Seeing the Second Bank of the United States (BUS) as an instrument of the wealthy elites, president Andrew Jackson vetoed its recharter in the summer of 1832. It was a controversial decision that sparked an animated conflict between Jackson and Nicholas Biddle, the president of the Bank.

What became known as “Bank War” (1831-1835) became one of the most significant national controversies of the era, ushering in the second party system which formed the country’s political structure for next two decades. The way in which Jackson handled the Bank War also expanded the power of the presidency.

Background to the Bank War

First chartered in 1816, the Second Bank of the United States replaced Alexander Hamilton’s First BUS which expired upon the termination of its charter in 1811. After the War of 1812, which demonstrated the value of a central banking authority to manage the nation’s finances, the Second BUS served as the government’s fiscal agent. Along with collecting payments due to the government, it was also responsible for dispersing government funds to cover expenses, such as pension payments to veterans. The BUS, therefore, became the central depository for government funds. It was responsible for establishing a uniform currency and reigning in the behavior of state banks that over-issued their bank notes and engaged in questionable lending policies.

While the BUS’s business centered around the government, it wasn’t solely a government enterprise. It was also a private commercial venture with the goal, like all commercial ventures, to generate profit for its investors. This mixing of public responsibility with private gain, however, did not sit well with Americans who already distrusted bankers. They were especially anxious during the Bank’s early years, when it engaged in the wildcat banking practices it was created to regulate. For many Americans, the Panic of 1819 was the last straw. Even though the BUS didn’t cause the crisis, many people still viewed it as a contributing factor.

Over the following years, the Bank took on a different image under the leadership of Nicholas Biddle, who took over as its president in 1823. Under Biddle, the BUS was able to fulfill its mission of providing a safe and uniform national currency while driving most state bank currencies out of circulation. Biddle also restored the regulatory function of the BUS, effectively keeping state bank lending under control. By the time Andrew Jackson assumed the presidency in 1829, the Second Bank of the United States had become more popular among a large segment of the population, especially business-oriented northerners and western land speculators who benefited from ready access to credit.

The President vs. The Bank

Although Jackson disliked the BUS, it was not clear upon taking office that he aimed to destroy it. Jackson’s disdain for the Bank can be attributed to several factors. For one, he sustained financial losses more than once due to paper money depreciation, leading to a general distrust of paper money and the banks that promoted its use. Second, Jackson grew fearful of the preponderance of British investors in BUS stock, worrying that British influence over the Bank, and by extension the nation’s economic system, would restore the crown’s authority over its former colonies. Lastly, and most importantly, Jackson envisioned an egalitarian society in which all (white men) had the opportunity to succeed on the sweat of their own brow; the BUS bestowed special privileges on a small, and in the president’s estimation, undeserving group who contributed nothing of material benefit to society. The BUS wielded far too much power and was therefore a threat to the peoples’ liberties and Jackson’s own authority. When Jackson heard rumors that the Bank had leveraged its vast resources to defeat him and his supporters in the 1828 elections, Jackson turned his attention to the Second Bank and its president, Nicholas Biddle.

Waging war against an institution as powerful as the BUS would not be easy. Jackson needed a band of loyal soldiers to take the monster Bank head on. While most of his cabinet members were generally friendly to the Second Bank, his attorney general, Roger B. Taney, was an avowed opponent. To fight the Bank, Jackson mostly relied on the informal group of advisors and allies who helped him shape public policy known as the Kitchen Cabinet. These men, most conspicuously newspaper editors Francis P. Blair and Amos Kendall, worked closely with Jackson and Taney to craft anti-Bank messages for public consumption.

Jackson’s official news organ, the Washington Globe — established in large part because of the Bank War — was critical in disseminating the administration’s anti-Bank stance to garner public support. Jackson also needed congressional backing to effectively fight the BUS, counting on men such as James K. Polk, C.C. Cambreleng, and Andrew Stevenson in the House and Thomas Hart Benton and Isaac Hill in the Senate to push the anti-Bank platform on the national stage. Jackson also received aid from those not necessarily connected with his administration, most notably William M. Gouge, whose anti-bank manifesto published in 1833 made perhaps the most convincing argument for abolishing the central banking system.

The Commencement of Hostilities

Trouble for Biddle and the BUS began almost immediately after Jackson took office. High level members of Jackson’s administration pressed Biddle to investigate charges of electioneering by various BUS branches, notably Louisville, Portsmouth and New Orleans, but the sensitive Biddle was far from cooperative. Unwilling to accept his bank was guilty of wrongdoing, Biddle conducted sham investigations to placate the administration. For Jackson, Biddle’s evasiveness only confirmed his preconception that the BUS was a corrupt monster meddling in politics where it did not belong and controlled by its equally corrupt president.

What would later be remembered as the Bank War began with Jackson’s first annual message to Congress, delivered in December 1829. The Bank’s charter was set to expire in 1836 but by the time Jackson gave his first annual address, the question of recharter had crept into the public mind. Aware of this, Jackson stressed the importance of considering if the BUS should be rechartered along with the observation that, “[b]oth the constitutionality and the expediency of the law creating this Bank are well questioned by a large portion of our fellow citizens; and it must be admitted by all that it has failed in the great end of establishing a uniform and sound currency.”

This inaccurate assessment must have disappointed BUS supporters, while Biddle took action to rectify the false perception. Biddle enlisted the help of Samuel Smith, the pro-Bank Jacksonian chair of the Senate Finance Committee, to launch an investigation into the president’s claims. The resulting report (ghost written by Biddle himself) maintained that the BUS was both constitutional and that it successfully established a sound and uniform currency. The House, through its Ways and Means Committee chaired by George McDuffie, submitted a similar report confirming the Bank’s utility. Biddle had both laudatory reports printed and circulated widely on the Bank’s dime, demonstrating that he would not allow Jackson to disparage his Bank without firing back himself.

As a further safeguard, Biddle sought to ingratiate himself to the president by building relationships with the pro-Bank members of Jackson’s inner circle. This effort seemed effective, as Biddle received positive assurances from William Lewis and Josiah Nichol, two Jackson confidantes, that the Bank would be rechartered if Biddle made the concessions the president sought. Optimism for peace was tempered however, when Jackson’s expressed the same misgivings about the BUS in his second annual address. In response, Biddle continued his public relations campaign in the newspapers, paying editors to print pro-Bank and in some cases, anti-administration articles. Biddle also secured loans from the BUS for influential editors and Congressmen, which essentially confirmed Jackson’s charges that the Bank was interfering in politics.

Biddle received good news in the spring of 1831, when the shakeup to Jackson’s cabinet led BUS supporter, Louis McLane, to become the new Treasury. As the presidential election was looming, Biddle and the new secretary met to discuss matters. McLane made clear that Jackson did not want the Bank to be an election issue as it could cut into his margin of victory. An understanding appeared to have been reached — Jackson would allow the BUS to be rechartered with the proper modifications if Biddle waited to request the recharter until after the election. When Jackson gave his third annual address, he echoed the same complaints from the previous two messages but added that the Bank’s fate ultimately lay in the hands of Congress.

For Biddle though, this was not enough. He was led to believe that Jackson would come out in support of the BUS, a fairly foolish assumption given the president’s long held position regarding the Bank. He now worried that the dissident voices among Jackson’s intimates, such as Taney and Kendall, would thwart any perceived deal with McLane. Consequently, with the support of prominent National Republicans, notably presidential candidate Henry Clay, as well as members of the Bank’s board of directors, Biddle submitted to a bank-friendly Congress an application for recharter on January 6, 1832. If Jackson signed the recharter bill (when it inevitably passed), then Biddle and the National Republicans would have their Bank. If he vetoed it, the BUS would become the issue of the election and maybe its popularity, Biddle hoped, would be enough to topple the wildly popular president.

The Pitched Battle – Veto and the Election of 1832

The recharter bill passed in the House on July 3, almost a month after the Senate. Seven days later, on July 10, 1832, Andrew Jackson issued perhaps the most consequential presidential veto in American history. In his Veto Message, Jackson made some incredibly provocative claims. For one, past presidents had only used the veto power to strike down bills they deemed constitutionally questionable. The Bank veto was different. Jackson attacked the BUS for exerting its financial resources to “bend the acts of government to their selfish purposes.” Such language was included for the purpose of stirring up class division — by justifying the veto as standing up against the moneyed aristocracy on behalf of the “humble members of society” who could not access the artificial privileges granted by the BUS, Jackson established the president as the mouthpiece and protector of the people. The days that followed in Congress were consumed by raucous debate over the audacious message.

The presidential election that followed Jackson’s veto was a disaster for the Bank and its supporters. Biddle tried to influence the election by spending considerable amounts money to print pro-Bank articles in hopes of swaying public opinion in its favor. Indeed, one estimate puts the Bank’s spending on printing between 1831-1832 at $48,287 (compared to $9,982 over the previous two years before election season got underway), not to mention the tens of thousands spent in what was labeled, “miscellaneous expenses.” These spending figures brought forth harsh charges by the Jacksonians that the BUS had engaged in electioneering thus confirming what Jackson had been saying about the Bank for years. Anti-Jacksonians argued that these expenses were purely for self-defense and that any institution under such heavy attack had every right to defend itself. In fact, what Biddle had conducted in trying to secure recharter was perhaps the first national lobby effort in the country’s history. Regardless, Jackson won the election, defeating Clay by an electoral margin of 219 to 49 with Anti-Mason candidate William Wirt picking up seven votes and John Floyd of Virginia capturing South Carolina’s 11 protest votes. Jackson’s popular margin of victory did shrink from 1828, however, leading to speculation that the Bank issue had siphoned away some of his support.

Dirty Fighting – The Removal of the Deposits

To Jackson, his sweeping electoral victory was a clear mandate for him to eliminate the BUS. However, merely letting its charter expire was no longer enough for the vindictive president. Instead, he would kill the Bank immediately. To do this, Jackson decided to remove the government deposits from its vaults, which was some $9 million.

According to section sixteen of the BUS charter, government deposits could be removed only by the order of the Secretary of the Treasury. Louis McLane proved unwilling to issue the order, believing the BUS was the safest place for the government funds. In June, 1833, Jackson promptly reassigned McLane to head the State Department and replaced him with William J. Duane, a known anti-Bank man from Philadelphia. But to Jackson’s surprise, his new appointee was no more willing to remove the deposits, calling the move “arbitrary and needless.” Undeterred, on September 18, 1833, Jackson presented to his cabinet with a paper enumerating his reasons for removing the deposits from the BUS and, perhaps to assuage Duane, assumed all responsibility for the decision. Two days later, the paper appeared in the Globe, thus cluing in the public to the president’s designs.

When Duane again refused to issue the removal, Jackson replaced him with Attorney General Roger Taney, whose animosity of the BUS exceeded that of Jackson himself. Three days after the appointment (which required no Senate confirmation).As the new Secretary of Treasury, Taney issued the order that government funds would no longer be deposited in BUS vaults and would instead be deposited in state banks chosen by the administration. After the Bank was stripped of its capital and divested from its role as the government’s fiscal agent, the Bank was close to collapsing.

Two Front War – The Panic Session

The threat of and actual removal of the deposits thrust the Bank War into a two-front engagement, one political and one economic. The political front was fought largely in Congress, where the members of the 23^rd Congress were greeted within days of convening with Taney’s reasons for removing the deposits. This kicked off what became known as the Panic Session in the House and Senate. The most dramatic conflicts occurred in the Senate, where anti-Jackson policymakers held a slight majority. Still stinging from his embarrassing electoral defeat, Henry Clay submitted two resolutions for debate, one censuring Jackson for taking an unconstitutional hold over the Treasury and one denouncing Taney’s reasoning for removing the deposits as “unsatisfactory and insufficient.”

The three-month debate that followed became more than just an alternating defense and attack of the Bank; it became the most important debate over the reach of executive authority and separation of power to occur since the early days of the Republic. Anti-Jacksonians flooded the session with speeches arguing that Jackson abused both his veto power and power to remove executive officers. Additionally, they argued that the Treasury department was beholden to Congress, not the president, and therefore any attempt by Jackson to meddle in the nation’s finances was a usurpation of legislative authority. Jacksonians argued that Clay’s resolutions were a defacto impeachment and that Jackson had not seized any power not clearly granted to him by the Constitution and the law. Three months into the session, the Senate voted in favor of both of Clay’s resolutions—the president had been censured. Jackson promptly responded to the censure with a lengthy protest message in which he shockingly declared himself “the direct representative of the American people.” Establishing such a role for the president became one of the most lasting impacts of the Bank War.

