Slouching Towards Utopia - Review

Brad DeLong's grand narrative of the long twentieth century

In my previous post, I criticized the notion that capitalism has always existed. Capitalism, I argued, is not commerce, or trade, or market exchange, but a very specific interlocking set of institutions and practices which originated in a particular place and time in Northwest Europe and spread across the world from there on the shoulders of European expansion and imperialism.

Another good refutation of this idea is to ask: If capitalism has always existed, then why did it have basically no effect on human living standards until only a few generations ago? If capitalism has been around since the dawn of time (and even before humanity according to at least one person), then why did it fail to raise most people's living standards for the first 150,000+ years or so of its existence?

Because that is what the evidence shows. Since the dawn of agriculture, most people's living standards hovered at basically around subsistence.

This is one of the conclusions of Berkeley economics professor J. Bradford DeLong (hereafter Brad DeLong) in his 2022 book, Slouching Toward Utopia. In this post, I'm going to describe the book's central thesis and outline, and then give my general impression. In a later post, I'll discuss where I agree and disagree with it. I've followed DeLong's blog for years and I've wanted to review this book for a long time. So here we go!

1

The central thesis of the book is that modern economic growth began around the year 1870. After 1870 or thereabouts, we basically solved the economic problem which had bedeviled humanity since the dawn of agriculture. It should have led to a utopia of abundance, comfort and leisure for everyone. Why didn't it?

DeLong argues that, although we haven't achieved utopia, we've made tentative, halting, and unsteady progress toward it, hence the title, "slouching" toward Utopia, from the poem by W.B. Yeats: "And what rough beast, its hour come round at last, / Slouches towards Bethlehem to be born?"

The year 1870 was chosen because that's when modern econometrics indicates that a significant phase shift in living standards took place. Unlike previous periods of economic growth, this time growth does not stall or stagnate but retains its momentum—and even accelerates—leading to the modern living standards enjoyed by most people in the global north today.

This 1870 date has generally been accepted by most economists and historians. In older history books the Industrial Revolution was portrayed as the beginning of an immediate rise in people’s living standards. However, more recent and careful scholarship has upended this view. In fact, the early Industrial Revolution actually reduced most people's living standards, often significantly. This can be seen both in econometric data like wages, purchasing power, and calories consumed, or in biometric data like height, infant mortality, and life expectancy. Indeed, for most people, the early Industrial Revolution was a catastrophe.

The term "Dickensian" originated during this time after its most celebrated author. The Communist Manifesto and the book "The Condition of the Working Class in England" were written during the middle of the 1800s graphically depicting popular immiseration. Poets inveighed against the “dark Satanic mills” polluting the landscape and making people ill. DeLong illustrates this situation with a quote from British philosopher John Stuart Mill: "[I]t is questionable if all the mechanical inventions yet made have lightened the day's toil of any human being."

Back in the early 1870s, John Stuart Mill put the finishing touches on the final edition of the book that people seeking to understand economics then looked to: Principles of Political Economy, with Some of Their Applications to Social Philosophy. His book gave due attention and place to the 1770-1870 era of the British Industrial Revolution. But he looked out on what he saw around him and saw the world was still poor and miserable. Far from lightening humanity's daily toil, the era's technology merely "enabled a greater population to live the same life of drudgery and imprisonment, and an increased number of manufacturers and others to make fortunes."

Yes, Mill saw a world with more and richer plutocrats and a larger middle class. But he also saw the world of 1871 as not just a world of drudgery—a world in which humans had to work long and tiring hours. He saw it as not just a world in which most people were close to the edge of being desperately hungry, not just a world of low literacy—where most could only access the collective human store of knowledge, ideas, and entertainments partially and slowly. The world Mill saw was a world in which humanity was imprisoned: in a dungeon, chained and fettered. (p. 19)

It turns out that Mill was right about his own day, but he was wrong about the future. After he wrote those words in the 1870s, things started to change. It was the beginning of an upward trend that continued well into the twentieth century. Economists like to plot all of this stuff in charts like these. The lines remain relatively steady and as far back as we can go until, suddenly, they all start heading upward after 1870 (or a bit earlier in some places). Wages, calories consumed, life expectency, and so forth, start trending up. Other lines, like starvation, infant mortality and birthrates, start going down.

