EH.net is owned and operated by the Economic History Association
with the support of other sponsoring organizations.

Capital Gains: Business and Politics in Twentieth-Century America

Editor(s):John, Richard R.
Phillips-Fein, Kim
Reviewer(s):Benson, Erik

Published by EH.Net (July 2017)

Richard R. John and Kim Phillips-Fein, editors, Capital Gains: Business and Politics in Twentieth-Century America. Philadelphia: University of Pennsylvania Press, 2017. x + 301 pp. $55 (hardcover), ISBN: 978-0-8122-4882-1.

Reviewed for EH.Net by Erik Benson, Humanities Division, Cornerstone University.

In this volume, Richard John of Columbia University and Kim Phillips-Fein of New York University compile eleven essays on the relationship between business and government in twentieth-century America. Contrary to popular perception, this relationship has not been exclusively adversarial, nor have business elites been exclusively committed to “free market fundamentalism” (p. 19). Their interests, views, and activities have varied significantly, and thus their involvement in politics has been complex.

In their introductory overview, the editors argue that in light of the importance of the political economy to the country, a renewed focus on and better understanding of its history is vitally necessary. They acknowledge the contributions of Progressive and corporate liberal scholars, but assert that the role of business elites in the policymaking process has suffered from neglect. Fortunately, a new generation of scholars is emerging who draw upon economic, political, and social perspectives to render a more complex portrayal of America’s political economy. Much as others have done with groups such as the working class, these scholars are presenting the business elite as real actors with complex and varied motives, approaches, and outcomes. At the same time, as a group, the business elite has been distinct in successfully influencing policymaking, at the municipal as well as national level. Acknowledging that the essays do not support overarching generalizations, the editors do note some common themes and insights. One is that the relationship between business and government has been “protean” — at times adversarial, at times not (pp. 19-20). Furthermore, when one considers local versus national perspectives, and the varied motives and interests of the different actors, the relationship becomes even more complex. Finally, sound scholarship based on archival research is necessary for a better understanding of the American political economy.

The volume has four parts. The first, covering the Progressive era through the 1920s, contains two essays. The first essay, by Laura Phillips Sawyer, reveals how business interests, worried by the unpredictability of court rulings in antitrust cases, successfully addressed this by establishing the U.S. Chamber of Commerce (USCC) in the 1910s. The USCC facilitated a working relationship with key federal officials and agencies that resulted in predictable economic policies. In the second essay, Daniel Amsterdam shows how business elites in Detroit and Atlanta successfully lobbied for dramatic increases in municipal spending, infrastructure, and regulation. Motivated by a mix of economic interest and reform impulse, these elites were quite willing to wield municipal power to establish a “civic welfare state,” even as they opposed a national welfare state (p. 45).

The second part, covering the New Deal and World War II, has three essays. In the first, Eric S. Hintz chronicles how the National Association of Manufacturers (NAM) blunted a New Deal initiative to reform the patent process. The NAM did so with a sophisticated public relations campaign that celebrated past inventions as pioneering achievements under the existing patent system, thereby portraying most reform as unnecessary. The second essay, by Mark R. Wilson, contemplates the “privatization” of American military procurement. Contrary to most accounts, the evolution of the “military-industrial complex” did not follow a linear trajectory. During the Progressive era, the military developed “in-house” production facilities for war material (p. 80-81). Yet it subsequently reversed course, relying once again on private contractors; this corresponded to the anti-statist turn of the post-World War II period. The third essay, by Richard John and Jason Scott Smith, highlights the work of Thomas McCraw, a leading scholar in the history of America’s political economy. Over a long and prolific career, McCraw “helped lay the foundations” for the now-burgeoning “history of capitalism” (p. 116).

The third part contains three essays that focus on business and economic development. The first, by Tami J. Friedman, uncovers a significant division in business ranks over federal involvement in the post-World War II economy. Decades before the Reagan administration, national business organizations (e.g. the USCC) were articulating an ideology of “free enterprise” and criticizing federal largesse. Yet some local and regional business interests, notably in the Northeast where industries were already failing, welcomed federal aid. The second essay, by Brent Cebul, presents an analogous story set in postwar rural Georgia. Here, business leaders formed local and regional associations to pursue federal funding for development projects. This represented a continuation of the “supply-side liberalism” of the New Deal (p. 143). The third essay, by Elizabeth Tandy Shermer, examines the efforts of business leaders in southern and western states to tailor higher education systems to their interests. This involved complex dealings with political and educational leaders, and while the systems expanded greatly, tensions over the purpose of higher education persisted.

The three essays in part four address business and liberalism. The first, by Jennifer Delton, exposes an internecine struggle between “conservatives” and “liberals” in the NAM during the 1950s and ‘60s. Liberals argued that business needed to balance profitability with “social responsibility,” which conservatives roundly condemned (p. 182). For a brief time, the liberal viewpoint held sway in the historically conservative NAM. In the second essay, Eric R. Smith chronicles the campaign of “Business Executives Move for Peace” (BEM) against U.S. military involvement in Vietnam. BEM played a unique role in the antiwar movement, employing economic arguments and distinct tactics. In the final essay, Pamela Walker Laird shows how business responded to the mandate for workplace equality in the wake of the Civil Rights Act of 1964. Initially, businesses complied to protect their interests, but as time went on, they came to champion diversity as a corporate value, going beyond the governmental mandate.

As a collection of essays focused on select topics, this is not a comprehensive account of the relationship between business and politics in twentieth-century America, nor does it purport to be. Rather, its purpose is to challenge the conventional wisdom about the American political economy by highlighting oft-overlooked complexities. In whole, the essays do this. They evidence extensive research, especially in primary sources, and their arguments are generally well presented. For their part, the editors provide a very useful framework for the essays. The work certainly contains points that are up for debate, yet these do not detract from its value; in fact, they represent opportunities for future scholarly engagement. In addition to scholars, undergraduate courses in business history could benefit from this work, as the essays are quite accessible and ideal for class discussion. In all, this is a fine scholarly contribution.

Erik Benson is the author of Aviator of Fortune: Lowell Yerex and the Anglo-American Commercial Rivalry, 1931-46 (2006), a study of a pioneering airline entrepreneur. He is continuing research in the history of flight, and serves on the editorial staff of Essays in Economic and Business History.

Copyright (c) 2017 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (July 2017). All EH.Net reviews are archived at http://eh.net/book-reviews/

Subject(s):Business History
Government, Law and Regulation, Public Finance
Geographic Area(s):North America
Time Period(s):20th Century: Pre WWII
20th Century: WWII and post-WWII