the sense of a moral bond connecting all the individuals in a society began to dissolve.
In any event, it was the frenzied emotions released by the Reformation that accidentally and ultimately shaped the full emergence of the Netherlands as the world’s first capitalist society. The Renaissance supplied the kindling and Luther and Calvin applied the flames. In the summer of 1566, the Beeldenstorm (“attack on the statues”), a furious outburst of Protestant iconoclasm, swept through the Dutch cities, smashing religious statues and desecrating churches. Phillip II, ruler of both Spain and the Netherlands, took his Catholicism very seriously indeed and sent in the Duke of Alba with an army of 10,000 men to bring the Dutch blasphemers to heel. The army’s brutal oppression touched off the Eighty Years War, or Dutch Revolt, which ultimately freed seven northern provinces from all princely rule, thanks largely to the political divisions of Europe, for Spain’s neighbors and rivals, England and France, were happy to reduce the Spanish Hapsburgs’ grip on the coast and ports of western Europe.10 A final peace was declared in 1648 by the Peace of Münster, establishing the “Dutch Republic” as an independent Protestant state, while the ten southern provinces remained under the control of the Spanish Hapsburgs. Among the terms of the peace treaty was the actual closing of the port of Antwerp, long the largest in Europe, so that the flourishing of the Northern provinces, and the ports of Rotterdam and Amsterdam in particular, would be guaranteed. Free trade for me, perhaps, but not for thee. Sometimes, a state strong enough to win a war and enforce a patently oppressive peace can come in handy.
It was only at this point that “free markets”, so grandly praised by Edward Stringham (remember him?) really began to have an impact on Dutch prosperity—free markets when they were selling, that is. As the Dutch began to supplant both the Spanish and the Portuguese—in the East especially, thanks to the emergence of the Dutch East India Company—they savored instead the joys and profits of monopoly,
Although much less famous in the Anglophone world than the British East India Company, which eventually metamorphosed into the British “Raj”, for two hundred years, from roughly 1600 to 1800, the Dutch East India Company—in Dutch the Verenigde Oostindische Compagnie or VOC—dominated the Asian trade, dwarfing its British rival and maintaining a, yes, near monopoly over spices, silks, porcelain, and other luxuries from the East.11 According to Wikipedia, the VOC “was a powerful company, possessing quasi-governmental powers, including the ability to wage war, imprison and execute convicts, negotiate treaties, strike its own coins, and establish colonies.”
At times the VOC’s policies could approach genocide, as when they virtually exterminated the original inhabitants of the Banda Islands in order to guarantee the VOC a monopoly over the production of both nutmeg and mace (they come from the same tree), a monopoly that lasted for several centuries. The Dutch freely employed slaves as well, of course, as they would also do in their possessions in the West Indies, and were also active in the slave trade itself, both with their own colonies and those of other European powers. Prak and van Zanden “explain” the Dutch use of slavery in their colonies as a consequence of “labor shortages”, but in a free market labor shortages are supposed to be cured by higher wages, not slavery.
The VOC was the first joint stock company in the world, and its rise was accompanied by a great number of “firsts” in the history of commerce that were part and parcel with the Dutch Republic’s “Golden Age”, which saw the first tentative steps to escape the “Malthusian Trap”, although it would take Britain’s first Industrial Revolution to make a real difference. This was accompanied to a large number of technological improvements—the famous (in Holland) “flyut” (which Word can’t even spell), for example, a light-weight, easily manageable cargo vessel that cut shipping costs almost in half—which are unknown except to specialists. The contribution of such inventions to the ultimate well being of humanity is immense, but the whole subject of “invention” is in extremely bad odor these days, a hypocritical “invention” of the white male patriarchy to mask its tyrannical rule.12
Wealth breeds emulation, envy, and, often, attempted robbery. In the Seventeenth Century the Dutch Republic engaged in numerous wars to expand its monopolistic hold in the Eastern trade and expand its role in the New World—briefly wresting control of much of Brazil from the Portuguese and turning “New Sweden” into “New Amsterdam” before the British turned it into New York. Despite the constant wars, its economy was the envy of Europe, so much so that Jean-Baptiste Colbert, first minister to Louis XIV, sought to turn France into the Netherlands via a top down economy so irritating to agricultural interests that they developed the doctrine of laissez-faire to “refute” him. Since all of Colbert’s efforts failed, the laissez-faireians, aka the Physiocrats, who of course inspired Smith, may have had a point, but the Dutch no more believed in free markets or free labor—not when they could get the whip hand, at least—than Colbert did.