What was going on?

2.

To explain the world before 1870, DeLong accepts the thesis proposed by the Reverend Thomas Robert Malthus in the early 1800s.

According to Malthus, all previous technological advancements and increases in efficiency merely allowed for higher populations to be sustained. The increase in population meant that the increased wealth produced was shared among a greater number of people causing living standards to regress to the mean for the average person throughout history. Malthus especially pointed to land. New cropland could be brought under the plow, Malthus agreed, but people can reproduce much faster than new land can be cleared and cultivated.

Put simply, during the agrarian era, technological advancements translated into population growth, not higher living standards.

DeLong says that this basically describes the entire preindustrial world throughout the agrarian era. It was a world of stagnation rather than growth.

To illustrate this point, DeLong notes that, due to high infant mortality and low life expectancy, the average woman in agrarian societies had to have about eight or nine pregnancies just to keep the population stable. She had to spend around twenty years of her life eating for two, which severely limited her options. Furthermore, the pressure for sons to take care of you and play the status game (i.e. patriarchy) meant that many people kept striving for sons keeping population growth high.

That’s why population growth was assured, despite the hand-to-mouth existence of most people. It also assured that living standards would remain forever stagnant no matter how efficient we became or how much technological innovation there was. This was simply the lot of humanity according to Malthus. The only way out of this trap, he said, was to forcefully restrict the growth of population. This could happen through abstinence, he said, but the more likely scenario was war, famine and starvation. This bleak outlook is still referred to as “Malthusian” today, often pejoratively.

3.

So what changed after 1870? Well, the foundations had been laid in the previous hundred years, but a few things had to come together in a certain way for us to get modern economic growth and escape the Malthusian trap. DeLong lists these as 1.) globalization; 2.) the modern corporation; and 3.) the industrial research laboratory.

1.) Globalization. Globalization had been around a long time before 1870. However, in the previous era moving bulky items was always expensive and difficult, especially overland. Packs of donkeys and camels or carts pulled by oxen and horses were the only option. But by far the most efficient way to move goods was by water, which is why places with ports and along rivers became trade hubs since the beginning of civilization. Before the Industrial Revolution, water transport was almost exclusively wind-powered.

But after 1870, the cost of transportation fell dramatically, first due to bigger and faster sailing ships like schooners and clippers, and then because of efficient steam-powered ships and railroads. Alongside this a unfolded a revolution in communications technologies which is still ongoing.

In previous eras, information could only be sent as fast as people could travel, and many were illiterate. The Pony Express relay was the fastest way to send information across North America in 1860. It lasted only a year before it was made obsolete by the telegraph. Then, in rapid succession, came the telephone, the radio, and everything else, all of which knitted the world together for the first time during the first era of globalization.

Spanning the globe with telegraphs was difficult. Particularly difficult to set up were the submarine telegraph cables. The year 1870 saw the English engineer Isambard Kingdom Brunel's SS Great Eastern—then the largest ship ever built (nothing larger would be built until 1901)—lay the submarine telegraph cable from Yemen to Mumbai, completing the undersea line from London. Future dukes of Wellington, and millions besides, no longer took months conveying news and commands from London to Bombay and back. It took only minutes. After 1870 you could find out in the morning how your investments overseas had done the previous day, and wire instructions and questions to your bankers overseas before lunch. (p. 53)

2.) The modern corporation. I wish DeLong had been more specific about what he means by the "modern" corporation. Corporations had been around for a long time before 1870 going back to the chartered companies like the British East India Company and the South Sea Company, the latter of which collapsed due to a stock bubble in 1720. The Joint Stock Companies Act of 1844 is considered a landmark in the development of corporate law.

I think what he means is corporations that can hire professional managers, technicians and specialists in fields like accounting, engineering and business management, and deploy them in a top-down fashion to realize some sort of business plan. In other words, the managerial corporation staffed by professionals. At least I assume that's what he means—it's not exactly clear what changed about corporations after 1870.