While anti-Jacksonians in the Senate earned largely symbolic wins, the president’s allies in the pro-Jackson House scored their own victories. The president enjoyed a friendly majority in the lower house bolstered by the presence of one his strongest supporters, James K. Polk, as chair of the Ways and Means Committee. After an initial blunder in which Polk unwittingly allowed Taney’s report to be debated in front of the whole chamber rather than within the confines of the Jackson-friendly committee, the future president regained his footing by steering through Congress four anti-BUS resolutions including an overwhelmingly bipartisan measure to investigate the Bank’s illicit behavior.

Meanwhile, Biddle opened the economic front by manufacturing a financial crisis to force a recharter bill and the two-thirds congressional support needed to override a veto. Even before Taney issued his order, Biddle, through contracting credit and calling in loans, took roughly $6 million out of circulation. Shortly after the removal order, Biddle squeezed harder, cutting back loans by an additional $5.5 million before the end of the year. Initially, the contraction worked. Petitions flooded both the House and Senate, imploring that the deposits be restored. Additionally, businessmen hit hard by the contraction went to Jackson with hat in hand begging for relief.

The wily president skillfully flipped the script, telling the frustrated callers to “[g]o to Nicholas Biddle…Biddle has all the money.” The tactic worked. As Biddle continued the monetary squeeze, reducing business by over $18 million in five months (roughly double the figure lost by the removal order), the public blame shifted to Chestnut Street. The worst for Biddle came when the pro-Bank governors from Pennsylvania and New York, George Wolf and William L. Marcy broke from the BUS over the excessive curtailment. By May, Biddle perhaps realized he had gone too far and reversed course. But it was too late, public support for BUS had waned and with it, any chance for recharter. Biddle’s gamble had failed.

War’s End – The Impact of the Bank War

Without government funds and hope for recovering them lost, the BUS lived out its remaining days quietly. When the Bank’s charter expired in March 1836, Biddle tried to keep it alive by successfully incorporating in the state of Pennsylvania but had to pay a hefty sum to do so. Biddle invested heavily in cotton but when the market went south in 1837, the Bank all but collapsed. Biddle stepped down as president in 1839 and the Bank closed in 1841.Biddle died just three years later, in 1844.

Historians continue to debate the economic impact of the Bank War. By dissolving the BUS, the Jacksonians were forced to find a replacement which they did in deposit banking. Rather than deposit government funds in the BUS and its branches, the administration would choose various state banks, derisively referred to as “pet banks” due to the political considerations that went into choosing them. The deposit banking experiment did not go smoothly and by 1837, the country once again found itself in the grips of a depression. Recent scholarship has downplayed the Bank War’s impact on the nation’s economy, arguing that a multitude of external forces acting on the United States’ finances were the real factors that crashed the economy in the late 1830s. Hindsight notwithstanding, much blame at the time for the economic woes were heaped upon Jackson and although his policies did not directly cause the panic, the perception that they did haunted his successor, Martin Van Buren, contributing to his crushing defeat in 1840.

The clearest impact of the Bank War was on the nation’s politics. The war finally gave Jackson’s opponents — former National Republicans, southern States’ Righters, wayward Democrats, strict constructionists, and Anti-Masons — an issue around which they could coalesce and served as the foundation for the creation of the anti-Jackson, Whig party. At the same time, the Bank War weeded out reluctant members of the president’s camp, leaving behind a devoted collection of Jackson followers that only the slavery question could rip asunder. These two parties would vie for power over the next two decades and formed the political backdrop that would plunge the country headlong into civil war.

Furthermore, the manner in which Jackson waged his war against the BUS forever bolstered the power of the president. The veto of the bank bill meant that Congress would now have to consider presidential will when crafting laws. Also, by viewing his reelection as a mandate to kill the Bank, Jackson formed a link between the peoples’ votes and presidential action that did not exist previously. The vast power presidents wield today is in part due to the political battles of the 1830s and those who have and will assume the office and enjoy all the power that comes with it have Jackson and his Bank War to thank.

About the Author: Michael Trapani has been teaching American History in central New Jersey for over fifteen years. His book, Panic in the Senate: The Fight Over the Second Bank of the United States and the American Presidency, will be available in spring 2021.

Suggested Reading

Campbell, Stephen W. The Bank War and the Partisan Press: Newspapers, Financial Institutions, and the Post Office in Jacksonian America. Lawrence, KS: University of Kansas Press, 2019.

Campbell, Steven W. “Funding the Bank War: Nicholas Biddle and the Public Relations Campaign to Recharter the Second Bank of the U.S., 1828-1832.” American Nineteenth Century History, 17:3, (2016), 273-299.

Catterall, Ralph C. “The Charges Against the Bank,” in Jackson Versus Biddle: The Struggle Over the Second Bank of the United States, ed. by George Rogers Taylor. Boston: DC Heath and Company, 1949, 36-53.

Catterall, Ralph C. The Second Bank of the United States. Chicago: University of Chicago Press, 1902.

Hammond, Bray. Banks and Politics in America: From the Revolution to the Civil War. Princeton, NJ: Princeton University Press, 1957.

Howe, Daniel Walker. What Hath God Wrought: The Transformation of America, 1815-1848. New York: Oxford University Press, 2007.

Kahan, Paul. The Bank War: Andrew Jackson, Nicholas Biddle, and the Fight for American Finance. Yardley, PA: Westholme Publishing, 2016.

Knodell, Jane. “Profit and duty in the Second Bank of the United States’ exchange operations.” Financial History Review, 10, (2003), 5-30.

Knodell, Jane. “Rethinking the Jacksonian Economy: The Impact of the 1832 Bank Veto on Commercial Banking.” Journal of Economic History 66, no. 3 (September 2006): 541-574.

Redlich, Fritz. Molding of American Banking: Men and Ideas. New York: Hafner Publishing Company, 1951.

Remini, Robert V. Andrew Jackson and the Bank War: A Study in the Growth of Presidential Power. New York: W.W Norton & Company Inc., 1967.

Schlesinger, Jr., Arthur. The Age of Jackson. Boston: Little, Brown and Company, 1945.

Temin, Peter. The Jacksonian Economy. New York: W.W. Norton & Company, 1969.

Trapani, Michael J. Panic in the Senate: The Fight Over the Second Bank of the United States and the American Presidency. New York: Algora Publishing, 2021.

Watson, Harry L. Liberty and Power: The Politics of Jacksonian America. New York: Hill and Wang, 2006.

Wilentz, Sean. The Rise of American Democracy: Jefferson to Lincoln. New York: W.W. Norton & Company, 2005.

Huple was a good pilot, but he was just a kid, so Dobbs, who was a worse pilot, snatched the controls. Dobb knew he wasn’t fit to fly a plane, and he even told his superiors so. If only they had listened. Soon after Dobbs took over and dropped their bombs over Avignon, the plane flipped and dove. “Oh, God! Oh, God! Oh, God!” Yossarian cried out, as the plane dove deeper. There was a bump and a loud clunk when the plane reached the ground. But “there was no blood,” as Joseph Heller writes in his 1961 satire, Catch-22.

This scene of a plane crash begins one of Heller’s chapters on Major Milo Minderbinder, the entrepreneurial mayor of Malta, who is introduced soon after Dobbs, Huple, and Yossarian climb out of the wreckage and mysteriously find their way back to their military base. As soon as they do, Dobbs reveals his plot to kill Colonel Cathcart, who had just raised the number of missions bombardiers must fly, from fifty-five to sixty. “I’ve got it all worked out,” Dobbs tells Yossarian.

Each bombardier in Heller’s novel is required to fly a set number of missions before they can go home, but Colonel Cathcart kept raising the number. Yossarian, who was all too familiar with the colonel’s menacing tendency, was always trying to get out of the whole mess. He would plead with Doc Daneeka, the camp doctor, to ground him, explaining that he was insane. Anyone who was insane didn’t have to continue flying missions.

But for Doc Daneeka, who was the expert at identifying insanity, the act of requesting to be grounded served as evidence that Yossarian was in fact sane. Doc Daneeka had left a profitable medical practice back in the states to serve in the war, and he often wondered why everyone else complained so much. “You think you’ve got it bad,” he continually asks, “what about me?”1

What Heller implies in this logical conundrum was that only someone like Doc Daneeka could identify the difference between sanity and insanity. While one would assume the generals in the novel have the most authority, Heller creates subtle and implicit questions about who has the authority in the novel and where the power is. The generals? Was it Colonel Cathcart, who kept raising the number of missions to impress the generals? Or was it Doc Daneeka, who had the power to define sanity itself?

To a surprising degree, this seemingly inescapable logic that saturates Heller’s satire reflects the underlying power dynamics of the modern economy. Power, in the modern world, is less about who commands the most resources and more about who controls the categories that shape our lives. Who shapes the meaning of creditworthy, work experience, unemployment, investment grade, functional, disabled, or productive?

It’s not a cabal of elites pulling the strings; it’s a fragmented network of seemingly sound minds carrying out a range of faceless rules and practices that have become so routine that few pause to question it. And the common response to those curious enough to raise an eyebrow and wonder about the legitimacy of the edifice is both timeless and effective: that’s just how the world works. Those who persist in their effort to expose any degree of absurdity in the system may eventually find themselves outside the category of rational actor—and therefore unqualified to have a voice.

The perception that the left has not merely tolerated but somehow cherished disorder, that progressive intellectuals have a sentimental attachment to criminality obscured by the language of racial justice, is as old as Richard Nixon and considerably less subtle. What Noah Smith has done is run it through the Substack version of peer review and returned it laundered, pressed, and ready for readers who would never admit to finding Tucker Carlson persuasive but find themselves, by the final paragraph, persuaded of roughly the same things. For Smith, this is not an isolated excursion. He has spent the past several years publicly accounting for what he sees as progressivism’s failures (on immigration, on crime, on public disorder) and the accounting always arrives at the same destination: the left was too permissive, too ideological, insufficiently serious about the concerns of ordinary people who simply want to walk to the subway without being disturbed. The crime post is the most elaborately documented version of this argument.

America, Smith argues, is not meaningfully worse than peer nations on healthcare, inequality, housing, or life expectancy. It is, however, catastrophically worse on crime. Crime, consequently, is what explains the subway disorder, the suburban sprawl, the transit deserts, the housing dysfunction, the general ambient dread of American urban life. Progressives who resist this conclusion are not merely wrong; they are, in their tolerance of public squalor, urban disorderliness, and their reflexive accusations of racism against anyone who notices it, actively complicit in the suffering they purport to oppose.

From the first chart to the closing paragraph, the argument is constructed from fabricated data, misappropriated statistics, reversed causal patterns, and a comparator pool carefully selected to make the conclusion inevitable. We will examine each of these in turn. But the individual lapses are less interesting than what they have in common, which is this: every single one of them works to place the causes of American urban decline somewhere other than in the political and economic arrangements that produced it. Crime descends on the American city like a biblical plague; suburbanization follows, transit withers, housing grows scarce. The people responsible for this sequence are the progressives who declined to prosecute enough turnstile-jumpers.

Smith would like you to know, naturally, that he is a rational arbiter of the facts before him. The tweets he reproduces from X are there to establish this: here is the typical leftist saying something utterly deranged about public urination, here is the ACLU doing its characteristic impression of a movement that has lost the plot, here is the progressive coalition once again mistaking a mugger for a victim of structural oppression. Smith is not like these people. He follows the evidence. He cites the occasional peer-reviewed literature. He reads the regressions (presumably). When he tells you that progressive prosecutors “really do prosecute crime less” but that “evidence of their impact on actual crime rates is mixed,” he is performing the intellectual honesty of a man who has already decided what he thinks, generously conceding the weakest possible version of the counterargument on his way to ignoring it.

