Empire and Globalization

By Johnny Fulfer

Just weeks after the American battleship U.S.S. Maine exploded in the Havana harbor, president William McKinley declared war with Spain, which gained the approval of Congress on April 20, 1898. For nearly four months, the United States fought Spain in the Caribbean where Theodore Roosevelt and the Rough Riders gained national fame in the Battle of San Juan Hill, and in the Pacific, where Commodore George Dewey gained recognition for taking Manila Bay. After what Secretary of State John Hay called a “splendid little war,” the United States annexed Puerto Rico, Guam, and the Philippines, while also securing control over Cuba. In 1936, historian Samuel Flagg Bemis called this experience a “great aberration” from the steady progress of American principles, while more recent historians take a more critical view, viewing this experience as the beginning of an American empire.[1]

Historians have acknowledged a diverse range of factors contributing to American imperialism in the late 19th and early 20th centuries, varying from formal territorial acquisition to informal cultural and commercial expansion. Historians in the Wisconsin School of U.S. Diplomatic History, beginning with William Appleman Williams and Walter LaFeber, have argued that the rising influence of the Industrial Revolution created an ideological consensus between U.S. policymakers and the business community in the 1890s.[2]

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Milton Friedman: Apostle of the Free Market

AFTER THE AUSTRIAN ECONOMIST Friedrich Hayek, Milton Friedman was perhaps the most influential advocate of free-market capitalism in the Cold War era. Educated at the University of Chicago under Frank Knight, Jacob Viner, and Henry Simons, Freidman pioneered a far-right perspective—not conservative or libertarian—but a unique “market outlook” that gained a wide audience in the United States between the 1950s and 1980s. While Knight and Viner sought to distance themselves from national politics, often criticizing colleagues who used academic credentials to support political issues, Friedman embraced his celebrity (see Angus Burgin’s excellent book, The Great Persuasion).

As the “prophet of the free market,” Robert Skidelsky writes, Friedman advocated drastic reductions of taxes, regulation, and government involvement in the economy, playing a central role in the shift in mainstream political economy from liberal Keynesianism to free-market neoliberalism. Propelled by the anti-communist movement in the postwar era, he pushed the conservative movement further right (see Kim Phillips-Fein’s great book Invisible Hands). Along with the earlier generation of free-market economists Friedrich Hayek and Ludwig von Mises, Friedman played an important role in shifting the pendulum of truth about freedom toward the self-regulating power of the market—a rationality of freedom that merged with perceptions of democracy.

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Economics as a science?

ECONOMICS AS A SCIENCE?

By Johnny Fulfer

Illustration by Heske van Doornen.

Is economics a science? Could it be? Should it be? The debate is as alive today as it was in the early 20th century. This article reviews some of the key arguments in the discussion and provides a helpful backdrop against which to rethink the purpose of economics today.

In 1906, the influential American Irving Fisher argued that economics is no less scientific than physics or biology—all three aim to discover “scientific laws.” While they may not always be represented in reality, Fisher argued that scientific laws are fundamental truths in nature. Newton’s first law of motion, for instance, cannot be observed. Only if certain circumstances were met, a body would move uniformly in a straight line. Fisher concluded that the same holds true for economics.

But not everyone agreed. The discipline of economics was charged with unsound methods. Specifically, economists were accused of using the deductive method without the necessary level of precision. Jacob Hollander addressed the charges in a 1916 essay, arguing that scientific inquiry involves uniformity and sequence. Progression in science relies on the formation of hypotheses, which may at some point become ‘laws.’ Observation and inference are the first steps toward the creation hypotheses. The final step in the scientific process is verification, which is required before we move from theory to law. Without verification, he argued, “speculation is an intellectual gymnastic, not a scientific process.”

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Democracy in Chains

NEOLIBERALISM IN ACTION

By Johnny Fulfer

Illustration by Heske van Doornen.

How did a network of libertarian influencers mobilize ideas and resources to restructure American society to reflect their radical “free market” perspectives? In her recent book, Democracy in Chains: The Deep History of The Radical Right’s Stealth Plan for America, historian Nancy MacLean strives to provide an answer to this question.

MacLean views the radical right as a group of “true believers” in freedom, an idea they associate with market freedom, aiming to remove public services and replace them with privatized schools and prisons that respond the market, not voters within a democracy. In doing so, MacLean argues that the radical right will eventually reduce freedom for the majority while privileging the propertied minority. The more power the propertied minority has, the less democratic society becomes. The ultimate target of the radical right, which has gained control of the modern Republican Party, is to change American society to privilege capitalism over democracy even more than it does now.

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ECONOMIC HISTORY AND THE HISTORY OF CAPITALISM

By Johnny Fulfer

THE NEW HISTORY OF CAPITALISM

The study of economic history emerged as an important area of inquiry after the Great Depression, when scholars began to examine the market system and the ways in which it emerged as a dominant economic system in Western society. Economic history remained primarily within economic departments until the early 2000s, when historians began to reconsider the nature of capitalism, a new field that examines the political nature of the markets system. “Its effort is to find new ways of exploring how institutions, political movements, and legal formations like debt, contract, and property come into being and inflect material and ideological life,” as historians Sven Beckert and Christine Desan write in their 2018 book, American Capitalism: New Histories.

Historians of the new history of capitalism have produced a wide range of scholarship, such as Walter Johnson’s 2013 book River of Dark Dreams: Slavery and Empire in the Cotton Kingdom and Edward Baptist’s 2014 book The Half Has Never Been Told: Slavery and the Making of American Capitalism that examine the role of slavery and the enduring legacy of racism in American capitalism. Still, historians face significant barriers in their effort to examine the American economy and the ways in which it has been influenced and legitimized by neoclassical economics, a highly mathematical field that has come to be associated with science.

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Financial Instability and the Panic of 1857

By Johnny Fulfer

FINANCE WAS NOT WELL UNDERSTOOD in the United States in the 1850s, and the notion of financial crises even less so. Many Americans viewed banking as a form of usury, while others leveraged the power of credit to seek their fortune in the American West. Antebellum finance was centered around the expansion of railroads, which led to the construction of 24,476 miles of rail by July 1, 1857. Thousands of Americans moved West in search of their fortune in the 1850s, an experience that coincided with speculation in land and railroad securities.

Investors took risks and directed their money—which was often borrowed—toward investments they expected to make the greatest return. Expected profits were dependent on the perceptions investors held of the broader economic landscape and how that environment would be in the future. Expectations were volatile, and investors often used economic indicators such as the growth rate of settlement in regions such as Kansas, to direct their money. Eventually, the rising level of risk would lead banks to contract loans and lead to a financial crisis.

The Panic of 1857 was not the first financial crisis in American history, but it was the first to spread rapidly throughout the country. News of the financial crisis that occurred just 20 years prior, in 1837, could only travel as fast as the postal service. The invention of the telegraph by Samuel F.B. Morse in 1844, made the news of the Panic of 1857 available to Americans around the country almost immediately. The Panic of 1857 was a confidence crisis that involved the failure of Ohio Life Insurance and Trust Company (Ohio Life), the end of the Crimean War, and excessive speculation in securities. This involved investors on both sides of the Atlantic, which produced uncertainty the American economy.

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