DeLong's Grasping Reality: Economy in the 2000s & Before: Slouching Towards Utopia—Reviews & Interviews

But do let me start by trying to correct the record in one respect:

Joe Weisenthal Really Likes My "Slouching Towards Utopia"!

Brad DeLong — Mon, 17 Jun 2024 20:21:24 GMT

& raises very important questions about economists’ false beliefs that modern science has solved the problem of (1) discovery, that our patent & copyright systems do as good a kludgy job as can be done about (2) development, and that the major diseases afflicting (3) deployment & (4) diffusion can be properly & easily treated with a good dose of neoliberal shrink-the-rapacious-state snake oil…

Joe Weisenthal writes:

Joe Weisenthal: Markets: Things You Need to Know to Start Your Day: Americas: ‘It's summer, so this is when people like to talk about books, and what they're reading at the beach and all that stuff. And so on that note, over the weekend I finished up Slouching Towards Utopia <http://bit.ly/3pP3Krk>, which is Brad Delong's book on the economic history of the 20th Century (or rather the Long 20th Century, which he defines as 1870-2010). I'm not gonna write up a review or go into it much, though I'll say that it was excellent, interesting, and the writing was unusually delightful, given the topic… <https://www.bloomberg.com/news/newsletters/2024-06-17/five-things-you-need-to-know-to-start-your-day-americas>

First of all: My spirits are greatly lifted by the fact that Joe liked the book!

Second of all: SO YOU ALL GO BUY BOOK NOW!! <http://bit.ly/3pP3Krk>

Third of all: I am even more impressed by the fact that Joe finished the book! The full book file is 188,000 words (admittedly, including the index and some notes that did not make it into the first edition but that I want to include when I revise the book.) That means that Joe has spent a huuuuge amount of time sharing his brain with the sub-Turing instantiation of the mind of the author that we spin up, run on our own wetware, converse with, and often argue with whenever we read a book—that is, with me! It is a huge favor to me that he has spent so much time hanging out—only in an internal-mental-dialogue way, admittedly—with me (or a compressed-network low-parameter version of me)!

Fourth: I want a review! Since I cannot redownload anything from the sub-Turing instantiation of my mind that ran on Joe Weisenthal’s wetware for so long at the beach, I feel cheated and deprived of my rightful feedback—particularly with respect to what I got bigtime wrong about the book!

But Joe goes on:

One thing (among many) that stood out was his discussion of why the last century saw the emergence of such a gigantic gap between rich countries (the US, Western Europe, and also parts of East Asia) vs. almost everyone else. He writes that in theory this shouldn't have taken place. In theory, it should have been easy for poorer countries to take advantage of various technological breakthroughs discovered first elsewhere: “Many global-south economies had managed to take some advantage of technologies from the global north in their domestic production. Others had benefited substantially from enhanced and richer markets for their exports. But the results were strikingly at variance with the expectations of neoclassical, neoliberal, and neoliberal-adjacent economists like myself, who hold that discovery is—or should be—more difficult than development, that development is more difficult than deployment, and so that the world economy should "converge" over time. Between 1911 and 1990 that did not happen. The opposite did: the world economy diverged to a stunning degree.”….
It's interesting to think about what everyone's talking about now here in the US. So much of the angst in the US is about the challenge in deploying advanced, cutting-edge technologies…. The technological discovery part (which economists might have assumed was the real bottleneck) isn't the aspect people are concerned with. It's the deployment. Tracy Alloway and I have done a few interviews with Jigar Shah… of the Loan Program Office at… Energy… [who] now has hundreds of billions of dollars in lending capacity…. Much of… technology [is what]… DOE have been working on literally for decades…. The challenge is getting something… into the field… operating in an efficient, competitive manner…. And of course this is true with things that aren't at the cutting edge technologically as well….
The US economy faces a challenge that for much of the 20th century we might have associated with developing economies…. Technology… exists…. The hard part is in the coordination and cooperation required to get them running… <https://www.bloomberg.com/news/newsletters/2024-06-17/five-things-you-need-to-know-to-start-your-day-americas>

Indeed: (1) discovery, (2) development, (3) deployment, and (4) diffusion. We economist types are in awe of the real scientists, and think that scientific discovery is the real hard part—learning enough about what is really going on so that you can reliably control nature. Like I was reading yesterday about the discovery of guncotton—nitrocellulose:

Wikipedia: Nitrocellulose: ‘Around 1846 Christian Friedrich Schönbein… was working in the kitchen of his home in Basel, he spilled a mixture of nitric acid (HNO₃) and sulfuric acid (H₂SO₄) on the kitchen table. He reached for the nearest cloth, a cotton apron, and wiped it up. He hung the apron on the stove door to dry, and as soon as it was dry, a flash occurred as the apron ignited…. The patent rights for the manufacture of guncotton were obtained by John Hall & Son in 1846, and industrial manufacture of the explosive began at a purpose-built factory at Marsh Works in Faversham, Kent…. The manufacturing process was not properly understood and few safety measures were put in place. A serious explosion… killed almost two dozen workers, resulting in the immediate closure of the plant. Guncotton manufacture ceased for over 15 years until a safer procedure could be developed… <https://en.wikipedia.org/wiki/Nitrocellulose>

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Why does nitrocellulose have a spontaneous ignition point of roughly 300F (so that you can make it and store it, if you do it carefully), and a flash point of roughly 50F (so you need to store it very carefully, and it will let off a lot of energy if disturbed)? Figuring out what was actually going on does not appear to have been straightforward, as the key task was to figure out how it is that -NO₂ groups can form and then be (a) stable enough to hang around, while (b) still produce a lot of energy when they are transformed. As I understand it, (b) is almost a given considering how much the nitrogen atom would prefer to be in an N₂ rather than an NO₂. But why (a)?

The process uses a mixture of nitric acid and sulfuric acid to convert cellulose into nitrocellulose…. Nitrocellulose is… a nitrate ester. The glucose repeat unit (anhydroglucose) within the cellulose chain has three OH groups, each of which can form a nitrate ester…. Eplosives are mainly the trinitrate…. The chemical equation for the formation of the trinitrate is:
3 HNO₃ + C₆H₇(OH)₃O₂ H₂SO₄→ C₆H₇(ONO₂)₃O₂ + 3 H₂O….
The principal uses of cellulose nitrate is for the production of lacquers and coatings, explosives, and celluloid… <https://en.wikipedia.org/wiki/Nitrocellulose>

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But by now our scientists are so good and know so much. We have demonstrated knowledge of how and capability to turn lead (well, bismuth) into gold via nucleon bombardment. We have the secret of the Philosopher’s Stone: we literally know how to turn lead (Pb: 82p, 125n) into gold (AU: 79p, 118n), as alchemists from Zosimos of Panopolis to Isaac Newton of Cambridge had sought, and beyond. But that knowledge does not a profitable business create: Physical Review C transmutation-via-nucleon-bombardment paper coäuthor Glenn Seaborg guestimated that “it would cost more than one quadrillion dollars per ounce to produce gold by this experiment…” There are enormous remaining tasks for “pure science”, but they involve figuring out how to use what we know about physics, chemistry, and biology to manage very complex and adaptive systems. Beyond that, our tasks are all further down the chain—finding a sufficiently resource-efficient economically-viable pathway, and proceeding from there.

We economists tend to say that the market can do most of the job—at least once we have taken care of Pigouvian positive and negative production-and-use externalities, Beveridgian wealth externalities, and Keynesian macroeconomic externalities. That part of the job that the market cannot do with respect to science and (1) discovery we throw over the wall to Michael Polanyi and his ideas about the “fiduciary institution” of science. That part of the job that needs to be done with respect to (2) development we claim that patent and copyright system handles in its kludgy way about as well as can be handled. And as for the rest—(3) deployment and (4) diffusion—we say that the properly supported market will do as good a job as can be done, and will rapidly develop optimal sub-market organizations of coöperation, as long as it is protected from rapacious and predatory governments that exist at many levels, and that are survivals from the day of pre-liberal societies of domination.

But it is quite clear that we are wrong.

References:

Aleklett, K, & al. 1981. “Energy dependence of 209Bi fragmentation in relativistic nuclear collisions”. Physical Review C. 23:3 (March). <https://journals.aps.org/prc/abstract/10.1103/PhysRevC.23.1044>.
DeLong, J. Bradford. 2022. Slouching Towards Utopia: An Economic History of the Twentieth Century. New York: Basic Books. <http://bit.ly/3pP3Krk>.
Fischer, Frank, &Alan Mandell 2009. “Michael Polanyi's Republic of Science: The Tacit Dimension”. Science as Culture. 18:1 (March), pp. 23-46. <https://doi.org/10.1080/09505430802705889>.
McGuire, J.E. 1967. “Transmutation & Immutability: Newton's Doctrine of Physical Qualities”. Ambix> 14:2 (June), pp. 69-95. <https://www-tandfonline-com.libproxy.berkeley.edu/doi/epdf/10.1179/amb.1967.14.2.69>.
Weisenthal, Joe. 2024. "Markets: Things You Need to Know to Start Your Day: Americas: June 17." Bloomberg. <https://www.bloomberg.com/news/newsletters/2024-06-17/five-things-you-need-to-know-to-start-your-day-americas>.

Here’s the full thing:

Joe Weisenthal: Markets: Things You Need to Know to Start Your Day: Americas: ‘It's summer, so this is when people like to talk about books, and what they're reading at the beach and all that stuff. And so on that note, over the weekend I finished up Slouching Towards Utopia <http://bit.ly/3pP3Krk>, which is Brad Delong's book on the economic history of the 20th Century (or rather the Long 20th Century, which he defines as 1870-2010).
I'm not gonna write up a review or go into it much, though I'll say that it was excellent, interesting, and the writing was unusually delightful, given the topic.
One thing (among many) that stood out was his discussion of why the last century saw the emergence of such a gigantic gap between rich countries (The US, Western Europe, and also parts of East Asia) vs. almost everyone else. He writes that in theory this shouldn't have taken place. In theory, it should have been easy for poorer countries to take advantage of various technological breakthroughs discovered first elsewhere: “Many global-south economies had managed to take some advantage of technologies from the global north in their domestic production. Others had benefited substantially from enhanced and richer markets for their exports. But the results were strikingly at variance with the expectations of neoclassical, neoliberal, and neoliberal-adjacent economists like myself, who hold that discovery is — or should be — more difficult than development, that development is more difficult than deployment, and so that the world economy should "converge" over time. Between 1911 and 1990 that did not happen. The opposite did: the world economy diverged to a stunning degree…”
Obviously the context here is, as mentioned, poorer, developing economies. But it's interesting to think about what everyone's talking about now here in the US.
So much of the angst in the US is about the challenge in deploying advanced, cutting-edge technologies. Thinking about the energy transition, or attempts to revitalize US semiconductor manufacturing, or batteries, or EVs, or anything else, almost all the discourse is about how the actual building is what's difficult here. At least for the most part, the technological discovery part (which economists might have assumed was the real bottleneck) isn't the aspect people are concerned with. It's the deployment.
Tracy Alloway and I have done a few interviews with Jigar Shah, the head of the Loan Program Office at the Department of Energy. Thanks to the Inflation Reduction Act, his office now has hundreds of billions of dollars in lending capacity to help qualifying early stage clean energy companies get the funding they need to get their technology up and running and out into the market.
A point that he consistently makes is that the technology risk itself isn't the hard part. Much of what's emerging is technology that people at the DOE have been working on literally for decades. The main challenge is not in coming up with something new that might work to produce clean energy. The challenge is getting something that's shown to work out into the field, and operating in an efficient, competitive manner. One key ingredient to making that happen is finding the necessary capital which is where the LPO has a role.
Anyway, it's no wonder his mantra is Deploy, Deploy, Deploy. At least as he sees it, it's not the discovery that's most difficult, it's the getting it out into the real world part.
And of course this is true with things that aren't at the cutting edge technologically as well. Nuclear has been around for a long time, and likely has a role to play in improving the grid. But it's hard to deploy, at least in the US, at least in some categories.
So to an extent, the US economy faces a challenge that for much of the 20th century we might have associated with developing economies. The technology to achieve things people want exists. Thinking them up and showing they can work is not the hard part. The hard part is in the coordination and cooperation required to get them running… <https://www.bloomberg.com/news/newsletters/2024-06-17/five-things-you-need-to-know-to-start-your-day-americas>

"Slouching Towards Utopia": The Sean Illing "Grey Area" Interview

Brad DeLong — Thu, 22 Feb 2024 19:21:00 GMT

We cover von Hayekian vs. Polanyian imperatives in the context of successive waves of Schumpeterian creative destruction; I have long thought that successful execution of my book project would have required giving much more pride of place to Schumpeter; I am starting to think that I should also have included a focus on a trinity of economists: Keynes, Beveridge, & Pigou to adjust the liberal system to compensate for macroeconomic externalities, income-distribution externalities, and plain-old externality externalities; & I am starting to think I should have done much more with modes of societal organization—market, bureaucracy, democracy, and whatever we think “civil society” is…

<https://megaphone.link/VMP2764898237>

Sean Illing talks with me about Slouching Towards Utopia <bit.ly/3pP3Krk> and my claim that the “long twentieth century” was the most consequential period in human history. It saw the creation of the institutions enabling and supporting rapid technological growth and full globalization. It set humanity on a path towards improving life, defeating scarcity, and—perhaps—enabling real freedom.

But... this has run into some problems…

Sean and I talk about the power of markets, how the New Deal led to something approaching real social democracy, and why the Great Recession of 2008 and its aftermath—perhaps—is a herald of the possible end of this momentous era, plus many, many other topics.

References:
Slouching Towards Utopia: An Economic History of the Twentieth Century by J. Bradford DeLong (Basic; 2022)
The Road to Serfdom by Friedrich von Hayek (1944)
The Great Transformation by Karl Polanyi (1944)
Capitalism, Socialism and Democracy by Joseph Schumpeter (1942)
"A Short History of Enclosure in Britain" by Simon Fairlie (This Land Magazine; 2009)
"China's Great Leap Forward" by Clayton D. Brown (Association for Asian Studies; 2012)
What Is Property? by Pierre-Joseph Proudhon (1840)
The Rise and Fall of the Neoliberal Order by Gary Gerstle (Oxford University Press; 2022)
Apple's "1984" ad (YouTube)
The General Theory of Employment, Interest and Money by John Maynard Keynes (1936)
"The spectacular ongoing implosion of crypto's biggest star, explained" by Emily Stewart (Vox; Nov. 18)
"Did Greenspan Add to Subprime Woes? Gramlich Says Ex-Colleague Blocked Crackdown" by Greg Ip (Wall Street Journal; June 9, 2007)
"Families across the country are tightening their belts and making tough decisions. The federal government should do the same," from President Obama's 2010 State of the Union Address (Jan. 27, 2010)
"The Eighteenth Brumaire of Louis Bonaparte" by Karl Marx (1852)
Why We're Polarized by Ezra Klein (Simon & Schuster; 2020)
The Paradox of Democracy: Free Speech, Open Media, and Perilous Persuasion by Zac Gershberg and Sean Illing (U. Chicago; 2022)

This episode was made by:
Producer: Erikk Geannikis
Editor: Amy Drozdowska
Engineer: Patrick Boyd
Editorial Director, Vox Talk: A.M. Hall

SubTuring BradBot reports:

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In this Grey Area Podcast with Sean Illing, Brad DeLong discusses his book Slouching Towards Utopia <bit.ly/3pP3Krk>. Illing and DeLong delve into the tension between economic growth and sustainable resource distribution, discussing the perspectives of Friedrich von Hayek and Karl Polanyi. Throughout the podcast, DeLong emphasizes the importance of historical perspective in understanding our current economic and social dilemmas. He advocates for a more inclusive and equitable economic model that can harness technological advancements for the common good,

They explore the rise of social democracies post-World War II, the impact of neoliberalism, and the challenges posed by the Great Recession in 2008. DeLong criticizes the response to the 2008 financial crisis and suggests that a more ambitious approach, similar to the New Deal, could have been more effective.

They embark on a journey that starts with the inception of what DeLong terms the "Long Twentieth Century," marked by an unparalleled surge in human productivity and wealth creation. This period, beginning around 1870, is characterized by the convergence of technological innovation, the expansion of global trade networks, and the evolution of corporate and governmental structures to manage and further these developments. DeLong highlights the explosion in productivity and technological advancement beginning around 1870, driven by the emergence of the industrial research lab, the modern corporation, and globalization. The increase in productivity was not just a matter of economic statistics but had profound implications for the quality of human life, expanding possibilities and reshaping expectations.

The conversation delves into the mechanisms of this transformation, emphasizing the role of market economies in driving innovation and efficiency but also recognizing their limitations in ensuring equitable distribution and sustainable development. The discussion then shifts to the challenges of managing the fruits of this economic growth. DeLong and Illing explore the tension between capitalism's ability to generate wealth and its propensity to concentrate that wealth, leading to inequality and social unrest. They discuss various historical moments and policies that aimed to address these disparities, including the New Deal, the welfare state, and more recent neoliberal reforms. DeLong is critical of the neoliberal consensus, arguing that while it succeeded in some respects, it also led to increased inequality and neglected the need for robust social safety nets.

Throughout the podcast, DeLong's insights are framed by his deep understanding of economic history and his optimistic belief in human capacity to adapt and innovate. The dialogue is enriched by Illing's probing questions and the exploration of counterfactual scenarios, which illuminate the complexities and contingencies of historical development.

The conversation also covers the role of government in regulating and guiding economic development. DeLong argues that effective governance is crucial for harnessing the benefits of market economies while mitigating their excesses and failures. He points to historical examples where government intervention helped stabilize economies, promote social welfare, and spur innovation, suggesting that a balanced approach is necessary for sustainable progress.

DeLong argues that this period was pivotal in human history, leading to unprecedented economic growth but also to significant challenges in equitable distribution and effective resource utilization. This rapid progress has on one hand has lifted billions out of poverty and enabled a standard of living for many that was inconceivable in earlier times; on the other hand, it has led to significant disparities in wealth and power, both within and across nations.

Illing and DeLong further discuss the global dimension of the long twentieth century, including the impact of colonialism, the Cold War, and globalization on economic development. They reflect on the rise of China and India as economic powerhouses and the challenges of integrating emerging economies into a global system that is equitable and sustainable.

A significant portion of their discussion is dedicated to examining the philosophical underpinnings of economic policy. DeLong, through his historical lens, critiques the neoliberal wave that took hold in the late 20th century, arguing that it prioritized efficiency and market freedom at the cost of equity and social welfare. Its emphasis on deregulation and market primacy often overlooked the necessity for robust social safety nets and equitable growth strategies. He contrasts this with the post-World War II consensus around social democracy. This critique is particularly poignant in his analysis of the 2008 financial crisis and its aftermath, where he suggests that the response lacked the ambition and scale of New Deal-era policies, leading to a slow and uneven recovery.

One of the most compelling parts of the conversation is the discussion on the potential end of the long twentieth century, marked by the financial crisis of 2008 and the growing threats of global warming, nuclear proliferation, and political extremism. DeLong expresses concern about the future, emphasizing the need for innovative solutions to address these existential challenges. He argues for a renewed commitment to social justice, environmental sustainability, and global cooperation, suggesting that the lessons of the past century can guide us in facing the uncertainties of the future.

As the conversation shifts to the present and future, DeLong and Illing discuss the implications of the digital and biotechnological revolutions. The conversation also touches on the potential for a new economic paradigm, driven by advances in information and biotechnology.

A critique of the arguments expressed wsould focus on several key themes:

Technological Progress and Economic Growth: While the achievements in the 1870-2010 era are undeniable, DeLong might underemphasize the associated costs, such as environmental degradation, the widening wealth gap, and the displacement of traditional industries and livelihoods. Technological advancements, while driving economic growth, have not equally benefited all segments of society equally, leading to increased socio-economic disparities.
Market Economies and Social Values: DeLong perhaps focuses too much the efficiency of market economies in allocating resources. While he highlights the challenge of ensuring that market prices reflect social values, he could have done more to explore the limitations of market mechanisms in addressing social and environmental issues. DeLong might overestimate the ability of markets to self-correct and align with broader societal values without significantly greater regulatory intervention.
Political and Economic Systems: The discussions of the impact of the Great Depression, the rise of social democracy, and the shift towards neoliberalism raises questions about the adequacy of DeLong's analysis of political ideologies and their impact on economic policies and outcomes. He might oversimplify the complex interactions between political movements and economic theories, potentially overlooking the nuances of how these ideologies adapt and change in response to societal needs and challenges.
Contemporary Challenges: DeLong's engagement with issues like global warming and political polarization fails to accomplish an in-depth exploration of the systemic changes required to address these challenges effectively. DeLong's optimism about the potential for future paradigms to solve these problems may underestimate the inertia within political and economic systems that resist change.
Historical Analysis and Future Outlook: DeLong’s focus on economic growth and technological progress overshadows other critical factors, such as cultural shifts, geopolitical dynamics, and the role of non-economic actors in shaping the 20th century. Additionally, the critique could question the adequacy of the historical lens used to predict future trends, considering the unprecedented nature of contemporary challenges.

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REVIEW: Anthony Annett: A New Social Democracy?

Brad DeLong — Mon, 31 Jul 2023 18:03:12 GMT

A New Social Democracy?

Brad DeLong’s economic history of the twentieth century

By Anthony Annett

July 16, 2023

Thomas Robert Malthus was possibly the most pessimistic economist of all time. Writing in the early nineteenth century, he argued that technological advances were ultimately futile as they would not raise living standards. In his telling, any rise in living standards would just lead to an increase in population, which would push per capita income back down to subsistence levels. This is the famous Malthusian trap. Malthus might have been right about most of human history, but things were starting to change just as he was writing. The Industrial Revolution created a way to escape from this trap: output rose faster than population, leading to an increase in per capita output. Living standards rose.