Louis XIV believed in a more direct approach than his first minister and set out to conquer the Netherlands rather than to emulate them, leading to a long series of spectacular wars, culminating in the War of the Spanish Succession, not ending until 1713, when the British, who had fought closely beside the Dutch to thwart Louis’ dreams of European domination, decided that the French had suffered enough and secretly switched sides, deliberately leaving their Dutch “allies” exposed to a successful counter attack. Though Dutch prosperity continued, the Republic was effectively reduced to the status of a second rate power, its independence maintained by Britain to prevent a great power from gaining control of the Channel Ports. Capitalism was safe, but “peace and easy taxes” (remember them?) had nothing to do with it.
They also had little to do with Britain’s eventual supplanting of the Dutch Republic’s role as the vanguard of capitalism. After a brief respite, a new cycle of “big” European wars began, pitting Britain against France: the War of the Austrian Succession (1740-1748) and the Seven Years War (1756-1763), which massively expanded the British Empire, culminating in the wars against Napoleon, running through 1813, which secured the Empire “forever”, or until 1914 and World War I.
Modern Times
Shall we return to Brad? I think that’s only fair. We started out with him. What’s striking to me about Brad is his absolute faith in the effectiveness in the top-down Keynesian economy despite the fact that, as he acknowledges, both implicitly and explicitly, it’s rarely been followed, only in the “Thirty Glorious Years” from 1945 to 1975. It’s a bit curious that, though Brad also acknowledges the “Forty Four Glorious Years” from 1870 to 1914 as the only other “super growth” period in world history, was, of course, entirely non-Keynesian, and very largely contemptuous of any direct concern for the “common man”, he fails to draw the seemingly appropriate moral. If Keynesianism was not necessary then, why is it necessary now? (Even though I agree that it is.)
And were the Thirty Glorious Years themselves all that Keynesian? As I argued in an earlier post, drawing largely on arguments from Robert Gordon’s The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War, the Thirty Glorious Years were in effect a “one of”, due largely to the “catch up” from the “wasted years” of the Great Depression and World War II (in Europe, of course, the “wasted years” extended all the way back to 1914), an enormous bounce that stimulated the economies of the United States, Western Europe and “even” the Soviet bloc, coupled with the full exploitation of the benefits of electric power and the internal combustion engine, bringing the Age of Steam to an end. Oh, and then there was the once famous “Baby Boom”, which unfortunately ended during the seventies. As I argued earlier at the top of this piece, I think Gordon exaggerates the lack of progress since 1940—and the current furor over AI, however overdrawn it may appear at the moment, certainly offers the possibility of a new acceleration.
What is additionally puzzling/frustrating to me is DeLong’s persistent assertion that the two big economic crises since the 1973 hike in oil prices—the sky rocketing inflation of the 1970s and the Great Recession could easily have been resolved by the quick application of basic Keynesian principles. Regarding the post 1975 rise of the hated neoliberalism he has this to say:
The pace of economic growth during the Thirty Glorious Years that followed made, by its end in the 1970s, people dizzy with success: expecting more and tremendously upset at what seem in retrospect to be relatively minor speedbumps and roadblocks. But mere rapid growth did not satisfy those of a right-wing temperament, who felt that a prosperity that was shared too equally was unfair and degrading. And mere rapid growth did not satisfy those of a left-wing temperament, either, for they felt that the problems that the market, even tweaked and managed by social democrats, solved did not produce even a partial version of the utopia they sought. And so the world took its neoliberal turn. But the neoliberal policy prescriptions did not produce a slouching toward utopia that was more rapid in any sense.
Here we see the sort of thinking so common in “Acelaland” (an Acelaland of the mind for Brad, of course, who lives in Berkeley), that “the other side” invariably gets into power not for any good reason, but rather simple trickery. And I would point out that the “speedbumps and roadblocks” that allowed the bad guys to somehow undeservedly slip into power seemed a bit more than minor at the time. The “misery index”, measuring the combined rates of inflation and unemployment (lower is better, of course), which averaged (according to Wikipedia) 7.88 under Truman, 9.26 under Eisenhower, and about 7 for Kennedy-Johnson, rose to 10.57 under Nixon, 16 under Ford, and 16.26 under Carter,12 then fell to 12.19 under Reagan, 10.68 under GHW Bush, 7.8 under Clinton, 8.11 under GW Bush, 8.83 under Obama, and 6.91 under Trump.
Furthermore, these data are only for the U.S., the least top down, and the most powerful, economy in the industrialized world. As is well known—if Brad would know it—Great Britain seemed several times, in 1974-1975 and the 1977-1978 “Winter of Discontent”, to be stumbling towards collapse. The misery index for the UK averaged 18 for the decade of the 1970s. It wasn’t an accident that anti-big government politicians like Ronald Reagan and Margaret Thatcher rose to power in the U.S. and the U.K. In France, the aggressively left-wing socialist François Mitterrand did take office in 1981, but by 1983 he was forced to perform “le tournant de la rigueur”—“the turn to austerity”. In 1984, he appointed Laurent Fabius as prime minister, a “SINO”—socialist in name only—who would surrender the central dogma of true socialism—the nationalization of basic industries—just as Tony Blair would do in the U.K. a decade later. Fabius would be followed in the premiership by Jacques Chirac, not a socialist at all but rather a member of the explicitly anti-socialist “Rassemblement pour la République” (Rally for the Republic), advocating for, yes, lower taxes, removal of price controls, privatization, yada, yada, yada. And in Germany, long-serving Socialist Helmut Schmidt was replaced as chancellor in 1982 by Helmut Kohl, from the Christian Democratic Union, who would stay in office for sixteen years compared to Schmidt’s eight. Those “relatively minor speedbumps and roadblocks” certainly had a remarkable impact, didn’t they? And wasn’t the Soviet Union falling apart at just about the same time? Almost as though it had been shaken to pieces by its journey through the 1970s-1980s obstacle course/minefield whose hazards Professor DeLong dismisses so blithely.
It is more than “significant”, I think, that Professor DeLong doesn’t tell us what those “speedbumps and roadblocks” were, nor how he would have navigated them. What would Keynes have done? Professor DeLong clearly suggests that Keynes would have had “the answer”, but what was it? It was Richard Nixon who said “we are all Keynesians now”, but that didn’t work out so well for him, and it didn’t work out so well with Jimmy Carter either, who did try pretty much standard Democratic policies of economic stimulus, particularly in his first two years in office, obtaining for his pains first a small rise in the misery index and then a small decline before, from March 1978 to April 1980, a virtual skyrocket from 13% to 22%. No wonder a Republican sweep followed seven months later.
To my mind, Fritz Bartel’s The Triumph of Broken Promises explains the “neoliberal moment” much better than Brad’s “minor speedbumps and roadblocks”, which somehow reshaped the politics and economies of all the major economies of the Atlantic world in less than a decade. According to Bartel, whose arguments I have been “borrowing from” rather liberally both in this post and my earlier takedown of Brad, viz. Q: Why did neoliberalism replace social democracy?, the social pact prevailing during the “Thirty Glorious Years”—the ever more generous welfare state, and ever more greedy labor unions—was simply no longer functional. In the U.S., there was plenty of “covert” union busting in the seventies by both Republican and Democratic administrations—allowing the Japanese to capture the ever-burgeoning home electronics field, for example, and allowing the once-legendary U.S. steel industry to wither almost to nothing. For a wide variety of reasons, production of U.S. steel fell from a high of 223 million tons in 1973 to 203 million in 1979 to 107 million in 1982. Production has since recovered: by 2005 the U.S. was producing as much steel as it had been in the boom years of the 1960s, but with 75% fewer workers. See Wikipedia for details.
The Carter administration, famous for bailing out the United Auto Workers with its loan to Chrysler, deliberately undermined the transportation unions by deregulating the trucking, airline, and railroad industries. The Teamsters Union, which represented truckers, saw its membership decline from 500,000 to 200,000. Employment in the aviation industry boomed in the 1980s, thanks to deregulation, but according to this 1992 study, based on the results to a questionnaire sent to five major airlines unions, the effects of deregulation on the unions had been strongly negative, weakening their ability to provide benefits for their members. According to, yes, ChatGBT, employment in America’s railroads fell from about 684,000 in 1970 to 223,000 in 1990. And, of course, these battles were as nothing compared to what Margaret Thatcher went through to bring the coal miners to heel. Does Professor DeLong really regard these changes as “minor speedbumps and roadblocks”?