Strip away the citations, the cherry picked facts, and what remains is a picture of social order so fundamentally Burkean that Edmund Burke himself might have found it a touch on the nose. If Burke, that is, had read too much Gary Becker and become utterly and thoroughly convinced by hyper rational choice theory.1 One of Smith’s main premises is that existing arrangements are basically sound. The pathologies visible in American cities are not expressions of those arrangements but disturbances to them, arriving from outside the sacred walls like the Huns outside Rome. The people most responsible for making things worse are the reformers: the prosecutors who decline to prosecute, the advocates who complicate the simple equation of order with justice. History, in this account, is not the record of decisions that produced the present. It is a neutral backdrop against which bad ideas periodically make things worse. And for good measure, Smith pulls out the most ancient tactic of liberal democracy and most powerful of American mythoi: the idea that in a free and democratic society, the predicaments that people find themselves in are fundamentally the result of their own choices.

The operation Smith performs on the American suburban order is identical to the one Burke performed on the English constitutional order: he transforms it from a historical artifact into nature itself, and then accuses anyone who would reform it of disrespecting the natural order. The urban sprawl, the car dependency, the transit deserts, the racial segregation baked into mortgage maps and highway routes; these are not, in Smith’s telling, the cumulative outcomes of federal policy, corporate lobbying, and racist covenants. This is, Smith would have it, the free operation of revealed preference: millions of Americans independently choosing, of their own sovereign will, the large automobile and the beautiful house at the end of the cul-de-sac. David Byrne spent four minutes in 1980 asking how exactly a person ends up there. Smith does not share the curiosity. The choices were made; the suburbs exist; the matter is settled. That the FHA, the highway lobby, and forty years of racially discriminatory mortgage policy were standing behind each of those choices with a firm and encouraging hand is, for Smith’s purposes, beside the point. It is a wisdom embedded in millions of individual choices that progressive reformers, armed with their abstract doctrines of racial justice and their suspicion of carceral enforcement, presume to override. And like Burke’s revolutionaries, they are not merely mistaken. Burke warned that “cabals” of reformers, emboldened by their publications and their sermons and their confidence in foreign sympathy, would “with some trouble to their country, accomplish their own destruction.” Smith’s progressives (with their bike lane proposals and their tolerance of turnstile-jumping) are Burke’s Jacobins in a lower key. The manufactured environment that actually produces crime, through concentrated poverty, spatial isolation, and the deliberate defunding of urban tax bases, becomes in Smith’s hands the innocent victim of a crime wave that progressives simply refuse to stop.

The causal story is, consequently, entirely circular. Crime causes suburbanization, which causes car dependency, which causes bad urbanism. Crime is the unmoved mover, the first cause, the thing that requires no prior explanation. Smith has made something of a career of this argument, decrying the left’s alleged tolerance of disorder and wistfully pointing to Japan as the civilization that got it right. It leads him to the remarkable claim that America’s suburbanized, car-centric urban development pattern exists “mainly due to crime,” a claim that requires blinding yourself to the historical reality of redlining, racially restrictive covenants, the Interstate Highway Act’s systematic demolition of urban neighborhoods, and the deindustrialization concentrated in Black and Latino communities. The causal pathways run in multiple directions simultaneously: federal policy produced suburbanization, which enabled white flight, which defunded urban tax bases, which degraded public services and concentrated poverty, which increased crime. Crime is not the beginning of this story. It is closer to the end. The root cause of American crime, Smith assures us, is the subject of a future post. He has written several thousand words establishing that we must take crime seriously as a causal force while declining, in those same several thousand words, to address what caused it. In the meantime, he has constructed an empirical case. It is worth examining what that case is made of.

À la Reinhart et Rogoff

Smith’s causal argument rests on a foundation he declines to examine. His empirical argument rests on something worse. In an homage that would make Reinhart and Rogoff blush (if they ever did), Smith, leveraging the capabilities of Gemini, produces a plot on homicide rates across “comparative” countries to the United States. The “astonishingly huge difference” between the United States and the rest of its “comparative” countries is its high homicide rate. Reinhart and Rogoff, it will be recalled, produced a spreadsheet error that provided the empirical foundation for a decade of European austerity policy. Their mistake was at least their own.

Using murder as the “cleanest” cross-national comparison is reasonable as far as it goes, but Smith treats the resulting fivefold gap as if it demands only a policing/disorder explanation. What he doesn’t engage is that the U.S. murder rate is substantially explained by a single variable that is genuinely exceptional in cross-national terms: gun density. The U.S. has roughly 120 firearms per 100 people; no other wealthy nation is remotely close. The problem is what Smith does not ask about it. A large body of research (Hemenway, Azrael, Miller for example) shows that assault rates in the U.S. are not dramatically higher than peer countries, but that American assaults are far more lethal because they involve firearms. The most comprehensive cross-national study to date, Rutar’s 2025 analysis of over 100 countries using panel methods robust to country-specific heterogeneity finds a consistent, statistically significant, positive relationship between gun ownership and gun homicide rates across every specification tested. A ten percent rise in civilian gun ownership is associated with roughly a three to four and a half percent increase in gun homicide. The same study finds no significant relationship between gun ownership and total homicide rates, which is consistent with partial substitution (where guns are scarce, other weapons are used) but does nothing to diminish the core point: that what distinguishes American violence is not the frequency of conflict but its lethality, and lethality is a function of what people are holding when the conflict occurs. Smith’s prescription of more policing and prosecutorial aggression speaks to neither.

The laziness of the framing, however, is dwarfed by what produced the chart (a hideous creation made in Python using matplotlib by Gemini AI) in the first place. There are multiple fabricated data points against the Wikipedia source Smith cited:

• Luxembourg: Smith/Gemini shows 1.54, actual value 0.752 (+105% inflation)

• Cyprus: Smith/Gemini shows 1.41, actual value 0.818 (+72%)

• Canada: Smith/Gemini shows 2.27, actual value 1.980 (+15%)

Reinhart and Rogoff at least had the dignity of making their error in Excel. They sat down, opened a spreadsheet, and made a human mistake in the traditional way. Smith’s method was to type a question into Gemini, receive a matplotlib plot in return, and publish it as the empirical foundation of his argument, an argument whose entire thrust is that progressives are insufficiently serious about evidence. Smith has written that modern economics represents “academia appropriately tamed,” “hemmed in by guardrails of methodological humility.” The guardrails it seems are continually not consulted before publication.

Beyond that egregious error, the comparison set of countries that Smith compares against because of his focus on “rich” countries is Qatar, UAE, Kuwait, Oman, Bahrain, Saudi Arabia: absolute monarchies with no independent judiciary, large migrant worker populations with severely limited legal recourse, known suppression of crime reporting, and in several cases capital punishment for a broad range of offenses. Singapore is authoritarian city-state with caning, capital punishment, state surveillance, and highly constrained civil society. Smith’s peer nations for America include Qatar, where homosexuality is punishable by imprisonment; Singapore, where the state canes people for vandalism and hangs them for drug offenses; and Saudi Arabia, which was still publicly beheading people for sorcery as recently as 2014. Their homicide rates are, indeed, very low. Smith does not say explicitly that America should become more like Saudi Arabia in order to solve its crime problem, but this is the logical content of the comparison he has chosen to make. He is a careful thinker. He simply did not follow the thought to its conclusion.

The United Nations Office on Drugs and Crime (UNODC) data (which is what Smith’s Gemini-produced chart almost certainly draws from) is a patchwork: some countries report 2021 data, others 2019 or even earlier. This matters enormously because the U.S. had an anomalous homicide spike in 2020-2021 associated with pandemic disruptions, Black Lives Matter movement, pandemic-era institutional disruptions, and firearms purchases. If the U.S. data point reflects 2020-2021 while many European comparators reflect 2018-2019, it’s baked in a cyclical American peak into what’s presented as a structural comparison. Smith even concedes homicides have come down significantly since 2022 but doesn’t reckon with what that does to his analysis.

What Smith’s chart also cannot show, and what Smith does not even present to his audience, is that the American homicide rate is overwhelmingly the result of firearm homicides. CDC data places the firearm share of American homicides at roughly 79 to 80 percent. The American firearm homicide rate alone, at approximately 4.5 per 100,000, exceeds the total homicide rate of nearly every country on Smith’s chart. The research literature going back to Zimring and Hawkins in 1997 and confirmed repeatedly since establishes that American assault rates are not dramatically higher than those of peer nations. What distinguishes American violence is its lethality, which is a function of gun density, not of a cultural disposition toward disorder or a political tolerance for criminality. The United States has approximately 120 firearms per 100 residents. No peer nation is even close to the range of that figure. Smith’s social policy, more police, enforced public order, prosecutorial aggression, addresses none of this, because none of it can.

The chart below makes the point more simply than Smith’s preferred methodology allows him to see. It plots civilian firearms per 100 residents against homicide rates across the same nations wealthy enough to appear in his comparison pool, with dot size proportional to population. The grey line is an ordinary least squares trend fitted to every country except the United States. Among peer liberal democracies, the relationship between gun density and homicide is weakly positive and the entire cluster sits below two homicides per 100,000 regardless of where countries fall on the x-axis. The actual American problem falls at the far right edge of the chart, approximately 85 firearms per 100 residents removed from the nearest peer nation, connected to the rest of the plot by a dashed red line because there was no other way to fit it in the same frame.

The problems with the comparison, unfortunately, do not end with the fabricated values. Smith’s inequality paragraph is worth dwelling on because it contains, in compressed form, the method of the entire piece, with its multiple misrepresentations. Smith concedes that America is more unequal than most rich nations, then immediately neutralizes the concession with a citation from the Canadian Fraser Institute establishing that the U.S. fiscal system is more progressive than most of its peers. The Fraser Institute defines progressivity by the steepness of marginal tax rates rather than by redistributive outcome, which is the definition a libertarian think tank would naturally prefer, and which has the additional virtue, from Smith’s perspective, of producing the desired result. By this measure, a country could abolish its welfare state entirely and become more progressive simply by raising its top marginal rate. This tells you something about what the “measure” is actually measuring. It does not appear to tell Smith anything. European social democracies achieve their redistribution not primarily through tax rates but through universal services (single-payer healthcare, universal higher education, subsidized childcare, parental and maternal leave) that do not appear in the Fraser framework because they are delivered as goods rather than cash transfers.

Having established, through this rather creative definition of “progressiveness,” that the U.S. is admirably redistributive, Smith turns to his linked chart of social spending as a share of GDP, which includes Sweden, Germany, Italy, Austria, the UK, Greece, Japan, the Netherlands, Canada, and Australia. He summarizes this chart by noting that the U.S. spends about as much as Canada, the Netherlands, and Australia. Canada, the Netherlands, and Australia are the three countries in the chart that sit closest to the American figure. Sweden at roughly 25 percent of GDP, Germany at 26, Italy and Austria above 27. These countries appear in the chart he links and not in the sentence he writes. The Netherlands comparison carries an additional layer of misdirection: Dutch private social spending, which runs to around 12 percent of GDP, is legally mandatory. Dutch residents are required by law to purchase health insurance through regulated private insurers; occupational pension contributions are compulsory. Comparing American public spending to Dutch public spending while treating the Dutch private component as equivalent to American voluntary employer coverage is not a like-for-like comparison. It is a definitional choice that happens to minimize the gap.

Smith observes, accurately, that Americans spend a lower share of their healthcare costs out of pocket than residents of most peer countries. What this aggregate share conceals is the distribution beneath it. The roughly eight percent of Americans without insurance face list prices that exist precisely because the insurance system inflates them; the much larger population with high-deductible plans faces cost-sharing thresholds that have no equivalent in single-payer systems; and medical debt remains the leading driver of personal bankruptcy in the United States in a way that is simply not true anywhere else in the developed world. None of this appears in a chart of mean out-of-pocket shares. Smith is technically accurate and substantively misleading in the same sentence, which is a refined achievement of misrepresenting facts. The OECD explicitly notes that when you account for private social spending and tax treatment of benefits, the U.S. actually has the highest net total social spending of any OECD country. Smith gestures at this to make the U.S. look generous. But net total social spending includes employer-provided health insurance premiums, 401(k) tax expenditures, and other private arrangements that are voluntary, unequally distributed, and tied to employment. A laid-off worker loses their health insurance; a Danish worker doesn’t. Counting Aetna premiums paid by Amazon on behalf of its employees as equivalent to Sweden’s universal healthcare in a social welfare comparison is an astonishingly senseless take.