In an impressive new book titled Slouching Towards Utopia: An Economic History of the Twentieth Century, economist Brad DeLong tells the story of the escape from the Malthusian trap over what he calls the long twentieth century—from 1870 to 2010. DeLong argues persuasively that this escape did not happen during the first Industrial Revolution—the revolution of steam power and railways. Rather, it happened after 1870, owing to three developments: the advent of the industrial research lab, which allowed for invention on the back of invention; the emergence of the modern corporation, which allowed the market to harness new technologies; and the expansion of globalization, which led to a massive decrease in the cost of transportation and communications. It was these developments that created what DeLong calls an “economic El Dorado” between 1870 and 1914. DeLong notes that Marx, writing in the middle of the nineteenth century, was on to something when he stressed the immiseration of the working class. But after 1870, Marx’s analysis was simply wrong. There were still serious economic problems during this period, including the extremely high inequality that gave rise to the Gilded Age. But by and large, ordinary people in Europe and North America were finally benefiting from technological progress.

This El Dorado didn’t last. It was unwound by the First World War, then by the rise of fascism and communism, and finally by the Great Depression and the Second World War. The big question DeLong asks is why things went so badly wrong. Why—given our new ability to increase economic output so much—didn’t we figure out a way to distribute that output so that people could have their needs met? DeLong is following a line of inquiry introduced by John Maynard Keynes in a 1930 essay titled “Economic Possibilities for our Grandchildren.” Keynes argued that technology would solve the economic problem so that everyone would have enough—and that, before the end of the twentieth century, no one would need to work more than fifteen hours a week. Keynes was right about the ability of technological change to dramatically increase incomes. But he was wrong that the economic problem would be solved. Debates about the distribution of resources are more contentious than ever. Inequality is skyrocketing, poverty is still with us, and people are still working forty-hour weeks.

What happened? DeLong’s answer is that technology revolutionizes the economy in every generation, and that this is bound to have social and political consequences. Governments find it hard to provide for people’s needs in the face of such constant fomentation. In his most original contribution, DeLong frames this as a struggle between the ideas of Friedrich Hayek and those of Karl Polanyi. DeLong summarizes Hayek’s position as “the market giveth, the market taketh away: blessed be the name of the market.” Hayek argued that the decentralized nature of the market would, if unimpeded, lead to remarkable wealth creation. The state only needed to protect property rights, and the rest would take care of itself. The problem, DeLong argues, is that people demand rights other than property rights. This is where Polanyi comes in. DeLong’s summary of Polanyi’s position is “the market was made for man, not man for the market.” In other words, people’s needs must come first, and these needs are not necessarily met by the market. Polanyi argued that relying on property rights at the expense of other economic rights was bad news. What are these other economic rights, according to Polanyi? As DeLong puts it, they are “rights to a community that gave them support, to an income that gave them the resources they deserved, and to economic stability that gave them consistent work.”

Debates about the distribution of resources are more contentious than ever. Inequality is skyrocketing, poverty is still with us, and people are still working forty-hour weeks.

If these rights were not guaranteed, Polanyi argued, then there would be a backlash. This backlash took many forms over the long twentieth century—some negative, such as fascism, Nazism, and communism; some positive, such as the postwar experience of social democracy. DeLong’s narrative brings home the role of contingency in all of this. It was not inevitable for World War I to break out when it did. But once it did break out, it led to an increasing economic divergence between the United States and Europe—while Europe suffered from economic, social, and political upheaval, the United States enjoyed the Roaring Twenties. It was just luck that Republicans happened to be in power when the Great Depression began; if they hadn’t been, Franklin Roosevelt might never have been elected with a mandate to implement New Deal policies and lay the groundwork for a new economic order. And without the experience of war and the solidarity it generated, social democracy might not have won out in the postwar period.

DeLong is at heart a social democrat. In his telling, the postwar social-democratic era in both Europe and the United States was the closest thing to economic utopia we have ever experienced—with economic growth rates surpassing even those of the 1870–1914 period, all in the context of low inequality and strong financial stability. Even before the war, the countries that did best during the Great Depression were the social-democratic (and mainly Scandinavian) countries.

For DeLong, social democracy is best seen as a “shotgun marriage” between Hayek and Polanyi, blessed by John Maynard Keynes with his commitment to full employment. I would argue that social democracy is an even bigger accomplishment than this formulation might suggest. As Thomas Piketty argues in his most recent book, A Brief History of Equality, social democracy marked a decisive shift in economic history. Something new was afoot—a huge expansion in the social-assistance state and progressive taxation over the latter half of the twentieth century.

DeLong recognizes an element of tragedy in the story of social democracy. As a system, it had proved its mettle. But by the 1970s, people started to lose faith in it. They began to take prosperity for granted, expecting ever-high growth rates. When growth faltered, redistribution became more controversial: without growth, some people had to get less in order for others to have more. On top of this, the experience of inflation during the late 1960s and ’70s undermined public confidence in the ability of social-democratic policymakers to deliver stability. In DeLong’s telling, this was what spurred the neoliberal turn of the 1980s, which defined the final period of his narrative.

But neoliberalism turned out to be a failure. It did not deliver the return to rapid growth that it promised, but it did lead to much higher inequality—and, in countries like the United States, to a second Gilded Age. This went hand in hand with a technology-induced decline in manufacturing employment. Globalization and market reforms did benefit the developing world, especially in Asia, but this was little comfort to people suffering from neoliberal policies in the deindustrialized West. So why, despite its failure, did neoliberalism prove so enduring? DeLong’s answer is that capitalism was perceived to have won the Cold War, and there was a triumphalist, end-of-history ethos around neoliberalism.

DeLong recognizes an element of tragedy in the story of social democracy. As a system, it had proved its mettle. But by the 1970s, people started to lose faith in it.

DeLong’s narrative ends in 2010, right after a global financial crisis destroyed the credibility of neoliberalism and led to populist and nativist backlashes. Here, he faults Barack Obama for switching immediately to austerity when unemployment remained high and recovery had barely begun. Given the political climate at the time, it’s hard to know if Obama could have pursued a different policy. But the story ends too abruptly to really draw this out, and one wonders why DeLong did not choose a later endpoint for his narrative.

Slouching Towards Utopia presents a compelling narrative and a fine overview of more than a century of economic history. It’s well written and doesn’t require any special training in economics on the part of the reader. Still, the book has its flaws. Especially in its early chapters, DeLong tends to get sidetracked with barely relevant vignettes and extraneous details. He devotes too little attention to the developing world and to the rise of China. Climate change gets only a passing mention, despite its looming importance for economies throughout the world and the particular challenge it poses to neoliberalism. But for a book that covers as much ground as this one does, these are minor quibbles.

Finally, what about that title? Are we still slouching toward utopia, or sliding away from it? There are few signs that our economic situation is about to improve any time soon. Technological advances continue, but we still haven’t learned how to divide the fruits of those advances equitably—how to make sure that everyone has enough and how to value everyone’s contribution. We need to think hard about what the next Polanyian backlash might look like, and what a twenty-first-century revival of social democracy would require.

What Is Right & What Is Wrong in "Slouching Towards Utopia": Venkatesh Rao's View

Brad DeLong — Tue, 20 Jun 2023 16:07:16 GMT

Book Review: Slouching Towards Utopia

One of the nicest things about writing my big book Slouching Towards Utopia <http://bit.ly/3pP3Krk> is that one gets very insightful reviews from serious, smart, hard-working people who think differently than I do. Not only is it a huge ego boost—someone smart is paying attention to me!—but I get to learn stuff as well:

Ribbonfarm Studio

Welcome back, and hello again from Seattle. I wish I could say that my six-week break was a refreshing reset, but it’s been a crazy busy time on the consulting front wrapped around probably the messiest move of my life. Still, I got a lot done. One of the things I got done was finishing Brad DeLong’s highly anticipated new book…

3 years ago · 30 likes · 1 comment · Venkatesh Rao

Venkatesh Rao: Book Review: Slouching Towards Utopia: ’A brave attempt at a grand narrative… a weak economic determinism story [that] is worth telling, despite its significant genre-level shortcomings. It is the story of the gradual taming… of a weakly domesticable beast, the market, that some viewed as a God it was sacrilegious to even attempt to tame, and others viewed as a Devil to be exorcised… [but that] is merely a kind of vast distributed computer… difficult… to program… opaque and complex… call[ing] for pragmatic engineering… rather than ideological grand-standing…. The story of the long twentieth century told with the presumption that economics was (and remains) “in charge” of history is… useful… vastly improves on motivated ideological mythologies…

And:

DeLong’s brave attempt at a new grand narrative… does not entirely succeed, but…. It’s heartening to see someone take on a grand narrative challenge…. The twentieth-century tale… in the… “short” telling… colliding charismatic ideologies that engaged in great wars over conflicting visions of equally false utopias… [that] elides the economic and technological strands… [and] reinforces deep confusions about the nature of our world and its pattern of progress…. DeLong scopes out a much truer periodization that he then proceeds to narrativize as a long period of “slouching” economic progress… towards utopia… the right way, the only morally defensible way… the pragmatic humane way…. The slouching story… encourag[es] you to draw certain conclusions. Especially conclusions about what does not work. It does not offer anything like a… distillation of a “correct” philosophy of economic governance…

But the book is far from perfect—blinkered by its genre, and hence not properly “Grand” at all:

A weakness of economic history as a genre…. You narrate what you measure…. It can at best tell the tale between significant surprise entrances of unmodeled forces…. DeLong is aware of… genre-level weakness of his approach to grand-narrativizing. He attempts to accommodate all this historical phenomenology that eludes an economic lens by corraling them within a notion of “Polanyian rights,” the idea that humans demand various extra-economic things such as work commensurate with their sense of their worth and skill, stable community life, and a sense of status… a kind of catch-all philosophical boundary condition and forcing function (“the market was made for man, not man for the market”) that can guide regulation of a wisely managed economy, and through which all extra-economic forces operate. Left unmanaged, Polanyian rights tend to generate nasty surprises that derail economic stories. Properly managed, they tame the market…. To some extent, this unceremonious bundling of all non-economic strands of history into the rubric of “Polanyian rights” works… [but] feels reductive, and like it is missing the point and the inner logic of those stories…

And, in addition, Venkatesh says:

[The book] is weakest where DeLong dives into the inside baseball of arguments over… the theological machinery that keeps EconTwitter busily arguing…
His account of the still-mysterious inflection of 1973–74… felt unsatisfying…
The weakest parts of the book are … the stories of a) the development of the Global South, b) growing inclusion and c) the role of technology qua technology…. DeLong cops to the inadequacy of his telling of all three tales, and gamely does his best…
The story of the Global South is largely that of large populations doing, economically speaking, nothing of consequence…
The story of minorities is… the arc of the moral universe doing various interesting things from Lincoln to Gandhi to MLK, but nothing particularly interesting economically (the exception here is the story of women, treated as an honorary minority, even though they constitute a majority—and to his credit, DeLong unpacks that thread a little)…

All of this is a wind-up to a main-event critique that Venkatesh makes, about my handling of technology:

The story of technology reduces to a gee-whiz parade of amazing science-fictional spectacles that mostly don’t matter economically—until they do. In the few instances where DeLong does tell hurriedly the story of a technology that mattered economically, he sometimes gets it mostly right (containerization) and at other times gets it kinda wrong (semiconductors and computing)…
[What] does not work well is in DeLong’s treatment of technology. The question of how technology shapes economics does not fit into the sociological rubric of Polanyian social rights…
For DeLong, technology is bundled into a sort of blackbox idealization of the industrial research lab. A magic box within which fascinating spectacles unfold, but from which they only occasionally manage to break out and “arrive” economically as discontinuous “surprises” in the Polanyi-Hayek dialectic…
[The] patching-over of a technological break boundary within an economic narrative is a kind of forced fiction of apparent economic continuity that weakens it. Major technologies, arguably, alter the fundamental logic of economics…. If you tried to navigate the present armed only with economic histories, you would be doomed to ignore most technological breakthroughs until it was too late…
DeLong’s treatment of technology is that of an unabashed fanboy who nevertheless insists on viewing it as a kind of separable species of blackbox that only impacts history through economic mechanisms in ways that are relatively predictable in aggregate…
To me, the story of the long twentieth century is primarily… technological…. Technology reshapes and alters reality much more directly than economists seem to think. It is not a matter of point-like “irruptions” emerging from “labs” and influencing reality indirectly through the midwifery of economic mechanisms. Technology is an input to all reality, not just to economic machinery. The vast proportion of the entangled dynamics of technology and history is economic “dark matter”…
DeLong candidly admits that his treatment of technology is inadequate, and that perhaps an equivalent grand narrative could be written with technology, rather than economics, as the main thread, implying that the two might be roughly equivalent…

What do I think of all of this?

First, and most important, I am tremendously flattered by and grateful for Venkatesh’s attention: that he read the book and thought about it—that he seriously engaged with it—that he took black marks on pages and from them spun-up a SubTuring instantiation of my mind and arguments which he then ran in a separate partition in his own WetWare and argued with—makes my day.

Second, I am incredibly pleased that—in Venkatesh’s reading—the book works: it does what I intended it to do. And I am even more pleased in his judgment that “this unceremonious bundling of all non-economic strands of history into the rubric of ‘Polanyian rights’ works…” Yes, it not only “feels reductive”, it is reductive. Yes, it not only feels “ like it is missing the point and the inner logic of those stories” of resistance to the market economy’s ruthless assertion of the dogma that the only rights that matter and are to be vindicated are property rights, it does miss the point and the inner logic of the stories of resistance. It could not do otherwise: all Grand Narratives are false. But, as he says, my Grand Narrative framework “works”.

Third, Venkatesh is right: the inside baseball of semi-technical economics is weak (but I had to include it because it did matter), the account of the still-mysterious inflection of 1973–74 and the Fall of Post-WWII Global-North Social Democracy is unsatisfying (but I had to include it because it did matter), the coverage of the development of the Global South is inadequate, and I believe that if I started over from scratch I could do a much better job at laying out the minorities (and female majority) -inclusion chapter (as one of the modes of the very partial dismantling of the pre–1870 élite domination-and-exploitation by force-and-fraud machine).

Fourth, what do I think about the main-event critique that Venkatesh launches, the critique of my handling of the category “technology”? I think he is right. I think the problem is half space—the book is 600 pages, and to keep it that short lots of things had to wind up on the cutting-room floor—and half that my Visualization of the Cosmic All does not have an adequate grasp of the relationship between technology and economy, of the workings of what somebody-or-other once called “modes of production”. But on all that more anon…

Interviewed by Smart-Thinking Books; & BRIEFLY NOTED: For 2023-03-11 Sa

Brad DeLong — Sat, 11 Mar 2023 14:36:37 GMT

FOCUS: Interviewed by Smart-Thinking Books:

Brad DeLong & Daryl Feehely: J. Bradford DeLong Interview - Smart Thinking Books - Books To Fuel Your Mind!

Q. DO YOU HAVE A FAVOURITE SMART THINKING BOOK (AND WHY THAT BOOK)?

I confess that I have always liked Marcus Aurelius's Meditations, and I find myself liking it much, much more as I age. Feeling things in the world, and then recentering yourself and focusing on "Well! That happened! But what would be a better state of the world to get to given where we are, what is important, and what should I do next?"—that is, I think, a very important skill and attitude to take toward the world. And a Roman emperor was perhaps ideally positioned to model and practice it.

Q. WHAT'S THE MOST RECENT SMART THINKING BOOK YOU'VE READ (AND HOW WOULD YOU RATE IT)?

It would be Danny Kahnemann's Thinking, Fast and Slow. An awful lot of wisdom in it, and wisdom that is especially relevant to our clickbait world where there are lots of people trying to take your money by triggering your fast-thinking modes where they are really inappropriate. Five stars.

Q. DO YOU HAVE A FAVOURITE CHILDHOOD BOOK?

Isaac Asimov's science-column books. And, I suppose, his Foundation series. Plus Rosemary Sutcliff's King Arthur book, Sword at Sunset.

Q. DO YOU PREFER READING ON PAPER, KINDLE OR LISTENING TO AN AUDIOBOOK?

On paper. But ebooks have been steadily gaining mindshare over the past 15 years. And audiobooks have been rapidly gaining mindshare over the past two years.

Q. DO YOU HAVE A FAVOURITE BOOKSHOP (AND WHY THAT SHOP)?

My neighborhood bookstore, Mrs. Dalloway's on College Ave. in Berkeley, CA. But I have always had a soft spot for Barnes and Noble.

MUST-READ: Þat Old-Time Religion:

Raghu Rajan preaches that old-time religion: the market giveth; the market taketh away: blessed be the name of the market:

Raghu Rajan: Hard landing or harder one? The Fed may need to choose: ‘Beliefs in an immaculate disinflation with only mild job losses could soon be put to the test…. Beliefs in a painless “immaculate disinflation” and soft landing lead to a self-reinforcing equilibrium, in which few believe the Fed will have to do much more. As a result workers are not being laid off, financial asset prices and housing are holding up, and households have the jobs and wealth to keep spending…. To get the job done… the Fed has to force markets to abandon their belief that disinflation will involve only mild job losses….
[But] there are dangers…. The markets could have their Wile E. Coyote moment. Lay-offs may spur more lay-offs…. Laid-off employees may be forced to sell their houses, depressing property prices and reducing household wealth. Unemployment and lower wealth may hurt household spending, which will in turn depress corporate profits. That will lead to more lay-offs…. We may end up with a deeper recession than currently anticipated because it is hard to get just a little unemployment…. The temptation… is for the Fed to be more ambiguous, keep a soft landing on the menu and pray for an immaculate disinflation. If so… the eventual unemployment… could be much higher. The Fed’s only realistic options may be a hard landing and a harder landing. It may be time for it to choose…

Whenever Jay Powell says he is going to raise interest rates more, Ms. Market thinks that he is then going to have to lower them more in the short-medium term in order to (probably unsucessfully) avoid a return to secular stagnation. So the ten-year bond rate stays constant, or drops. And since it is the ten-year bond rate that matters for aggregate demand, Jay Powell right now has next to no levers with which to curb aggregate demand.

Thus it is not clear how Raghu thinks Jay Powell can “force markets to abandon their belief that disinflation will involve only mild job losses…”, short of raising short-term interest rates so high that that directly breaks some things and bankrupts some people—i.e., a bunch more SVBs. And that does not seem to be to be a good idea.

MUST-READ II: Using Bing-AI:

Another solid-useful piece of information from the thoughtful Ethan Mollick:

Ethan Mollick: Power and Weirdness: How to Use Bing AI: ‘Don’t think of Bing as a search engine. It is only okay at search. But it is an amazing Analytic Engine. Indeed, Bing is at its most powerful, and most different from ChatGPT, when it is looking up data and connecting diverse sets of information together. It is often a startling good data analyst, marketer, and general business companion. One trick for using its power is to ask it for charts that pull together lots of information. Analyze the market for alternative milk products. provide a chart with each product, how it is made, its cost per liter, and its market size. The results are pretty impressive. You should check any important data (the links at the bottom usually, but not always, will help you understand where the data is from), and be careful not to push Bing into lying, but results quality has tended to be very good. That doesn’t mean that Bing doesn’t hallucinate wrong answers, it very much will, but it is better than ChatGPT. Still, verify numbers to make sure they are accurate, and don’t expect it to do math correctly…

MUST-WATCH: Origins of the European Economy

Michael McCormick: Origins of the European Economy: Communications and Commerce AD 300-900:

Very Briefly Noted:

Noah Smith: Why was there a run on Silicon Valley Bank?: ‘And how will this affect startups and the financial system?… The government occasionally lets banks collapse in a disorderly, disruptive way, out of a sense of wanting to ensure financial probity…. But… recent experience… suggests that the government has learned… prevent[ing] panic and contagion is a lot more important than the need to make a bunch of startups lose 5% or 20% of their cash
Dan Davies: Silicon Valley Bank is a very American mess: ‘The rules work! They just weren’t applied to SVB Financial…. The fact that a risk isn’t covered by a regulatory ratio doesn’t mean it doesn’t exist…. That large domestic banks in the US are apparently allowed to run such sizable funding mismatches… is likely to be a source of embarrassment…
Michael Hiltzik: Contrary to latest claims, there's still not a speck of evidence that COVID escaped from a Chinese lab: ‘There is no evidence — not a smidgen, particle, speck or iota — that COVID leaked from a lab. There never has been...
Susan Page: A GOP war on 'woke'? Most Americans view the term as a positive: ‘By 56%-39%, Americans say 'woke' means being aware of social injustice, not being overly politically correct...
Read Brad DeLong's Grasping Reality in the Substack app
Available for iOS and Android

¶s:

Noah Smith: Which industries will China dominate?: ‘Factors at play… Export controls, Government-directed reshoring efforts and other industrial policies, Massive R&D into emerging technologies, Rising Chinese costs and other pre-existing economic trends…. The flip side of “Which industries will China dominate?” is “Which industries will the U.S. and its allies fail to dominate?”.... China’s two key advantages are disruption and scale; this will allow it to dominate many new industries where existing stores of knowledge aren’t a big advantage, and older technologies where producing large amounts cheaply is key...