I am at one with Brad in deploring Barack Obama’s shameful surrender to the budget-cutters in the midst of the worst economic decline since the Great Depression. I disagree entirely with this his notion that a quick Keynesian fix could have put the whole thing in the world’s rear view mirror in a year at most—the economic disruption was far too great for that. Yet it’s certainly true that the Great Recession is “on” the neoliberal/libertarian mindset,13 which took the notion that markets are self-policing as absolute gospel. The famous story of former Treasury Secretary Larry Summers’ reaction to Raghuram Rajan’s now famous paper, Has Financial Development Made the World Riskier?, delivered at the August 2005 Jackson Hole, Wyoming gathering of the great and wise—“I’m not even sure we should be talking about this”—that is to say, “Let’s not give the villagers ideas. They might start trying to tell us what to do”—described in Adam Tooz’s Crashed—indicates the level of hubris prevailing among the economic elite of the time, heedless of the fact that their profound analysis really rested on nothing more than a blind and absurd belief that American housing prices would continue to rise significantly to the end of time, a belief that was driven entirely by greed and guaranteed to come to grief and threaten to pull down the entire economy around the world along with it.
I also agree with Brad—I seem to be agreeing with him a lot here—that the Obama administration was far too tied to “strict” neoliberalism from the get-go: the decision to appoint Tim Geithner as secretary of the treasury in particular as an explicit guarantee that the new administration would do nothing to offend Wall Street. Once in office, Geithner refused to acknowledge the first and most obvious fact about the crash—that it was driven entirely by Wall Street’s lust for “obscene” profits—profits that could only be achieved through massive and irresponsible assumption of “risk”. Instead, Geithner treated the crash as an unforeseeable act of God—when, in fact, it was totally foreseeable—and claimed that the only reform necessary was a freer hand for the U.S. Treasury and the Federal Reserve to clean up the mess and hold the culprits harmless for their gluttonous crimes.
A good part of the commitment of “new Democrats” to neoliberal doctrines was simply obeisance to Wall Street, due in turn to the notion that a Democrat with Wall Street money “couldn’t lose”. I think that the motivation of then Secretary Robert Rubin’s decision during the Clinton Administration to join “iconic” (unfortunately) Fed Chief Alan Greenspan in smacking down Brooksley Born’s proposal to regulate derivatives, was simply to keep Greenspan happy regardless of cost—though of course whatever plan that could have been put in place in the few years remaining to the Clinton administration would have been immediately torn to pieces under George Bush, who was, of course, determined to out obeisance the Clinton administration to Wall Street at every turn.
One must confess that the sins of the “absolute” neolibs were many, but not all came from “doctrine”. Alan Greenspan contributed mightily, not out of doctrine but out of political calculation, when he gave his blessing to the entirely unnecessary and entirely counterproductive tax cuts engineered by the Bush administration. According to my speculation, Greenspan was acutely aware of Republican bitterness over his moves just prior to the 1992 election to cool off the economy, which many Republicans, most specifically including George H. W. Bush, believed had cost Bush his re-election. Greenspan himself desired reappointment to a fifth term as fed chair, which he surely would not have gotten if he had been cool to the Bush cuts. Greenspan further ingratiated himself to Bush by supporting the invasion of Iraq and the toppling of Saddam Hussein, on the quite specious grounds that Saddam might seize control of the Persian Straits and shut off the flow of oil to the outside world. He also made no public comment on the massive new domestic spending policies that Bush engaged in, largely to short circuit any congressional concern for the enormous cost of Bush’s disastrous wars. Thus Greenspan gave Bush a green light to policies that turned a massive budget surplus into an equally massive deficit, which, in my purely speculative opinion, made it more difficult for Congress to muster the political will to engage in counter-cyclical spending sufficiently massive to counteract the effects of collapse.
When Obama took over, he unfortunately bought himself more trouble at the opposite end of the political spectrum, first through his patently unwise comments on the police arrest of Harvard professor Henry Lewis Gates. The police probably did behave “stupidly”—but it’s also possible that they did not (Wikipedia offers dueling accounts from Gates and the police)—and in any event was exceedingly foolish and self-indulgent for Obama, as president of the United States, to comment—something he still fails to understand and something that reflects his tendency to grow impatient with due process when he already knows “the truth”.
