How Profit Became the Measure of Progress

Shortly after the Panic of 1837, American journalist Freeman Hunt published the first edition of Hunt’s Merchants’ Magazine, a monthly periodical that aimed to provide the American business community with a wide range of information, from population growth in promising American cities to movements in railroad securities (p. 130). As historian Eli Cook shows in his prize winning book, The Pricing of Progress: Economic Indicators and the Capitalization of American Life, Hunt’s was one of the earliest efforts to transform the American landscape into information that could be leveraged and capitalized.

Hunt’s sought to not only transform the American landscape, but also to create a “science of business” which could indicate which plots of land, for instance, would yield the most profit. The value of land was associated with population growth in early American cities — those that were growing the fastest would offer the highest return on investment, making this monthly periodical one of the most treasured tools for the American investor class.

Shaped by the desire to gauge society through its ability to generate profit, economic indicators such as Hunt’s served as “quantified ideological carriers,” Cook writes, “injecting certain political views, gender roles, racial prejudices, class interests, or cultural preferences” (p. 15). The more that economic indicators like Hunt’s were used in the United States, the greater the influence these ideological underpinnings had in American society. As these economic indicators permeated American culture, it normalized the perception that profit was progress.

American policymakers embraced this “pricing of progress,” as Cook demonstrates, viewing private profit with public good and capital gains with national progress. Organizations such as the Massachusetts Bureau of Labor Statistics, the Rockefeller Foundation, and economists such as Irving Fisher, leveraged their influence to create an orthodox view of economic ‘science’ that legitimized this relationship between profit and progress. Robber barons such as John D. Rockefeller recognized the value of this new science. The task of American economists for Rockefeller and his contemporaries was not to help them make important decisions, it was to use their perceived scientific discipline to “serve as a mediator that transformed private ‘interests’ into ‘exact’ facts” (p. 257).

Seemingly scientific and ‘apolitical’ economic indicators facilitated the emergence of this new intellectual normality, playing a central role in the emergence of American capitalism. Rather than defining capitalism as the expansion of commodities and market relations, Cook argues that capitalization is the central feature of modern capitalism. ¹Capitalization is the process in which everything from natural resources, education, human beings, to the modern nation-state, “are transformed (or ‘capitalized’) into income-generating assets, valued and allocated in accordance with their capacity to make money and yield profitable returns” (p. 5).

Framing the World as Profit or Loss

Only by transforming nations, natural resources, and human beings into financial assets — a process Cook calls the “capitalization of everyday American life” — can they be measured through the binary lens of profit or loss. The idea of progress then becomes increasing the monetary value of these investments, an experience that marginalizes abstract ideas such as social justice and the nuances of life.

Perhaps the most famous expression of this “pricing of progress” is the Gross Domestic Product (GDP), the most widely used economic indicator in the world. With the support of the National Bureau of Economic Research, American economist Simon Kuznets created the GDP in the midst of the Great Depression. Since its inception, the GDP has become the central measure of national income (and thus progress) within a nation. Building on the work of Kuznetz, macroeconomists have used the GDP to determine rates of economic growth that are normal or abnormal, while also creating new categories that divide the world into developed and developing nations.

Just as problematic as the GDP is the GDP per capita, which divides total income of a nation (its GDP) by the total population, creating an average income for people within a certain nation. The higher the GDP per capita, it is believed, the higher the nation’s standard of living. What the GDP per capita does, however, is obscure the level of inequality in a nation. At the end of 2018, for instance, the U.S. GDP was $20.89 trillion while the population was 327.2 million, making the GDP per capita $63,844.74. While this seems pretty damn high, it obscures the fact that over 32 percent of the labor force make less than half of this, while 12.3 percent of the US population (39.7 million people) live in poverty and 552,830 people are homeless.

Eli Cook’s book is important because it demonstrates how economic indicators disseminated a market mentality that marginalized ideas of equality, justice, and thoughtful citizenship, while also revealing the underlying power relations that are trafficked within this governing rationality. Economic indicators have become the central measure of nearly every aspect of American society, continually reinforcing the idea that economic growth is synonymous with social progress, a process that reproduces capitalist values that sustain inequality. “Many Americans today see not only themselves as an investment,” Cook writes, “but their nation as well” (p. 265). This investmentality has led many Americans to believe that businessmen with a track record of making profit is a more important indicator for public leadership than a track record of community service.

The Pricing of Progress is easily one of the best books that I’ve read, and it should definitely be required reading for anyone with an interest in the history of American capitalism, the history of economic thought, neoliberalism, and American history generally.

About the Author: Johnny Fulfer received his M.A. in American History from the University of South Florida, and his B.S. in Economics and B.S. in History from Eastern Oregon University. Johnny is interested in U.S. history during the Gilded Age and Progressive Era, monetary history, political economy, the history of economic thought, and the history of capitalism. @Johnny_D_Fulfer.

1. The materialist view of capitalism assumes that capital is valuable because of the innate value of the material it is held in. Like Cook, historian Jonathan Levy disagrees, arguing instead that capitalization (the perceived capacity to generate profit) was central to the emergence of American capitalism. See, Jonathan Levy, “Capital as Process and the History of Capitalism,” Business History Review 91, no. 3 (2017): 483.