Marc Cooper: Chile's Utopia Has Been Postponed: ‘Thirty years of civilian government after the end of the Pinochet dictatorship in 1991 had brought a fair share of democracy, and until 2016, rapid economic growth…. Yawning economic and social gaps continued to grow…. Three decades of civilian rule have lifted expectations just enough to produce mass disillusionment and disappointment, scorn for all the traditional parties and a sense of exclusion…. Adding to Chile’s tinderbox was the then-incumbent government led by right-wing billionaire Sebastian Piñera, stocked with the country’s indifferent elite. Piñera’s administration provoked the ire of millions by announcing that while food had gotten expensive, flowers were still cheap; that if a schoolhouse needed a new roof, maybe it was time for a bingo fundraiser; and if workers didn’t like recent subway fare increases, they should get up two hours earlier to beat the peak-rate fare. It was a “let them eat cake” performance by a government of cartoon plutocrats…. As protesters fought police, much of downtown Santiago was trashed…. Piñera put together an agreement with congress and opposition figures such as Boric for a plebiscite… allow[ing] Chileans to choose and write a new constitution…. In October 2020… nearly 80 percent of voters approved the rewriting of the national charter…. The constitutional assembly’s 155 delegates were… free of tutelage from the discredited political parties; the political right was virtually excluded from the process…. In December 2021, Gabriel Boric was elected president of Chile with 55 percent of the vote in a runoff with Jorge Antonio Kast, a marginal figure of the extreme right and an open enthusiast of Pinochet and Brazilian strongman Jair Bolsonaro…. Though Boric lacked a majority in a narrowly divided Congress, expectations for change remained high…. Voters overwhelmingly rejected the constitution, with a whopping 68 percent of Chilean voters turning it down…. The rejection – El Rechazo – hit the government, its supporters and the Chilean left like a Category 5 storm…. Chile appeared fragmented, with an atomized population more interested in building a better bookcase than making sure their neighbors could eat…. Strategists close to Boric project that tax reform and possibly expanded pensions could pass this year, take effect in 2024, and be useful political capital for a 2025 election that promises a titanic fight with the right. These reforms are a long way from utopia, or even the peaceful revolution imagined by many in the streets in 2019. But they would produce meaningful improvements in the quality of life for millions of Chileans and keep the flame of deeper reforms alive…

David Chance: REVIEW of “Slouching” at Independent.ie

Brad DeLong — Wed, 01 Feb 2023 19:17:00 GMT

Nice to see:

David Chance: ‘At 600-plus pages… not for the faint-hearted, but there’s little in the way of jargon… the booked is laced with interesting anecdotes, although DeLong does get a bit wordy…’

“A bit wordy.” Hah! At over 600 pages, it is not a book for a flight from Dublin to Frankfurt or a ferry ride to Liverpool. Think “transoceanic” instead.

Slouching Towards Utopia <bit.ly/3pP3Krk>

David Chance: Slouching Towards Utopia: Clinton guru’s sweeping story of an economic dream that died: ‘Economist Brad DeLong has described himself as a ‘card-carrying neoliberal’ and a firm believer in the power of globalisation and free markets to deliver prosperity.
His narrative <bit.ly/3pP3Krk> of capitalism and the unprecedented wealth it created during a ‘long century’ that lasted from 1870 until 2010 tells a tale in which near-universal poverty finally ended for those fortunate enough to be born white and male and to live in northern industrial countries.
DeLong is professor of economics at the University of California and was a top US Treasury official during Bill Clinton’s presidency, where he helped to make policy on issues such as the North American Free Trade Agreement, which critics say killed US manufacturing.
This book, more than two decades in the making, tells the story of what DeLong says is an era in which economic transformation was the dominant force in society for the first time.
The story is presented through the prism of two individuals. The first is Friedrich Hayek, the intellectual father of free markets and the force behind Thatcherism; the second is Austro-Hungarian philosopher Karl Polanyi, who believed self-regulating markets were incompatible with human needs and desires.
At 600-plus pages, it is not for the faint-hearted, but there’s little in the way of jargon and the booked is laced with interesting anecdotes, although DeLong does get a bit wordy.
With a century and a half to cover including two world wars, the rise and fall of fascism and communism (or, as DeLong irritatingly insists on calling it, ‘really-existing socialism’), the Great Depression and the post-war economic miracle, the tale rips along at a decent pace.
The starting point is one in which the life of ordinary people has barely changed in centuries — it is defined by the precarity of too little food, poor health, high population growth and high infant mortality.
Life, for most people, was just grim. All of that started to change in 1870, DeLong argues, when the industrial revolution was married to the organisational skills of modern firms by free-market capitalism.
It is not just the invention of the flush toilet or electric power that had a transformative effective on the lives of ordinary people, he argues, but the ability of companies to deliver those products.
“What is most important is never so much the arrival of any particular technology as it is the burgeoning understanding that there is a broad and deep range of new technologies to be discovered, developed and deployed,” he writes.
For this to work, you needed the market order of property rights, contracts and exchange to incentivise production of goods, said Hayek, whose life spanned most of that ‘long century’.
Yes, life was still hard, dirty and very unequal in the US but it was a life that people from Ireland, Hungary and Russia would travel thousands of miles to live. Hayek believed that not only did justice and fairness not matter, they were antithetical to the workings of the market and to freedom.
The marriage of technology and business saw the average wage of unskilled workers rise by a half by 1914 as commerce became globalised like never before.
Then the music stopped with the ‘isms’ that would derail progress — the nationalism of the World War I and then the emergence of communism and fascism followed by a second global war.
This is where Polanyi comes in. In reaction to the displacement of social relationships by the market, he argued society would strike back against what it sees as unfair outcomes.
“As a consequence, a market society will face a backlash — it can be a left-wing backlash, it can be a right-wing backlash, but there will be a backlash — and it will be powerful,” DeLong writes.
A backlash also killed off the equitable wealth creation of the social democratic post-war era amid the great inflation of the 1970s which then ushered in Thatcherism and Reaganism.
Despite what DeLong sees as the failure of the new neoliberal project, it remains the dominant economic and political force, animating Bill Clinton and Tony Blair as well as Fine Gael here in Ireland.
DeLong had announced in a 1998 lecture with the same title as this book that he aimed to complete the work by the end of that century. Had he done so, it would have been a very different narrative. Communism had been defeated only a decade earlier and China had not yet started cutting a swathe through the American heartland.
As recently 2006, DeLong saw “rising working- and middle-class incomes in America during the next generation”. Economists, he stated, could transform the business cycle “from a life-threatening economic yellow fever of the society into the occasional night sweats and fevers”.
That dream died in the financial crisis, which the author says was mishandled by Barack Obama. Now we have real fascists winning the Italian election and ‘nativists’ running Hungary, Britain and America under Donald Trump. Europe is at war again, thanks to Vladimir Putin. While income growth for those at the top is better than ever, white men lower down the scale now resent having to share their slice of the economic pie with ethnic minorities and women. “A new story, which needs a new grand narrative that we do not yet know, has begun,” DeLong concludes.
Non-fiction: Slouching Towards Utopia <bit.ly/3pP3Krk> by J Bradford DeLong
Basic Books, 624 pages, hardcover €22.99; e-book £17.99

Project Syndicate: Say More

Brad DeLong — Tue, 31 Jan 2023 19:16:03 GMT

This week in Say More, PS talks with J. Bradford DeLong, Professor of Economics at the University of California, Berkeley, and the author of Slouching Towards Utopia: An Economic History of the Twentieth Century <bit.ly/3pP3Krk>.

J. Bradford DeLong Says More…

Project Syndicate: In March, you wrote that higher inflation was “inevitable and therefore not regrettable,” because it was “a side effect and a consequence of the robust recovery,” which amounts to a “massive policy victory.” You also predicted that price stability would return in the medium term, though you also noted in June that the US Federal Reserve’s ability to raise interest rates sufficiently was constrained by forward guidance. Are you still relatively sanguine about US inflation, and was the Fed’s latest interest-rate hike the right call? How effective will the Inflation Reduction Act (IRA) be in supporting the Fed’s efforts to ease inflation?

J. Bradford DeLong: All confident predictions of a return to price stability have been upset by Russian President Vladimir Putin’s attack on Ukraine and the resulting shocks to energy and grain prices. With the war extremely unlikely to be brought to a rapid conclusion, a soft landing may no longer be possible. But we should still try for one.

Is the Fed’s latest interest-rate hike the right call? My strong belief is that the central bank ought to have moved its short-term policy rate to the appropriate level, and then paused. Instead, rates are below what the Fed thinks is the appropriate level, but there is uncertainty about how much higher the Fed believes it will end up going. That does not make for confident markets, investors, or businesses.

As for the IRA, it will put a small amount of downward pressure on inflation in the short term and a slightly larger, but still small, amount in the medium term. It is welcome much more for what it does to expand supply and wealth than for what it does to reduce inflation.

PS: You have praised the IRA and the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act as “major legislative victories” for the Democrats and “more than enough to flip the narrative about [US President Joe] Biden’s first two years in office.” If, boosted by these victories, the Democrats perform well in November’s midterm elections, what should define their economic agenda?

JBD: “Supply-side progressivism” is a very good brand, and if given the chance, US Democrats should keep running with it. The United States is still massively underinvesting in the human capital of its non-rich residents. It is also massively behind the curve in the transition to renewables and in boosting the resilience of supply chains. Catching up will require, no surprise, massive amounts of investment.

PS: In your latest PS commentary, you argue that four thinkers help explain why we have not “become as good at slicing and tasting the economic pie as previous generations were at making it bigger.” If diagnosis is, as you put it, “only half the battle (and probably less),” which thinkers, ideas, or proposals might be able to lead us toward solutions, especially “figuring out the politics of wealth redistribution”?

JBD: Ah. If I knew the answer to that question, I would be a much happier man.

My view is that all of the problems of distribution and utilization become much, much easier with the relatively equal income distribution of a middle-class society. So, I am inclined to put all of my energy into boosting the wages and productivity of the not-rich, and increasing taxes on the rich. If we manage to accomplish that, then we will see. But if we do not accomplish that, I do not see much prospect for improvement.

By the Way…

PS: In your new book, Slouching Towards Utopia: An Economic History of the Twentieth Century, your “grand narrative” of the “long twentieth century” (1870-2010) is shaped – for better or worse, depending on who and where you are – by globalization and, more recently, neoliberalism. Now, we have seemingly entered an age of deglobalization, and the neoliberal orthodoxy is being widely challenged. Do these trends make you hopeful, worried, or something else? Are there historical lessons we should be heeding to ensure that our current path doesn’t take us in circles?

JBD: I think that the major lesson is that, at a time of rapid technological advancement, it is vain and counterproductive to try to revive institutions from the past. The underlying structure of production and work is drastically different now than it was a generation ago, so whatever rough-bargain set of arrangements was satisfactory then has no more than a minuscule chance of being satisfactory now.

Attempting to revive any past solutions or approaches, whether those of Franklin D. Roosevelt or Ronald Reagan, is likely to be a huge waste of effort. What we should take from the likes of FDR and Reagan is the confidence to undertake what the former called “bold experimentation” – something we can certainly afford – and the latter’s conviction that if we do so, our best days are still in front of us.

PS: From the “Devil of Malthus” to “Marx the prophet” and the “patron saints” Friedrich von Hayek and Karl Polanyi, you regularly use religious imagery in your book. Is this merely a stylistic choice, or a comment on the dogmatic nature of economic thought? Is the key to progress to break the dogma, or to develop one that leads to better outcomes than the “shotgun marriage” of Hayek and Polanyi – “blessed” by John Maynard Keynes – that you argue got us the closest to utopia?

JBD: It is mostly a stylistic choice. But there is this underlying message: People in the twentieth century have been attributing to ideas the amount of respect and commitment that people in the past reserved for their gods. I do not think that is terribly healthy. Even Oliver Cromwell, when confronted with a bunch of people whom he regarded as religious fanatics, said: “I beseech you, in the bowels of Christ, consider that you might be mistaken...”

PS: You began Slouching Towards Utopia before the “long twentieth century” ended, and wrote tens of thousands [hundreds of thousands?] of words that never made it into the book. When did it become clear to you that the end had arrived? Was there an idea, event, or anecdote that was particularly difficult to cut?

JBD: I would say that up until 2003, I thought that the end of the long twentieth century had arrived, and it was a Francis Fukuyama “end of history” kind of ending. In 2010, however, it became clear to me that the real end of the long twentieth century had just arrived – and it was much less optimistic. We had had the chance not only to create an economy capable of producing great wealth, but also to distribute and use that wealth effectively. But, unable to build the needed institutions, we had squandered that opportunity.

In between, I was confused about what was going on.

The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era By Gary Gerstle

Why has policy in the United States since 1980 not advanced social democracy – the system that I would prefer, which Gerstle calls The New Deal Order? I wrestle with this question in my new book, Slouching Towards Utopia: An Economic History of the Twentieth Century. Gerstle wrestles with it in this book, at much greater length and, I believe, more successfully. He argues that a confluence in the 1970s of left- and right-critiques of the New Deal Order as overly bureaucratized and institutionally rigid caused people to reject it in favor of the Neoliberal Order, which they believed – largely wrongly – would bring economic and cultural freedom. The least satisfying part of the book is its ending: Gerstle hopes that the Neoliberal Order has fallen, raising the prospect of a better future. I am not so sure.

A Monetary and Fiscal History of the United States, 1961-2021 By Alan S. Blinder

Blinder’s writing is exceptionally witty and readable, and not just for an economist. This book, which comes out today in the US, provides an insider’s perspective on what economic advisers recommended to politicians, and how the politicians then attempted to advance full employment and price stability. Blinder focuses a little too much on the economists’ arguments, rather than on what non-economists thought those arguments were or should have been. Only a little, to be sure. But it is often the zeitgeist that shapes policy. Economists, meanwhile, may be left protesting that their ideas have been misconstrued or misrepresented.

Karl Marx: A Nineteenth-Century Life By Jonathan Sperber

Sperber takes Karl Marx very seriously. The things Marx worried about, he emphasizes, were largely things that we still worry about today. But Sperber looks at these issues through the lens of Marx’s concerns and uses the intellectual toolkit of Marx’s time. He shows how Marx thought that poverty and scarcity would not be permanent problems – that human ingenuity, together with technological advances, would eradicate them. The problem, he explains, was that bosses could store up crystallized past labor in the form of capital, thereby making present labor compete with past labor and pushing down wages. Trying to figure out how a society could become increasingly rich without wages rising was Marx’s life’s work, and Sperber does a very good job of putting the reader in Marx’s shoes.

Slouching Towards Utopia; An Economic History of the 20th Century

The long twentieth century – the first where the economy was no longer a painted backdrop, but rather revolutionized the lives of each successive generation – taught humanity expensive lessons. The most important of them is this: only through the shotgun marriage of Friedrich von Hayek and Karl Polanyi – a marriage blessed by John Maynard Keynes – have we been able even to slouch toward utopia, and that marriage has failed its own sustainability tests. Whether we ever justify the full bill run up over the 140 years from 1870 to 2010 will depend on whether we remember that lesson.

<https://www.project-syndicate.org/onpoint/an-interview-with-j-bradford-delong-on-us-inflation-redistribution-economic-dogma-2022-10>

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Zach Carter REVIEWS “Slouching” for “Dissent"

Brad DeLong — Mon, 23 Jan 2023 04:45:52 GMT

A Dose of Rational Optimism

Slouching Towards Utopia is a rise-and-fall epic—but it is better at depicting the rise than explaining the fall.

Zachary D. Carter ▪ Fall 2022

A cover of Scientific American portraying Thomas Edison’s electric dynamometer, mirror galvanometer, and electric generator (Universal History Archive/Getty Images)

Slouching Towards Utopia: An Economic History of the Twentieth Century
by J. Bradford DeLong
Basic Books, 2022, 624 pp.

There is a masterpiece in J. Bradford DeLong’s Slouching Towards Utopia, and a very interesting muddle.

Humanity, the Berkeley economist argues, spent nearly the entirety of its history condemned to poverty by an insufficient supply of calories and a chronically excessive birth rate. But in the “long twentieth century”—the period between 1870 and 2010—an almost miraculous transformation took place: more and more people lived longer, healthier, more prosperous lives than ever before. Arenas of intellect and creative expression that were once accessible only to the most privileged of elites became the common experiences of mass cultures. Humans did not find utopia, DeLong argues, but we stumbled in its general direction.

In the grim morass that has followed the financial crisis of 2008, it is refreshing to receive a dose of rational optimism—however tempered—from a serious intellectual examining our place in the grand scheme of history. DeLong does not avert his readers’ eyes from the brutalities of imperial conquest, genocide, and revolution gone awry, which define the political milieu of the era under his microscope. But his narrative is fundamentally hopeful: people can accomplish amazing things on a colossal scale. Not that long ago, we did so all the time.

This perspective is refreshing precisely because everyone, DeLong included, knows that something has gone terribly wrong.

Slouching Towards Utopia is a rise-and-fall epic, but it is better at depicting the rise than explaining the fall. “Why, with such godlike powers to command nature and organize ourselves, have we done so little to build a truly human world, to approach within sight of any of our utopias?” DeLong asks in his final chapter, only to dodge an answer: “A new story, which needs a new grand narrative that we do not yet know, has begun.” Modesty is a virtue in a historian of long centuries, but after the persistent enlightenment of the book’s first 450 pages, this limping denouement is a disappointment.

Ah, but those first 450 pages. DeLong’s long twentieth century is a nod to the idea of the long nineteenth century developed by Eric Hobsbawm, one of two great economic historians (the other is Charles P. Kindleberger) that DeLong alternately channels and challenges throughout Slouching Towards Utopia. For Hobsbawm, everything changed between 1789 and 1914, as humanity established the material foundations that could support true liberation and the political structures to deliver it. In Hobsbawm’s telling, the Industrial Revolution and its political handmaiden, the French Revolution, opened the door first to liberal progress and then to the possibility of egalitarian salvation under Soviet Communism. Hobsbawm was very good at what he did—so good that many of his most strident political opponents still take a great deal of his intellectual framework for granted. DeLong spends much of his book detailing the horrors engineered by Stalin and Mao but ultimately offers a revision of Hobsbawm’s thesis in lieu of an outright rejection. The era of economic revolution is not 1789–1914 but 1870–2010; the transition is not from barbarism to socialism but from squalor to social democracy.

According to DeLong, the Industrial Revolution was just one of several economic innovations that improved humanity’s lot at the margins without fundamentally changing the trajectory of the human experience. He quotes an aging John Stuart Mill, who lamented in 1870 that the triumph of so many liberal reforms—the abolition of slavery, the expansion of the franchise, the growth of international trade—had not produced a healthier or happier world. The planet could support more people than it had been able to when Mill was born, but living standards had not improved for anyone outside a tight circle of elites. Even those who had thrown off the yoke of slavery had been delivered from the cruelty of forced labor into the cruelty of fate; a bad harvest or an unusually cold winter could bring mass death. Almost everywhere, life remained uncertain and short, if not nasty and brutish. Mill saw no way out absent a rigorous program of global birth control.

The wonder of the twentieth century, DeLong observes, was the attainment of previously unimaginable material gains amid a global population explosion. As DeLong notes, “Four percent of Americans had flush toilets at home in 1870; 20 percent had them in 1920, 71 percent in 1950, and 96 percent in 1970. No American had a landline telephone in 1880; 28 percent had one in 1914, 62 percent in 1950, and 87 percent in 1970. Eighteen percent of Americans had electric power in 1913; 94 percent had it by 1950.”

DeLong’s upgrade of Hobsbawm is persuasive, but it inspires an obvious question: why begin the story of material triumph in 1870, when the era of broadly shared prosperity did not really begin until the 1940s?

For DeLong, the ingredients of economic liberation are the industrial research lab, the modern corporation, a globalizing economy, effective demand management, and the rough balance of private and public power discovered during the New Deal. The first three factors arrived much earlier than the other two, and for DeLong’s story of technology-fueled growth to hold up, he needs technological fuel, which did indeed take root when he says it did. The number and the significance of new inventions skyrocketed in the 1870s. It is impossible to imagine twentieth-century life without electricity, the telephone, photographic film, recorded sound, the open-hearth steel furnace, the automobile, the motion picture, and a host of other innovations that arrived before 1900.

What distinguishes this technological revolution from Hobsbawm’s Industrial Revolution is what DeLong calls “the invention of inventing”—the development of new processes and forms of organization that enabled ideas to build on one another in rapid succession. “What was invented in the industrial research labs could be deployed at national or continental scale,” DeLong writes. “Perhaps most importantly, these economies discovered that there was a great deal of money to be made and satisfaction to be earned by inventing not just better ways of making old things, but in making brand-new things.”

Still, the Gilded Age was not an era of great social progress. In many respects, living standards for the vast majority of Americans deteriorated. As the historian Richard White details in The Republic for Which It Stands, most Americans living in the final decades of the nineteenth century lived shorter lives than their Revolutionary War–era forebears. A typical ten-year-old white boy could expect to live only another thirty-eight years. He was also shorter of stature than his recent ancestors would have been, an indication of inadequate childhood nutrition. The data vary across regions and by race, with Black lives notably briefer than white throughout, the South underperforming the rest of the country, and significant divergences between rural and urban life, with cities suffering from poor sanitation and deadly disease outbreaks. But the broad pattern is grim. Only after 1890 did things start to look up, and only after 1900 would American lifespans begin the general, unambiguous upward ascent that public health experts took for granted until very recently.

Why didn’t the wondrous new inventions of the 1870s lead swiftly to better living? The decade also marked the beginning of a revolution in global commerce brought on by the wide acceptance of gold as a common medium of exchange. The gold standard facilitated international trade and helped spread efficiency gains from a global division of labor. But the gold standard also established a new era of macroeconomic mismanagement. After the Civil War, the United States experienced chronic deflation until the turn of the century. The period between 1873 and 1879 proved so horrific that people called it the Great Depression.

DeLong’s story begins in 1870 because you cannot have the diversity of travel, consumption, art, and entertainment that defined the twentieth century without the inventions of the Gilded Age. But none of these fancy gadgets would have developed into a transformative mass culture without DeLong’s later plot points—particularly the coming of John Maynard Keynes. He enters Slouching Towards Utopia like Orson Welles in The Third Man, the brilliant man of mystery whose ideas have colored the entire work at last given room to explain the world and its problems. (Keynes was not a sinister villain like Welles’s character, though he would eventually be chased from the scene.)

Keynes’s great genius, DeLong argues, was his recognition that economic troubles had ceased to be matters of resource scarcity alone; they had become problems of systems management. The market needed an economic steward to consciously maintain aggregate demand for the goods it produced. Depressions were not the result of bad harvests or a lackadaisical workforce, but rather of a collapse in consumer spending. Keynes concluded that capitalism was dysfunctional, perhaps incoherent, without state economic management. DeLong, inspired by Charles P. Kindleberger, adds an international twist: global economic progress cannot take place without the active management of an international economic hegemon. The British Empire provided this service with decidedly mixed results through the First World War. When the United States refused to take up the mantle, the period that we now call the Great Depression ensued.

Keynesian ideas opened the door to an extraordinary array of compromises and collaborations between liberals and socialists. Keynes, a card-carrying member of the Liberal Party, helped design Britain’s National Health Service (NHS) for the Labour Party. In the United States, Franklin D. Roosevelt signed the Social Security and Wagner Acts. Europe and America enjoyed what DeLong heralds as “Thirty Glorious Years of Social Democracy,” where living standards rose sharply for nearly everyone. In the United States, the economic gap between Black and white families narrowed, as did the earning differential between men and women.

And then the neoliberals took over. The great puzzle of neoliberalism, DeLong astutely maintains, is how it preserved and even consolidated its intellectual grip even as it straightforwardly failed to achieve the social outcomes it promised. Milton Friedman, DeLong notes, insisted that repealing the elaborate economic management apparatus of the New Deal would produce price stability, something close to full employment, and a socially tolerable distribution of income. But none of that actually happened under Reagan and Thatcher. Inequality skyrocketed, as did unemployment. There are true believers who insist that their program wasn’t sufficiently libertarian—Social Security, the NHS, and defense spending all survived. But the retreat on fiscal and regulatory policy was real, and the results were higher unemployment and deeper inequality. That should have been enough to discredit the program. Instead, DeLong notes, Bill Clinton declared the era of big government to be over, and Barack Obama called for deficit reduction with unemployment over 9 percent.

DeLong concludes that the American victory in the Cold War gave neoliberalism an unearned aura of triumph. When Reagan was credited with vanquishing the Soviet menace, his brand of capitalism took the ideological win. The market had defeated the state, leaving no conceptual room for the Keynesian public-private hybrid, even though the United States continued to function as a thoroughly mixed economy. It is a creative and convincing explanation.

DeLong delivers this material with the clarity and dexterity of Kindleberger at his best. And though he does at times take excessive detours into dorky cul-de-sacs—the book does not need quite so many pages on the development of alternating current or the transistor—these indulgences can be skimmed easily enough.

The only truly frustrating element of the book is its treatment of globalization—and here the trouble is concentrated near the end. DeLong is a fine chronicler of national economies and of the development of Europe and the United States as economic units. But as he acknowledges, the story of the Global South during his period of interest is really dozens of different stories driven by different political currents. Beyond the inevitable narrative disjuncture is a genuinely difficult conceptual problem: how did globalization advance the welfare of so many billions of people when protectionist trade policies dominate so much of the long twentieth century?

Once again the Gilded Age is instructive. American trade with the rest of the world expanded dramatically after 1870, but it did so as the United States deepened its commitment to protective tariffs. There is substantial variation by year and by product, but generally, European manufacturers could expect to face duties of about 50 percent in the American market between 1870, when President Ulysses S. Grant signed his postwar tariff bill, and the outbreak of the First World War.

Over this same period, U.S. exports increased by more than 640 percent, according to U.S. census data, while imports more than quadrupled. How could this happen during an era of historically high U.S. tariffs marred by chronic deflation, repeated financial crisis, and a federal government that refused to support domestic demand?

The answer appears to be that the British Empire—international economic hegemon of the Gilded Age—simply didn’t care much about trade reciprocity with the United States. Free trade was a principle of almost religious devotion in Great Britain, and by the 1870s, the empire had done away with nearly all of its tariffs. Yet it refused to punish the United States when it did not follow suit. As a result, Americans simultaneously enjoyed the benefits of both free trade and protectionism. Its farmers maintained access to large consumer markets abroad, while its industrialists could undercut foreign competitors and generate large profits and new jobs.

Britain was not so generous with the rest of the world. For India, one price of expanded trade with the British Isles was the deliberate deindustrialization of the Indian economy. India ceased to manufacture its own textiles, and instead provided raw materials to Britain, which handled the factory work. Under the traditional free trade theory of comparative advantage, this process should have maximized the wealth of both countries. In practice, however, it meant India had to wait decades to develop a high-wage industrial sector and experienced a much longer spell as an agrarian economy chained to the standard population problem of human history.

For most of his book, DeLong seems unusually clear-eyed about this phenomenon for an American economist, presenting the protective industrial tariff as an essential prerequisite for developing economies trying to shake off the Malthusian devil. Though tariffs were frowned upon after the Second World War, DeLong notes, the new economic hegemon, the United States, provided direct industrial investment to Europe, Japan, and other allies, and it looked the other way when those allies provided massive subsidies to their manufacturing sectors. Thus Japan and South Korea enjoyed a vast improvement in living standards over the second half of the long twentieth century, while most of the Global South did not.

But DeLong abandons this narrative when the 1990s arrive. Suddenly the principles of industrial expansion and material progress that dominated the first 120 years of his story cease to apply. Globalization and free trade now go hand in hand. DeLong is surprised that the North American Free Trade Agreement did not substantially raise wages in Mexico, and unsure why so many Americans have been angry about deindustrialization in the twenty-first century. DeLong maintains that no overall domestic damage has occurred, stating that U.S. manufacturing jobs have simply been transformed into warehousing and transportation jobs—without pausing to wonder if these new jobs aren’t quite so good as the originals.

DeLong is not a triumphalist about the experience of what he calls “hyperglobalization” in the 1990s. He acknowledges that the overwhelming majority of the gains from this project came in China, where the glory of new material prosperity must be balanced against the abuses of authoritarian surveillance and ethnic persecution. But he presents the era as a greater puzzle than it really is. The gains from hyperglobalization have been concentrated in China because hyperglobalization was a race to the bottom, and China won the race. And it won by pursuing the same development strategy that DeLong chronicles elsewhere. China’s economic managers tried everything they could to give Chinese exports a leg up on international competitors, including currency devaluation and massive subsidies to state-owned enterprises. And the United States, like Britain in the nineteenth century, played along, believing that a broader, wealthier Chinese middle class would be good for human rights and global stability. The question for China, and the world, is whether this protectionist first step will lead to “Thirty Glorious Years” levels of shared prosperity without the social democracy that fostered it in the United States.

DeLong’s story of hegemony as a driver of stability and growth is extremely compelling—but it’s also a nice way of saying that imperialism isn’t so bad when it works. The neoliberalization of the world that began in the late 1970s not only undermined U.S. fiscal policy management, it decimated America’s effectiveness as an international economic hegemon—a fact that is obscured by the expansion of American military operations over the same period. Our leaders rely more on death and destruction in foreign policy and less on economic coordination and cooperation. They solve political problems with guns and threats, and assume the market will take care of prosperity and harmony.

The last quarter century clearly demonstrates that this program does not work. But DeLong’s first 450 pages inspire a question that the American left does not often ask: if we cannot return to rising global prosperity without a responsible international hegemon, what is the proper role for the United States? America’s wars in Vietnam, Iraq, Afghanistan, and elsewhere make the promise of a more balanced and cooperative geopolitical order attractive. But today’s world, for better and for worse, runs on dollars, and it will not be made to do otherwise without extraordinary dislocation.

And we are running out of time. The acceleration of climate change will stress the global economy’s capacity to support human life. DeLong is right to fear that humanity is not slouching into the next phase of its history, which looks very little like a utopia.

Zachary D. Carter is the author of The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes, winner of the Arthur Ross Book Award and the Sidney Hillman Book Prize.

Steve Donoghue: REVIEW of “Slouching” at Open Letters Review

Brad DeLong — Wed, 11 Jan 2023 19:14:02 GMT

Very nice to see:

Steve Donoghue: ‘Historical asides are so winningly conversational that they very much help to make the book’s 600 pages surprisingly easy reading… [DeLong] has written the most entertaining End Times narrative since The Late Great Planet Earth…’

Although Steve does seem to have less of the optimism-of-the-will than I do. Slouching Towards Utopia <bit.ly/3pP3Krk>

Steve Donoghue: Slouching Towards Utopia: Clinton guru’s sweeping story of an economic dream that died: ‘DeLong clarifies at the start of… Slouching Towards Utopia <bit.ly/3pP3Krk> [that] he’s pegging the beginning of the “long” 20th century around 1870, marked by “the triple emergence of globalization, the industrial research lab, and the modern corporation,” and the ending in 2010, “with the world’s leading economic edge, the countries of the North Atlantic, still reeling from the Great Recession that had begun in 2008, and thereafter unable to resume economic growth at anything near the average pace that had been the rule since 1870.”
This timespan is the setting for what DeLong refers to as his “grand narrative,” and at first glance, the end results of that long 20th century look pretty good, as DeLong is the first to describe: “The consequences of the long twentieth century have been enormous: Today, less than 9 percent of humanity lives at or below the roughly $2-a-day living standard we think of as ‘extreme poverty,’ down from approximately 70 percent in 1870. And even among that 9 percent, many have access to public health and mobile phone communication technologies of vast worth and power. Today, the luckier economies of the world have achieved levels of per capita prosperity at least twenty times those of 1870, and at least twenty-five times those of 1770 – and there is every reason to believe prosperity will continue to grow at an exponential rate in centuries to come.”
And yet, according to DeLong, “the history of the long twentieth century cannot be told as a triumphal gallop, or a march, or even a walk of progress along the road that brings us closer to utopia.” The true situation, “is, rather, a slouch. At best.” He sets about recounting the history of the long century, checking in on every major economic depression in the years since the American Civil War and of course citing every major economist from Friedrich von Hayek to Joseph Schumpeter to John Maynard Keynes. And he broadens the scope of his narrative to include commentary on larger historical events—as, for instance, when he can hardly contain his astonishment over Adolf Hitler’s mania for re-arming Germany once he took control of the country. “Political effectiveness we understand,” DeLong writes. “But weapons? Armies? Hadn’t World War I taught the Germans, and even the Nazis, and even Hitler, not to do that again? No, it had not…”
These historical asides are so winningly conversational that they very much help to make the book’s 600 pages surprisingly easy reading. Part of this is likewise attributable to DeLong’s semi-ironic adoption of a “grand narrative” (even though Ludwig Wittgenstein considered such grand narratives “nonsense”), which he doesn’t exactly hide under a bushel. One of the main reasons why humanity’s progress towards utopia has been more of a slouch than a march, you might ask? DeLong cites many factors (this is not a simple book, much though you at times get the impression its author would have liked it to be), but his central villain is gently indicated when he refers to the market economy as “that Mammon of Unrigtheousness.”
The free-market economy pops up repeatedly in these pages, always wearing a dark, oily mustache like Daniel Day-Lewis deep in character as a homicidal maniac. People are no sooner starting to feel some free-range autonomy, able to smile and play with their children and lay away a little nest egg for the future, when suddenly up pops the market economy to ruin everything with the ravages of prosperity. And DeLong is always on hand when that happens, ready with choice sarcasm: “We again hear echoes of our whispering chorus,” goes one such passage. “The impersonal market had taken from some, given to others, and greatly increased the total; blessed be the market.” One senses a bit of disaffection.
With all due respect to the Great Depression, the crucial economic watershed in DeLong’s long century was the enactment of one of the single worst acts of public pillaging since Alaric sacked Rome: the neoliberalist fantasy-religion of supply-side economics, particularly as embodied in the economic policies of Ronald Reagan and Margaret Thatcher, which “began the process of destabilizing the distribution of income in a way that has led to our Second Gilded Age.” On this point DeLong’s carefully-modulated scorn encompasses both the imposters of this religion and those afflicted by it: “The neoliberal turn was very successful in restoring the growth rate – and more than restoring the growth rate – of the incomes and wealth of those at the top. The rich had the largest megaphones, and they trumpeted the fact that their incomes were growing rapidly. And those lower down, who voted for candidates and politicians who had turned the wheel and made the neoliberal turn? They were told that if only they were sufficiently worthy, the unleashed market would give to them too, and they more than half believed it…”
And in the end, are we any closer to Utopia? Or has all this slouching been in vain, except for hideously enriching 60 people out of a world population of 8 billion? DeLong recalls that the future seemed bright during some hazy Clintonian heyday, but then, he notes, post-2010 America elected Donald Trump, and every kind of Utopia suddenly seemed not only further away but permanently out of reach. Whether that betokens the end of the quest or what he refers to as a whole new narrative, DeLong doesn’t say. But either way, he’s written the most entertaining End Times narrative since The Late Great Planet Earth.

Paul Seabright: Review of “Slouching Towards Utopia” for the TLS

Brad DeLong — Wed, 28 Dec 2022 19:20:51 GMT

<https://www.the-tls.co.uk/articles/slouching-towards-utopia-j-bradford-delong-book-review-paul-seabright/>

Economics|Book Review

Trouble in paradise

Why is economic progress so little cause for celebration?

By Paul Seabright

September 23, 2022

Read this issue

The Los Angeles Electrical Age Exposition, 1936|© Bettmann/Getty Images

IN THIS REVIEWSLOUCHING TOWARDS UTOPIAAn economic history of the twentieth century
624pp. Basic. £30 (US $35).J. Bradford DeLong

J. Bradford (“Brad”) DeLong, a macro–economist and economic historian (and deputy assistant secretary at the US Treasury under President Bill Clinton), has written a history of the “long” twentieth century, which he situates between 1870 and 2010. It is explicitly and instructively contrasted with Eric Hobsbawm’s history of the “short” twentieth century, from the outbreak of the First World War to the fall of the Soviet Union. Hobsbawm the Marxist was interested in the big ideas that dominated the twentieth century, notably socialism, communism and fascism. Paradoxically, it takes DeLong, who is no Marxist, to counter that the story of the underlying economics of the twentieth century is even more interesting than that of the ideological superstructure.

DeLong claims that it is “around 1870 [that] we got … full globalization, the industrial research laboratory, and the modern corporation. These were the keys. These unlocked the gate that had previously kept humanity in dire poverty”. What he estimates to be the annual growth in the global “stock of useful ideas about manipulating nature and organizing humans … shot up from about 0.45 percent per year before 1870 to 2.1 percent per year afterward, truly a watershed boundary-crossing difference”. (The author’s measure of this “stock of ideas” is proportional to income per capita, but also increases with total population, though less than proportionately. This reflects the fact that more people bring more ideas, but that there is also population congestion of scarce resources. The measure is contestable, but under most reasonable alternative measures the conclusion would be similar.) The result was that almost nobody in 2010 was living in a world that would have been recognizable to the inhabitants of the world into which their grandparents were born.

The changes have been spectacular: “today, less than 9 percent of humanity lives at or below the roughly $2-a-day living standard we think of as ‘extreme poverty’, down from approximately 70 percent in 1870”. Furthermore,

there are more than enough calories produced in the world, so it is not necessary for anybody to be hungry. There is more than enough shelter on the globe, so it is not necessary for anyone to be wet. And there is more than enough clothing in our warehouses, so it is not necessary for anybody to be cold.

Yet the narrative DeLong develops is anything but triumphalist:

Suppose we could go back in time to 1870, and tell people then how rich, relative to them, humanity would have become by 2010. They would almost surely have thought that the world of 2010 would be a paradise, a utopia … But not so. It has now been 150 years. We did not run to the trail’s end and reach utopia … what went wrong?

DeLong’s choice of 2010 as the end date for his history is shaped by the financial crisis of 2008 and the ensuing recession, which produced, among other consequences, the election of Donald Trump and a pervasive current sense that the economic and political systems of the world are in potentially terminal crisis.

DeLong sees two main reasons for this. First, “material prosperity is unevenly distributed around the globe to a gross, even criminal extent”. Second, “material wealth does not make people happy in a world where politicians and others prosper mightily from finding new ways to make and keep people unhappy”. He adds that we should seek justice rather than mere productivity and abundance, though he leaves his definition of “justice” tantalizingly unclear. He summarizes morosely: “The history of the long twentieth century cannot be told as a triumphal gallop, or a march, or even a walk of progress along the road that brings us closer to utopia. It is, rather, a slouch. At best”.

It is invigorating to read a diagnosis of the failings of modern capitalism that does justice to the innovation and productive energy that capitalist institutions have made possible. DeLong is surely right that our ancestors of five or six generations back would have been astonished to see the material abundance that surrounds us. He does not say, but would surely agree, that they would have been no less astonished by our inability to be satisfied with the world we have made. After all, we are not only materially better off, on average, to a spectacular degree, but we lead longer and healthier lives, and are at a much lower risk of violent death – despite the destructive potential of modern technology, which goes hand in hand with its more productive, ameliorating features. The real puzzle of the long twentieth century is not why it failed to achieve what its first inhabitants might have hoped for: it’s why the achievement of far more than its first inhabitants ever dared to hope for has seemed to us, looking backwards, to be so little cause for celebration. Not everyone would agree with this downbeat assessment – but the fact that so many people do is surely one of the most striking facts that any modern social commentator can seek to address. Even merely for framing the question in this way, DeLong’s book deserves a wide readership.

The author’s answer to the question is delivered through a set of seventeen narrative chapters, divided sometimes on thematic but mostly on chronological lines. A recurring theme is the tension between a vision of markets as the solution to all social problems, presented as the brainchild of Friedrich von Hayek, and a contrasting vision of the market as an inadequate response to human beings’ legitimate assertions of rights, presented as the brainchild of Karl Polanyi. DeLong is an engaging writer, full of unexpected information about subjects ranging from the struggle between Nikola Tesla and Thomas Edison over whether the electric grid would carry direct or alternating current to the experience of his own grandfather relocating his shoe factory to Maine after facing bankruptcy in Massachusettsand the chemistry of making semiconductors, as well as the details of a ten-week stay in New York City in early 1917 by Lev Davidovich Bronstein, shortly to become famous as Leon Trotsky. I learnt something on almost every page. As a set of thought-provoking essays on themes related to its overall topic, Slouching Towards Utopia is hard to fault.

Yet there is much the book doesn’t give us. The first disappointment is a painfully inadequate set of references, apparently inflicted by the publishers, who seem to think that readers who like this kind of history will be put off by too many footnotes. The result is many unsourced assertions (often plausible, sometimes not), plus some summary generalizations that may puzzle non-specialist readers while making specialists wince. There is, for example, the airy assertion that “full globalization” – whatever that means – only got going around 1870. Or the summary of Hayek’s views in the repeated mantra “the market giveth, the market taketh away, blessed be the name of the market”, for which (despite the quotation marks) no source is given, and which is a strange dictum to attribute to someone who insisted there was nothing moral, let alone blessed, about what the market distributed. Hayek may have been a zealot at times, but his vision of the market was pragmatic, as something that delivered the goods.

It will likewise be hard, without bibliographic help, for readers to know how to situate this book in the growing literature on “How the World Became Rich”, to take the title of Mark Koyama and Jared Rubin’s comprehensive overview, published earlier this year. In fact, DeLong doesn’t really try to get under the skin of this phenomenon. After nodding to the threefold blessings of “full” globalization, the modern corporation and the industrial research laboratory, he tells us a little about globalization, but nothing, for example, about how many industrial laboratories there were, or how they functioned, or about how or when the “modern corporation” came into existence, or what difference it made. There is an entire chapter on military tactics in the Second World War, but next to nothing on the key institutions (such as research laboratories and corporations) that made the economic miracle possible. This is clearly an authorial choice, but it does seem strange in the context of a book that is supposedly dedicated to the economics of the long twentieth century.

We are even left in some doubt as to how much DeLong is convinced by his own answer to his penetrating question. He tells us repeatedly that economics mattered more than anything else during this century, but he then explains that the economic and social insanity of the First World War was caused by “nationalism” and “aristocracy” – the members of the latter seeking to prevent the erosion of their influence and status. He cites many reasons for concluding that “hyperglobalization has not impoverished the workers of the major industrialized economies”, but has only a few speculative sentences to add about why globalization came to be “such a powerful red cape to elicit rage at the end of the long twentieth century”. He alludes to ideas such as a link between economic gains for women and a diminished status for men, but leaves it unclear how important a part of the answer they are.

That is not a criticism as such – his question is tough, and few other commentators have better answers to give. But it tells us something about the experience of reading J. Bradford DeLong. He is a charming companion, full of entertaining stories, and he asks deep questions in newly engaging ways. We don’t want the experience to end. But that’s partly because we sense we’re not getting the answers we thought he was offering.

Paul Seabright teaches at the Toulouse School of Economics and was until 2021 Director of the Institute for Advanced Study in Toulouse. He is the author of The Company of Strangers: A natural history of economic life, 2010

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Michael Hiltzik INTERVIEW on “Slouching Towards Utopia"

Brad DeLong — Thu, 22 Dec 2022 19:19:58 GMT

Michael Hiltzik: Column: How did America get addicted to a policy that fails everyone but the rich?

The neoliberalism of Ronald Reagan has served only the rich, yet it still governs American economic policy. UC Berkeley’s Brad DeLong examines why in his new book.

Here’s the central riddle of U.S. politics since the Great Depression:

Social Democratic policies crafted in the 1930s succeeded in creating a long era of widespread prosperity, then suddenly lost their credibility in the mid-1970s. They were replaced by the neoliberalism of Ronald Reagan, which failed to help anyone but the rich, yet still governs American economic policy.

The ascent of neoliberalism and its staying power “is a puzzle,” J. Bradford DeLong writes in his magisterial new economic history of the 20th century, “Slouching Towards Utopia.” It’s the central puzzle that DeLong, a professor of economics at UC Berkeley, a widely followed economics blogger and one of our leading critics of economic inequality, aims to examine.

DeLong takes as the canvas what he calls the “long twentieth century,” which he defines as the period from 1870 to 2010 and argues was “the most consequential years of all humanity’s centuries.”

The “watershed-crossing events” of 1870, in his view, include the emergence of globalization, the industrial research lab and the modern corporation. The era ends in 2010 with the developed world — specifically the countries of the North Atlantic — still coming to grips with the Great Recession of 2008.

The story DeLong tells doesn’t really end there, for its reverberations still are felt today. In that context, the most important portion of his book covers the shifting approach to market forces. That portion starts with the Depression.

By bringing to the middle class and working class the recognition of their shared interest in a more inclusive economy, the Depression produced a drive for social insurance and social justice. Franklin D. Roosevelt’s New Deal recognized those interests by creating programs such as Social Security and pro-labor policies through the National Labor Relations Act.

This was the era of social democracy, reflecting the views of Hungarian economist Karl Polanyi, who rejected the conservative view that the market had to be permitted to function without interference, even if it produced unjust outcomes.

“Polanyi’s counter was that whether saying the market can do it all or that it’s all we can have, people will not stand for it,” DeLong told me during a lengthy conversation about his book. “You will get a large group of people wanting to elect someone who will do something about the system.”

In the post-Depression era, it became understood that “not only shouldn’t the market be left to do it all,” DeLong says, “it can’t do it all or very much unless it is properly primed and aided and guided.”

“So you need things like the GI Bill to produce a money flow into education, and things like Fannie Mae and Freddie Mac [the government-sponsored housing finance agencies], because otherwise funding homeownership expansion on the scale that America needed would be all but impossible.”

Social democracy, in DeLong’s telling, encompassed a vast array of programs not normally thought of as core economic ventures — airport construction, the National Park Service, government-funded research in health, Head Start in education.

However one defines it, social democracy worked, ushering in what DeLong calls “thirty glorious years” of prosperity (actually 1938-1973 — the phrase was coined by a French economist, referring to the postwar French economy of 1939-1979). The developed economies grew by an annual average of 3% during those years.

The very breadth of economic expansion made the public highly receptive to all these programs, including the social safety net. As president, Dwight Eisenhower warned that tampering with, much less abolishing, Social Security, unemployment insurance and other social programs would mean the extinction of the Republican Party.

But then it all came apart. It would have been hard to sustain annual growth of 3% under any circumstances, but the 1970s brought the oil shocks, which tripled the price of oil, produced high inflation and provoked a sharp economic slowdown.

Opinion soured on redistribution of income to sustain the poor, and on environmental regulations. “The fading memory of the Great Depression,” DeLong writes, “led to the fading of the middle class’s belief ... that they, as well as the working class, needed social insurance.”

The stage was set for what DeLong calls “the neoliberal turn.” Of course, “neoliberal” is a misnomer; the concept is more properly described as a return to conservative market economics. The right wing yoked economic conservatism to a cultural critique aimed at discontent with the movement for racial justice.

Indeed, one insight that DeLong’s approach leads us to is how little the right’s attack on social justice initiatives has evolved in nearly a half-century. In 1980, conservative economist Martin Feldstein inveighed against unemployment insurance because it would produce inflation, health and safety regulations because they would reduce productivity, and welfare because it would “weaken family structures,” Medicare and Medicaid because they would drive up healthcare costs.

Even earlier, in 1962, Nobel economics laureate George Stigler lamented the “insolence” of civil rights demonstrators. Complaints about the “permissiveness” of liberal parents was a feature of Republican critiques.

Compare that to today’s GOP shibboleths. Republican governors competed to see which of them could rescind pandemic-related unemployment benefits faster; deregulation has become a permanent plank in the GOP platform; Medicaid is still a target of right-wing “reformers”; Sen. Ted Cruz (R- Texas) depicts President Biden’s student loan relief program as one directed at “the guy that studied queer pet literature,” and Rep. Lauren Boebert (R-Colo.) says it will rob hardworking Americans to pay for a student’s “degree in lesbian dance theory.”

Targeting ethnic and Black communities still exists on the right, though the GOP today also targets LGBTQ rights.

The social democracy movement “ran aground in the 1970s,” DeLong told me.

To some extent, social democracy foundered on an outbreak of bad luck.

“With no Iranian revolution, no tripling of world oil prices, Jimmy Carter wins reelection and you get a reconfiguration of social democracy with more respect for the role of a market economy with the right adjustments and the right distribution of income,” DeLong says.

“So it was just bad luck that landed us with Reagan and Thatcher, who had very little idea about how to actually accelerate growth, and who wound up doing nothing constructive except greatly increasing income and wealth inequality and then entrenching the ability of inequality to put its thumb on the scale of elections.”

As DeLong writes, “The rich had the largest megaphones, and they trumpeted the fact that their incomes were growing rapidly. And those lower down ... were told that if only they were sufficiently worthy, the unleashed market would give to them too, and they more than half believed it.”

It’s proper to acknowledge, as DeLong does, that even amid rising inequality the average American’s living standards have improved markedly, in part thanks to the fall in prices of technology: Households with home air-conditioning have risen from 55% in 1979 to 90% in 2010; microwave ovens from 5% to 92% of households; computers from 0% to 70%.

Yet DeLong points out that the features of a middle-class life that used to be within reach have receded, such as a detached house in a good neighborhood, the ability to pay for a good college without borrowing, health insurance that doesn’t leave one bankrupt after a heart attack.

Despite its obvious shortcomings, neoliberalism has wriggled its way into political orthodoxy. It was embraced by Bill Clinton who, as DeLong writes, declared in a State of the Union address that “the age of big government is over” and pledged to “end welfare as we know it” (via a reform program that has had a disastrous effect on poor households). Barack Obama, DeLong notes, called for government austerity when the unemployment rate rose above 9%.

DeLong posits that the neoliberal turn has survived because the end of the Cold War gave Reagan a halo that persists, and for some reason has infused his economic policies despite their failure to produce economic justice.

So where does that leave us today?

“Resurrecting social democracy is not in the cards, because it rested on technologies of production and social organization as they existed in the 1950s,” DeLong told me. “Nor is resurrecting Reaganism. But if there is no left-wing alternative to neoliberalism, the right-wing alternatives are much more unpleasant — a politics of ‘you have enemies and you need to give me close to plenary power so I can protect you.’ That’s a dangerous situation, and one that we seem to be drifting towards.”

Whether the hands on America’s economic tiller are capable of guiding us to a fair future remains in question. DeLong concludes his book with that question: “A new story,” he writes, “which needs a new grand narrative that we do not yet know, has begun.”

Nick Lichtenberg: Interviews Brad DeLong in Fortune

Brad DeLong — Tue, 20 Dec 2022 18:19:04 GMT

Top economist Brad DeLong speaks on student debt, NIMBYism, inflation and his new book on our economy slouching towards dystopia

BYNICK LICHTENBERG

September 5, 2022 at 4:00 AM PDT

GENEVIEVE SCHIFFRAR; COURTESY OF BRAD DELONG

It’s the best of (economic) times and the worst of (economic) times.

That’s the argument in Slouching Toward Utopia, out Tuesday by J. Bradford DeLong, the UC Berkeley economist, former Clinton White House official, and old-school member of the economic blogosphere (dating all the way back to the late 1990s.)

Forget about the “long 19th century,” DeLong argues. That’s the theory made famous by Eric Hobsbawm, who The New Yorker profiled in 2019 as “the communist who explained history.” The pivotal period in world history occurred from the American and French Revolutions of the late 1700s to the first World War in 1914, Hobsbawm argued.

To hear DeLong tell it, Hobsbawm just didn’t live long enough to see himself proven wrong, as DeLong’s “long 20th century” from 1870 to 2010 was a period of unsurpassed economic growth. The problem, DeLong says, is that’s been over now for more than a decade and the global economy might never recapture its momentum. Humans got closer to utopia than ever before, but we’ve been slouching toward it for too long.

He sat down with Fortune ahead of his book’s release to talk about whether the economy’s best days are behind us, or if we are doomed to live in a dystopia full of killer robots flying through the air, scorching summer temperatures wrought by climate change, and, to paraphrase Allen Ginsberg (DeLong loves economic paraphrases, as the title of his book indicates), the best technical minds of the world turned to selling ads by figuring out how to scare people.

But he says he still believes that the United States is the “furnace where the future is being forged.”

The following interview has been lightly edited and condensed for clarity.

Congratulations on your book and thank you for taking the time after walking your dog.

Yes, we got two dogs during the plague year. It’s very good to have the daily exercise of dog-walking: It’s an effective way of gaining and outsourcing additional willpower.

I’ve been a reader of yours for a long time, and you have always had this unique style among economic writers.

I personally really love this book, because I have long been a big fan of Eric Hobsbawm and his concept of the “long 19th century.” When did you first read him?

I first came across Hobsbawm when [former Harvard economics professor] David Landes made me read them back when I was an undergraduate, around 1980 or so. Landes would say, “I don’t really recommend left-wing students read Hobsbawm, because he’s too convincing, but you’re enough of a right winger that it will annoy you, but also teach you and you’re really the kind of person who ought to read this.”

Well, thinking about the long 19th century, you have democracy and industry starting off together in the middle of the 1700s, and then the globalized industrial revolution with steam, the industrial economy changing to coal and oil, and empire. That then takes you up to 1914 and the catastrophe that starts there. The arc of those three books is, I think, quite wonderful and extremely successful. Especially the first two.

Your “long 20th century” runs from 1870 to 2010, when the world had a burst of economic progress that you say is now over, thus proving Hobsbawm wrong. So is it really over?

In 1870, the last institutions fall into place to produce technology that doubles every generation, thus enabling Schumpeterian creative destruction in which the next generation is twice as rich, but also a huge chunk of industries, occupations and patterns of life vanish in order to make that happen, and that makes a lot of people angry. Whatever running code of societal organization you crafted, the forces of production as they existed at any moment after 1870, those no longer work 30 or 40 years later, and you have to build new and different patterns and institutions on the fly. And that’s a very hard task, and it’s now very hard.

As for when it ends, you could say between 2001 and 2003, when the George W. Bush administration says the United States is no longer the benevolent, hegemonic, technological pioneer, we’re just another country and we’re going to follow our own interests.

You could say 2006, when my friend John Fernald says it becomes clear that information technology is actually not going to be as big a deal for most people as electrification or the internal combustion engine or modern materials.

You could say it’s 2007, when the idea that you actually needed to manage finance because it wasn’t trustworthy on its own turned out to be nonexistent.

Or you could say 2010, at a time when standard Keynesian theory would say the private sector has sat down on spending and the government sector needs to stand up, and even Barack Obama is saying no, the government must tighten its belt, and if the Democratic Congress actually passes any spending bills, I’m going to veto them.

You could also say it’s 2016 with the election of Donald Trump. And if I had to write it over again, I would say there’s a case for saying it’s 2022, with the return of major power war [between Russia and Ukraine].

But sometime between 2002 and 2020 the whole complex of things that gave us the long 20th century—this technologically progressive, globalized United States, the furnace where the future was being forged—dissolves piece by piece, and it leaves us in a new world in which China and India are likely superpowers and in which dealing with global warming is likely to become all important.

You know, you go around the world and ask about Xi Jinping and hear back that he may have some rough edges, but at least he’s been tested as a competent administrator and someone who listens to advice, as opposed to the ethnonationalist politicians being thrown up by the industrial democracies right now—Trump was no prize and Boris Johnson was no prize. That’s a very strange configuration of things. And people have not quite wrapped their minds around this new world yet.

Another part of this new configuration is the high inflation we’ve been experiencing. What are people not wrapping their minds around with this highest inflation in 40 years?

On inflation, my view was that we were going to have some coming out of the plague. And it was going to be by and large, a good thing.

Let me explain: The plague has given us maybe 15 years of metaverse-style technological development in just over two years. And the economy has a new configuration: Fewer in-person workers in retail establishments, a lot more delivery orders, substantially more goods production, and also substantially more information entertainment and production as well. That requires that we shift a lot of people into new jobs, and you can’t cut anyone’s wages nominally without making them extremely angry at you, which means that in the expanding sectors, you have to raise wages in order to pull people into what are the growth sectors of the post-plague economy, and that’s going to give us a bunch of inflation.

Plus, when you reopen the economy, you discover all the supply-chain bottlenecks, and you need the prices of things where there are bottlenecks to go up in order to get people focused on how do we produce more of this stuff or how do we use less of it?

Your book is called Slouching Towards Utopia because you describe how we made so much progress in the 20th century and then stalled out, but now that we have gone through this accelerated metaverse evolution, do you think in a way we’ve sprinted towards a new kind of economic utopia, coming out of the plague?

I wrote in my book that I saw the best technical minds of the world turned to selling ads by figuring out how to scare people, so their eyeballs stayed glued to the screen.

And they figured out how we can use the screen you’re looking at to hack your brain so that you keep watching so we can sell you more ads.

So do you see this as a dystopia that we have emerged into?

It certainly has dystopian elements. Technological progress always has dystopian elements implicit in it, of which large-scale thermonuclear war is only one, and now we are also cooking the planet—how hot is it in Beijing today? Is reaching 120 degrees or so a normal climate kind of thing? We have gotten extremely good at advancing our technology but extremely poor at using it to build a proper socioeconomic political system that makes us happy.

We also shouldn’t underestimate the fact that while three-quarters of the world went to bed seriously hungry in 1870, now it’s only about one-fifteenth of the world that does so today. It’s a huge accomplishment when one of your chief mental concerns is where am I going to get my food tomorrow, rather than which of the 93 things I might want tomorrow should I pick up at the supermarket?

But revealed political preferences are that this does not make people happy or satisfied or thinking that things are going well.

So is it possible to recapture our momentum with economic progress, or is that asking the wrong question? It sounds like we still have a lot of progress, but you’re describing a crisis of values about how that technological progress is used.

Well, we certainly could recover our momentum.

The nice thing about invention is that two heads are not twice as good as one, but two heads are far better than that. And now the potential of the scientists and engineers that we could deploy, if we really wanted to, is absolutely enormous. Yes, the low-hanging fruit has been picked and it’s getting harder and harder to push the technological frontier forward. But our resources are still immense and they still scale.

There are people, my colleague and neighbor Fred Block among them, who think that one of the big things my book misses is the neoliberal turn in the United States that pushed corporations toward declaring maximum short-term profits, which means all the Xerox Parcs and the IBM Labs and the Bell Labs were essentially dismantled, and business started saying, instead of doing research, just figure out how to make what we’re making 1% cheaper next year. And the loss of those semi-public industrial research lab organizations—which because they were research-oriented were for the benefit of all, but were inside corporations and actually focused on technologies that might work—has been a huge minus and a major cause of the slowing down of technological progress.

Another huge cause of the slowdown is our failure to keep expanding education. When my father went to Harvard in 1955, it admitted 900 men and 300 women. Now it has 700 men and 900 women. That’s only gone up from 1,200 to 1,600 in total over 65 years, not a huge increase in capacity in a country that’s much more than doubled in size and in a world in which maybe five times more people are qualified for an Ivy League education. That failure to scale is really quite remarkable and amazing.

The problems with education at the private level are very much the NIMBYism, that is the not expanding capacity. At the public school level, it’s simply that we seem to be pretty good at what we do at teaching people things and preparing them for lives in which they appear to be very productive, but we have no idea how we do it. We really have zero idea about what parts of the educational process are useful. What are we doing that is simply a medieval ritual that was a response a long time ago to bad educational technology, and what things actually encourage people to think and talk and acquire skills so they can then better understand and deal with the world? American education is still an attractive thing to people from all over the world, but it needs to be reformed and we have very little idea of how to reform it. So it’s a big puzzle.

And understanding NIMBYism, the “not in my backyard” mentality, comes from how the creative destruction process indeed destroys a lot of things. But we live in a market economy where the only rights that really matter are property rights. And if you have property rights, then you tend to think you should have a voice about the surrounding built and natural environment not being changed without your buy-in, or at least without you getting bought off in some way.

Huge numbers of people are tremendously offended at the Biden student loan relief plan, but whoever we are, we have all had more than $20,000 of good or bad luck affect our lifetime income paths. There are a lot of people who went to school, and then with the totally crappy labor market of the past 15 years, it really didn’t pay off. So if your principal reaction is that those people are getting something they don’t deserve, that shows a very powerful thing about human psychology.

Also, many people do not like creative destruction at all. The idea that your job or your industry, the fabric of your life, might blow away if some rootless cosmopolis decides the business you work for no longer satisfies a maximum profitability test gets people very angry. These things have been animating progress and its effect on politics ever since the days of William Jennings Bryan.

Well that’s quite a note to end on, a reminder that these are not new concerns even if they feel that way, and that creative destruction versus NIMBYism is a major issue to resolve.

What I hope is that a lot of younger people read my book. When you get to my generation, you look around and it’s by and large a retrospective on what went wrong while we were supposedly in control. And I’d like the younger generation to have a stronger sense of how this kind of conflict between property rights and other rights on the one hand, in an environment of repeated creative destruction, on the other hand, has greatly hobbled our ability to actually use our huge technological powers to build a kind of human world as opposed to a world in which Beijing’s temperature reaches 120 degrees Fahrenheit and in which right now, killer robots are flying in the skies above Ukraine looking for people to kill.

You know, back when I was 12 or 13, there was a difference between the utopian science fiction novels with amazing technological competence and virtual reality and so forth, and the dystopian science fiction novels in which you had excessive heat from the greenhouse effect and killer robots, and yet it turns out in real life those have become something like the same thing. Yeah. We have managed to purchase both.

Wow, well that really sums it up. I just want to say I read your book and I devoured it. I really loved it.

Thank you. Oh, that’s excellent. That’s excellent. I remember [UC Berkeley colleague and former Obama advisor] Christina Romer saying, “Wow, this is actually readable.” And the more people who say that, the happier I am.

Interview: Dylan Matthews at “Vox"

Brad DeLong — Sun, 18 Dec 2022 23:05:39 GMT

Humanity was stagnant for millennia — then something big changed 150 years ago

Why the years from 1870 to 2010 were humanity’s most important.

By Dylan Matthews

dylan@vox.com Sep 7, 2022, 8:00am EDT

<https://www.vox.com/future-perfect/2022/9/7/23332699/economic-growth-brad-delong-slouching-utopia>

Amanda Northrop/Vox; Getty Images

This story is part of a group of stories called

Finding the best ways to do good.

“The 140 years from 1870 to 2010 of the long twentieth century were, I strongly believe, the most consequential years of all humanity’s centuries.”

So argues Slouching Towards Utopia: An Economic History of the Twentieth Century, the new magnum opus from UC Berkeley professor Brad DeLong. It’s a bold claim. Homo sapiens has been around for at least 300,000 years; the “long twentieth century” represents 0.05 percent of that history.

But to DeLong, who beyond his academic work is known for his widely read blog on economics, something incredible happened in that sliver of time that eluded our species for the other 99.95 percent of our history. Whereas before 1870, technological progress proceeded slowly, if at all, after 1870 it accelerated dramatically. And especially for residents of rich countries, this technological progress brought a world of unprecedented plenty.

DeLong reports that in 1870, an average unskilled male worker living in London could afford 5,000 calories for himself and his family on his daily wages. That was more than the 3,000 calories he could’ve afforded in 1600, a 66 percent increase — progress, to be sure. But by 2010, the same worker could afford 2.4 million calories a day, a nearly five hundred foldincrease.

DeLong’s book is called Slouching Towards Utopia, though, not Achieving Utopia. The unprecedentedly fast change in the lives of residents of rich nations brought with it profound political instability and conflict. Perhaps the worst off were residents of the Global South, and oppressed communities like women and racial minorities in the Global North, who were denied much of the benefit of the world’s economic revolutions while suffering the bulk of the harm from the ensuing political and social revolutions.

DeLong and I talked last week about the book, the economic significance of the long 20th century, what caused technological progress to speed up so dramatically, and whether this kind of explosive growth can continue.

A transcript of our conversation, edited for length and clarity, follows.

Dylan Matthews

You argue that 1870 through 2010 were “the most consequential years of all humanity’s centuries.” What’s your case?

Brad DeLong

It really looks that we had as much technological change and progress between 1870 and today as we had between 6000 BC and 1870 AD. We packed what had previously been nearly eight millennia of changes in the underlying technological hardware of society, which required changes in the running sociological code on top of that hardware. To try to pack what had been eight millennia worth of changes before in 150 years is going to produce an awful lot of history.

Before 1870, most of history is how elites run their force-and-fraud, domination-and-extraction mechanism against a poor peasantry so that they, at least, can have enough, and so that their children are only two inches shorter than we are, rather than five or six as the peasants are. It’s about how the elites elbow each other out of the way as they eat from the trough. And it’s about the use they make of their wealth for purposes good and ill, of civilization and destruction.

But if you’re enough of a Marxist, like me, to say that the real motor of history is the forces of production, their changes, and how society reacts for good or ill to changing forces of production, then yes, [1870 to 2010] has to be as consequential because there’s as much technological change-driven history as there is in entire millennia before.

