Government and the American Economy: A New History

Published by EH.NET (October 2007)

Price Fishback et al editors, Government and the American Economy: A New History. Chicago: University of Chicago Press, 2007. xix + 613 pp. $35 (paper), ISBN: 978-0-226-25128-8.

Reviewed for EH.NET by Gavin Wright, Department of Economics, Stanford University.

Dedicated to Robert Higgs and prepared by a group of his friends, colleagues and former students, Government and the American Economy differs substantially from the conventional academic festschrift. Rather than inviting scholars to submit original papers and then tortuously pounding them into a theme to please a publisher ? the most common scenario in our profession ? this group has assigned time periods and specialty topics to individual authors, so as to generate a comprehensive historical survey of government in American economic history. The result is a series of stimulating cameos by a distinguished assemblage of economic historians.

The lead editor is Price Fishback, the Frank and Clara Kramer Professor of Economics at the University of Arizona, who contributes a dedication, an introductory chapter, and three substantive essays ? on the Progressive Era, the New Deal, and the Post-World War II period. Another two-time contributor is Gary Libecap, who covers both “Property Rights and Federal Land Policy” and “The Federal Bureaucracy: From Patronage to Civil Service.” The rest of the cast is as follows: Stanley L. Engerman on Government in Colonial America; Robert A, McGuire on the Founding Era (1774-1794); Richard Sylla on the financial system since 1789; John Joseph Wallis on the National Era (1790-1860); Jeffrey Rogers Hummel on the Civil War and Reconstruction; Robert A. Margo on government and race; Mark Guglielmo and Werner Troesken on the Gilded Age; Sumner La Croix on Labor, Education and Health; Robert Higgs on the World Wars; Randal R. Rucker and E.C. Pasour Jr. on farm programs; and Lee Alston and Joseph P. Ferrie on the role of the South in shaping U.S. welfare policy.

What general themes emerge from this 600-page, four-century inquiry into the role of government in the American economy? In truth, unifying themes are not easy to find. In light of Bob Higgs’ well-known libertarian position, one might have expected to encounter skepticism and perhaps even hostility towards government actions, and such perspectives are indeed represented in the volume. But Fishback’s dedication is careful to say that not all the contributors fully share Higgs’ views on government, and it appears that the writing process (as opposed to the assignment of topics) was highly decentralized. Thus Sylla paints a generally positive picture of the evolution of the U.S. financial system to its present status as “just about the best financial system in the world” (115), albeit a record punctuated by misguided policy reversals. Wallis emphasizes the active growth-promoting policies of state governments in the antebellum era (during which economic growth accelerated towards modern rates), and notes that the appropriateness of this activism was “never seriously challenged” at that time (182). Margo notes that governments have often been hostile, but at other times beneficial, to the wellbeing of African-Americans (249-50). Thus, the essays in the volume reflect a diversity of conclusions and perspectives on the impact of government policies at various times. Unfortunately, these variations or differences of opinion (if that is what they are) are not really joined or confronted explicitly in the volume.

Although the introductory material does not quite say so, the essays seem addressed mainly to students or to general-interest readers, rather than to specialists. If there is a general weakness, it is that many of the essays have a textbookish character, bending over backwards to be “fair and balanced,” and referring the interested reader to the literature (often the author’s own work) rather than making a forceful case for a favored interpretation. Personally, I prefer the more argumentative, provocative chapters, such as Jeff Hummels’ argument that the Civil War marked the decisive transition in the rise of State power, or Bob Higgs’ similar case for the lasting impact of the World Wars in the twentieth century. Virtually any of the chapters can be assigned as a reliable guide to the literature, but if you want to provoke response and discussion from students, I recommend Hummels and Higgs.

The same might be said for the concluding chapter by Price Fishback, “Seeking Security in the Postwar Era,” whose opening footnote generously credits Bob Higgs for much of the organization and many of the insights. The central theme is that “after World War II the demand for government protection rose to new heights, and the corresponding loss of individual economic liberties proceeded apace” (508).

There is an interesting progression in the three Fishback chapters. The Progressive Era is interpreted as “interest group politics writ large,” sometimes with Win-Win outcomes, as in the case of Workers’ Compensation ? the subject of Fishback’s prize-winning book (joint with Shawn Kantor). On the New Deal (another object of his own research attention), Fishback’s conclusion is judiciousness itself: “There were so many changes and so many programs and so many problems that it is hard to sort out how successful the New Deal programs were at resolving these issues” (417). Thus, Fishback does not contend with the major interpretive syntheses of the New Deal, such as David Kennedy’s Freedom from Fear. When it comes to the postwar era, however, the chapter portrays an inexorable extension of government regulation and power, with no end in sight other than those set by the consideration that “an increasingly voracious predator must ultimately destroy its prey and therefore its means of sustenance” (546). The positive government-assisted economic and social achievements of the postwar era ? expanded educational opportunities, improved access to home ownership, virtual abolition of poverty among the elderly, social and economic liberation for African-Americans, women, and other minorities, and dramatic improvement in environmental conditions, to list just a few ? are barely or grudgingly mentioned. (Environmental gains are acknowledged, but the main focus of this section [537-542] is on the inefficiency of much environmental regulation.)

There are at least two possible ways to interpret this pattern. One is that the country really has been on a long downward slide, so that the mixed outcomes of governmental activity in earlier eras ultimately gave way to the grimly oppressive reality of more recent times. Another possibility, however, is that in those subject areas on which Fishback has himself conducted careful, detailed, empirical research, he is more inclined to see the full range of successes, failures, and trade-offs that comprise the historical record.

These observations are only meant to say, however, that the chapter succeeds in capturing attention and provoking responses. Like the volume as a whole, it can be recommended with confidence to scholars, students and interested readers.

Gavin Wright is the William Robertson Coe Professor of American Economic History at Stanford University. His article, “The Economics of the Civil Rights Revolution,” will appear in Winfred O. Moore, Jr. and Orville Vernon Burton, editors, Towards the Meeting of the Waters: The Civil Rights Movement in South Carolina (University of South Carolina Press).