Much more long-lasting, of course, was his determination to bring universal health care to the U.S. Liberals have never been willing to accept the fact that most Americans are opposed to “universal” health insurance because they already have health insurance and don’t want to pay for someone else’s. Furthermore, both conservative and libertarian “thinkers” (there are such), who had already worked themselves into a quiet hissy fit over Obama’s triumph at the polls, then worked themselves into full-fledged hysteria over what came to be known as the Affordable Care Act, intended by the Democrats to be the “Republican” bill, which they would then make more liberal. It’s impossible to say what might have emerged if the Republicans—some of them, anyway—had been willing to even discuss the matter, but instead, goaded by extremists acting either on “principle” (largely libertarians) or racism (the Tea Party), the Republicans instead shouted themselves into a mindless frenzy that make “no compromise” their sole motive for action. Still, Obama (and the Democratic Party in general) should have set their sights much lower than they did.
By seeking to please both Wall Street and “the poor”, Obama earned himself the rage of “great” middle class—though it’s striking, to me, how little right-wing hatred of Obama differed from the level of hatred directed at Clinton twelve years before, in much less trying times. Republicans simply could not handle rejection, as I’ve bitched about many times, most extensively here.
But it’s more than “interesting” that, despite all the special factors contributing to the American middle classes’ “rage” over the Great Recession and the Obama administration’s responses to it, a similar passion for “austerity —entirely misguided and counter-productive—broke out over all of Europe—all of prosperous Europe, at least. Crashed, Adam Tooz’s book on the Great Recession, recounts the intense level of frustration—frustration and outrage—kindled in Europe towards the United States, a nation whose limitless greed and limitless irresponsibility—as the Europeans saw it—destroyed the dream of global prosperity for the entire world—forgetting that that dream rested very largely on the dream/fantasy that the boom in American real estate prices would continue forever—for funds were pouring into the U.S. from every corner of the world seeking to share in the high returns that, seemingly, only the U.S. economy could provide. When that dream exploded, the reaction in Europe was what one could call an International Tea Party, though the Europeans were more refined in their manners, though not their policies.
I have often been impatient with “demands” from liberals like Brad, and Paul Krugman, and Larry Summers for their endlessly expressed wish that the U.S. could be “more like Europe”, a realm where, in their imagination, an educated, informed elite makes all the decisions, and makes them all correctly. Poor Paul, at least, knows this isn’t true, but can’t help wishing it were.
I winced with Brad when President Obama said, in his 2010 state of the union address, that government must “tighten its belt”, but Obama was kowtowing, not only to his Wall Street billionaire buddies lusting for entitlement cuts but what Karl Marx would have called “the revenge of the petty bourgeoise”—the furious reaction to any sort of significant counter-cyclical spending that broke out among the middle class across the “Atlantic community of nations”—except in France, appropriately enough, where the political community reacted by looking down its Gallic nose at “Anglo-Saxon neoliberalism” in favor of neo-Gaullist, neo-socialist dirigisme—because, in a pinch, every French president needs to ask himself “what would Napoleon do?”
Sadly, among the Anglo-Saxon powers, the reaction was far different. Obama very unwisely sought to please both the rich and the poor at the expense of the middle class—though most of the middle-class “rage” was simply the desire to inflict their suffering on others, regardless of culpability, insisting on treating economic issues as moral ones, and seeing everyone as sinners except themselves. The “Tea Party” revolt, stupidly interpreted by both libertarians and conservatives as a desire to return to real “small government” conservatism, really reflected a largely racist desire to destroy the presidency of Barack Obama as an end in itself, as I have complained many times. Ruin, then rule? Hey, sounds like fun! It sure beats thinking!
Despite the heavy burden as the control of the House of Representatives by an entirely unprincipled and utterly shameless Republican Party, and despite endless pressure from Wall Street big shots and DC “wise men” like Establishment butt boy Robert Woodward14, Obama did a much better job than Europe did, where poor Greece was half-destroyed in order to affirm German “virtue”. While both Brad and Paul Krugman, among others, rightfully condemned the European obsession with “austerity” as the naivest form of economic “policy” imaginable—exactly what you shouldn’t do during a massive economic downturn—they failed to notice that this might be a good argument for being glad, instead of sad, that we weren’t “like Europe”, as liberals so often wish we were. Today we see both the United Kingdom and France facing both financial and political meltdowns over the burden of their oh so generous, and oh so often envied welfare states. Everywhere in Europe, irresponsible right-wing parties are flourishing, all of them having the same goals as today’s Trumpified Republican Party—more for “us” and a kick in the teeth for “them”.