The life expectancy gap is handled with similar dexterity. Smith attributes it to obesity and drug overdose, which he characterizes as “diseases of wealth and irresponsibility” rather than failures of policy. Obesity in the United States is concentrated in low-income, food-insecure populations­­; it is, to the extent that it reflects anything about wealth, a disease of its absence, not its presence. The opioid epidemic was substantially produced by Purdue Pharma’s fraudulent marketing, by FDA regulatory failures, and by the deliberate targeting of deindustrialized communities where alternative forms of relief were scarce. “Diseases of wealth and irresponsibility” is a phrase worth reading slowly for all its smuggery. The populations with the highest obesity rates in America are concentrated in food deserts, in places where a bag of Doritos is cheaper and more available than a vegetable, in communities where the nearest grocery store requires reliable transportation that not everyone has. The opioid epidemic Smith presumably includes here was not a spontaneous outbreak of irresponsibility: it was a fraud scheme, prosecuted in federal court, in which Purdue Pharma falsified clinical data, paid physicians to prescribe, and deliberately targeted the deindustrialized communities least equipped to resist. The responsible parties paid fines and the Sackler family kept their name on museum wings. The irresponsible parties are, in Smith’s formulation, the people who got addicted.

Smith’s policing argument rests on a single paper (Chalfin and McCrary’s 2018 estimate of the marginal productivity of an additional police officer) which Smith presents as settling the question of whether the ACLU is wrong about policing and crime. What Chalfin and McCrary actually estimate is a marginal effect at the intensive margin: given a city’s existing police force, what is the crime-reduction value of one more officer. This is a different question from whether police concentration across cities is causally related to crime rates, which is confounded by the obvious fact that cities with more crime hire more police in response.

Chalfin and McCrary’s central contribution is mostly methodological: it identifies massive measurement errors in the UCR police data and argues that correcting for them increases the estimated police elasticity. The actual empirical conclusion on murder (the crime that drives their entire welfare calculation) is an elasticity of -0.67 with a standard error of plus or minus 0.47. Their estimated confidence interval runs from approximately -1.14 to -0.20. It is very close to zero. The authors themselves describe the quasi-experimental literature as providing “suggestive but not persuasive evidence regarding the effect of police on violent crime.” And yet it is “Very solid evidence,” Smith writes, of a paper whose authors describe their own quasi-experimental literature as “suggestive but not persuasive.” He is following the evidence. The evidence is following him.

The chart below illustrates the identification problem that Chalfin and McCrary built their entire methodological apparatus to address, and that Smith’s summary of their work quietly drops. The data are drawn from the FBI’s Uniform Crime Reports for 2019 (Table 10 and 78 respectively), plotting sworn officers per 10,000 residents against violent crimes per 10,000 residents for every American city in the dataset, log-scaled on both axes, colored by whether the city sits in a state that voted Republican or Democrat in 2024. Each point is an American city in 2019; the axes are log-scaled; the slope is positive. Cities with more sworn officers per resident have higher violent crime rates. Smith, presumably, would not conclude from this that police cause crime. The slope is positive because the causal arrow runs in the direction any sentient observer would expect: departments grow because crime is high, not the other way around. This is simultaneity bias, and it is the reason a naive cross-sectional regression on police and crime tells you almost nothing about whether hiring more officers reduces violence. It is also, not coincidentally, the reason Chalfin and McCrary’s paper exists.

Cities located in Republican-voting states, where Smith’s general philosophy of public order and prosecutorial seriousness enjoys something closer to political hegemony, average 23.6 sworn officers per 10,000 residents and 33.1 violent crimes per 10,000. Democratic-voting-state cities average 21.8 officers and 23.0 violent crimes. The cities that have most faithfully followed the prescription have the worst outcomes by the prescriber’s own metric. Smith, presumably, would not conclude from this that policing causes crime; and he would be right not to, because the causal arrow runs the other way, which is precisely the point. But it does mean that the cross-sectional data he implicitly relies on to make policing sound like an obvious solution is actually a picture of the problem he claims it solves. It suggests that the cross-sectional relationship between policing and crime is dominated by reverse causality, which is precisely what makes invoking Chalfin and McCrary as “very solid evidence” for Smith’s policy conclusion an act of considerable interpretive audacity.

The welfare calculation that produces the “underpoliced” conclusion in Chalfin and McCrary’s paper is also sensitive to the murder elasticity in a way the paper is explicit about: if police have no effect on violent crime and only affect property crime, the cost-weighted elasticity is a “scant -0.07,” well below the threshold that would justify additional police. The whole conclusion rests on the assumption that the murder elasticity is meaningfully negative, an assumption the paper flags as uncertain in a footnote that Smith, who has read paper carefully, does not mention. Chalfin and McCrary’s footnote 12 flags that the cost-benefit calculation “would not justify the existing number of police” if restricted to property crime effects. The policy prescription that America is underpoliced, that the ACLU is very wrong, that progressive prosecutors are getting people killed: all of it balances on a confidence interval that the authors themselves describe as inconclusive. Smith has built his peroration on a footnote he declined to read. In a paper published a year prior to the 2018 one, Chalfin and McCrary’s abstract states: “Evidence in favor of deterrence effects is mixed.” The review also documents that crime responds to labor market conditions (wages, unemployment, legitimate economic opportunity) as a mechanism equal in importance to policing. Smith does not mention this. The carrots-and-sticks framing in the literature review, where labor market improvements deter crime as effectively as policing, would redirect the entire policy argument toward structural economic conditions rather than doubling down on a policing policy of prosecution. This, of course, disappears entirely from Smith’s account.

Chalfin and McCrary’s literature review also notes that potential offenders frequently do not know when policing policy has changed, that risk perceptions among the general population bear little relationship to actual arrest probabilities, and that deterrence effects are most pronounced among younger offenders early in criminal careers. None of which appears in Smith’s invocation of “very solid evidence.” The evidence is far from it and yet Smith uses it to declare the ACLU “very wrong” about mass incarceration and racialized over-policing which is a claim about the aggregate scale and demographic distribution of criminal justice policy over decades. A measurement-error correction paper studying police elasticities in medium to large U.S. cities between 1960 and 2010 cannot answer that question. The ACLU’s argument, in any case, is not about the sign of a marginal effect. It is about who bears the costs of policing policy and at what scale. This broader social question is not something that a paper on officer productivity cannot answer and is not designed to. Smith uses the one to dismiss the other, which requires treating them as answers to the same question.

The treatment of homelessness and public disorder follows the pattern established everywhere else in the piece. Homeless people commit violent crime at higher rates than the general population, Smith observes, citing an ABC Local television news interactive, an evidentiary standard that, applied consistently, would restructure the social sciences considerably. What the peer-reviewed literature on this population shows (Kushel and colleagues in 2003, Baggett and colleagues in 2013) is that homeless people are disproportionately victims of violent crime rather than its perpetrators. The causal question Smith does not ask is whether unsheltered homelessness produces disorder or whether unsheltered homelessness and disorder share common causes in housing unaffordability, defunded mental health infrastructure, and the gutting of substance use treatment capacity. Smith does not ask it because asking it would require him to treat homelessness as a consequence of something other than “diseases of wealth and irresponsibility,” and consequences imply causes, and causes imply that political and corporate forces, at some point, made decisions that produced the present which is precisely the explanatory territory Smith has cordoned off from the beginning.

This same evasion structures his treatment of suburbanization. Smith cites Cullen and Levitt’s 1999 regression analysis, which he characterizes loosely, as a study of “the effects of changes in the criminal justice system” to establish that crime is a huge driver in Americans’ preference for suburban living. The paper is worth reading carefully, because what it actually shows is more modest and more interesting than Smith’s use of it suggests. Cullen and Levitt study 127 American cities (MSAs to be exact) between 1970 and 1993 and find that a 10% increase in crime corresponds to roughly a 1% decline in city population, with most leavers relocating within the same metropolitan area rather than leaving the region. This is a finding about marginal population adjustments within an already-built suburban landscape, a landscape that federal highway policy, discriminatory mortgage underwriting, and racially restrictive covenants had spent the preceding three decades constructing. Smith also uses the paper to soften the white flight characterization, noting that middle-class Black families fled too. Cullen and Levitt’s own data shows that Black households were in fact less responsive to rising crime than non-Black households, and substantially less likely to leave the metropolitan area entirely. The paper Smith cites to broaden the story beyond race tells a more racially specific story than he acknowledges. Its authors, for their part, cite Wilson’s The Truly Disadvantaged in their introduction. Cullen and Levitt knew what literature they were entering. Smith, having encountered their paper, chose not to follow the citation. Smith then makes the brash claim that America’s urban development pattern is more suburbanized and car-centric than people would like mainly due to crime. Setting aside that this is an extraordinary causal claim to rest on a single paper, it requires ignoring a body of historical and sociological scholarship that runs directly against it. Scholarship that is not obscure, not contested at the margins, and not difficult to locate, or otherwise unavailable to Smith except for a penchant for willful ignorance. Smith has simply chosen not to consult it, which is a choice, and one that turns out to be remarkably convenient for his argument.

Douglas Massey and Nancy Denton’s American Apartheid (1993) documented how hypersegregation (the simultaneous concentration, clustering, centralization, and isolation of Black populations in American cities) was produced by the coordinated operation of racially restrictive covenants, FHA underwriting standards, and real estate industry practices, and how this spatial arrangement interacted with Black poverty to produce the concentrated disadvantage of the inner city. The mechanism Massey and Denton describe does not begin with crime. It begins with the deliberate construction of a geography in which Black families were restricted to a small set of deteriorating neighborhoods while white families were subsidized to leave. William Julius Wilson’s The Truly Disadvantaged traced how deindustrialization then removed the manufacturing employment base from these same neighborhoods, concentrating joblessness in communities already spatially isolated, producing what Wilson called social isolation: the removal of working and middle-class Black residents, the erosion of institutions, and the concentration of the population most vulnerable to economic disruption in precisely the neighborhoods that economic restructuring was devastating. Crime, in Wilson’s account, is one expression of this social isolation, not its cause.

Kevin Fox Gotham’s Race, Real Estate, and Uneven Development uses Kansas City as a case study to show how this process worked at the level of specific institutions and practices: the National Association of Real Estate Boards formalizing appraisal techniques that linked property value to neighborhood racial composition; the FHA adopting HOLC residential security maps that rated Black neighborhoods as hazardous lending risks; blockbusting and panic-selling used to accelerate white departure from transitional neighborhoods; school boundary-drawing used to reinforce racial separation after the covenants were legally voided. Troost Avenue in Kansas City, a north-south thoroughfare that still marks the city’s racial and economic divide, did not acquire its character and reputation because crime made the east side dangerous. It acquired it because the real estate industry and the FHA spent four decades ensuring that Black families could not live anywhere else. To this day, the repercussions of this racially constituted residential segregation pattern persists.

The Interstate Highway Act of 1956, funded by a $25 billion gas tax and administered in part by Francis DuPont, whose family held the largest share of General Motors stock, did not pick and choose at random to place its 40,000 miles of highway. The FHA’s own Underwriting Manual had recommended using highways to separate white and Black communities. Highway construction demolished 37,000 urban housing units per year through the 1960s, disproportionately in Black neighborhoods. As the Columbia University Mailman School of Public Health documented, in the first twenty years of the interstate system, highway construction displaced over one million low-income people of color. Atlanta’s I-20 was designed in a 1960 planning document to serve as “the boundary between the White and Negro communities.” Miami’s I-95 was routed through Overtown, then described as the “Harlem of the South,” reducing a neighborhood of 40,000 to 8,000 residents. James Baldwin’s observation that urban renewal meant “Negro removal” was not rhetorical excess; it was a description of the administrative record, a phrase that appeared in the internal documents of urban renewal agencies themselves.