3.) The industrial research laboratory. DeLong uses short biographical sketches of famous individuals throughout the book to give a more human face to economic change (including Herbert Hoover and Leon Trotsky). Here he profiles Thomas Edison and Nikola Tesla. Tesla, he notes, was notoriously difficult to work with given his eccentric behavior, which meant that he probably would not have been able to put his prodigious gifts to use were it not for the creation of the industrial research laboratory funded by investors with deep pockets like George Westinghouse. Inventing, in effect, became professionalized during this time.

For the first time ever, you could have en entire class of individuals whose full-time job it was to come up with new inventions—whether it was in electronics, chemistry, medicine, transportation, manufacturing, construction, or what have you. And you had corporations standing by to manufacture and deploy those inventions. Finally, globalization spread those discoveries around the world, along with the knowledge of how to build them. A great example of this (which DeLong does not cite) is Bell Labs:

What Would It Take to Recreate Bell Labs?

These, then, are the inventions which sparked modern economic growth according to Brad DeLong.

By Ben Moore - Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=31057028

4.

So, then, 1870 is the beginning of what DeLong calls the "long twentieth century." The concept of "long" and "short" centuries is borrowed from a number of historians who use bookend dates around various centuries to frame major historical time periods. Two of the most notable examples are the "short twentieth century" of Eric Hobsbawm: from the outbreak of World War One in 1914 to the fall of the Soviet Union in 1991; and the "long nineteenth century," which is dated from either the French Revolution or the battle of Waterloo until World War One. Another example is the “long sixteenth century” of Immanuel Wallerstein from 1450 to 1640 which he saw as the incubator for capitalism after the protracted crisis of feudalism.

DeLong's long twentieth century lasts from 1870—when modern economic growth took off—until The Great Recession of 2008-2009: “By 2016 it was clear that 2007-2010 had not been a simple backfire, after which forward motion resumed as normal. It was even clear that things had fallen apart even before 2007; it was simply that people had not noticed.” (516)

DeLong argues that this is the first period where the history of humanity is primarily economic history. This is a simple, yet profound observation. If you think about it, it's true. History books rarely discuss economic issues in any detail unless they are specialized texts. There is simply no reason to. Most historians focus exclusively on political and military affairs, while daily life is not examined at all precisely because it was so static. For most of human history, peasants and craftsmen toiled away in obscurity to produce the modest surpluses that elites fought wars and killed each other over for tens of thousands of years since the beginning of recorded history. Economies were local, goods were handmade, and global trade consisted mostly of luxury items for wealthy elites. The average person lived much the same way his ancestors had for generations even as armies ravaged the countryside and rulers came and went.

But all that changed after the Industrial Revolution. The history of long twentieth century, DeLong says, is primarily an economic history. While yes, there were still purely political and diplomatic issues to consider, events like the Great Depression, the rise of China, and the Global Financial Crisis were primarily economic in nature.

In fact, much of the background of the Twentieth Century was the antagonistic relationship between two competing economic systems—capitalism on the one hand and communism on the other. Things like the gold standard, the Bretton Woods agreement, and organizations like central banks and other financial institutions played roles just as large and important as national governments or militaries. Managing the economic engine and ensuring growth became the central concern of politicians everywhere. Issues like wealth distribution and inflation dominated political discourse in a way they had not before this time.

Slouching Toward Utopia, then, is Brad DeLong's “grand narrative” of this long twentieth century. Five major themes recur throughout the book: 1.) economic history, 2.) the technological cornucopia, 3.) government mismanagement, 4.) world globalization, and 5.) intensive tyranny (pp. 339-340). Over and over again, DeLong expresses astonishment that, if previous generations were able to see the productive powers unleashed by humanity during this era, they would naturally assume that we had built a utopia.

Why we did not is the central question of the book. Another important question is why there was such a stark divergence in wealth between what's been termed the “global north” and the “global south.” Once we understood how to unleash the productive capacity of industry and manage large economies, why didn't everyone, everywhere in the world, become rich at the same time? Why did poverty persist?