Back in 2016, on the verge of the British vote on Brexit, Krugman wrote a sad, bitter column, Fear, Loathing, and Brexit, describing his frustration with the European Union’s long record of both making bad decisions and failing to learn from them—many of the decisions Paul had correctly objected to in “real time”—but never noticing that this might be the “natural” response of an entrenched elite rooted in Europe’s post World War II social democratic cultural tradition. Germany, after all, which was clearly the worst offender in Europe’s post-2008 debacle, was often held up as the social democratic ideal, the land where labor unions were actually represented on corporate boards, where they had real power—policy-making power! The thought that they might use that power in selfish ways never seems to have occurred to elitist liberal thinkers like Paul and Brad. Thanks to COVID, we have had an excellent demonstration of the ability of highly skilled elite bureaucrats to make terrible decisions, lie about them, and then make them all over again, and about the ability of unions to make selfish decisions that help themselves and harm everyone else. Furthermore, both Brad and Paul have either linked to, or spread on their own, “misinformation” on the response of the scientific establishment to the COVID epidemic, pretending that the establishment always simply “followed the science”, when in fact there is a long history of deliberately misleading statements issued for political reasons
I find it “interesting”—though hardly dispositive—that Franklin Roosevelt could fight and win what were essentially two world wars, fought at opposite ends of the earth, in less than four years, yet after eight years could leave the U.S. mired seemingly “forever” in a deep, “endless” recession, with no ideas of how to end it. War seems “easier”—as long as you’re winning. Fighting a massive economic collapse, such as those of the Great Depression and the Great Recession, provokes so many resisting counter forces that it seems “impossible” to pursue any “bold” course long enough to restore prosperity.
In his blog writing since the publication of Slouching Towards Utopia, Brad seems to have grown only more bitter towards the neoliberal “inheritance”, constantly moaning about the failure of neoliberalism to restore the growth rate of U.S. productivity to its previous high levels, and, perhaps even more passionately, constantly denouncing the seemingly endless increase in economic inequality—“a new Gilded Age”, as he likes to put it, which is a bit ironic, really, because it is the first and greatest point of his book that the real Gilded Age, 1870-1914, saw the greatest increase in economic productivity the world has ever known.
Brad is amply seconded by Paul Krugman on the issue of economic inequality, Paul in particular pointing out, over and over again, that the richer you are, the richer you are getting, that the margin between the top 1% and the rest is increasing faster than the margin between the top 10% and the rest, and the margin between the top. 0.1% and the rest is increasing faster still. This is very much the entire theme of The Great Leveler, Walter Scheidel’s massive study of economic inequality through the ages, which argues convincingly that the rich always get richer, the one great exception occurring during the first half of the 20th century, thanks to the momentous social upheavals occasioned by the two world wars, resulting in the outright liquidation of the ruling classes in countries like Russia and China and, even in relatively stable states like the U.S. unprecedented taxation of the rich and significant redistribution of wealth via the welfare state. This state of affairs, Scheidel claims (and DeLong and Krugman concur) remained essentially in place until the Reagan-Thatcherite neoliberal “revolution” circa 1980.
Much of what they (and a myriad of other liberal thinkers) say is true—disparities in wealth are returning to pre-WWI levels—but, disappointingly, they resolutely ignore the obvious: that life is much better for “the masses” than it was during the first “Gilded Age”. Claiming that things are as “bad” as they were 150 years ago is absurd. There is simply no comparison between the way people lived then and the way they live now. Furthermore, this concentration on the economic record of the U.S. since 1980 as grounds for condemning neoliberalism outright ignores the stunning progress that occurred in the rest of the world—most spectacularly in China, of course, but also in many other countries in Asia, Latin America, and “even” Africa, as this chart from Wikipedia demonstrates. For decades following World War II, the “developing” nations didn’t develop, because they identified capitalism with colonialism and, following the teaching of good Keynesians (if not Keynes himself, who was not a socialist), sought a “managed”, socialist economy directed from above that would ensure rapid industrialization without all the exploitation and economic inequality associated with capitalism. What they got, of course, was a stultifying, self-serving bureaucracy whose first goal was always self-preservation. It was only when the ideas of, yes, “Thatcherite/Reaganite neoliberalism” began to spread around the globe that we began to see the development of a true global economy, one that, contrary to Brad and Paul’s frequent contentions, is both elevating overall living standards and reducing inequality, according to a number of recent impressive essays—Yascha Mounk’s Goodbye to the Prophets of Doom, and Branko Milanović’s The Great Convergence Global Equality and Its Discontents.