The automobile industry’s role in this is also documented and not contested. GM President Alfred Sloan established a unit in 1922 charged with replacing streetcar systems with car-dependent alternatives. The GM front company National City Lines, reorganized in 1936 as a holding company, acquired more than 100 streetcar systems in 45 cities and systematically degraded service until ridership collapsed, providing the financial justification for conversion to buses.2 In 1949 GM and its co-conspirators were convicted in federal court of conspiracy to monopolize interstate commerce. The conviction did not restore the streetcar lines. Sloan’s National Highway Users Conference, founded in 1932, became the highway lobby that secured the 1956 National System of Interstate and Defense Highways Act. Charles Wilson, GM’s president, became Eisenhower’s secretary of defense and advocated for the nationwide freeway program on national security grounds—an argument that most certainly would not feel out of place in the current political environment.3 The infrastructure that made the American city car-dependent and the American suburb inevitable was not a market outcome. It was an industry campaign, a federal commitment, and a racial project, operating simultaneously.

Smith’s claim that America’s urban development pattern is mainly due to crime requires that none of this happened, or that it is irrelevant to where Americans live and how they get around, or even more preposterously that it’s the culmination of people making choices. (Smith certainly seems to be holding the latter position).4 The United States is, without exaggeration, Levittown writ large5: a geography produced by the FHA discriminatory practices, the highway system, the racially restrictive covenant, and the deliberate destruction of the transit infrastructure that had made dense urban living viable. William Levitt’s own position was not subtle. He told House and Home magazine in 1954 that he would not sell to Black families, because doing so would cause white families to leave, which would end his market.6 It was the operating principle of the postwar suburban development industry, backstopped by federal mortgage policy and made permanent by highway construction that ensured no alternative geography was available. Crime did not produce all these social maladies: crime is one of the things this produced.

Smith belongs to a specific and well-developed tradition in American liberal thought: the position that presents itself as the view from nowhere. It is the ideology that it is not ideology. The claim is not “I have the right ideology” but “I have transcended ideology by following the evidence.” If you disagree with Smith, you are letting your politics distort your reading of the data. If he reaches a conclusion that sounds like Tucker Carlson, that is simply what the data shows. Smith is a market liberal with a strong prior that existing arrangements are basically efficient; that where people live, what they earn, how healthy they are, reflects something close to equilibrium. Pathologies are disturbances to that equilibrium, introduced by bad actors (criminals, progressive prosecutors, ACLU lawyers, Twitter and Threads leftists) or “bad” ideas. The system itself is not pathological. This is why he cannot ask what caused crime, or what caused suburbanization, or what caused the opioid epidemic. Those questions lead to the system, and the system is the prior he is protecting. This aligns him firmly in the tradition of Gary Becker, although whether Smith recognizes the lineage is doubtful, given his publicly stated conviction that economists have no particular need to read the history of their own discipline. Becker’s project was to extend rational choice theory into domains (crime, family, discrimination) that had previously been understood as social and historical, transforming political questions into optimization problems that could be solved by adjusting incentives rather than changing structures. Smith inherits this framework wholesale, and with it the presuppositions about human nature that render crime as a choice that better policing can make less attractive, suburbanization as a revealed preference, and obesity as irresponsibility. This is not, it should be said, an ideology Smith holds with any particular consistency. Having spent a decade arguing that libertarianism was wrong, he recently apologized, not because his arguments had been refuted, but because Trump’s tariffs turned out to be worse than the free market. “In this world,” he concluded, “there are monsters far more terrifying than the market.” The framework produces whatever conclusion the political moment requires.

Smith ends his post with an update: a paper showing that Republican prosecutors reduce firearm homicide among Black men primarily by securing convictions that legally restrict gun ownership, that is, by reducing gun access, the precise mechanism his entire argument declines to address. He presents this as a challenge to progressives. It is confirmation that the variable he spent several thousand words not discussing is the one that does the work. “Someday soon,” Smith writes, “we should think about getting around to fixing it.”

In the winter of 1996, Alan Greenspan coined a term: irrational exuberance. It “came to me in the bathtub,” he later recalled of the moment he scribbled notes for a speech he would deliver to the American Enterprise Institute, a conservative think tank. Making his way from the bathtub to the ballroom, Greenspan, then chair of the Fed, went on to deliver a speech that suggested that “irrational exuberance has unduly escalated asset values.”

From Tokyo to New York, markets tumbled in response. But it wasn’t the kind of market correction that Greenspan had hoped for with his carefully worded “Fedspeak.” Over the following months, markets didn’t just rebound—they exploded. By July of 1997, the Dow Jones Industrial Average had reached 8000 while the Nasdaq broke 1,500, both record highs. Even with this widespread sense of optimism, though, few believed Lazlo Birinyi Jr., a global strategist for Deutsche Bank Securities and the owner of an investment research firm, when he predicted the Nasdaq would reach 2,800 by the end of 1999. When it climbed to 4,000, Bloomberg journalist Anthony Bianco described him as “The Prophet of Wall Street.”

When the market finally crashed in March 2000, destroying over $5 trillion in market value, the only narrative that seemed to hold sway was Greenspan’s “irrational exuberance,” a term that economists such as Robert Shiller later elaborated in his book of the same title. For Schiller, who had also testified before the Federal Reserve Board two months prior to Greenspan’s speech, explaining that “market levels were irrational,” the term “irrational exuberance” meant “extravagant expectations.” It was “wishful thinking on the part of investors that blinds us to the truth of our situation.”1

The Dot-Com Bubble, the historical episode that materialized in this new term and reshaped our thinking about financial crises, has gained relevance. It has become a reference point in an ongoing conversation about the AI Bubble, with some seeing an uncanny relationship with this moment of irrational exuberance to the “extravagant expectations” in the potential of AI. Even Sundar Pichai, the head of Alphabet, said there were “elements of irrationality through a moment like this.” Since his statement back in November 2025, financial observers have continued to weigh in on the issue. William Janeway, professor of economics at the University of Cambridge, thinks that “financial speculation is outpacing productivity gains.” Financial observers such as Bill Conerly, meanwhile, believes the “underlying fundamentals are extremely positive for artificial intelligence companies.”

While there seems to be a growing consensus that there is, in fact, a bubble, these kinds of observations create more questions than answers. What we do know for sure, though, is that there is a growing narrative about an AI Bubble. And if narratives, as a growing number of economists suggest, shape expectations about the future—which, in turn, shape behavior—then how is all this bubble talk shaping the economy? To a degree, maybe all this bubble talk doesn’t just describe the current economic conditions. Maybe it plays an active role in shaping perceptions of risk, expectations, and economic behavior.

It might also be interesting to consider how much bubble talk impacts expectations and behavior at different stages of the narrative. For instance, when bubble talk goes mainstream, with many different journalists and other financial observers pointing to the possibility at once, it may have a more significant impact on expectations than later stages of the narrative. In contrast to the early stage, when there may be a greater sensitivity to risk, investors become desensitized to the narrative in the later stages. It becomes background noise, making the prospect of a bubble seem less urgent. Where is the inflection of bubble talk, when investors become the most sensitive to the narrative? When do warnings about excess begin to alter behavior—and when do they simply fade into background noise? If economic expectations are shaped by stories, then the story about an AI bubble may matter as much as the bubble itself.

For nineteenth-century American women, Wall Street posed a paradox. On the one hand, the stock market was widely condemned as reckless, corrupt, and morally dangerous—an arena thought especially unsuitable for women’s supposedly delicate constitutions. Yet refusing to participate meant surrendering access to one of the most powerful new engines of wealth in post–Civil War era. What was a woman to do?

Early financial advice manuals for women urged caution, steering women away from the stock market and recommending “safe” investments in real estate or government bonds. Best to entrust one’s capital to a male relation or family friend rather than to some crafty and conniving stockbroker. Along with authors such as John Cromwell, who warned of “an army of sharks and rascals” who preyed on gullible women, newspapers and novels were full of cautionary tales of naïve women who were financially ruined by corrupt brokers. These may have been well-intentioned concerns to protect women from financial risk, but they also served to exclude them from potentially lucrative investment opportunities.

Women’s rights advocates were ambivalent. Even as they described “the Street” as a bastion of male corruption, they still pushed to participate more fully in market capitalism. These conflicting attitudes can be found in the pages of The Revolution, a progressive paper edited by Elizabeth Cady Stanton and Susan B. Anthony, the nation’s leading suffragists. Even as it denounced capitalism, The Revolution still celebrated pioneering businesswomen. In one 1868 editorial, Stanton compared the stock market to a “gambling saloon on a large scale” and vowed to “turn Wall Street inside out.” Stanton and Anthony later castigated robber barons Jay Gould and Jim Fisk for attempting to corner the gold market in 1869, arguing that such financial scandals would be impossible in a nation governed by women. Could women reform Wall Street by becoming brokers and bankers, or would they inevitably become corrupted by man’s “bank note world”?

Victoria Woodhull and her sister Tennessee Claflin offered a test case. In February 1870, when they opened their brokerage business in New York City, becoming America’s first women stockbrokers, they were initially celebrated as the “Queens of Finance.” Like many other women’s rights advocates who saw Woodhull, Claflin & Company as a sign of better times, Susan B. Anthony described it as triumph for “working women.” In an interview with Claflin for The Revolution, Anthony argued that “the advent of this woman firm in Wall Street marks a new era” when women could “be at the head of a banking institution, surrounded by ledgers, high stools, and those evidence of masculine superiority that men have plumed themselves upon so long.” For Claflin, economic independence would free women from exploitation. Being a broker, she told Anthony, was far “better than sewing drawers at ten cents a pair, or teaching music at ten dollars a quarter.”

Male commentators and brokers were far less enthusiastic. Many characterized the “lady brokers” as foolish and inept, and their hostility grew after the sisters began publishing Woodhull and Claflin’s Weekly, a newspaper that sought to uncover corporate fraud and crooked stock market deals. As Woodhull later boasted, “we exposed in our Weekly one nefarious scheme after another when we realized that companies were floated to work mines that did not exist…and to make railways to nowhere in particular, and that banks and insurance societies flourished by devouring their shareholders’ capital.” The paper frequently highlighted how women were financially victimized. Woodhull and her supporters helped organized the People’s Party, which fronted her 1872 presidential candidacy and championed the American worker against the capitalist cabal of “money-lenders, land grabbers, rings and lobbies.”

Along with her forceful personality and advocacy of radical causes like women’s suffrage and free love, Woodhull’s inflammatory politics made it easy for opponents to brand her as unwomanly and immoral. In a famous cartoon in Harper’s Weekly, for example, Thomas Nast depicted Woodhull as “Mrs. Satan,” with horns and cloven hoofs, tempting women to abandon their families and follow the primrose path of free love. The Cleveland Leader argued that Woodhull’s “brazen immodesty as a stock speculator on Wall Street” clearly indicated that she was “a vain, immodest, unsexed woman.”

Woodhull and Claflin breached the exclusive fraternity of Wall Street, but not for long. When their brokerage failed in 1873, the male establishment was quick to draw conclusions about the financial incapacity of women. For stockbrokers such as William Fowler, the dissolution of “the feminine firm” was “evidence [of] how unsuited to woman’s nature is such a field of enterprise.” In his 1875 guidebook, Bulls and Bears of New York, Matthew Hale Smith implied that the Claflin sisters were little better than prostitutes, enticing men to part with money through the employment of feminine wiles. Only fast women, Smith suggested, would be attracted to the life of speculation and the sordid world of the stock market.

During their brief sojourn on Wall Street, the Claflin sisters exposed its clubbish atmosphere and misogynist attitudes. The hyper-masculine world the Street endured for decades, maintaining a hostile environment for enterprising women. Many brokers’ offices replicated the masculine ambience of saloons, with free cigars, lunches, and paintings of naked women. In popular novels like Edith Wharton’s The House of Mirth (1905) or Upton Sinclair’s The Moneychangers (1908), brokers were often depicted as sexual predators. Legendary financiers like Cornelius Vanderbilt, Jim Fisk, and August Belmont embraced the playboy lifestyle and flaunted their womanizing. To their admirers, it was just another part of their oversize personalities. “[S]exual prowess, whether real or imagined,” as historian Steve Fraser writes, “became an enduring part of the mythos of the Wall Street titan.”

