My Amazon Review of J. Bradford DeLong's "Slouching Toward Utopia: An Economic History of the Twentieth Century"

The Long Twentieth Century 

U.C. Berkeley economics professor and former Clinton treasury official Brad DeLong has written a narrative economic history of the long twentieth century which he argues began in 1870 and ended in 2010 with the great financial crisis. It was during this time that economic growth exploded and humanity, for the most part, escaped the Malthusian trap. Along with rising living standards the long twentieth century brought with it industrial strength destruction and environmental degradation. He attributes this to the rise of the giant corporation, the industrial research laboratory and globalization. However this book differs from Robert Gordon’s “The Rise and Fall of American Growth” (Shulmaven: My Amazon Review of Robert J. Gordon's "The Rise and Fall of American Growth") in that DeLong covers far more than technological developments.

 

DeLong frames his argument over the differences between the views of Friedrich von Hayek and Karl Polanyi. DeLong characterizes Hayek as believing “the market giveth and the market taketh away, blessed be the name of the market” and Polanyi’s view that the market is made for man, not the other way around. A long time ago I had an economics professor who would open each class by invoking the blessing of the market and he was a liberal Democrat.  DeLong’s utopia represents a merger between Hayek and Polanyi that ends up with a social democratic version of Keynesian economics.  What he is vague about is that when he discusses the notion of Polanyian rights, which amount to the belief that citizens are entitled to a host of economic benefits, earned and unearned with no real limiting factors. DeLong is a fan the European entitlement state, but he fails to mention that most of the entitlements are funded by regressive payroll and value added taxes that would be a very rough sale in America.

 

Where the book is good, he has excellent vignettes on the lives of real people who were making history such as Nikola Tesla and Leon Trotsky. He also goes into the horrors of “really existing socialism” in both its Russian and Chinese forms. In that sense DeLong is a true social democrat. He is also very good in discussing how the 1970’s inflation undid the Keynesian consensus and led to the neo-liberal order which then collapses as deregulated financial markets were consumed by a fire of their own making.

 

What DeLong leaves out is that much scientific progress came outside of the organized industrial laboratories. He gives no credit to governmental and university labs, and he leaves out the garage work of Bill Hewlett and David Packard, Bill Gates, and Steve Jobs. These folks were tinkerers in the tradition of the early Thomas Edison. Further for some reason he leaves out of his discussion the role of the oil industry whose products fueled the mobility of his long twentieth century. Without the oil industry little of what he discussed would have occurred.

 

DeLong has written an excellent narrative history of our era; just take his politics with a few grains of salt.

For the full Amazon URL see: The Long Twentieth Century (amazon.com)

My Amazon Review of Janek Wasserman's "The Marginal Revolutionaries: How Austrian Economists Fought the War of Ideas"

Something was in the Coffee

I first learned of Eugen von Bohm-Bawerk from the late and great UCLA economist Jack Hirshleifer’s capital theory class nearly 50 years ago. Who knew he was an Austrian and I had never heard of the Austrian School of economics. I have since learned of the people and ideas associated with the school. Here University of Alabama history professor Janek Wasserman presents a way too detailed look at the people and ideas of the Austrian School.

There must have been something in the coffee of late 19^th and early 20^th Century Austria-Hungary. In Vienna there lived the founders of the Austrian school including the above mentioned Bohm-Bawerk and Friedrich Hayek, Joseph Schumpeter, Carl Menger, Fritz Machlup, Gottfried Haberler, Oscar Morgenstern, and Ludvig von Mises. Not to be overshadowed in the dual monarchy, Budapest produced such physicists as Edward Teller, Leo Szilard, John von Neumann, and Dennis Gabor around the same time. In fact the two strands would merge when Morgenstern teamed up with von Neumann to write the “Theory of Games and Economic Behavior” in 1944.

The Austrian school was a major promoter of the now accepted marginal utility theory of value. Menger along with Jevons and Walras developed the theory in the 1870s and it was codified by Marshall in the 1890s. Marginal utility stood in direct contrast to the classical labor theory of value developed by Adam Smith and David Ricardo that was later expanded by Karl Marx.

The Austrians viewed themselves as classical liberals and as such they stood foursquare in opposition to the growing appeal of socialism that developed in the 1880s. Their theory was developed in the coffee houses of Vienna and many of their seminars were open to all. Indeed Bohm-Bawerk was open enough to invite socialists Otto Bauer and Rudolf Hilferding and the soon to be Bolshevik   revolutionary Nikolai Bukharin. But make no mistake, the Austrians were suspicious of popular democracy.

Their world first crashed with the onset of World War I and its aftermath and then the leading lights were forced into exile with the arrival of Hitler. Two emigres to the West became famous in the 1940s with Hayek’s “The Road to Serfdom” and Schumpeter’s “Capitalism, Socialism and Democracy.” 

With collectivism on the rise in the 1940s, they formed the Mont Pelerin Society where unlike the looser seminars of pre-World War I Vienna, dissent was not welcomed. It was through Mont Pelerin that the Austrians linked up with such Chicago School luminaries as Milton Friedman and George Stigler. It was at one of their conferences that von Mises called them out as socialists. Splits were inevitable.

Nevertheless after the Austrians linked up with Chicago and they received increasing funding from sympathetic foundations their influence soared as their views of limited government, free trade, floating exchange rates and the information economy percolated up to policy makers on both sides of the Atlantic. In a sense they were the godfathers of the neoliberal world.

Wasserman tells the story in way too much detail which is great for the academic reader, but not so much for the educated lay reader.

The Full amazon URL appears at: https://www.amazon.com/review/R1ZQEF4OUM2GWU/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv