Ryan Avent: Review of “Slouching Towards Utopia” in “The Economist"
Sep 8th 2022
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"
"[Obama's] 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."
Being nice to big business is not "neoliberal. TARP (becasue it was in part "troubled equity holders recovery program") was not "neo-liberal." Bagehot is Neo liberal. Or at least Bagehot is our "that which cannot be named," (Maybe we can come with a tetragrammaton.)