Simply being able to unleash the cornucopia enabled by technological progress is only part of the puzzle. The other has to do with political decision making. This is the difference between economics and political economy.

Two competing and contrasting ideas form the backdrop to debates over political economy during this period. DeLong illustrates these with two European intellectuals both born in Vienna in the late nineteenth century. The first is Friedrich August von Hayek, the Austrian economist, whose thought DeLong summarizes as, "the market giveth, the market taketh; blessed be the market." The second is Karl Polanyi, whose views he summarizes as, "the market is made for man, not man for the market." These, he says, are the two Platonic ideals which framed the debates about political economy throughout the long twentieth century: "In the long twentieth century in which the economic and its repeated revolutionary transformations are dominant, nearly all of our other protagonists in all of our stories are profoundly shaped by at least one, perhaps both, of these ideas." (143)

Basically, the debate boils down to whether the market alone should distribute the fruits of economic growth, or whether governments have a vital role to play. While markets are good aggregators of people’s individual wants and preferences and convey essential information to producers, market logic says that people’s only worth is what they produce and how much they own—their property rights, in other words. But a functional society requires more than just property rights. People believe that they are worth more than simply what they own or what they produce and demand more from their elected leaders—things like social justice, freedom from want, security, stability, clean air and water, and other things which the market alone cannot provide.

Another recurring theme is government mismanagement. Time and time again, policy elites make poor decisions which hamper economic growth and retard progress, or even set it back. For instance, officials often believe that public debt is too high and implement austerity measures in times when they should be expansionary. Or they sit on their hands and do nothing because they assume that markets are self-correcting. Or they draw the wrong lessons from previous events. It also occurs in peripheral countries where kleptocracies mismanage their economies due to graft and corruption and establish "extractive" institutions instead of "developmental" ones. These, then, are some of the reasons why the promised Utopia fueled by economic growth failed to materialize like previous generations assumed it would once we had solved the economic problem.

Another theme is the role of sheer contingency and luck in historical events:

When I first started writing this book, I felt, as many others did, that 1929-1933 was a uniquely vulnerable time, and planned to devote considerable space to explaining why. But in 2008, we skated to the edge of another Great Depression, which made it painfully clear that the years 1929-1933 were not so uniquely vulnerable after all. Rather, we had been remarkably lucky before 1929, and we had been remarkably lucky after 1929. (213)

DeLong breaks down his history into the following periods:

1870-1914. The fire of modern economic growth is lit. The list of new inventions is long and transformative. Mercantilism is abandoned and the world globalizes under the aegis of European empires—especially Great Britain—to an extent not seen until the later half of the twentieth century. Only a handful of countries resist European colonization or domination. Much of the world also democratizes. Crowned heads increasingly make concessions to government by the people.

DeLong brings up the book The Great Illusion by Norman Angell. In a nutshell, Angell argued that the new economic relations meant that general prosperity was now divorced from territorial conquest, meaning that aggressive war no longer made economic sense. What he forgot, of course, was the fact that humans individually and collectively make decisions that make no sense all the time, and always will, resulting in:

1914-1918. World War One. The industrial north sleepwalks into armageddon. Here, DeLong emphasizes the political decisions that led up to the tragedy as distinct from purely economic concerns. The prosperity built from 1870-1914 is rapidly burned to the ground and globalization goes into reverse.

1918 - 1929. The "Roaring Twenties." The world tries to rebuild from World War One but is held back by high war debts, tariffs, and the gold standard. In the aftermath, the costs of rebuilding, along with the need to take care of war veterans, cripples national economies leading to inflation and stagnation. The onerous reparations demanded by the victors is the reason why Germany's hyperinflation was so astounding, but much of Europe was affected, too:

Of the countries that experienced post-World War I inflation, Germany was hit the worst, with prices increasing...by a trillionfold. But a number of other countries also saw inflation climb to devastating levels. In Russia prices rose four billionfold. In Poland, they rose two and a half millionfold. In Austria, prices rose two thousandfold. In France, inflation was only sevenfold...(183)

Also during this period, the Russian Empire undergoes a revolution to establish what DeLong refers to as "really-existing socialism" based on the theories of Karl Marx—what the rest of us call communism.

