Pocketbook Politics: Economic Citizenship in Twentieth-Century America

Published by EH.NET (July 2005)

Meg Jacobs, Pocketbook Politics: Economic Citizenship in Twentieth-Century America. Princeton, NJ: Princeton University Press, 2005. xii + 349 pp. $35 (cloth), ISBN: 0-691-08664-8.

Reviewed for EH.NET by Robert Collins, Department of History, University of Missouri – Columbia.

Over the past several decades historians have explored the idea of the United States as a mass consumption society to good advantage. Indeed, they have come to regard mass consumption as one of the defining elements of cultural modernity (hence, the tendency to view the 1920s as the “first modern decade”). But the political impact of mass consumption has been rather more elusive. Following the lead of those intellectuals who applied the mass culture critique to the United States at mid-century, the conventional wisdom has tended to consider mass consumption primarily as an escape from politics rather than a vehicle for politics. In this superb book, Meg Jacobs of the Massachusetts Institute of Technology rebuts that overly simple interpretation by arguing persuasively that the pocketbook issues of how much things cost and the ability of the mass of American consumers to afford them lay at the heart of left-wing politics over the first half of the twentieth century.

The pocketbook politics Jacobs describes unfolded over the first six decades of the twentieth century on both the local and national levels, encompassing activities that ranged from grass-roots protests such as rent strikes and consumer boycotts to congressional law-making and the bureaucratic administration of national wage and price controls. Consumerist forces, which included at various times and in differing combinations ordinary bargain hunters, social reformers, intellectuals, labor unionists, and liberal government officials, pursued a number of interconnected goals. First, they attempted to exert downward pressure on prices, demanded better information about products, and called for minimum standards of product safety and purity. Second, they supported the drive for industrial unionism and higher wages as a way to bring the mass of people up to a morally acceptable “American standard of living.” Third, they developed an influential view of the U.S. economy that held that overall economic prosperity, the welfare of all, depended on the maintenance of mass purchasing power. As Edward Filene, the Boston merchandiser and archetypal “purchasing-power progressive,” put it in the 1920s, “Production cannot be profitable unless it produces, first of all, consumers” (p. 80).

The economic collapse of the 1930s appeared to liberals to validate the earlier concerns about underconsumption, while business saw overproduction as the more serious problem. Consequently, Jacobs argues, policymakers in the early years of the New Deal alternated between trying to boost consumers’ buying power and trying to raise prices; sometimes, as in the National Recovery Administration (NRA), they tried to achieve both ends at the same time. Gradually, however, left-leaning New Dealers created a formidable political movement by joining together consumer interests pursuing lower prices and higher product standards and labor interests fighting for higher wages and stronger unions. The result was a genuinely radical New Deal, one that tried to redistribute both wealth and power while challenging business prerogatives and attacking monopolies.

The culmination of leftist purchasing-power politics came in World War II with the creation of a command economy in which the state took control of wages and prices, most notably through the operations of the Office of Price Administration. The OPA, in Jacobs’s words, “served as a radical model of state management: a popular government agency working in alliance with a coalition of labor, consumers, and social liberals that challenged the right of private industries to set their own prices and sell their items freely” (p. 180). The end of World War II witnessed a bitter and protracted struggle between liberals who sought to extend the OPA and its far-reaching apparatus of controls and conservatives who sought to abolish it. The conservatives won, and the return to a market economy constituted a critical turning point in the history of the modern American political economy. Thereafter, despite a brief experience with wage and price controls during the Korean War and continued anxiety over inflation in the 1950s, liberalism gradually moved away from its quantitative, purchasing- power orientation toward a more qualitative and rights-centered brand of politics that flourished in the 1960s and beyond.

No short summary can do justice to Jacobs’s achievement in this volume. In arguing that “twentieth-century consumerism was not merely a distraction for the working class nor simply a by-product of national prosperity” but rather “the linchpin in an ongoing political debate about how to organize, reform, and regulate American capitalism,” she provides an important reinterpretation of the contours of liberal politics in the first half of the twentieth century (p. 265). Moreover, she makes this large argument compelling by grounding it in impressive archival and secondary research and a truly striking command of the politics and policies of the broad time-span under discussion.

On the whole, Jacobs is approving of the consumer liberalism she describes so well, which she views as exemplifying “the democratic potential of an engaged citizenry pursuing the promise of a better, richer life” (p. 265). But she is never uncritical or tendentious, and remains alert throughout to the subtleties, contradictions, and ironies embedded in her topic.

In the end, one’s assessment of purchasing-power liberalism is likely to be strongly influenced by how one views the role of prices and markets in a capitalist system. Jacobs’s protagonists tended to view the pricing mechanism more in terms of power and fairness than in terms of efficiency. They did not dwell on the crucial role prices play in the allocation of resources in a market economy. Nor, for that matter, does Jacobs, and that fact colors her analysis in subtle ways. For example, she explains the failure to extend OPA-like controls into the postwar world chiefly in political terms, emphasizing the internal stresses within the liberal coalition between labor fighting for higher wages and an expanding middle-class fearful of inflation. Readers who particularly value the price system for its contribution to efficient resource allocation will likely attribute the collapse of the OPA controls regime to its own inevitably stultifying, long-run economic inefficiency. Regarding the extension of the OPA, what liberals interpret as an historic missed opportunity, conservatives will view as a narrow escape.

It is a tribute to this first-rate study that it opens up such fundamental issues in exciting new ways. Every serious student of modern U.S. political history and political economy will profit from reading Jacobs’s path-breaking scholarship.

Robert Collins is Middlebush Professor of History at the University of Missouri-Columbia, where he teaches modern U.S. history. In spring 2006 Columbia University Press will publish his book Eighties America: The Recentering of Politics and Culture in the Age of Reagan.