Little wonder that Woodhull and Claflin found their reputations in tatters, and the scandal that drove them out of business cast a long shadow over women in general. Other women who tried to earn their living selling securities risked being seen as indecent. One such case was Sophronia Twitchell, a women’s rights activist turned broker. She worked as an agent for the Equitable Life Insurance Company in San Francisco, where she speculated heavily, and successfully, in mining shares. In 1880, at the age of 50, she moved to New York and opened a business on lower Broadway as a broker in mining securities. Although she ran a genuine stock business and sometimes made a great deal of money, she was very unpopular with male brokers. They may have resented her success, and they certainly resented her unusually forthright manner. Tall and energetic, Twitchell became a familiar figure on Wall Street, especially for barging into brokers’ offices. Once, when a businessman ordered her out of his office, she struck him with her umbrella and was arrested for assault.

Unlike Woodhull, who was often depicted as a beautiful siren seducing the likes of Vanderbilt out of stock tips, Twitchell was mocked as an outlandish old crone. Newspapers described her as a “crazy crank,” a “nuisance,” a “human curio,” and “the Galloping Cow from Frisco.” In 1888, the New Haven Register provided an unflattering portrait: “She is a woman almost six feet tall and she is well along in years, but you see her rushing around at a lively pace in Wall Street in all sorts of weather, looking for tips and watching an opportunity to play the market to her advantage.” Seeing her as an intimidating and bewildering presence, many brokers tried to freeze her out and to discredit Twitchell as an unwomanly freak.

By the 20^th century, Wall Street had become more welcoming to passive women investors, but no less hostile to active women brokers. During the 1920s, women constituted 30 percent of the nation’s shareholders, but only 2 percent of its stockbrokers. And by the 1950s, women made up half of all American investors but were still woefully underrepresented on Wall Street. Not until 1967 did the New York Stock Exchange finally admit its first woman member, Muriel Siebert. But like her predecessors on Wall Street, she endured sexist headlines like “Skirt Invades Exchange” and “Powder Puff on Wall Street.”

Deregulation of the securities industry in the 1970s led to new employment opportunities for women, especially in research and sales. Siebert herself noted that although women were coming into Wall Street in large numbers, “they are still not making partner and are not getting into the positions that lead to the executive suites. There’s still an old-boy network.” In 2011, women constituted 55.4% of financial services employees, but only 16.6% of executives.

Beginning in the 1970s, the Equal Employment Opportunity Commission brought several sex-discrimination lawsuits against Wall Street firms. Brokerage houses began promoting more women, though not necessarily treating them well. Susan Antilla’s Tales from the Boom-Boom Room: Women vs. Wall Street (2002) documented a pattern of discrimination and sexual harassment in the financial industry during the 1980s and 1990s. Women were paid less than men for the same positions, demoted following maternity leaves, and subject to a constant barrage of crude, sexist behavior.

Popular representations of Wall Street still perpetuate the notion that the world of high finance is presided over by greedy and priapic brokers. The Victorian incarnation swilled champagne, while his modern counterpart supposedly prefers cocaine. Gordon Gekko, the antihero of Oliver Stone’s film Wall Street (1987), embodied the hyper-masculine culture of American finance.

The most recent battle of the sexes on Wall Street involves the dueling statues near the New York Stock Exchange. Since 1989, Arturo Di Modica’s giant bronze “Charging Bull” has embodied the power and exuberance of American capitalism. But this meaning was changed overnight in 2017, when Kristen Visbal deposited her own bronze statue opposite the bull—a defiant girl in ponytails with her hands on her hips. “Fearless Girl” was immediately celebrated as a feminist challenge to the testosterone-charged atmosphere of Wall Street. That no one had to explain this new meaning only confirms Wall Street’s long-standing reputation as a masculine preserve. Victoria Woodhull certainly would have understood, and she might well have lamented that things hadn’t improved much over the last 150 years.

About the author: George Robb is a professor of history at William Paterson University of New Jersey. He has a PhD from Northwestern University and was a Fulbright scholar in England. His most recent book is Ladies of the Ticker: Women and Wall Street from the Gilded Age to the Great Depression.

Consider market reform, for example. The pervasive language of liberalization, privatization, and deregulation implies that market reform is primarily a process of removing constraints. But liberalizing markets does not mean liberating them. In reality, empowering markets is a process of building institutions, not one of removing barriers. It requires more state capacity, not less. It means more regulation, not less.

Let’s begin with market reform in the post-Communist world. We have now experienced several decades of debate over the nature of the transition from a planned economy to a market economy, often caricatured as a contest between shock therapy and gradualism. The crux of the debate hinged on whether market reform was primarily a matter of dismantling the old command system or one of building the institutions to sustain a market economy. The latter view has now prevailed, both in the realm of scholarly analysis and in that of real-world experience. But if we had viewed market transition as a matter of marketcraft, then shouldn’t this have been obvious from the outset? Couldn’t we have avoided a lot of fruitless debate and some devastating policy errors?

Or consider market reform in developing countries. Again, we have traversed several decades of debate over the fundamental nature of the problem and the appropriate solutions. A more institutional perspective has now dislodged the Washington Consensus, after a protracted battle, countless flawed policies, and untold human suffering. But shouldn’t we have figured this out a bit sooner?

And what about market reform in the advanced industrial countries? While we have discovered that market reform requires building institutions in post-Communist and developing countries, we have been slow to recognize that the same logic applies to rich countries as well. Ironically, we are less attuned to the institutional character of market reforms in our own countries because they already have a fairly well developed institutional infrastructure. But market reform means enhancing this institutional infrastructure in the rich countries, just as it does elsewhere.

The term we most commonly use to describe market reform in rich countries – deregulation – nicely illustrates the confusion. The term is typically used to depict a decrease in government regulation and an increase in market competition, as if the two were naturally associated. But enhancing competition most often requires more regulation, not less. In network sectors, for example, incumbents are not likely to voluntarily cede their market power. So the government has to fabricate competition via regulation. In telecommunications, governments crafted competition via asymmetric (anti-incumbent) regulation, requiring incumbents to lease their lines to their competitors.

In the rich countries, as elsewhere, insufficient attention to the institutional nature of markets has fostered policy errors, with devastating results. The causes of the global financial crisis are complex, multidimensional, and intertwined, yet the essence of the story boils down to a massive failure of marketcraft. Federal Reserve Chairman Alan Greenspan made this case rather poignantly, if inadvertently, with his famous recantation in testimony to Congress in 2008. “Those of us who have looked to the self-interest of lending institutions to protect shareholder’s equity (myself especially),” he conceded, “are in a state of shocked disbelief.” Pressed by Committee Chairman Henry Waxman on whether his laissez-faire ideology contributed to decisions that he regrets, Greenspan replied, “What I am saying to you is, yes, I found a flaw . . .”

The U.S. authorities committed fundamental errors of marketcraft in the lead-up to the financial crisis. They gave financial institutions greater freedom to engage in risky behavior without strengthening regulation and oversight. They chose not to regulate derivatives in the late 1990s, partly because they viewed derivatives as instruments within an isolated market of sophisticated investors, and partly because they feared that regulation would destabilize financial markets. They put too much faith in the ability of market players to self-regulate. And they failed to appreciate the degree to which the U.S. mortgage-backed securities market had become plagued with misaligned incentives.

But marketcraft can do good as well as evil. After all, marketcraft produced the information revolution. The U.S. government funded the research that produced much of the relevant technology, and provided early-stage capital for many of the most successful high-tech firms. U.S. institutions, and the Silicon Valley ecosystem in particular, fostered the innovative start-ups that played a key role in commercializing the Internet, with innovations in devices, computing, transmission, and services. Antitrust policy played a less obvious but critical role by preventing vertically integrated firms like IBM and AT&T from dominating the emerging information technology sector. And this in turn enabled the open innovation characteristic of the digital economy. And regulatory reform brought lower communications costs, including flat-rate local service, which allowed startups to offer value-added services and household consumers to experiment with new applications at a reasonable cost.

These two examples – the financial crisis and the information revolution – illustrate the enormous stakes in the game of marketcraft. I am not suggesting that marketcraft is the same thing as statecraft. But I am contending that marketcraft has profound implications for economic performance, social welfare, and national power. So we should want to get it right.

Marketcraft will be even more critical going forward. The marketcraft realm is growing as a share of what governments do, and as a core element in how governments enhance or undermine the welfare of their people. Some of the core items on the marketcraft agenda – financial regulation, intellectual property rights, and the governance of the digital economy – are among the most consequential policy issues today.

About the author: Steven K. Vogel is Chair of the Political Economy program, the ll Han New Professor of Asian Studies, and a Professor of Political Science at the University of California, Berkeley. This article is based on his book, Marketcraft: How Governments Make Markets Work, from Oxford University Press. Follow him on Twitter @StevenKVogel

An earlier version of this essay appeared in Economic Sociology and Political Economy.

Spinning Out the Story

The Industrial Revolution — which here will mean the mechanization of textile production in Britain between the 1760s and the 1840s — is too often packaged and served as a kind of a technological myth in global economic history. Whether valorized as a tale of innovation and economic growth or condemned as an instrument of European imperialism and oppression, the Industrial Revolution often functions as a climax or inflection point in traditional narratives of world history.1 In playing these roles, “The Industrial Revolution” has too often been presented as what historians of technology call a “black box,” in which inventions enter the story at one side (John Kay’s flying shuttle, followed by various devices for spinning cotton into yarn) and mass production (and with it, English empire, and the West’s triumph over the Rest) are spat out the other end of it. Most of what happens in between is unexamined — placed in a black box that needs no further examination. In this mythical version, new mechanical devices function as exogenous shocks. Leaving unexplored the processes by which individual devices were developed and adopted into existing systems means that the Industrial Revolution has for too long been presented as a coherent episode of technological change — a foundation myth, with lessons to impart.2

The traditional version of the Industrial Revolution begins with John Kay’s flying shuttle, patented in 1733, which, according to William Radcliffe in 1828, sped up weaving so much that each weaver needed as much yarn (his raw material) as 5-8 people could spin. That was more than his family could provide.3 The flying shuttle thereby threatened a domestic system of production in which all members of a household had contributed to making a finished cloth piece from beginning to end. In this story, improvements in weaving created a bottleneck in household production. To meet the looms’ demand, James Hargreaves invented a spinning jenny and Richard Arkwright devised a water-frame (both patented in 1769), and then came Samuel Crompton’s spinning mule (about 1779) which combined the two. Each device successively improved the quantity and quality of yarn spun to meet the demand of the weavers equipped with the new shuttles that flew.4 Arkwright is also often credited with the invention of the factory (the reason he was knighted), while James Watt invented a steam engine at about the same time, that powered the machines of mass production. Even in the mythological version, people resisted their shift to working for wages in factories, instead of minding their families as workers at home: Luddites broke textile machinery to preserve traditional ways, and further mechanization helped replace them.5

The story is familiar in its shape if not its details: new inventions are ascribed to individual men, which create a new social, economic, and political world that eventually triumphs — despite resistance from indigenes, proletarians, and other groups made subaltern by the very story they protest. The narrative form of black-boxed technological change is almost invariably a tale of progress, as one machine gives way to the next. One traditional method that historians of technology have used to open such black boxes is to bust the myths that stand in the stead of the actual messy history. In the case of the Industrial Revolution, this myth-busting can be done from several directions.

The Persistence of the Handloom

First, the mythological narrative is a story of spinning alone, and does not explain weaving, which in Britain was done at home without power for another half-century. Handloom weaving of machine-spun yarns increased dramatically during the Industrial Revolution: the number of cotton handloom weavers tripled in Great Britain between 1795 and 1833, as did the prices paid for their finished pieces.6 While John Kay’s flying shuttle supposedly sped up weaving, which then inspired mechanization of spinning and its movement out of the domestic setting, the mechanization of spinning actually increased the workforce that wove at home by hand. Moreover, the reason for the persistence and expansion of handloom weaving was not simply the lack of appropriate machines: looms powered by steam engines were already operating in New England’s factories by 1815, while in 1829 handloom weavers in Britain still outnumbered those at work on powerlooms by four to one. Inventing a machine is not the same as shifting a sector to mechanized production.7 Critical thinkers will also recognize that William Radcliffe was himself the inventor of a powerloom, and his historical analysis of spinning and its shifts also advertised his own device.