By focusing all of his attention on the U.S. economy and striving always to see economic history as a morality play “proving” the necessity of an active, benevolent ruling class of “experts”, Professor DeLong gives a thoroughly skewed view of the impact of “neoliberal” ideas—bemoaning the “fact”, for example, that, despite (or thanks to) neoliberalism, people in California are living in cardboard boxes. The good professor might take notice of the fact that the average price of a home in California in 2023 was about $763,000, as compared to about $305,000 in Texas, almost as if “big government” has a tendency to protect the big guy instead of the little one. The impact of neoliberal ideas has been, in fact, phenomenal, though the notion that the U.S. housing bubble in the early oughties couldn’t be a bubble because markets are never wrong was, obviously, catastrophically wrong, in a tragically global scale, provoking a worldwide obsession with nationalist parochialism of one form or another, all of them ugly and, all too often, dangerous.
In the years following World War II, the overwhelming economic dominance of the U.S. faded, and the oligarchical structure of the economy, symbolized conveniently by the “Big Three” automakers, which allowed the costs of fat union contracts to be passed on effortlessly to consumers, who had no meaningful alternatives, became obsolete. The old industrial Midwest shifted from being economically favored to economically disfavored, leading to the painful yet unavoidable collapse of once prosperous cities, exacerbated severely, in many cases, by rampant crime and accompanying drug and alcohol abuse. At the same time, much of rural America is simply shrinking, thanks to increasing efficiency, much of it maintained by disguised welfare in a myriad of rural subsidies, reflecting in part the rural states’ overrepresentation in the Senate and Electoral College.
Currently, both Brad and Paul, and a lot of other liberals, are marvelously pumped by President Biden’s overt commitment to a new dose of “industrial policy” for the U.S., about which I expressed a great deal of skepticism back when this legislation was first being proposed. My biggest complaint about Brad and Paul is that, all too often, they are much more comfortable preaching to the choir instead of lecturing it. I think it “disappointing” that Brad has said nothing about the California Bullet Train to Nowhere, whose tale of woe grows ever more pathetic and that Paul has been similarly silent regarding the Big Apple’s $3.4 billion one mile of subway track. It’s true, as Brad argues, that every nation has an industrial policy of some sort, and the track record of Germany and Japan, for example, two of the leading industrial powerhouses of the world for more than a century, deviates sharply from Adam Smithian concepts. But I would suggest that most industrial policies that work are not designed with the welfare of the workers in mind—as Chip Miller’s Chip War makes abundantly clear. I am extremely dubious about the new breed of “socialist” Democrats, many of them young people severely burned by the Great Recession, who will be determined to make sure that “capitalism” knows who’s boss, getting into fights over whether the company cafeteria should only offer a “woke” localvore menu, for example, along with endless diversity training, and—much more importantly—demanding what will very likely be an overt quota system to ensure that the white patriarchy won’t be in the driver’s seat.
I have expressed my own, entirely unoriginal ideas for promoting economic growth and greater economic equality in the U.S. perhaps most extensively at the start of this very long post titled CRT v. Anti-CRT: Wait, Wait! You’re BOTH Right! Occasionally.. I put a great deal of stress on reversing rampant NIMBYism, half of which, or more, is disguised as “preserving the environment”, something both Brad and Paul fail to note as often, or as stridently, as they should. Paul could, and should, inform his fellow New Yorkers that rent control is a terrible idea that burdens the poor, and Brad could do the same for his Californians regarding their deeply retrograde “freeze” on property taxes, which is simply a form of rent control for the rich. It is impressive to see that, even without Brad’s urging, the tide is apparently turning against NIMBYism in California, a highly welcome development. Know hope, as Obama used to say.
Afterwords—Nothing More to Write
One can do worse than quote Huckleberry Finn. This is a strange tirade I have embarked upon, with a strangely protracted detour and frolic through the history of the Netherlands, which I was not planning when I began this rap, but, well, let the journey take you where it will. There is no attempt at completeness here—just a collection of crotchets and enthusiasms that make a mixed bag indeed. The great fall from the optimism of the year 2000 is hard to process, and this is only a piece of the story. But I think it’s worth the telling.
CORRECTION/UPDATE/SEMI-APOLOGY
Brad links to an excellent (and timely) takedown of NIMBYism, here. Know hope indeed!
1. Brad uses the “thorn” symbol—“þ”—once a functioning letter in the English alphabet, to represent the “th” sound.
2. Consider the difference in both levels of pain and “quality of outcome” when comparing a visit to the dentist in 1940 versus one in 2010. To illustrate, in 1947 the British poet W. H. Auden “celebrated” his 40th birthday by going to the dentist and having his last tooth pulled. How many Americans are toothless at 40 today?