Dylan Matthews

You seem on solid ground in arguing that something radical changed that enabled humans to become dramatically richer over the last 300 years; almost every economic historian would agree with that. But many people start the story in the 18th century, with the development of the steam engine and the beginning of the Industrial Revolution in Britain. You start it in 1870, well after that process was underway.

Why does the story start later for you?

Brad DeLong

When do we start? Let’s start 300 million years ago in the Permian period, when plants die and they get pushed underground and turn into coal. And then we flash forward to 25,000 years ago, when the last glacier episode scrapes all the rock on top of the coal deposits off of the British Isles and then retreats, leaving Britain with an ungodly amount of surface coal at sea level. Since it’s a wet island, it’s thereupon very easy to move by water.

You need a steam engine if you want to dig even 10 feet down in order to get out the coal, and then around 1770, the steam engine and textile machinery attained critical mass and the Industrial Revolution begins, which is usually taken as the hinge of economic history, although some people push it back further.

However, you look worldwide and you take my index of technological progress, and it [grows by] less than half a percent per year from 1770 to 1870. That’s based on exploitation of really cheap coal and also on the productivity benefits of falling transport costs that gather all of the manufacturing in the world into the place [the United Kingdom] where it’s most productive and most efficient, because it’s the place where coal is cheapest.

I was struck by a line I came across from the 1871 version of John Stuart Mill’s Principles of Political Economy: “Hitherto it is questionable if all the mechanical inventions yet made have lightened the day’s toll of any human being.”

Say you have some slowdown in global technological progress after 1870 because the cheapest coal has already been mined and the deeper coal is hard to find, and say that you have some other slowdown because you don’t get the boost from gathering manufacturing in places where it’s productive. We might well have wound up right with a steampunk world after 1870: a world with about the population of today, but the living standards of 1870 on average.

That’s what the pace of progress was, except that we got the industrial research lab, the modern corporation, and then full globalization around 1870. The industrial research lab rationalized and routinized the discovery and development of technologies; the corporation rationalized and routinized the development and deployment of technologies; and globalization diffused them everywhere.

Dylan Matthews

For most of human history since the advent of agriculture, we were ruled by Malthusian dynamics: If we gained the ability to grow more food, we would simply have more children, meaning no one’s quality of life could improve too much. And this, of course, put tremendous pressure on women, who were expected to have many children and do almost all the biological and practical work of gestating and raising them.

You cite a very striking statistic in the book: the average number of years of a woman’s life spent either pregnant or breastfeeding. That has gone down dramatically, from 20 years of a typical woman’s life in 1870 to four years today. Explain that number to me, and what it means.

Brad DeLong

It’s from a book called Women’s Work: The First 20,000 Years by Elizabeth Wayland Barber. We really do not know much about what human life was really like in the hunter-gatherer age. Once we have agriculture, productivity goes way up. Life becomes somewhat boring because our brains are probably built to be hunter-gatherers. Population grows, and living standards fall.

You have this biological situation in which one in seven women appears to die in childbirth; in which [to expect] one son surviving, you need to have two kids survive, which means three reach early adulthood, which means four reach the age of 5, which means seven or so babies born, which means nine advanced pregnancies.

Once you become an undernourished, agrarian Malthusian being, all of a sudden you are biometrically close to being effed completely.

Your children’s immune systems are too compromised to fight off the common cold. Maybe you’re too skinny to ovulate. If you aren’t, maybe you lose two teeth and break an arm as the baby leeches calcium out of your body into itself. Then you add on to that the fact that patriarchy means that if you are female, your only durable source of social power is to have surviving sons. And so any temptation to do much of anything other than have surviving sons, and then have more as insurance, is very hard to resist. Those are the biological, ecological, economic forces tending toward patriarchy, of which men as a group then took absolutely horrible advantage.

And yet once technological progress starts to hit 2 percent per year, then some people begin to have incomes above subsistence and infant mortality falls. But those changes came remarkably quickly.

Dylan Matthews

The highlight of the 140 years you study are the Thirty Glorious Years: roughly from 1945 to 1975, as the US and Europe recovered from World War II. They managed to build economies and welfare states that directed substantial benefits to working-class people while sustaining really fast productivity growth. After the 1970s, that regime broke down.

I finished the book thinking, “How can we get back to those 30 years? How do we get fast growth and equitable growth like that again?” But at the same time, many people you might think sympathetic to that vision are instead questioning the value of economic growth or calling for “degrowth” as a way to manage global warming.

Is it possible to go back to the Thirty Glorious Years? Or do we need degrowth instead?

Brad DeLong

We definitely need to decarbonize. But go back to the steampunk world — suppose that we hadn’t had the last acceleration and we’re at the 1900 level of technology. We’d be pumping out only about a third or a quarter as much carbon dioxide as we are now, but we’d be pumping out many, many tonloads of other pollutants.

Think of the amount of farmers and farmland that we would have needed in order to support 8 billion people on 1900 technology. Those were days when we’d send people with pickaxes to islands off of the South Atlantic to knock tons of bird shit off to try to boost agricultural yields by a little bit.

Degrowth is a mistake because we still have our bottom 500 million [people in global poverty], who certainly deserve much better. We certainly need much better technologies to deal with global warming. But do we indeed have to worry more about how to utilize our wealth, and less about how to produce much more wealth? I would say probably so. The best minds of a generation moving to South of Market in San Francisco to figure out how to scare the shit out of people and glue their eyeballs to screens — that’s not a terribly good use of human brainpower.

Interview: With James Ledbetter at “The Observer"

Brad DeLong — Sun, 18 Dec 2022 23:03:38 GMT

<https://observer.com/2022/09/technology-is-the-only-thing-that-can-potentially-save-us-a-conversation-with-brad-delong/>

“Technology Is the Only Thing That Can Potentially Save Us”: A Conversation with Brad DeLong

The economist and historian J. Bradford DeLong discusses the development of technology, globalization, and climate change.

By James Ledbetter • 09/06/22 3:12pm

J. Bradford DeLong is an economist who teaches at the University of California Berkeley, and served in the Treasury Department under President Bill Clinton. He is the author of multiple books, including the just-published Slouching Toward Utopia, an economic history of the twentieth century. Observer executive editor James Ledbetter recently interviewed DeLong; this transcript has been edited of length and clarity.

Economist J. Bradford DeLong (courtesy Basic Books)

Observer: So you’ve written a lot of books, most of them shorter than this one. What made you take on a topic this sweeping?

DeLong: It was a book I wanted to read and no one else was writing it. So I decided I should. I wrote a draft chapter or two, and then Tim Sullivan of Basic came along and said, why don’t we put you under contract to do this? And then about every three years, they’d call me up and say, where is it?

How long was this?

One of my roommates claims he read a full first draft 30 years ago, but he’s a liar. I wrote a chapter in 1998. And then maybe there was an outline in 2004. And there was maybe a semi-draft in 2012.

Give us a summary of your grand narrative.

It’s mostly a Karl Polanyi narrative, it’s that in 1870, all of a sudden everything changed. For the first time technological progress became fast enough that there was actually a possibility that humanity could bake a big enough economic pie so that everyone could have enough. And that governance could be actually focused on making a truly human world, rather than governance being figuring out how to run a force-and-fraud machine on everyone else so that it alone could have enough. And indeed from 1870 to today, technological progress has been absolutely wonderful. By the scale of any previous century, they would say you have much more than enough for utopia. But while we have done a superb job at solving the problem of baking a sufficiently large economic pie, the problems of properly slicing and then tasting the pie, of making sure everyone actually does have enough and utilizing our wealth to allow us to lead lives in which we are healthy, safe, secure, and happy, that continues to totally flummox us.

What specifically happens in 1870 that causes this tremendous technological transformation?

In 1870, we get the coming of the industrial research lab, which allows us to discover and develop technologies at a very high rate; of the modern corporation that allows us to develop and deploy technologies; and then with full globalization, the opportunity to deploy and then to diffuse as other people copy what you’ve done becomes so vastly attractive. Someone like Nikola Tesla, who was borderline socially dysfunctional, but also knew better than anyone else how to make electrons get up and dance and advanced us all by himself at least a decade in terms of developing electric power, would’ve been totally useless without George Westinghouse to create the industrial research lab and smooth the ruffled feathers of everyone else working there and also the Westinghouse corporation to then take and deploy the stuff. And then the copycats Edison and elsewhere, and the financing from JP Morgan and George Fisher…those change Tesla from being someone who is not a big net gain to society to someone who moves one-tenth of the economy forward by 10 years. And since 1870 human technological prowess has at least doubled every 30 years. That means enormous amounts of Schumpeterian creative destruction: immense wealth, new industries, occupations, etc—but old industries, occupations, incomes, communities vanish.

One of the most interesting aspects of the book is that while the events and the trends that it discusses are relatively familiar, there are just constant surprises. For example, I would’ve imagined that most people attribute the strong and steady growth that Western Europe enjoyed after World War II to the Marshall Plan. But you argue that the Marshall Plan was kind of small potatoes.

It’s one percent of US GDP, three percent of European GDP. Even if you say we get a 30% rate of return on these investments, as opposed to a normal seven, five or three percent return, that’s just 0.3% per year on the growth rate.

So if it wasn’t the Marshall Plan that led to those glorious years, what was it?

In some respects, it was what happened in Eastern Europe after 1990. Lots of people saying we see the future and it’s to our west. We don’t care about what the political ideology is. We want to become a lot more like America. We want to do it now because they’ve got it, and we don’t. And that at least gives society and government a substantial direction. Plus the fact that the right had clung to Nazism for much too long and the far left was tied to Joseph Stalin and could not untie itself.

The chapter on inclusion is really important for the “slouching” part of your title. In other words, by the middle of the 20th century, the global economy has figured out how to provide a very good standard of living for a huge number of people. But definitely not everybody, not even in the most developed countries. Why didn’t that happen?

The hope after World War II was John Maynard Keynes saying, put my technocratic students in charge of the macro economy. Everyone will have a job and labor will have substantial social power. Wages will be reasonable. And with a full employment policy, interest rates will be low, which means that returns on capital will be low, which means that if plutocrats want to exercise their social power, the only way they can do so is they spending down their capital. Hence they cease to be plutocrats. Hence there may be a lot of wealth inequality, but there’s not a lot of income inequality. And so maldistribution is not an incredibly huge thing—and have full employment, programs that redistribute income and wealth, progressive tax system, heavy inheritance tax, a lot of public provision of commodities, taking them out of the markets as well and provide parks and schools and roads and pools then you do have something that looks like a proper road to utopia. The he problem is this fails its sustainability test in the 1970s. Go and talk to Paul Krugman about it, he says “if only we hadn’t had the inflation.”

I’m going to come back to that. Related to the idea of inclusion or exclusion is North/South divide; one of the points you make is that something important happened around 1990.

The African retardation ends. The post-World War II decolonization two decades are good for literacy and good for public health in Africa, but absolutely horrible for production. There are a lot of people who say that it really was 400 years of slavery and the resulting destruction of social trust at a very basic level. You could actually run an industrializing economy and a primary product exporting economy, as long as you could borrow your colonizer’s market network and trust that contracts will be obeyed. And that bureaucrats will be honest. But once they withdraw leaving nothing, then you have to try to build up the social division of labor nearly from zero in an environment in which governments with late 20th century means of coercion are able to exploit and corrupt a great deal.

That in Africa seems to come to an end in the 1990s. From the year 2100’s perspective, people will say that neoliberalism and the global south actually unlocked a great deal of things that had been frozen in stasis in the post-World War II generation, under the influence of really existing socialism to various degrees—nationalism and bureaucratization and so forth. That’s, I think, an important issue and not one I spend enough time on.

You obviously started this book well before the current bout of inflation that a lot of countries are experiencing right now. But what you say about inflation in the 1970s and how it spawned this political and intellectual reaction seems highly relevant right now.

When aggregate demand is too low, you have a lot of people who lost their jobs and can’t find new ones and you have people who don’t dare ask for a raise because then they think they’ll be first on the block to be fired if something bad should happen. And those are relatively small groups of people, unless it’s a Great Depression. But with inflation, pretty much everyone finds they can’t buy things at the prices that they expected. So the market economy has disappointed their expectations, and has done so in a way that’s got to be the fault of the rulers. And that’s a principal sign that we need a different group of rulers.

I recognize that your use of “utopia” is at least a little ironic. But it’s interesting that the period and the very developments that you credit are exactly the same period and developments that a lot of people would say is exactly when humanity went on the wrong path, that put civilization on a carbon-based path of global destruction. You talk about the environment a little bit in some places, but I wonder how you think people should think about the tradeoffs between economic growth and climate change.

Economic growth in renewables is politically, and I’d say also humanly, kind of the only way to keep from cooking the planet. Technology is about the only thing that can potentially save us here. A carbon tax would be best and fairest, but large-scale public subsidies for renewables are a good second best. And we need to move there as fast as possible. As for the coal-based road to industrialization, that’s the only way that we get from being limited by human and horse muscles to actually being able to use more power. I think if you don’t do that, you will never get economic growth fast enough to outrun Malthusian pressures. And as long as you have a world of patriarchy in which women only have durable social power if they’re the mothers of surviving sons, you really need to get a lot of economic growth very quickly in order to get people rich enough for infant mortality to fall low enough for people to say, ‘Gee, maybe we don’t need to try for nine children in order to have two that survive’. Without coal, you have a Malthusian world of medieval poverty. Unless you a figure out a way to get rid of patriarchy, which is a difficult thing to do.

Annie Lowrey: Interview/Profile in “The Atlantic"

Brad DeLong — Sun, 18 Dec 2022 22:50:07 GMT

<https://www.theatlantic.com/ideas/archive/2022/09/brad-delong-economist-slouching-towards-utopia-book/671337/>

IDEAS

The Economist Who Knows the Miracle Is Over

An era of remarkable prosperity has ended.

By Annie Lowrey

Erik Carter / The Atlantic; Getty

About the author: Annie Lowrey is a staff writer at The Atlantic.

Brad DeLong felt confident that the story started in 1870.

The polymath economist was writing a book on economic modernity—about how humans transitioned from eking out an existence on our small planet to building a kind of utopia on it—and he saw an inflection point centuries after the emergence of capitalism and decades after the advent of manufacturing at scale. “The Industrial Revolution is good. The Industrial Revolution is huge,” he explained to me recently, sitting on the back porch of his wood-clad Colonial Revival in Berkeley, California. But “as of 1870, things have not really changed that much for most people.” Soon after that, though—after the development of the vertically integrated corporation, the industrial research lab, modern communication devices, and modular shipping technologies—“everything changes in a generation, and then changes again, and again, and again, and again.” Global growth increases fourfold. The world breaks out of near-universal agrarian poverty. Modernity takes hold.

DeLong had begun working on this story in 1994. He had produced hundreds of thousands of words, then hundreds of thousands more, updating the text as academic economics and the world itself changed. He kept writing, for years, for decades, for so long that he ended up writing for roughly 5 percent of the time capitalism itself has existed. The problem wasn’t figuring out how the story started. The problem was knowing when it ended.

In time, he decided that the era that had begun in 1870 ended in 2010, shortly after productivity growth and GDP growth had collapsed, as inequality was strangling economic vibrancy around the world and revanchist political populism was on the rise. With a bit more writing, he finished Slouching Towards Utopia, one of this year’s most anticipated economics books, to be published on Tuesday. His long-gestating examination of what he calls the “long 20th century” is sweeping and detailed, learned and accessible, familiar and strange—a definitive look at how we arrived at such material splendor and how it failed to deliver all that it seemed to promise. His decision to end the story in 2010, and thus to finish his book, holds a message for all of us: Despite its problems and iniquities, the economic era Americans just lived through was miraculous. And now it is over.

Derek Thompson: Is this a recession? Wrong question.

As for the story of DeLong himself: He is an economic historian and a macroeconomist at UC Berkeley, a liberal policy stalwart, and one of the original econ bloggers, still publishing his thoughts almost daily, as he has done since before the word blog was invented in 1999. His story, I suppose, really begins in Washington, D.C., where he grew up as the science-fiction-obsessed, math-whiz son of a lawyer and a clinical psychologist. (His mother still sees patients.) He went to Harvard for an undergraduate degree and then a Ph.D. in economics, writing papers and forging close friendships with a teenage Soviet refugee named Andre Shleifer (now the second-most-cited economist on Earth) and Larry Summers (the former Treasury secretary and Harvard president). “Brad is the person you want to write with if you want a collaborator doing something that’s bold, potentially important, possibly wrong, and unlikely to satisfy pedantic academic referees,” Summers told me. “I’m a huge, huge fan of the guy.”

Along with his academic work, DeLong served in the Clinton administration. He married the legal scholar Ann Marie Marciarille, an expert on health-care regulation; they had two kids, now adults. And he started blogging—the thing for which he is perhaps best known. Since 1999, he has written in his “semi-daily journal,” which is funny, erudite, and weird. (Over the years, he has flambéed no fewer than 11 people as the “stupidest man alive,” among them former World Bank President Bob Zoellick.)

DeLong’s book project preceded the blog. In 1994, he read the socialist historian Eric Hobsbawm’s The Age of Extremes, on the “short 20th century” between the assassination of Franz Ferdinand, in 1914, and the collapse of the Soviet Union, in 1991. “It makes a grand narrative arc, with communism as the tragic hero of the 20th century, hopelessly marred by the circumstances of its birth,” DeLong told me. He loved it, and decided to cast his own long arc, with capitalism as the tragic hero.

The heroic part is heroic: For the first time in history, DeLong notes, the world managed to create enough after 1870. Enough to end subsistence agriculture in much of the world. Enough to reduce the global child-mortality rate from nearly 50 percent to less than 5 percent. Enough that many of the very poorest people on Earth have access to cellphones and electricity today. But the tragic part is tragic: This modern era also brought with it machine guns and atom bombs and the atrocities of the Holocaust, among other genocides. And even as so many economies succeeded, so many governments failed—to end racial injustice, to protect the most vulnerable, to ensure that everybody shared in the world’s prosperity, to conserve our common environment.

In his basement, his attic, and his office, DeLong kept assembling his book. He used the free-marketeer Friedrich Hayek and the social-protectionist Karl Polanyi as central figures and then braided in details about a huge cast of characters: Marx; Henry Ford; Keynes; Hitler; Gandhi; his own great-great-uncle, an economic historian named Abbott Payson Usher.

His editors kept checking in. His friends inquired about the drafts they had read years before. The project ballooned in its complexity. “I have had editors who were saying [they were] going to drop me if I couldn’t get it down to 150,000 words,” DeLong told me. (The book ended up at 180,000, plus online notes and appendices.) But he kept learning new things. “I can start reading a book, and then from it I can spin up in my brain a sub-Turinginstantiation of the author’s mind, which I then run on my wetware,” he told me. “I can ask it questions, and it answers.” Describing his own thought process, he added: “‘A rich inner life’ is one way to put it. Or perhaps a slight absence of grip on what is the real world and what is not.”

In 1999, he thought the book could end by discussing what Francis Fukuyama called “the end of history”—the idea, popularized in a book of the same name, that the fall of communism heralded the final triumph of democracy and free-market neoliberal economics. “There were these huge ideological struggles, but now we’ve kind of got it,” DeLong said, describing his mindset at the turn of the millennium. “There’s going to be some future alternation between right neoliberalism, left neoliberalism, and social democracy.” But then came 9/11 and the global War on Terror. “People seemed to be about to start killing each other in large numbers about religion,” DeLong said. Moreover, he added, “most of what we Clintonites had actually managed to do in terms of whacking economic policy into what we saw as a good state was to enable another round of tax cuts for the rich and another round of plutocracy.” And then came President Barack Obama and the “enormous failure to actually implement what I had thought was the standard playbook we’d learned in the Great Depression,” DeLong said.

In time, DeLong concluded that neoliberalism and social democracy would not be gently taking turns. In political terms, the future instead would be about the “return of something that Madeleine Albright called fascism, and who am I to tell her not to,” he said. And in economic terms, it would be about high inequality, low productivity, and slow growth. “We may have solved the problem of production,” DeLong told me. “We certainly have not solved the problem of distribution, or of utilizing our extraordinary, immense wealth to make us happy and good people.”

The story the book tells is compelling, though occasionally overpowering in its detail and telescoped in its argument. The global South—where the majority of humanity lives—gets cursory treatment. DeLong argues that fitting much of its economic history into his book would have been too complicated. And while gesturing to the evidence that colonial empires leeched prosperity from conquered land, he asserts that the North “causally led” the “advances” of the South. Yet the book is justice-minded and tenderhearted too. “There’s someone in Bangladesh who would almost surely be a better economics professor than I am and is now behind a water buffalo,” he told me. “The market economy gives me and my preferences 200 times the voice and weight of his. If that isn’t the biggest market failure of all, I don’t know what your definition of market failure could possibly be.”

For all its problems, the long 20th century granted enormous prosperity to billions of people: cellphones, white-collar jobs, the birth-control pill, penicillin, space exploration, home appliances, electric grids, the internet. If, as DeLong claims, a remarkable period of prosperity has ended, then governments face the enormous task of strengthening representative democracy, reallocating the world’s immense resources more equitably, and reigniting productivity growth. As for DeLong, he has a more immediate challenge: figuring out what to do with the hundreds of thousands of words he trimmed out of Slouching Towards Utopia. He thinks he might write a history of the economy, full stop. That story might start in 6,000 B.C.

Annie Lowrey is a staff writer at The Atlantic.