1929-1939. The Great Depression and rise of fascism in Europe, setting the stage for World War Two. This was by far the greatest purely economic catastrophe of the long twentieth century. In the US, at the height of the depression, nearly a quarter of the workforce was unemployed and production fell by 40 percent from its 1929 level.

At its nadir, the Depression was collective insanity. Workers were idle because firms would not hire them to work their machines; firms would not hire them to work their machines because they saw no market for goods; and there was no market for goods because idle workers had no incomes to spend...In the lead-up to the Great Depression, policy elites doubled down on the austerity measures to which they had committed themselves in the 1920s. Faced with the gathering depression, the first instincts of governments and central banks was to do, well, nothing. Businessmen, economists, and politicians expected the recession of 1929-1930 to be self-limiting. They expected workers with idle hands and capitalists with idle machines to try to undersell their still-at-work peers. Prices would fall. When prices fell enough, entrepreneurs would gamble that even with slack demand, production would be profitable at the new, lower wages. Production would then resume, This is how earlier recessions had come to an end. (pp. 212-213)

DeLong mentions Say's Law, which argued that, while some goods might be overproduced, a general glut was impossible because, according to Jean-Baptiste Say, "supply creates its own demand." But Say was wrong. Without diving into too much detail, the ultimate cause of the Depression appears to lie not with production itself, but with the monetary and financial systems that enable production—that is, with issues of money, debt, and banking. World governments followed financial orthodoxy, restricting the amount of money in circulation for fear of inflation just as everyone wanted to exchange risky assets for cash, causing supply and demand for money to became unbalanced. The result was, "the twentieth century's greatest case of self-inflicted economic catastrophe." (218).

1939-1945. The Second World War. Of course, entire books have been written about this topic. One interesting speculation is that, had Britain not resolutely declared war on Germany in 1939 and forced them to fight on two fronts, they might have successfully defeated the Soviet Union and won the war. Appeasement of Hitler would have led to the genocidal German regime being able to conquer much of Eastern Europe and convert it into slave plantations to work the native Slavic populations to death. Sobering thoughts given today's geopolitical situation.

The post-war period saw several overlapping periods:

1945-1991. The Cold War, or "the war of coexisting yet hostile systems." The Korean and Vietnam wars. Anticolonialism. The space race. Competition forced capitalism to invest in workers and provide social welfare.

Interestingly, DeLong agrees with the idea that one of the factors that caused the demise of the Soviet Union was a collapse in oil prices due to Saudi Arabia increasing production. Collectivization of Soviet agriculture resulted in inefficiency, meaning that there was not enough grain to feed the urban population. High oil prices allowed the Soviets to sell oil on the world market and earn dollars to import grain from abroad, but the collapse of oil prices in 1985 put a stop to this. The Soviets started borrowing to cover the difference from 1986 to 1989 but eventually the banks stopped lending and they were forced to negotiate with the West.

1950-1990. The global south becomes much more integrated into the world economy in trade, technology and communications. Some countries become success stories that leapfrog into the Global North while others are left behind. Not only are previously excluded countries integrated, but so are previously excluded people. Minorities and women become integrated into the workforce during the 1960s and 1970s thanks to movements like Civil Rights and Women's Liberation. In 1900, one in four women worked, the vast majority of them unmarried. By the end of the century the workforce gender ratio was 50:50. In 1920 only four percent of married women worked; by 1980 it was 60 percent. (389)

In 1950, more than half the world's population still lived in extreme poverty: at the living standard of our typical preindustrial ancestors. By 1990 it was down to a quarter. By 2010 it would be less than 12 percent. And, in 1950, most of this extreme poverty was spread throughout the global south. Thereafter it would become concentrated in Africa, where, by 2010, some three-fifths of the world's extreme poor would reside. (345)

1945-1975. The "thirty glorious years of social democracy," sometimes also referred to as "The Golden Age of Capitalism" (although DeLong does not). This the the second "economic El Dorado" following 1870-1914. DeLong describes this period as a "shotgun wedding" of the ideas of Hayek and Polanyi. Economic growth returns to levels not seen since the first era of globalization, and even surpasses them. New technologies revolutionize people’s daily lives and living standards rise all over the world, especially in the global north.