3. Other than the use of the word itself, to which I have previously objected, several times, to wit: Paging Dr. Yeats! Paging Dr. Yeats! and W. B. Yeats called. He wants his word back.
4. A non-Hegelian synthesis, one might say, containing neither rather than both. (Hegel, I guess, saw his own work as largely a synthesis of the Middle Ages and the Enlightenment.)
5. Rotterdam, Europe’s largest port, is located in the delta. Antwerp, located on the Scheldt in what is now Belgium, is Europe’s second largest. Amsterdam, the Netherlands’ largest city, and Europe’s fourth largest port, is north of the delta, on the Amstel, which is now connected to the Rhine via a recent canal.
6. A famous “Analect” of Confucius addressing this issue in discussed in Why an Upright Son Does Not Disclose His Father Stealing a Sheep: A Neglected Aspect of the Confucian Conception of Filial Piety, by Yong Huang. “In the Analects, Confucius recommends to not disclose one’s father stealing a sheep, claiming that zhi 直 lies within it. This passage has become the focus of a heated and prolonged debate among Chinese scholars in the last decade. A proper understanding of zhi, which is central to understanding this whole passage, is to straighten the crooked, or uprighten the non-upright. So what Confucius means is that the upright son ought to make his non-upright father upright; the best way to do so is to remonstrate his father against his wrongdoing, and the best environment for the successful remonstration can be provided by non-disclosure of his father’s wrongdoing.”
7. Confucius did say that women should be not be allowed to learn to read or write. Perhaps fortunately for his image, foot binding did not become a thing until more than a millennium after his death.
8. Classic, though almost—almost!—unreadable, thanks to Tawney’s ridiculously affected prose style, as compulsively ponderous as Gibbon is “elegant”. Born in 1880, Tawney was rooted in traditional English culture, and treats his readers to quotations in medieval Latin, French, and German without offering translations, and quotes the likes of Dante and Goethe without bothering to identify them, on the assumption that “everyone” knows who they are. Yet he was a committed socialist—a Christian socialist, of course—however awkwardly he fit into the British Labour Party. He lived until 1962 and is particularly remembered in the U.K. for his efforts to establish programs for adult education.
9. When I first read Henrich’s book, I was “sure” that somewhere he explained that “WEIRD” was an anacronym for something, but if he did, I can’t find it now. Daniel Dennett has a nice review in the New York Times.
10. The political divisions of Europe were first credited as a possible pre-condition and source in the development of free thought by such Enlightenment thinkers as David Hume, and more recently seconded by contemporary authors like Jared Diamond and Walter Scheidel, mentioned earlier.
11. The Dutch East India Company was actually formed in 1602 in response to the founding of its English (later British) rival in 1600 but eclipsed it almost immediately.
12. When I was a boy, it was easy to find such books as “A Boy’s Book of American Inventors”. (In the UK, one could surely find “A Boy’s Book of British Inventors”.) This sort of thing has died out, being as they are examples of the quintessentially bourgeoise thought crime that anyone can, with a little hard work, and a decent patent law regime, make a million dollars. (The thought that inventions are practical is also deeply offensive to the Left.) Today’s emperors of the Digital Universe, who aspire to centi-billions rather than millions, appeared to be reviving the legend prior to 2008, but the Great Recession, plus some bad boy acting out, seems to have permanently reversed their image. For a refresher on the power of invention, try William Rosen’s highly informative though tediously overwritten The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention, including one of my personal favorites, Cornelis Corneliszoon‘s wind-powered sawmill.
12. It reached 21.5 in April 1980, which certainly helps explains Ronald Reagan’s crushing win in November. Particularly stunning was the Republicans’ win in the Senate, picking up a majority for the first time since 1954, something even many Republicans thought impossible.
13. I count myself a “neoliberal”, meaning I believe that capitalism, and only capitalism, can generate the sort of long-term economic growth necessary to lift the general population out of poverty,
14. Giess I’m feeling a little irresponsible myself here, but, even though I’m definitely tepid on the subject of Obama, I felt the pressure on the president to “seal the deal” with Republicans was utterly ridiculous, since they clearly had no desire to deal. They didn’t want a deal; they wanted destruction, and, if that meant destroying America’s credit rating, well, what’s wrong with that, as long as it gets the job done?