Ryan Avent: Review of “Slouching Towards Utopia” from “The Bellows"

Brad DeLong — Sun, 18 Dec 2022 22:38:21 GMT

The two twentieth centuries

The two twentieth centuries

The case against seeing the period from 1870 to 2010 as an economically coherent whole

Ryan Avent

The Bellows

Brad DeLong’s Slouching Towards Utopia (my official review of which can be found here) is an economic history of what he calls the long twentieth century, stretching from 1870 to 2010. When most scholars go about slicing up modern history, they tend to see a clear break in 1914, and perhaps another around 1989-91, and from a political or ideological per…

4 years ago · 11 likes · 2 comments · Ryan Avent

Brad DeLong’s Slouching Towards Utopia (my official review of which can be found here) is an economic history of what he calls the long twentieth century, stretching from 1870 to 2010. When most scholars go about slicing up modern history, they tend to see a clear break in 1914, and perhaps another around 1989-91, and from a political or ideological perspective one can certainly see why. Brad, though, argues that the clearest lens through which to see the past century and a half is an economic one, and that upon peering through that economic lens one sees an era from 1870 to 2010 which is rightly characterized as a coherent whole.

How so? Well, for one thing, 1870 was a watershed year in terms of the development and deployment of new technologies and the pace of economic growth. Before that, growth at the productivity frontier was just about fast enough to allow for sustained growth in real incomes; after that year, the world was off and sprinting away from its Malthusian past. And for another, the period 1870-2010 traces the arc of America’s rise to economic dominance and its subsequent humbling. The end-year choice of 2010 is a little arbitrary; arguably either 2008 or 2016 would have made more sense. But the message communicated by the end date is clear enough. Around that time, America’s economy sat wounded by the global financial crisis and its aftermath, its eclipse by China seemed certain and obvious, and its capacity to perform a critical role as global hegemon and democratic exemplar looked very much in doubt.

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Now, let me say here that Slouching is a wonderful book and you should buy and read it. It should become one of the books that helps structure people’s thinking about the twentieth century. But because it is such a very good book by a very compelling thinker and writer, it deserves to be engaged with in a critical way. I will have some sweeping things to say about the book in a forthcoming dispatch, but before that I wanted to take a moment to reflect on the broader economic story that Brad is telling—and ask whether it is the right one.

Brad has a primary narrative, which he structures as a push and pull between the ideas of Hayek and (Karl) Polanyi. Hayek stands in for the power of the market to harness distributed information and deliver Good Things, subject to certain caveats; from 1870 on, Hayekian forces transformed industrializing economies and led them down the path toward “economic El Dorado”. But Hayekian forces can easily trample rights that people feel quite strongly about: to have a say in society whether or not they own property, for instance, or to earn a stable and adequate income. And so the transformation wrought by the market repeatedly ran into Polanyian forces, in the form of efforts to preserve human communities and individual rights in the face of market disruption. People sought the franchise, and they voted for redistribution and regulation—and occasionally they went and had a revolution.

After decades of back and forth between the Hayekian and Polanyian forces, the world, or parts of it, found their way to the happy middle ground of postwar social democracy. The marriage of Hayek and Polanyi that it embodied (combined with the Keynesian insight that governments should help the economy maintain full employment) allowed markets to do their work while preparing people to participate in the market and insuring them against its vicissitudes. Having found its way to that good place, the rich world enjoyed a generation of blistering, broad-based growth.

That feels like a happy ending to the narrative, but of course there was more twentieth century left. And like the crummy last season of a beloved show, tacked on in a cynical effort to wring more profit from the fan base, the last few decades of the twentieth century were a disappointing muddle. Faced with the productivity slowdown and macroeconomic headaches of the 1970s, rich economies tried to bring back the glorious postwar economy by dialing down the Polanyi a bit and dialing up the Hayek. But this “neoliberal” turn didn’t bring back the scorching growth of the postwar era. Instead it contributed to rising inequality in the rich world (which amplified the pain that slower aggregate growth imposed on poorer households) and to financial excess, though also and more beneficially to a period of rapid growth in some emerging economies. The show then ends with the heroes wondering how they drove the economy into a major financial crisis, while previously peripheral characters in South and East Asia, seemingly introduced solely to lay the groundwork for a spin-off series, lecture the rich world about the weaknesses of western capitalism.

Are there morals to this story? There are: that economic growth is powerful, that governments should let markets work where markets work well but also have critical roles to play in keeping an economy working well, and above all that material prosperity is a necessary but not sufficient condition for utopia—and we’re still trying to figure out what the other ingredients are.

But maybe there is another moral, as well: that it is important to know when to conclude the narrative.

The story above is the main one that Brad tells but it is not the only one. Why did growth accelerate around 1870? It did so because the nature of industrialization changed. For the first century of the industrial era, Britain led the way. The British industrial revolution was concentrated in a few key sectors, like textiles and iron production, powered by water and steam, and authored mostly by tinkerers on the make. But a major shift occurred around 1870. Then, technological leadership passed from Britain to Germany and the United States. As it did so, the pursuit of productivity-enhancing innovations became more purposeful; as Brad puts it, leading economies invented invention.

So, societies which were investing heavily in education produced lots of engineers and scientists, who went to work in corporate research laboratories, whose innovations were exploited by sophisticated firms with complex bureaucracies that allowed for a high degree of task specialization. And while this was happening there was fantastic growth in the scale of the market thanks to globalization. Yes, people and goods and money and ideas had flowed around the world for ages. But in the latter third of the 19th century, transportation and communication costs tumbled, and cross-border flows of all of those things exploded. Growth in the size of available markets gave a spur to the resource-intensive, massive-scale industry that allowed productivity growth to rocket upward in places like America. This revolution physically transformed the world. Cities grew massively and became electrified. The pace of travel grew fantastically thanks to mass car ownership and commercial air travel. Mass education transformed society: from one in which almost no one had completed high school to one in which almost everyone had.

And all of this did indeed usher in mass prosperity, or something like economic El Dorado: because Depression and war and high levels of taxation battered the fortunes of the rich, but also because the structure of the economy permitted it. Sophisticated, capital-intensive production at massive scale, undergoing rapid productivity growth, created the conditions for almost-utopia. Strong labor unions and governments committed to full employment helped workers capture a large share of the producer surplus generated across the economy. And a compressed distribution of income encouraged firms to produce consumer goods for a mass market, at an enormous scale which facilitated continued productivity growth.

But it couldn’t last. That, I think, is the key point. Why couldn’t it last? For a few reasons.

One very big one is that there was a tension between the rich world’s desire to maintain high levels of employment at good wages in mature manufacturing industries, the developing world’s desire to get rich, and the rich world’s commitment to an open global economy. Another was that the rich world had for more than a century achieved rapid productivity growth by augmenting the efforts of labor with ever larger amounts of energy and other resources, with little attention paid to environmental costs. But as societies grew richer, the environmental side effects of the prevailing growth strategy no longer seemed worth bearing, and the energy shocks of the 1970s led to a dramatic shift in attitudes toward energy consumption.

But beyond that, the nature of technology was changing. Many of the key innovations which had powered growth over the prior century had matured, while other promising ones were in their infancy. And another very powerful general-purpose technology had by the 1970s grown beyond its infancy into an increasingly disruptive force. Intel was founded in 1968, Microsoft in 1975, and Apple in 1976. This new technological force, however, operated according to rules quite different from those of the golden age of industrialization. Looking back on the first few decades of the “new economy”, two insightful economists noted:

It is a fact that we today simply do not know yet how to make the intellectual property system work for the new economy. Back in the Gilded Age, intellectual property as such was not such an important factor. Industrial success was based on knowledge, but on knowledge crystalized in dedicated capital. Many people knew organic chemistry. Few companies—those that had made massive investments—could make organic chemicals.
Today, it appears that intellectual property is rapidly becoming a much more important source of value. One response would be to reinforce the rights of “owners.” The underlying idea is that markets work because everything is someone’s property. Property rights give producers the right incentives to make, and users the right incentives to calculate, the social cost of what they use. It is clear that without strong forms of protection of property rights, a great many useful products would never be developed at all. This principle applies as strongly to intellectual as to other forms of property.
But with information goods, the social marginal cost of distribution is close to zero. One of the most fundamental principles of economics is that prices should be equal to social marginal cost. In this case, strong intellectual property rights have the potential to decrease economic efficiency by driving prices away from marginal social costs.

“New institutions and new kinds of institutions…may well be necessary,” wrote Larry Summers and Brad DeLong in that paper, before concluding:

What changes in the government-constructed underpinnings of the market economy are needed for it to flourish as the economic changes produced by computers take hold? How should governments deal with their possibly large distributional implications? And what failures to change or what changes made in support of vested interests would hobble the transformation now under way?

In Slouching, Brad argues that key institutional innovations were critical to unlocking the growth potential that was realized from 1870 on. That seems absolutely right to me. A few places, through luck and foresight, made critical policy choices and fostered the evolution of powerful corporate forms, which got things rolling in the last third of the 19th century. Governments then struggled mightily to manage what they’d unlocked, learning some incredibly tragic lessons along the way, but ultimately built up a social, corporate, governmental complex of institutions which yielded extraordinary prosperity.

That is the complete story of that era, which ended in the 1970s when a confluence of forces fatally weakened the economic basis of that complex. It isn’t a long century; it is just about one century exactly, albeit inconveniently misaligned with our preferred way of slicing time up. And the next chapter would ideally have been one in which societies really grappled with the difficult questions posed by the end of that era: and threw themselves into the job of achieving an energy revolution, and an information revolution and above all an institutional revolution which would have helped society continue down the path to economic El Dorado in a rapid and equitable way. But it wasn’t. The ideas simply weren’t there. As Brad writes, people looked in the store window for a new intellectual framework to replace the one that seemed to stop working in the 1970s and found such a dismal set of options that neoliberalism looked most attractive.

It’s funny; in the book, Brad writes that he can very easily imagine how the critical innovations which enabled rapid growth after 1870 might never have come to pass. In that case we would have remained locked in what he calls a “Permanent Steampunk” world: in which we were much less rich than we could have been; in which new technologies, like the airplane, appeared but remained must less transformative than it seemed they should be, and in which a whole slew of other and older technologies simply remained a critical part of life for far longer than seemed appropriate—though it might not have seemed so to the people stuck in that world, who couldn’t know that an alternate future was possible, except perhaps through imagination and intuition.

But—isn’t that the world we’re in now? Aren’t we in a world in which it seems as though a hand-off from one set of marvels to another should have taken place but somehow…didn’t? Isn’t that the story of this unsatisfying new chapter of global economic history: this lackluster instantiation of the multiverse in which far too many people remain far too poor, and we seem more interested in recapturing the best bits of an older era than in constructing a wild new one?

In this interpretation, the bitter side-effect of the otherwise marvelous fall of communism wasn’t that it validated neoliberalism, as Brad argues, but that it validated the rich world’s broader approach to generating new ideas and turning them into higher living standards, which neoliberalism ultimately did not alter by all that much. And the missing piece to the puzzle of rich-world ennui isn’t just the One Weird Trick that will allow us to build a utopia out of the material prosperity we now enjoy; it’s a set of new institutional arrangements which will help us solve the very real and serious problems we continue to face globally and allow us to believe in a promising future once again.

I don’t know if that’s right, of course. But I’d be curious to know what Brad thinks, because I do feel that his book lends itself to this interpretation of recent economic history.

Timothy Noah: Review of “Slouching Towards Utopia” in “The New Republic"

Brad DeLong — Sun, 18 Dec 2022 22:35:21 GMT

<https://newrepublic.com/article/167610/20th-century-economic-inequality-piketty>

Timothy Noah

FLOP ERA

Why Isn’t Everybody Rich Yet?

The twentieth century promised prosperity and leisure for all. What went wrong?

In 1930, John Maynard Keynes predicted that a hundred years hence—which is to say, right about now—“the economic problem may be solved, or be at least within sight of solution.” People would work perhaps three hours a day. “For the first time since his creation,” Keynes wrote, “man will be faced with his real, his permanent problem—how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.”

If only! It’s 2022, and most of us are still on the clock. Oddly, though, much of Keynes’s reasoning was correct. He estimated that, over the next century, annual economic growth would average, globally, 2 percent. That must have seemed insanely optimistic at the start of the Great Depression. But it was too low. The Yale economist Fabrizio Zilibotti has calculated that since 1930, annual growth has averaged, over the long term, closer to 3 percent. Keynes predicted the standard of living within the more advanced economies would increase by a factor of eight. In fact, according to Zilibotti, it increased by a factor of 17. Keynes was even right, up to a point, that the number of hours worked would fall, and that people would find other things to do. Observing this phenomenon in vthe 1960s, the journalist Tom Wolfe made his name chronicling a proliferation of leisure activities—surfing, stock-car racing, dropping acid—well beyond the imagining of Keynes and his Bloomsbury set. Wolfe called it a “Happiness Explosion.”

Slouching Towards Utopia: by J. Bradford DeLong :: Basic Books, 624 pp., $35.00

What Keynes did not consider was how unevenly this Happiness Explosion would be distributed across nations and within them. Even in the United States, the richest nation on Earth, you can still find people who lack those two ancient basics, food and shelter. Keynes was right that the economic problem ought by now to be solved, or within sight of being solved. But it is not, and probably won’t be even a century from today.

A Brief History of Equality: by Thomas Piketty :: Harvard University Press, 288 pp., $27.95

Keynes’s optimism was driven by the advent of what J. Bradford DeLong, in his new economic history, Slouching Towards Utopia, calls “the long twentieth century,” whose start DeLong sets at 1870. This was the period, DeLong writes, during which the maturing Industrial Revolution, combined with various social changes such as the advent of the modern corporation and the industrial research laboratory, “unlocked the gate that had previously kept humanity in dire poverty.” Those who lived through this period saw an unprecedented explosion of productivity and prosperity. They well understood this at the time. Keynes called it an “economic El Dorado.”

To understand why all this wealth wasn’t more broadly shared, DeLong looks beyond growth alone. How the economic cares of humankind were met, and not met, by the prosperity explosion that followed the Industrial Revolution depended, he shows, on noneconomic developments, including two world wars; on warring notions about what markets alone could achieve; on colonial legacies; and on the varying competence of governments to manage economies wisely. DeLong’s grasp of these individual subjects is extremely sophisticated, but it’s a lot to integrate into what he self-consciously calls a “grand narrative,” stretching from 1870 to 2010. If the story seems unwieldy by the end of his account, that may be because he piles onto his plate much more history occurring in many more places than one may easily digest.

It is easier to pinpoint when the story of this great change begins than when it ends. If your interest is in traditional manufacturing or in organized labor, it ends, in Europe and the United States, in the 1970s. If your interest is in the computer revolution, it ends around 2000. If your interest is in the rise of China, India, and the “tiger economies” of Southeast Asia, the story doesn’t begin until the 1970s and 1980s and has no end in sight. If your interest is in the economic awakening of the Southern Hemisphere, that story has scarcely begun.

It’s not hard to see why Keynes was so optimistic in 1930. A mere 60 years earlier, the global economy had still operated almost entirely on a subsistence basis. In 1870, more than 80 percent of the world population lived on what it farmed rather than what it purchased. When the French anarchist philosopher Pierre-Joseph Proudhon pronounced, in 1840, that property was theft, he was being less metaphorical than we might today suppose. You couldn’t enrich yourself without impoverishing someone else, because the economic pie barely expanded. Only after 1870 did transoceanic telegraph cables and screw-propeller steamships and railroads and improved power looms and the Bessemer steelmaking furnace, among many other wonders, conspire to accelerate economic growth to the point where one man’s wealth accumulation could increase wealth for others.

Before 1870, economic life was governed largely by the principle, laid out in 1798 by the gloomy English cleric Thomas Robert Malthus, that population growth (in DeLong’s loose but apt paraphrase) “ate the benefits of invention and innovation … leaving only the exploitative upper class noticeably better off.” For the vast majority, material conditions never changed. The wages of a construction worker in England were, after inflation, exactly the same in 1800 as they’d been six centuries earlier. By 1870, they had risen more than half, yet even that gave little taste of what was coming. By 2000, they had risen more than thirteenfold. Much of that increase was driven by international trade. In 1850, cross-border trade represented about 4 percent of total world production—scarcely more than the proportion 150 years earlier. By 1880, it represented 11 percent of world production. Today, it represents 30 percent.

The long twentieth century refuted the Malthusian construct that population growth outpaces food production and pushes down wages. Today’s world population is six times the size it was in 1870; crop yields are about eight times greater; and per capita income is nearly nine times greater. Technological and organizational progress came much faster, and with far greater benefits, than Malthus could imagine. Since 1870, DeLong calculates, the pace of that progress has been four times faster than from 1770 to 1870, 12 times faster than from 1500 to 1770, and 60 times faster than before 1500. This acceleration enabled the long twentieth century to become “the first century ever in which history was predominantly a matter of economics.”

The great benefits of this change bypassed what we call today the global south. Prosperity was largely confined to the great imperial powers of Britain, Western Europe, and the United States. (The United States, itself a former colony, is sometimes excluded from this group because it practiced a more limited colonization—mainly in the Philippines, Cuba, and the South Pacific. But its violent seizure of the North American continent from Native Americans and its enslavement of Africans, through violence and the threat of violence, to perform farm labor in the New World, situated the United States in the front rank of imperialist nations, albeit in a way that required little travel.)

European colonization had begun around the sixteenth century, but as the North Atlantic economies matured, their need for raw materials from abroad grew more urgent. Trees are a good example. European nations were deforested, the University of Chicago historian Kenneth Pomeranz has noted, and wood became scarce even as demand for it as a building material increased. In the mid-sixteenth century, 33 percent of France was covered by forest; by 1789, that was down to 16 percent, and by 1850, forested areas in Great Britain, Italy, and Spain were all down to 10 percent or less. In the mid-eighteenth century, Britain built no fewer than one-third of its merchant ships in its American colonies, simply because it needed American timber for its masts.

“I have had no peace of mind since we lost America,” King George III says in Alan Bennett’s 1991 play, The Madness of George III. “Forests old as the world itself, meadows, plains, strange, delicate flowers, immense solitudes, and all nature new to art. All ours. Mine. Gone. A paradise lost.” The king sounds as though he’s grieving the loss of a pastoral wilderness. But as his speech continues (this part isn’t in the 1994 film adaptation), it becomes plain he’s grieving the loss of England’s opportunity for plunder. “Soon we shall lose India, the Indies, Ireland even,” he says, “our feathers plucked one by one, this island reduced to itself alone, a great state moldered into rottenness and decay.” The wealth of his kingdom lay outside it.

Why didn’t countries in the global south follow the North Atlantic example and turn to manufacturing? “When I am asked,” DeLong writes, “I say that the initial cost advantage enjoyed by Britain (and then the United States, and then Germany) was so huge that it would have required staggeringly high tariffs in order to nurture ‘infant industries’ in other locations. I say that colonial rulers refused to let the colonized try. I say that the ideological dominance of free trade kept many others from even considering the possibility.” In summary, the advantage that came from being first to industrialize made North Atlantic countries so rich so fast that they were able to make the rules, and the rules they preferred set the price of entry too high for latecomers. Not until the second half of the twentieth century were the nations of Southeast Asia able to raise their manufacturing capacity to the level of the North Atlantic countries—and then surpass it.

We think today that economic prosperity is a stabilizing alternative to war, but for a very long time it had the opposite effect. As the nineteenth century turned into the twentieth, and Western European nations grew ever wealthier, they built up ever more powerful military forces that eventually gave us two world wars. DeLong suggests World War I was a last hurrah for aristocrats who could find no place in the new economic order. To preserve their position, they whipped up nationalistic fervor. Neither the Central Powers nor the Allied nations fully grasped, until it was too late, that with weaponry more destructive by several orders of magnitude than was previously deployed, and with each side matched evenly in wealth and strength, the result was bound to be a very long and unimaginably bloody stalemate. Even Keynes understood this only in retrospect.

After World War I, the economic circumstances of the North Atlantic nations diverged. The United States, where the war had not been fought, experienced the frenzied economic growth of the Roaring ’20s. Europe, still digging itself out of the rubble, struggled through economic hardship and social unrest. These were especially destabilizing in Germany, where the armistice had imposed ruinous economic reparations. The paths of the two continents were rejoined in 1929 when the stock market crashed and economies went bust all over the world. After Adolf Hitler became German chancellor in 1933, he pulled Germany out of the Depression faster, DeLong reports, than any other nations save the Scandinavian countries and Japan. “With the Gestapo in the background to suppress agitation for higher wages, better working conditions, or the right to strike,” DeLong explains, “and with strong demand from the government for public works and military programs, unemployment fell during the 1930s.” Fascism worked, until it didn’t.

Hitler was of course the most evil dictator in world history, or close to it. (Stalin and Mao murdered more people.) One benefit of looking at Hitler through an economic prism is learning that the Führer was also a Malthusian. In Mein Kampf, Hitler worried that Germany’s growing population would “ultimately end in catastrophe.” Hence the Anschluss, the Nazi annexation of Austria, and Lebensraum, Hitler’s program of expansion to the East. The United States entered the war at the end of 1941. The economic mobilization this required restored the United States to economic health. Hitler’s defeat and Germany’s loss of its territories were Stalin’s gain, as countries occupied by the Nazis were absorbed into the USSR and the Eastern bloc. The Allies moved in the opposite direction, losing colonies over the following decades. War-impoverished Western Europe in many cases saw more cost than benefit in the imperial project. Eventually, a crumbling Soviet Union would follow a similar course and cut its satellites loose. Russian President Vladimir Putin’s recent Ukraine invasion is a brutal and foolish attempt to reverse course yet again, with no obvious economic benefit to anyone.