After World War II, or, to be more precise, 1938-1973 in America and 1945-1973 in Western Europe, came another economic El Dorado, an age of a swift jog or even a run along the path toward utopia at a pace previously unseen in any historical era—including 1870-1914. For the poor majority, it delivered relief from the pressures of dire necessity and access to considerable amounts of at least the most basic conveniences of life. For the rich, it delivered a cornucopia of material abundance not just beyond the compass but beyond the wildest imaginings of the richest and most powerful monarchs of other ages. Social democracy was delivering.

Creative destruction might eliminate your job, but there would be another one as good or better because of full employment. And because of rapid productivity growth, your income would certainly be higher than that of the typical person of your accomplishments and position in any previous generation. And if you did not like what your neighborhood was or was becoming, you could buy a car and change your residence to the suburbs without disrupting the other parts of your life—at least if you were a white guy with a family in the global north. (p. 428)

However, it did not last. The standard explanation is inflation combined with stagnation, but why did that happen? DeLong lists the usual suspects: the oil shock and military spending on Korea and Vietnam. He also notes lower productivity due to environmental regulations, the poor assimilation of the Baby Boom generation into the workforce, and the eventual exhaustion of innovative technologies that had been developed during the War. But, perhaps most important, he points to frustrated expectations being behind the rise of neoliberalism:

In my view, the greatest cause [of the neoliberal turn] was the extraordinary pace of rising prosperity during the Thirty Glorious Years, which raised the bar that a political-economic order had to surpass in order to generate broad acceptance. People in the global north had come to expect to see incomes relatively equally distributed (for white guys at least), doubling every generation, and they expected economic uncertainty to be very low, particularly with respect to prices and employment—except on the upside. And people then for some reason required growth in their incomes be at least as fast as they had expected and that it be stable, or else they would seek reform. (429)…A tripling of global-north living standards between 1938 and 1973 had not brought about a utopia. Growth gets interrupted and slowed. And in less than a decade, all of this was felt to indicate that social democracy needed to be replaced. (436)

Sobering, given current circumstances—in a similar vein, pandemic inflation followed previous decades of low inflation and stability giving people unrealistic expectations. DeLong quotes from Keynes about the dire effects of inflation on mass psychology. And, as we saw above, economic disruption doesn't always lead to the New Deal, or even neoliberalism. Sometimes it leads to fascism and genocide as it did almost exactly one hundred years ago.

1975-2000. The neoliberal turn and the rise of China as a major player in the global economy. DeLong notes in this chapter that this era unfolded alongside his own career as an economist which he implies colors his perspective, but it makes this part of the book more interesting in my opinion. People felt that social democracy was no longer delivering on its promise, and neoliberalism promised to do better. DeLong points out that it did no such thing according to every measurable economic statistic, but it did lead to lower productivity and greater wealth inequality:

The neoliberal turn had failed to deliver higher investment, greater entrepreneurship, faster productivity growth, or the restoration of middle-class wage and income growth. The new policies had delivered massively greater income and wealth inequality.

What was the appeal? The neoliberal order hung on because it took credit for victory in the Cold War, because it took credit for making sure the undeserving didn't get anything they did not deserve, and because the powerful need their megaphone to loudly and repeatedly tell others that they deserved the credit for whatever they claimed neoliberal policies had achieved. And so the hand that was dealt played out. (461)

DeLong does a good job articulating the attitudes that led to neoliberalism. The problem, according to a lot of people, was that broadly shared prosperity—including full employment—was fundamentally incompatible with cold, hard market logic. Workers were simply demanding too much. There was a lot of moralizing about "living beyond our means," and that there was no “free lunch,” and so on. As DeLong notes, quite a lot of people felt that Social Democracy was making people equals who should not have been equals.