But even the mythical version, in which successive inventions for spinning advanced British cloth merchants toward mass production, evokes the long-established productive framework into which new machinery arrived — the household, with its own division of labor, from which had emerged over several centuries a putting-out system, that divided the work of spinning and weaving into separate households. The second critique of the mythical Industrial Revolution notes that the earlier and ongoing division of labor outside the scale of household production was itself an innovation, and not one caused by the new mechanical spinning devices associated with the Industrial Revolution story.

Protection and Power

Thirdly, those British clothiers who adopted new machinery relied on the market protection provided by their government. Merchants who felt that domestic production was threatened by a “Calico Craze” of cotton cloth imported from India sought Parliamentary protection for their business. The Calico Acts of 1701 and 1721 provided successive laws against imports, shielding the nation’s merchants as they tinkered with new production methods and distribution channels. Beyond the production on the British Isles, the nation’s tradesmen also dealt goods across what they called “the Atlantic trade,” established during the centuries of American colonization, and adapted to the cultivation and sale of cotton after American independence. And finally, the Atlantic trade was anchored to the slave trade between Africa and the Americans, and the enslaved people transported on the Middle Passage of the triangular trade were the labor forces of the plantations growing cotton in the nineteenth century—the raw materials that fed into the spinning machinery of Britain’s industrial revolution. Protection in the home market, adventurism abroad, and stiff competition for customers on distant shores: this was the economic context for the adoption of the storied machinery of the Industrial Revolution.8

In other words, the traditional mythological version of the Industrial Revolution ascribes it to inventions, and thus to British men with brilliant labor-saving ideas. But bursting the myth open reveals both a global story of interconnections as well as a national story of industrial protectionism. It is not enough to show counter-evidence that undermines the mythological version, though. It is also important to recognize the history of that version and the purposes it served: it was presented by men like William Radcliffe in 1828, and other men with economic interests in the cotton spinning industry, in their pursuit of political power. The nineteenth-century “Free Trade” movement that abolished the Corn Laws and the Parliamentary protection for agricultural, landed elites was animated and populated by cotton merchants and manufacturers whose goals described neither the protectionist past in which their industry had grown up nor the nation then expanding its imperial might. Men who sought what they called “Free Trade” invented a mythological version of complicated technological change in order to make it palatable and powerful in their politics. Their success can be found in the statues of inventors and the names of heroes that advance the stories.9 But the traditional story of industrialization is mythological not only because it was invented, stitched together and puffed up into a narrative by people with goals, but also because it functions the way myths do: it opens the window to the imagination of modern Western culture — that innovation is the product of individual genius, and that technology changes the world around it. Closer investigation into the history of technology reveals impulses derived from the world outside machinery itself, the goals that devices are intended to meet, and inputs that help make technology operational.

Toward a History of Technological Context

These are the reasons the Industrial Revolution is worth re-investigation, and the reasons why I wrote a book about it for the undergraduate classroom, using history of technology methods to uncover the contexts for the British origins of global processes.10 As a result, the Industrial Revolution no longer functions as merely an inflection point, for good or ill, in global history. Instead it is a case-study in the complex processes of technological change. Machines do not themselves explain mechanization, but close investigation of their internal workings actually indicate the social, political, and economic context of why devices worked then and there. The actions of British merchants in response to changing patterns of business on the world stage, the efforts of workers to protect their prerogatives as their conditions changed, the transformations outside the Isles — shifting global history, from the Indian Ocean to the French Revolution. The Industrial Revolution presents a welcome opportunity for understanding and explaining to students the ways in which new devices are made to work, the world on which they draw.

About the author: Barbara Hahn is Professor of History at Texas Tech University. Her first book, Making Tobacco Bright: Creating an American Commodity, 1617-1937, examined the relationship between the tobacco industry and tobacco agriculture over three centuries, while her second The Cotton Kings: Capitalism and Corruption in Turn-of-the-Century New York and New Orleans (with Bruce E. Baker, Newcastle University), investigates cotton futures trading and the regulation of new financial derivatives in the Progressive Era. More recently, Dr. Hahn published Technology in the Industrial Revolution, which is short and intended for the undergraduate classroom.

An Oral History of the Fed’s Covid-19 Crisis, Financial Times

Earlier this month, the Federal Reserve released all the full transcripts from its many scheduled and unscheduled FOMC meetings in 2020…The US central bank releases edited minutes from its meetings with a three week lag, but the full transcripts and accompanying internal agendas and presentation materials are only published after five years. And on January 16, the Fed released all the ones for 2020.

The Care Factory, Boston Review

In the decades since the Wages for Housework movement, care work has become a site of profit in ways its leaders could never have predicted.

The Economics of Regime Change, The Economist

REGIME CHANGE is often viewed as an economic turning point. Impoverished by years of fiscal indiscipline, price controls and state decay, nearly seven in ten Venezuelans believe their livelihoods will improve over the next year now that America has deposed their feckless dictator, Nicolás Maduro. Many Iranians bravely protesting against their theocratic rulers over sinking living standards must harbour similar hopes. Yet even though political moments can arrive abruptly, as Mr Maduro and the ayatollahs have learned, economic outcomes take longer to adjust.

Amazon’s Robot Revolution, Dissent

The word “automation” was coined by a vice president of production at the Ford Motor Company in 1947, one year after the largest strike wave in U.S. history. Automation didn’t refer to a specific technology, but rather to “an argument about the meaning of labor and its relation to technological change,” as historian Jason Resnikoff writes in his book Labor’s End: How the Promise of Automation Degraded Work.

From Oil Nation to Wind Power Nation? An Exploration of Norway’s Turn to Offshore Wind Power, 1998–2024, Business History Review

This article examines how Norway, a hydropower-rich oil and gas producer, has sought to diversify its energy production since the late 1990s. It explores how and why leading Norwegian oil companies have attempted to redeploy into offshore wind, and how this redeployment has been shaped by political developments and sectoral interests. Through a four-part historical analysis, the article pays particular attention to the motives and interests of key stakeholders within the so-called oil–industrial complex, which encompasses both industrial and political actors, including employer and labor organizations. By integrating corporate and political perspectives, the article explains Norway’s attempt to transform from an “oil nation” to a “wind power nation” despite growing awareness of poor profitability and challenging conditions for offshore wind.

The Political Economy of Commodity Cartel Formation: The Case of Coffee, 1930-1940, Journal of Economic History

We inquire how a commodity cartel is created by studying the negotiations between Colombia and Brazil to stabilize the international coffee market in the 1930s. We show how differences among actors involved in the industry within the negotiating countries in terms of land ownership and type of coffee produced, prevented early cartelization agreements. Cartelization was only achieved when four factors converged: financial and infrastructural capability to store excess production, in-depth knowledge of the industry by the negotiating parties, full government support, and presence of a third-party enforcer. We combine an innovative game-theoretic approach with previously unexplored archival sources.

“Downtown Lowell is a Fun Place to Be”: Postindustrial Regeneration and the Making of the ‘New Liberals,’ 1974–1992, Modern American History

In the 1970s, deindustrialization and urban decay forced national, state, and local policymakers to focus more intensely on public-private partnerships as mechanisms of economic regeneration. This approach to postindustrial regeneration intersected with a rising generation of liberal politicians: labeled variously “Atari Democrats,” “neoliberals,” or “New Democrats,” they sought to orient the Democratic Party towards market-friendly politics. This intersection was evinced in the regeneration of Lowell, Massachusetts, a city dealing with decades-long industrial decline. Contrary to narratives that emphasize public-private partnerships only as instruments of privatization, however, Lowell’s experience exemplified how successful regeneration required an expanded role for the state: this article reinserts the “public” into “public-private partnership.” Excavating this reality in Lowell’s heretofore understudied history also demonstrates that New Liberals’ market-friendly political posture obscured deeper policy continuity with twentieth-century liberalism. Far from emerging locked into an ideological embrace of “neoliberalism,” the New Liberals sought to reimagine liberalism’s commitment to developmentalism.

In case you missed it:

After the gun smoke cleared from Baja California, ending the last skirmish of the Mexican American War, Edward Gould Buffum went searching for gold. Traveling north through Sutter’s Fort, the soldier turned prospector reached Weaver’s Creek, where he found a new army of men who traded guns for shovels and went to war with the earth. While Buffum was eager to find his fortune, he was equally absorbed in the novelty of the adventure. A former journalist, Buffum documented his travels like a detective searching for something strange. What he found, though, was more puzzling than he ever imagined. It wasn’t the rugged landscape or the frenzy for hidden treasure; it was the Indigenous people, who threw gold into rivers or scattered its dust into the wind. “When the gold was first discovered,” he later wrote of his encounter, they “had very little conception of its value, and would readily exchange handfuls of it for any article of food they might desire, or any old garment gaudy enough to …

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Stefan is an Associate Professor of History at Dartmouth College and author of Forging Global Fordism: Nazi Germany, Soviet Russia, and the Contest over the Industrial Order (Princeton UP), which explores how the 20th-century automobile industry took shape as activist states confronted America, competed over industrial development, and clashed over the terms of globalization. It also talks about the ideological origins of mass production in Midwestern Populism, the Soviet context of Gramsci’s Prison Notebooks, and the proto-developmental state in Nazi Germany.

Noam is a Senior Lecturer in American History at Queen Mary University of London and author of Brahmin Capitalism: Frontiers of Wealth and Populism in America’s First Gilded Age (Harvard UP), which is a finance-driven and urban-centered account of the transformation of American capitalism at the end of the nineteenth century. His new project interrogates the integration of what became the American West into the economic orbit of the United States. With renewed attention to the core concerns of political economy, it aims to position the Western US comparatively alongside other global peripheries – in Russia, Egypt, India, and Latin America – that were aggressively pulled in this period into the world economy.

Johnny Fulfer: Could you explain what your article is about?

Noam Maggor and Stefan Link: The article is a ‘Viewpoints’ piece that is part literature review, part historiographical critique, and part articulation of a research agenda, informed by our own independent book projects. It asks a simple question: why is it that economic development has been an urgent question for historians (and social scientists) of virtually all regions around the world but rarely in research about the United States? Why is it that despite the widespread rejection of American exceptionalism, scholars of various stripes still regard American industrialization as an almost inevitable process rather than as a historical problem to be interrogated and explained? We try to open up some of the insularity of American historiography and explore the US from a global-comparative perspective, with Latin America as a comparative case. From this vantage point, it is clear that there is nothing straightforward about a rapidly expanding exporter of agricultural goods, like the US in the nineteenth century, becoming a huge manufacturing economy. And yet, this trajectory itself has not really been framed as a historical puzzle.

There is of course a great deal of excellent scholarship about the growth of the American economy, and, especially recently, emphasis on the robust “infrastructural” power of the US state (for example, Bill Novak, Gary Gerstle, Richard John, Nicolas Barreyre, Ariel Ron, Gautham Rao, Monica Prasad, Mark Wilson, and others). We call for this conversation to take an extra bold step and cohere around the concept of an American “developmental state” that not only provided the legal and political foundation for markets but more proactively shaped market activity. We argue that only an American developmental state, analogous but of course not identical to more familiar cases of developmental states in the twentieth century (South Korea, Taiwan, China, etc.), could have facilitated a complicated, broad, and deep-seated shift from the export of primary commodities to domestic industry. We turn to the American West to offer a rough sketch of what such a state looked like and how it pushed back against economic specialization on extraction to nurture diverse manufacturing.

JF: What are some of the most important books and articles that shaped your thinking about the history of US economic development?

NM & SL: The starting point for the early conversations that led to this article was The Visible Hand by Alfred Chandler. We both thought of it as a deeply ideological artefact of the Cold War Era and yet marveled at its amazing resilience. We could not help noticing that the book’s underlying apolitical economism continued to pervade later accounts, including ones that ostensibly challenged it.