What DeLong self-consciously calls his “grand narrative” falters as he shifts into the postwar years. He lays in a lot of Cold War history that, while fascinating in itself, is related indirectly at best to the economic story, and he gropes for a satisfactory answer—maybe there is none—to why postcolonial regimes in the global south have stumbled politically and economically. DeLong’s book is, in fact, fairly undisciplined throughout. It’s loaded with infelicitous witticisms; variations on “blessed be the market” appear no fewer than 16 times. For pages on end, DeLong argues with himself. For even longer stretches, the economic thread vanishes completely. There are many fascinating trees—intriguing facts and sharp insights—but not much forest. That’s especially true of the book’s second half.

The postwar story is actually fairly simple. For the next 35 years, the North Atlantic economies grew at a phenomenal pace, and, within those nations, the benefits were distributed more broadly than ever before. The French call these years Les Trente Glorieuses; the Germans call them the Wirtschaftswunder (“economic miracle”); Americans call them the Great Compression. The French economist Thomas Piketty, in his tidier and more lucid new book, A Brief History of Equality, writes they were characterized by “a massive and relatively egalitarian investment” across society: in education and health care, transportation and other infrastructure, pensions, and “reserves, such as unemployment insurance, for stabilizing the economy and society in the event of a recession.”

The economic boom was the fulfillment of demand that had built up in the United States since 1929 and in Western Europe since 1914. But it was also the logical result of government spending not, as previously, in service of large private fortunes (greatly diminished, especially in Europe, by two world wars and the Depression), but rather to strengthen a newly prosperous middle class. The root of this change was a democratizing trend that, in those nations that resisted fascism, had been gathering strength since around 1900, with such advances as women’s suffrage, the direct election of senators in the United States, diminishment of the House of Lords’ power in the United Kingdom, and growing union power everywhere.

Part of this story was progressive taxation. It was an old idea, but it didn’t really take root, Piketty writes, until early in the twentieth century. The United States led the way in 1913 with its progressive income tax, followed by progressive income and inheritance taxes in Europe. The two world wars drove taxes higher—especially the second—and after World War II, taxes fell only somewhat. Piketty trumpets the societal benefit of imposing “confiscatory” (his unapologetic term) top marginal rates of 80 to 90 percent in the United States. These put an end to “the most astronomical remunerations.” There was no reason for companies to push a top executive’s wages above the threshold for the top marginal tax bracket, because the federal government would collect nearly all that additional cash in taxes. That helped prompt companies to spend any surplus on the rank and file instead. Conservatives today argue that when marginal tax rates rise too high, that chokes off innovation. But through the 1950s and 1960s, “confiscatory” taxes choked off only excessive wage growth at the top. Productivity climbed briskly anyway, and so did per capita income.

The good times for the North Atlantic nations ended in the 1970s, through a combination of oil shocks, out-of-control inflation, falling productivity, and deceleration of economic growth. By the end of that decade, manufacturing was shifting decisively to Southeast Asia, creating competition for the United States and Europe. In his influential 1975 book, Equality and Efficiency, Arthur Okun, chairman of President Lyndon Johnson’s Council of Economic Advisers, argued that you could increase economic equality or you could increase economic efficiency, but you couldn’t do both at the same time—a view that paved the way for market fundamentalism. (The favored term in the economics profession is “neoliberalism,” but I reject it because many critics of market fundamentalism with a more diffuse political agenda also called themselves neoliberals, wholly unaware of its other meaning.)

DeLong makes a strong case that the turn in the 1980s to market fundamentalism was a dismal economic failure. He notes that President Ronald Reagan and British Prime Minister Margaret Thatcher, in cutting taxes and reducing regulation, achieved no discernible improvement for employment, wages, investment, or economic growth. Inflation came down, stimulating a cyclical economic expansion, but that was the doing of Paul Volcker, chairman of the Federal Reserve Board. Meanwhile, the deregulated banking industry created first a savings and loan crisis that caused $160 billion to evaporate, with most of that tab picked up by taxpayers, and, later, a mortgage crisis that caused $3.3 trillion in home equity to evaporate, very little of it reimbursed by the government. Reagan and Thatcher’s true legacy, mostly through tax cuts, was to extend and accelerate the late-1970s return to ever-growing economic inequality, a trend that continues today—and that, contrary to Okun, yields absolutely no benefit to economic efficiency.

I take the somewhat conventional view that the long twentieth century ended around 1980. Cherry-picking from DeLong and Piketty, here is my summary of the long twentieth century. At its start, rapid economic growth hypercharged imperialism and militarism. The latter spun madly out of control from 1914 to 1945, killing about 100 million people. After 1945, democratization dating to earlier in the century matured to the point where industrialized nations moved steadily toward greater economic equality. But by 1980, both the rapid economic growth and the egalitarian trend were over. Applause, curtain.

DeLong, however, extends his long twentieth century to 2010. That allows him to include the computer-driven economic boom of the late 1990s, which hyper-globalized the economy and pushed manufacturing, unevenly, into the global south. But the computer revolution was, I think, less a culmination of the long twentieth century than a distant echo of its beginnings. It seems a big deal to us because we witnessed it. But the late–nineteenth- and early–twentieth-century convergence of telephones, electrification, cars, radios, motion pictures, airplanes, and so on altered economic life much more dramatically. The computer boom mimicked the effects of the Industrial Revolution but fell well short of its breadth and magnitude. The wealth it created boosted middle-class incomes for a few years in the late 1990s, but it boosted incomes for the superrich much more, and, after 2000, pretty much exclusively. That made it a less transformative event than the Industrial Revolution, whose benefits were, during most of the twentieth century, shared widely.

The economic story of the twenty-first century will not, forecasters typically say, be a happy one. One school of thought says the economy has entered a long period of what Harvard economist Larry Summers calls “secular stagnation,” or slow economic growth due to a reluctance to invest. Another school, led by the Northwestern economist Robert Gordon, says productivity growth will be sluggish because future technologies can’t possibly be as transformative as those of the long twentieth century. Yet another school of thought says that the economic story of the next 80 years will be China, and that the rest of us will just be along for the ride. A virtue of both DeLong’s book and Piketty’s is that they avoid such crepe hanging. Piketty is guardedly optimistic about the prospects for future social progress—a pleasant surprise after the pessimism he expressed in his 2014 book, Capital in the Twenty-First Century—and DeLong says we just can’t know what lies ahead. He’s right.

But whatever our next grand narrative turns out to be, the economic problem won’t be solved. How can it be, when inequality is still rising throughout the industrialized world, and when most of the global south hasn’t even started to address the economic problem? We’ll all be richer, but to vastly unequal degrees. Even if we succeed in reversing the trend toward growing economic inequality, and even if we find ourselves speaking, in awed tones, of the tiger economies of Africa and Latin America, the economic problem will remain unsolved because today’s notions of sufficiency will (one hopes) be too stingy to serve a more prosperous future. So don’t give up your day job just yet.

Ryan Avent: Review of “Slouching Towards Utopia” in “The Economist"

Brad DeLong — Sun, 18 Dec 2022 22:34:19 GMT

<https://www.economist.com/culture/2022/09/08/bradford-delong-reconsiders-the-20th-centurys-economic-history>

Culture | Progress and its discontents

Bradford DeLong reconsiders the 20th century’s economic history

“Slouching Towards Utopia” is a tale of stunning material progress—and of its limits

Slouching Towards Utopia. By J. Bradford DeLong. Basic Books; 624 pages; $35 and £30

Between the hot war in Europe and a brewing cold one between America and China, today’s world has a very 20th-century feel. Amid these echoes, historians and international-relations buffs have been reappraising the failure of liberal democracy to consolidate its victories over rival political systems. In his new book, Bradford DeLong of the University of California, Berkeley, places the successes and failures of the 20th century in their economic context. In doing so, he provides insights into how things have gone wrong in more recent years—and what must go right if catastrophe is to be avoided in the current century.

“Slouching Towards Utopia” is an impressive achievement, written with wit and style and a formidable command of detail. Ambitiously, Mr DeLong seeks to redraw the temporal map. Many historians—among them the late British scholar Eric Hobsbawm—have preferred to chop modern history into a long 19th century, stretching from the French revolution to the crisis of 1914, and a short 20th, ending with the fall of communism. Mr DeLong, by contrast, argues that the period from 1870 to 2010 is best seen as a coherent whole: the first era, he argues, in which historical developments were overwhelmingly driven by economic ones.

At its outset, despite the Industrial Revolution, even the most prosperous parts of Europe and North America still had one foot firmly planted in a Malthusian world—in which, for millennia, technological improvements never yielded enough new production to outrun population growth. Incomes had stuck close to subsistence levels. Yet from around 1870, growth found a new gear, and incomes in leading economies rose to unprecedented levels, then kept climbing.

The step-change in growth stemmed from technological advances, specifically three meta-innovations that drove rapid and sustained progress: the modern corporation, the research laboratory and globalisation. Thanks to these, a widening part of humankind hurtled towards “economic El Dorado”, a land of plenty that prior generations could scarcely have imagined.

Mr DeLong—an economist after all—helpfully quantifies the dramatic change in economic fortunes. For roughly 10,000 years before 1500, humankind’s productive potential (meaning the stock of useful knowledge, roughly corresponding to real output) doubled about once every three millennia. Over the following 370 years, that productive power doubled again. Thereafter, it rose at a pace of just over 2% per year, which equates to a roughly 20-fold rise in productive power over 140 years. It was economic magic, which allowed living standards to rocket even as the global population swelled to 7bn.

Had the denizens of the 19th century known how fantastically wealthy their descendants would become, many would have supposed those heirs lived amid peace and contentment. Yet building harmonious societies out of material abundance has proved maddeningly difficult.

Mr DeLong frames this history as a duel between the insights of Friedrich von Hayek, an Austrian economist who extolled the power of the free market, and Karl Polanyi, a Hungarian thinker who warned that the market was there to serve man, not man the market. In the years before the first world war, markets generated rapid growth—but also soaring inequality and jarring disruption. People pushed back, demanding greater political rights, which they used to pursue regulation of the economy and social insurance. After the war, both the Polanyian and Hayekian impulses contributed to disasters: in the totalitarian socialism of the Soviet Union on the one hand, and, on the other, in the Depression, which persisted and deepened until politicians eventually abandoned laissez-faire orthodoxy.

In the aftermath of the second world war, though, the mix of a market economy and a generous safety-net made for a happy marriage of Hayek and Polanyi—“blessed by Keynes” (as Mr DeLong puts it), who provided the insight that governments should act to prevent recessions. The union bore fruit, in the form of a three-decade post-war run of torrid growth never matched before or since. And yet the last third of Mr DeLong’s long 20th century was coloured by disappointments.

When growth sagged and inflation rose in the 1970s, voters supported politicians promising market-friendly, or “neoliberal”, reforms, such as lower taxes and reduced regulation. (During a stint in Bill Clinton’s Treasury department, Mr DeLong was himself a steward of such policies.) Those reforms failed to keep growth high and led to worse inequality—yet rich countries pressed on with them, the author writes, up to the global financial crisis and the end of the long 20th century.

The values gap

Could things have gone better? In Mr DeLong’s version of history, key events are often the product of chance rather than structural forces. He reckons, for instance, that had victory in the Falklands war and the collapse of communism not seemed to validate the records of Margaret Thatcher and Ronald Reagan, voters might have been quicker to see the limitations of their economic outlook. But that analysis underestimates how deeply neoliberal ideas took root across both the left and the right, at least in the Anglosphere. Barack Obama was no Reagan nostalgist; his unwillingness to respond to the financial crisis in a more interventionist way seems to have been grounded in a genuine belief that doing so would have made things worse.

Indeed, if this book has a weakness, it is its occasional reluctance to give credit to people’s beliefs, rather than narrow economic concerns, as a driving force of history. Mr DeLong cites Max Weber’s dictum that though “material interests may drive the trains down the tracks…ideas are the switchmen.” The start of the 21st century suggests that faiths and myths and values are even more consequential than that.

“Slouching Towards Utopia” shows how economic growth can transform the world. It also demonstrates that material prosperity alone cannot transport people to the promised land. The future may well be shaped by fights about what can. ■

This article appeared in the Culture section of the print edition under the headline "Can’t buy me love"

LINK: <https://www.economist.com/culture/2022/09/08/bradford-delong-reconsiders-the-20th-centurys-economic-history>

REVIEW: John Quiggin Reviews “Slouching Towards Utopia” & “The Chile Project”

Brad DeLong — Thu, 08 Dec 2022 16:45:34 GMT

Rough beasts slouching towards utopia, by Stable Diffusion via NightCafe

John Quiggin: The slow demise of neoliberalism: ‘Like most political terms, “neoliberalism” is used so loosely that many people have suggested it’s no more than a general pejorative. But the ideas and institutions that emerged from the economic chaos of the early 1970s undoubtedly differed in fundamental ways from those of the decades after 1945 and clearly deserve their own name. That these ideas and institutions have lost much of their power is just as obvious, even if nothing coherent has emerged to replace them.

That, at any rate, is the conclusion reached both by Brad DeLong in his new book, Slouching Towards Utopia: An Economic History of the Twentieth Century, and by Sebastian Edwards in his forthcoming book, The Chile Project: The Story of the Chicago Boys and the Downfall of Neoliberalism. Importantly, neither DeLong nor Edwards can be numbered among the neoliberals’ irreconcilable opponents. Both embraced neoliberalism for many years, though in different forms.

The Chile Project, of which Edwards was a generally sympathetic observer, ranks with Thatcher’s Britain as the paradigmatic case of what I’ve called “hard neoliberalism,” which combines authoritarianism and radical free-market policies. The success of the “Chicago Boys” — the economists who have long dominated the Chicago School of Economics — in persuading the Pinochet dictatorship to implement market-driven policies that were largely sustained under subsequent democratic governments. They included a privatised pension system, writes Edwards, along with “openness and globalisation, the fiscal rule, the taming of inflation, and austere health, education, and environmental policies.”

As the examples of Pinochet and Thatcher suggest, hard neoliberalism has nothing in common with the concern for freedom of speech that motivated John Stuart Mill and other liberal thinkers. But it was consistent with the strain of classical liberalism represented by the Austrian-born economist Friedrich Hayek, for example, who was more worried about preserving individuals’ freedom of action, particularly by minimising government interference in property rights.

The “neo” in hard neoliberalism reflects how the successes of social democracy in the twentieth century permanently discredited the kind of classical liberalism that would tolerate mass poverty alongside massive wealth. Neoliberals accepted the need for social services to raise most people above the poverty line. Provided that goal was achieved, they argued, there was no need to be concerned about political and economic inequality.

DeLong is, or at least was, a proponent of what I’ve called “soft” neoliberalism, which derives from the distinctive US use of the term “liberal.” Soft neoliberalism was epitomised by the Clinton administration, in which DeLong served as deputy assistant treasury secretary under Lawrence Summers. Outside the United States, soft neoliberalism was often described as the Third Way. Its central theme was the idea that the goals of social democracy (or liberalism in the US sense) could best be achieved by embracing market-oriented reforms, and particularly financial deregulation, while maintaining a generally redistributive welfare state.

In both hard and soft versions, neoliberalism reached its high point in the 1990s. Chile experienced severe economic crises under Pinochet, but the end of the dictatorship in 1990 was followed by a decade of strong economic performance. The government’s most distinctive reform, a pension system based on individual accounts, was seen as a model by George W. Bush’s administration in the United States.

The triumph of soft neoliberalism in the United States was announced in hyperbolic fashion by Francis Fukuyama’s The End of History and the Last Man and popularised in airport bestsellers like Thomas Friedman’s The Lexus and the Olive Tree. The stockmarket boom of the 1990s, roughly coinciding with Clinton’s term as president, seemed to promise endless prosperity.

Particularly notable were a series of corporate-friendly free-trade agreements that contained investor-state dispute settlement mechanisms allowing corporations to sue governments for policy decisions harmful to their profits. Even more striking was the embrace of the financial sector, symbolised by the appointment of former Goldman Sachs chairman Robert Rubin as treasury secretary.

Neoliberalism’s weaknesses became more evident from the late 1990s on. A series of financial crises (the Asian crisis of 1997, the Long-Term Credit Management bailout in 1998 and the dotcom bust of 2000) prefigured the massive financial disaster triggered in 2008 by the global financial crisis, which continued for most of the next decade.

Having recovered somewhat in the 1990s, productivity growth slowed to a crawl. DeLong marks 2010 as the year when the “long twentieth century” of technologically driven growth came to an end. As he observes, “The years following 2010 were to bring large system-destabilising waves of political and cultural anger from masses of citizens, all upset in different ways and for different reasons at the failure of the system of the twentieth century to work for them as they thought that it should.”

In Chile, meanwhile, the much-touted pension scheme had proved to be a flop, with workers losing much of their savings to management fees. A series of reforms have gradually moved the system back towards a more traditional public pension scheme. Moreover, while absolute poverty fell, broad-based prosperity didn’t result. Those at the top of the income distribution captured most of the gains.

Edwards sees the protest movement that launched in 2019 as the beginning of the end for Chilean neoliberalism. Taking account of global trends, DeLong marks 2010 as the year when the “slouch towards utopia” slowed to a crawl or stopped altogether. Either way, neoliberalism had gone from unchallenged hegemony at the turn of the twenty-first century to full retreat twenty years later.

So far I’ve focused on the period of neoliberal dominance that began with the breakdown of Keynesianism in the early 1970s. This framing exactly fits Edwards’s book, which begins with the Chilean military coup of 1973. For DeLong, though, neoliberalism was the second act in a drama that began in the late nineteenth century. During that hundred-year first act — about which he writes as an economic historian rather than a participant — economic life was utterly transformed for the majority of people on the planet.

The story begins in Western Europe and its offshoots, most importantly the United States, and it is on the latter that DeLong focuses most of his attention. He chooses 1870 as his starting point because that was the year when “invention was invented” with the creation of industrial research laboratories. These enabled inventors to focus on innovation rather than an endless, and often futile, effort to commercialise and license their inventions. Surprisingly, despite being affiliated with the University of California Berkeley, home to twenty-six Nobel prize winners and alma mater of dozens more, DeLong doesn’t mention research universities, which provided the basic science underlying most of these inventions.

As his title suggests, the subsequent century saw remarkable progress that nonetheless failed to create the utopia many believed could emerge from the massive improvements in technology. Instead, the century was consumed by disputes over how to organise societies and economies — ferocious and bloody disputes in the first half of the twentieth century followed by an uneasy peace under the threat of nuclear annihilation.

DeLong personifies the schools of thought within the capitalist world as being those of Hayek (“The market giveth, the market taketh away; blessed be the name of the market”) and Karl Polanyi (The market was made for man, not man for the market). More prosaically, while Hayek opposed all forms of government intervention in the economy as a “road to serfdom,” Polanyi argued that people “had rights to a community that gave them support, to an income that gave them the resources they deserved, to economic stability that gave them consistent work.”

Within this schema, the decades following 1945 (Les Trente Glorieuses, as the French call them) can be seen as the period in which this tension was resolved by the combination of Keynesian macroeconomic management and the social-democratic welfare state. Hayek was victorious in the campaign against comprehensive economic planning but not in his opposition to large-scale public provision of health, education and infrastructure services of all kinds.

Polanyi’s views seemed to gain ground during Les Trente Glorieuses, with the size and scope of the state growing steadily. In the cold war setting of the mid twentieth century, many expected that the rival economic systems of capitalism and communism would converge to a “mixed economy,” with most large businesses owned or tightly regulated by governments, and market forces ruling elsewhere.

But the tables were turned in the space of a few years. Hayek triumphed in the 1970s, both in DeLong’s symbolic terms and as the intellectual star of the decade. Financial markets were deregulated, public enterprises privatised and unions crushed. The era of neoliberalism, which forms the second part of DeLong’s story, had begun.

This account leaves DeLong, and his readers, with two big problems. First, did technological progress really cease to work after 2010 and, if so, why? Second, why was a relatively short burst of high inflation enough to overthrow social democracy yet decades of poor economic performance insufficient to generate an alternative to neoliberalism?

On the first question, I am a bit more optimistic than DeLong. The twenty-first century has seen huge growth in the volume of information distributed through media of all kinds. Unlike traditional goods and services, information is a “non-rival” product: making information available to one person does not reduce the amount available to everyone else. But the infinite capacity for reproduction also makes it hard to force people to pay for information. The most common, though highly unsatisfactory, solution is to attach useful information to advertising people would not otherwise choose to look at.

In these circumstances, traditional measures of output, income and consumption become less and less relevant. At least in countries where most people have access to a basic twentieth-century set of household goods and to a variety of personal services, it may be that future improvements in living standards will come almost entirely from access to information provided outside the market.

On the second question, DeLong argues, correctly I think, that social democracy was a victim of its own success. Everyone expected accelerating growth in their incomes combined with a continuation of full employment and low inflation. When the system failed to deliver at quite the expected level, neoliberalism promised a return to prosperity. By the time it became clear that this promise would not be realised, expectations had been lowered so much that (for example) a 5 per cent rate of unemployment was seen as a success rather than the disaster it would have been perceived as in the 1970s.

Again taking the optimistic view, we are seeing a gradual rehabilitation of the institutions of the mixed economy, including activist governments, public enterprise and trade unions. At least for the moment, we don’t have to worry that our limited successes will recreate the hubris of the 1960s. Perhaps we can finally put the era of neoliberalism behind us. •

Slouching Towards Utopia: An Economic History of the Twentieth Century
By J. Bradford DeLong | John Murray | $34.99 | 624 pages

The Chile Project: The Story of the Chicago Boys and the Downfall of Neoliberalism
By Sebastian Edwards | Princeton University Press | US$32 | 376 pages