2000-2007. Reglobalization becomes hyperglobalization due to the information technology revolution. The first period of globalization was seen as a boon to nearly everyone. By contrast, hyperglobalization saw large numbers of people in the global north experience declining living standards and lower incomes leading to anger and resentment.

DeLong points out that in the pre-World War I Belle Epoque era, trade flows were nearly as high as the hyper-globalized 1990s. And he notes that, between 1850 and 1920, one in every ten people in the world moved to a different continent. Cross-border flows of people are actually smaller in the post-1973, or even the post-1990 world than in the previous globalization era. (483)

However, he notes that, during the previous era of globalization, trade was mostly limited to commodities and securities. Now multinational corporations span the globe, setting up production anywhere, hiring from everywhere, moving people around, leveraging wage arbitrage, and moving money, goods, and information around with much greater ease and speed than ever before leading to widespread feelings of disorientation and loss of control.

2007-2009. The Great Recession. This was followed by an anemic recovery afterwards which leads us up to 2022 when the book was published. Shady financial instruments and a subprime loan crisis caused the entire securities market to seize up, effectively suspending economic activity. Highly leveraged globe-spanning financial instutitions—all counterparties to each other—started falling like dominoes.

DeLong sees the bailouts as necessary to prevent what happened during the Great Depression when the banking system seized up leading to a decade of sub-par growth and high unemployment. What he sees as the big mistake by policy makers in Europe and America was the resulting turn to austerity, supposedly to pay down the extraordinary costs incurred by bailing out the financial institutions. This has led to sluggish growth and political resentment, as it looked like the people who crashed the world’s economies benefited from it while everyone else was hung out to dry. We desperately needed another New Deal, but this time we didn’t get one: “In the United States, the Obama adminstration, the leaders of the Republican Party, and the American people were not up to the job, as 2016 showed. In Western Europe, things were worse.” (518)

Ever since then growth rates have been sluggish, leading DeLong to ask whether we will ever again see another economic El Dorado, or even get back to the average growth rates we experienced throughout the long twentieth century.

5.

So, then, what is my overall impression of the book?

DeLong supposedly offers us a "grand narrative," but the book doesn't seem to have any kind of central driving philosophy at its core—it reads like the "one damn thing after another" school of history. The interpretations given for these big economic events is the parochial, orthodox view, with little novel or original insight. If you don't already know the conventional economic explanations for, say, German hyperinflation or the Great Depression, then this might still be worthwhile. However, there are few fresh insights into these phenomena. The book suffers from being in a zone where, if you don't know much about economics, the explanations might be a tad hard to follow, but if you do, then the explanations are too simplistic.

You won't gain much perspective from alternate schools of thought like Marxism, environmental economics, MMT, or other schools. That's not necessarily bad, but it is limiting. Don't expect a critique of things like planned obsolescence or artificial scarcity. Don't expect a critique of infinite growth or environmental externalities. Don’t expect a discussion about class warfare. While DeLong discusses some of these events in his chapter, "Democratizing the Global North" (chapter 3), he doesn’t say much about the role these events played in securing the broadly shared prosperity enjoyed by the public after 1870, despite this being a central thesis of the book. Like most orthodox economists, he simply assumes that broadly shared prosperity resulting from economic growth and technological innovation is a given, rather than something that must be fought for and demanded by every generation lest it be monopolized by the rich and powerful, or even used to oppress us.

Still, I think DeLong’s long twentieth century is a good framework for thinking about history, and his focus on the crucial role economics played during this period is sorely needed and lacking in most conventional histories which focus mainly on political, social, or military affairs. It also puts this historical period into perspective by taking the “long view” of human history, something most economists fail to do.

In giving us such a “grand narrative” the book necessarily suffers because, as DeLong himself acknowledges, entire books have been written about these topics, so there is no way to discuss these events in anything more than in a cursory fashion, even confining ourselves to just economics. At a whopping 535 pages (although fairly short pages), I can only give the most superficial summary here, leaving a ton of fascinating information out. I advise people to give the book a read, especially the early chapters where he lays out his main thesis.