Alexander J. Field

Certain periods in American history are so important, such key psychological anchors for ideologies and narratives and subsequent lives, that even the passage of decades or centuries hasn't managed to build a truly solid and universal consensus about what they mean, even if they're recognized as having made something about the way life before was lived impossible to continue or recapture. There's a truism concerning the way that many students are taught about the Civil War that illustrates this idea: in elementary school, you learn it was about slavery; then in middle school, you learn that it was about states' rights (airbrushed postbellum statements from former Confederate officials leavened with cherry-picked Jeffersonian quotes typically feature heavily); and then in high school and college you learn that, no, it really was a war primarily and specifically fought and won over whether it was possible for a nation conceived in liberty to permit the institution of human bondage to persist, whether or not individual states or groups of citizens disagreed.

The answer to the question of what the Civil War was "about" isn't just a question of historiography, it's a question of what kind of country America is, and what values that implies. If the Civil War was really about states' rights, then that implies a different set of lessons to be learned about what America is about, and also, implicitly, a different way of thinking about how it should be run in the future. The Great Depression (and by extension, the New Deal programs implemented to try to end it) is another epoch in US history that follows the same sort of explanatory circle: students first learn that the Depression was caused by unchecked capitalism and ended by the social programs of the New Deal; then they learn that it was a business cycle bubble ended by the massive military buildup during World War 2; and then they settle on the explanation that a persistent shortfall in aggregate demand was finally filled by aggressive federal monetary and fiscal policy, with varying roles for different programs and initiatives.

However, while no one but a few isolated neo-Confederates still claims that the Civil War had nothing to do with slavery, recurring episodes of revisionist pseudo-history like Amity Shlaes' or Lee Ohanian's work show that the Depression is still contentious; beliefs about its causes, effects, and cures are inseparable from, and in fact essentially define modern political ideologies. It was a true watershed moment that left very few aspects of our national character unaffected, and so it's a historical event that's too important to be left to mere historians. Is it even possible to have a dispassionate study into our greatest national economic crisis and the changes it caused? What would it look like? Alexander Field has written an extremely interesting book with a very provocative claim about the background behind the laws and political struggles of the Depression: that the dozen years from 1929 to 1941 were, despite being miserable and wrenching years of want, at the same time the most technologically progressive in American history.

Despite the innovations of wartime military research, there were essentially three main reasons that the years from the end of the war to the early Seventies were a unique time of such seemingly perpetual abundance: rapid advances in manufacturing sophistication (i.e. the continued shift from steam to electric power in factories); improvements in transportation that allowed producers, distributors, and consumers to take advantage of better automobiles (and particularly trucks); and changes in the nature of companies from antiquated 19th century businesses practices to the more complex and ordered processes of what we now recognize as the modern corporation. While the array of New Deal programs like the NIRA or Wagner Act had important contributions to the character of the economy, in an important sense they were largely channeling broader improvements in productive potential that resulted from the experiences of people and firms in an era of deprivation and necessity.

To support this thesis, he employs not only careful collection and disaggregation of many statistical measures of productivity and GDP growth (made difficult for any scholar to analyze by the relatively primitive and often semi-reliable data available from this turbulent era), but also thoughtful reflections on the narrative implications of what those changing numbers in each economic sector mean, creating a useful synthesis of two strands of inquiry that check each other's work. It is one thing to compare the proportion of paved roads to dirt roads over time, it is another to explain how that improvement in logistics enabled vast increases in GDP as new economic opportunities became unlocked; similarly, the magnitude of increase in manufacturing capability by replacing bulky and unsafe steam distribution conduits in factories with electrical power becomes much more apparent when the productivity and capital intensity data is shown.

The first part of the book is devoted to technical discussions on why many economists (and most of the public) have previously overlooked the eye-popping increases in "silent" indicators of economic strength in what's universally seen as a decade of stagnation and failure - this inside-baseball section is fairly dry and relies heavily on tables, charts, and regressions - but it is extremely convincing in conveying just how unique that era was. No other time, including the railroad boom of the Gilded Age, the Baby Boomer postwar years, or the IT revolution in the modern era, came close to the Thirties in the advance in what the economy was capable of producing. This is even more interesting when, as the second part of the book discusses, there was no single new "general purpose technology" responsible for this advance.

A GPT is a poorly defined concept roughly corresponding to a "game changer" like the domestication of the horse, the invention of the wheel, or the discovery of agriculture that provides a Promethean spark to a society's technological capabilities. Field makes a fairly persuasive argument that no matter how broadly you define the term GPT, despite the copious amount of invention in the Thirties there was no single unique technology created that would explain its revolutionary nature, merely sustained improvements in infrastructure, broad advances in logistics, transportation, and the way that the loosely structured companies of the time reorganized themselves into more highly regimented and productive entities. As a bonus, he offers a fascinating look into how, despite its seemingly obvious transformative power, the IT boom of the 21st century "shows up everywhere but in the data" of GDP growth. The invention of the computer seems to have touched every aspect of our lives, yet it has not increased our potential economic output by nearly as much, in percentage terms, as the less glamorous factory retooling or dam construction of Roosevelt's day.

But that fact has major implications for the two big takeaways from Field's research that he discusses: first, what did the things that people actually remember from the Depression - the New Deal alphabet agencies and government spending initiatives - have to do with ending it; and then, could our current recession be another period of outward misery yet inward growth waiting to be unleashed in another burst of prosperity? As far as the first is concerned, Field concludes that while much of the advance in the Thirties was more or less insensitive to government policy (in his phrase, "With or without the depression Wallace Carothers would have invented nylon"), and that certain redirections of scientific talent to initiatives like the Manhattan Project did not directly benefit the consumer economy, on balance FDR's fiscal and monetary liberalism played a large role in coordinating and strengthening the private sector's growth in potential. This suggests that comparable use of fiscal and monetary policy by the current administration has prevented a worse recession or a second Depression, though the effects of individual components of larger programs like quantitative easing and the stimulus package are always debatable.

The second question is much harder to answer, both because the difficulty of knowing what the future will consider to be important advances, and because of the possibility that there are simply not many modern equivalents of transformative productive improvements like paving dirt roads or electrifying rural areas. Investments in improvements to America's aging infrastructure would certainly help the economy in the long term, as would proposals like educational reform, health care reform, or reductions in poverty and inequality, but it is difficult to identify where the applications of technological and organizational progress would yield a comparably enduring boom. High-speed rail might certainly be worth the cost, yet it’s hard to see how it would have the legacy of the US Route system. Additionally, while it is certainly true that in the long run the Schumpterian “creative destruction” processes of recessions can help make societies leaner and meaner, sometimes it simply makes them meaner. For some people, recessions are just lost years.

And yet, the fact that the US has avoided a large part of the conservative policy mistakes that made the Depression so Great gives room for hope - unemployment, while bad, is nowhere near Depression levels, and even in deeply troubled regions of the world economy like Europe enough of the lessons of the Thirties have been learned to prevent similar catastrophes. The US may not be able to replicate 1941's feat of being able to produce an astonishing 40% more than it had twelve years prior with no additional capital or labor, but the possibility remains that necessity could be the mother of invention yet again. Field's work of cliometrics is one of the clearest looks backward and thought-provoking guides forward in recent years.… (mehr)