More broadly, we both came out of the history of capitalism project at Harvard, led by Sven Beckert and Christine Desan. We perhaps interpreted the goals of this project differently than how it has come to be understood (especially among economic historians for whom the ‘new’ history of capitalism – NHC - is often synonymous with a particular argument about American slavery). Our own agenda has always been to politicize economic and business history by putting political conflict over market institutions at the center of the analysis and even the engine of historical change. We see this, on one hand, as an extension of the goals of social and labor history, since this is where we began intellectually. But we also view this as a in part a critique of the reluctance of this older scholarship to engage more broadly with political economy and rethink meta narratives handed down in one way or another from modernization theory. It is in large measure scholars who themselves came out of social history such as Elizabeth Blackmar, Nelson Lichtenstein, Leon Fink (and younger historians like Jeffrey Sklansky, Lawrence Glickman, Scott Nelson, Elizabeth Shermer, and Amy Offner), who provided the inspiration for this move. As Nelson Lichtenstein once memorably explained to us, in connection with his work on Walmart and globalization: “we used to think the history of capital was simple and overdetermined, and the history of labor was contingent and in need of close, contextual study.” We were encouraged not to make the same assumption.

JF: What did the “global division of labor” look like in the years before the First World War?

NM & SL: We are indebted to the synthetic work of Kevin O'Rourke and Ronald Findlay (and of course a longer intellectual tradition associated with Wallerstein’s worlds-system theory) for our thinking about the late nineteenth century in terms of a global division of labor marked by specialization. This framework emphasizes an accelerating historical trend toward ever greater economic specialization and divergence between exporters of manufactured goods (‘core) and exporters of primary commodities (‘periphery’). We found it interesting how awkwardly the US fits into this divide since it was (and continued to be) a massive exporter of primary commodities – expanding territorially in leaps and bounds – even as it rapidly industrialized, becoming a net exporter of manufactured goods, and forged a dynamic financial sector. Whereas the literature on a country like Argentina has long been preoccupied with why territorial expansion and export-led prosperity in this period did not nurture a vibrant manufacturing sector, Americanists tend to assume the former necessarily lead to the latter. They rarely ask the inverse set of questions: why did the US not specialize like other frontier economies in this period? Why did it not develop the familiar symptoms of ‘Dutch Disease’? How did it diversify beyond commercial agriculture and mineral extraction? Economic historians such as Gavin Wright, Stanley Engerman, Kenneth Sokoloff, and Robert Allen, have contended with these questions in their own ways. We think historians have their own unique contribution to make in this area.

JF: By provincializing US development, you argue that the United States shouldn’t be viewed as the reference point/standard for economic development. What sort of problems are there with viewing the United States as the reference point for economic development?

NM & SL: Historians and social scientists that work on other regions in the world understand all too well the pitfalls of taking the US – or the West – as a benchmark for “success” and analyze other cases in terms of “pathologies” that contribute to “failed” or “incomplete” modernizations. It is generally well understood that this is a misguided exercise. What has not been reflected on as much is how to rethink the US in light of these types of insights. How do we think about the US as yet another historical case rather than a template for successful modernization as such? Historians of the US nowadays are of course not very sanguine about American history. US historiography has lost its former triumphalism and embraced a much more melancholy tone. Americanists are also much more aware of the sheer levels of violence, volatility, corruption, dysfunction, and environmental damage that pervaded the American past. Nevertheless, even harsh critics continue to think of the US, ever and always, as an incipient world hegemon, as if any other path is unfathomable. We think that provincializing the US must also include greater awareness of US power in the twentieth century to be historically specific and in need of explanation, not a transhistorical fact to be assumed. This might be easier to do these days as American dominance no longer seems to be the country’s perpetual heirloom.

The implications, by the way, extend beyond economic history itself. This perspective opens the possibility of grasping American history, including politics, society, and culture, as much more open-ended and malleable than conventionally understood. It massively loosens the familiar teleologies that usually frame this history. It allows us, for example, to revisit a long array of contentious political battles that preoccupied Americans in the nineteenth and early twentieth centuries – tariffs, taxation, corporate regulation and governance, central banking and monetary policy, competition and antimonopoly, and many others – as fully formative for the trajectory of the country, rather than as reformist or adaptive (a ‘response’ to market-driven economic change). It allows us to grasp social movements in this period, not as defeated alternatives or romantic crusaders, but as full participants in forging the industrial order. We can better appreciate that (as with other developing countries) the stakes were not limited to how resources would be distributed or even who would govern and how, but also what kind of political economy and society would ultimately be governed.

JF: Could you describe what you mean by the “post-Polanyian paradigm” and what differences and similarities, if any, it has with Northian institutionalism?

NM & SL: This question speaks precisely to the formative role of politics in shaping markets that we previously mentioned. In The Great Transformation, Polanyi argued that nineteenth-century markets (in particular, global markets) did not simply emerge spontaneously but were the result of purposive and often coercive political action. He also argued that reactions to market-making, actions he put under the rubric of “social protection” – a grab bag in which he included everything from tariffs to factory legislation to welfare provisions to capital controls – were "spontaneous". He was, in effect, turning early neoliberals like Mises and Hayek on their heads (who often portrayed markets as spontaneous, and social protection as interventionist and political). Polemically, this move is still very effective, and Polanyi remains instructive in drawing our attention to the politics of market-making. But Polanyi also clearly overcompensated (and this is why we say “post-Polanyian”). Neoliberals, as Quinn Slobodian has shown, in fact understood that market-making required strong states (to clear the space for spontaneity, so to speak). And of course pushback against markets was/is also thoroughly political. We thus aim to remove any ambiguity on this issue and insist that there are in fact no dis-embedded markets. We foreground the inevitable political contestation over the precise contours and limits of markets, and over the design of economic institutions more generally. We situate ourselves within an emerging paradigm, associated with Christine Desan, Steven Vogel, Bill Janeway, Fred Block, and Mariana Mazzucato: one that moves beyond the binary of “intervention” and “markets” to the thick muddle in the middle, where in fact everything happens.

Where this view departs from Northian institutionalism is in its emphasis on historicity and on ongoing political contestation as inescapable in the formation of markets. The capstone of North’s paradigm (Acemoglu & Robinson can also be mentioned in this context) is identifying institutional constellations that spur economic growth. For scholars in this vein, these institutions have one thing in common: they restrain political ‘meddling’ (viewed as a source of distortion or even corruption) so as to provide for the kind of stability and protection of private economic actors without which markets allegedly cannot function. It is here that institutionalism betrays is pedigree, which we think comprises of four grandparents: from classical liberalism it got its bourgeois sensibility and embrace of negative liberty; from Max Weber and modernization theory it imbibed a concept of history as quasi-blind process of rationalization; in its universalist claims it carries on mid-twentieth century positivist social science. As we insinuate in the article, Northian institutionalism is sufficiently historical to trace how institutions emerge from political conflict. Such conflict has historically produced – as though by fortuitous accident – a set of benign (growth-generating) institutions, which then locks in developmental take-offs. To the institutionalist sensibility, politics beyond this point becomes a distraction - or worse. Marx poked fun at the penchant of classical political economists like Smith and Ricardo to naturalize their own (bourgeois) present as the historical expression of some transhistorical truth: in such accounts, “once there has been history, but now there is no more.” One might adapt this and say that in Northian institutionalism, once there has been politics, but now there is no more.

JF: What you mean by “developmental state” seems to be centered around the intersections between the state and the economy to show how economic development was and is always political. Your essay Americanizes the literature on East Asian “developmental states,” while also showing the parallels between this literature and the post-Polanyian paradigm. Could briefly explain the historiographical significance of reframing US economic development through the lens of a post-Polanyian developmental state and what you hope to see from future scholarship that follows this frame of US history?

NM & SL: Your characterization of the piece is right on the mark. And there is indeed an interesting convergence between post-Polanyian theoretical insights, which often rest on a critical reading of American and European institutions, and the literature on ‘developmental states’ in East Asia and elsewhere. This convergence in our own time is potentially very generative, maybe even transformative, for how we will think about political economy in the not so distant future. The idea of the US as a market society, and of American history as driven by private market forces, runs very deep, so the revisionist implications of these types of insights for American historiography are particularly profound. American history has often been framed around the rise and triumph of ‘the market’ – with some debate over what was the most pivotal inflection point in this process (the Market Revolution of the 1820s? The Gilded Age? The 1920s?). If we indeed move away from thinking about market-driven change as “the norm” and proactive government as an anomalous and occasional form of “intervention,” there is room for much more emphasis on political-economic regimes, each with its own institutional blend, driven by shifting political and ideological alignments. Thomas Piketty’s recent book, by the way, fruitfully moves in this direction. He discusses a sequence of what he calls “regimes of inequality,” each historically specific, without privileging one over others as some kind of baseline – but of course inequality is only one feature of each regime and his is only one way of periodizing this history. As mentioned, historians have been rediscovering the American state for quite some time. There is a lot to build on. Nevertheless, we really do hope to see state-driven and politically-embedded approaches to the American economy becoming much more central to how we conceive of this history.

JF: You write that Northian institutionalism theorizes “political contestation up to an inflection point that gives birth to the ‘highest’ form of institutions – ‘open access’ systems, and the state as parsimonious arbiter of functioning markets,” while the “developmental state” literature demonstrates that the political conflict that shapes and harnesses markets never actually ends (p. 31).

NM & SL: Yes, precisely. This raises the crucial issue of state capacity to discipline markets that we think remains underexplored in the literature about the US. The prevailing view, even in corners of the literature that emphasize the infrastructural power of the American state, is that it was often – almost as a matter of course – instrumentalized by market actors or made to accommodate their imperatives. In this view, capitalist interests have always been all too happy to socialize the risks and costs of doing business and feed off of government subsidies, incentives, grants, etc. But what about the reverse? Have American state institutions ever successfully harnessed private interests for their own political goals? Were they in some cases able to (to paraphrase Mazzucato) privatize the costs and socialize the rewards? Given the developmental results, the “developmental state” literature, especially insights drawn from the work of Alice Amsden and Vivek Chibber, would insist that this must have been the case, at least to some extent. We know that American courts upheld state supremacy vis-à-vis corporations and that the notion of ‘laissez faire’ has been vastly exaggerated. Our own ongoing research has also revealed many instances of state discipline, mostly found in a broad array of policies, ranging from corporate regulation, antitrust, central banking, labor, and taxation. In all of these contexts, we think historians have not done a great job recognizing and appreciating the structural significance of substantial political pushback against the rights of investors in the American context. There is no question that the balance of power between investors and legislators was far less lopsided in American settings than they did in other analogous contexts. But this remains to be studied in greater detail, and with fewer preconceived notions about what the final outcome of those types of contests ‘must have been.’ We are moving more deeply into this with our own empirical work, and we of course hope to encourage more research into this particular issue in a variety of contexts across time.

JF: By reframing US political economy through the lens of the “developmental state,” you’re saying that this Northian point of inflection essentially doesn’t exist and that the United States is in a state of perpetual development. Because the language of development implies a sense of natural growth that will eventually reach a point of maturity, do you think your critique of this “point of inflection” creates questions about the limitations of “development” as a frame of analysis? Because development also implies assumptions of natural deterioration, do you think it would be interesting to conceptualize economic institutions through the lens of both growth and deterioration? Or, how can you show the fluidity of economic institutions, which gives it a more diverse range of movement—instead of just growth or forward movement?

NM & SL: These are interesting questions – and clearly development has different connotations in different disciplinary conversations. This makes it in some ways fraught as a framework. We have already received some pushback from scholars who confidently asserted that the US was never a developing nation, which from our perspective as historians seems a little strange. Was the US born great? Was greatness baked into this highly dynamic society from its earliest origins? But for the same reason, the concept of development might potentially be fruitful as a point of cross-disciplinary engagement. We received excellent comments on the piece from Brad Hansen, Michael Pettis, Naomi Lamoreaux, John Wallis, pseudoerasmus (of course), and others, who have helped us deepen our own thinking and clarify our research agenda. It has generally been very affirming to speak across various divides.

Overall, by linking up with the “developmental state” literature, we aim to divest the concept of development from its entanglements with modernization theory. And perhaps this is not entirely possible, given that the prevalent association (at least in the west) of development with Cold War modernization. But we would point out that development has a more variegated conceptual history; long before Truman articulated it in 1949, it had been used by state and political actors engaged in (or theorizing) economic catch-up efforts alongside various other terms (such as “restoration”, “revolution”, “(re)construction” etc). In this context, we could also point to a longstanding protectionist tradition, going back to Hamilton, Carey, List, Gerschenkron, and others.

In the piece, we understand development as purposive structural economic change that consequentially shifts the global division of labor. Its main marker is not undifferentiated “growth”, abstractly conceived, but qualitative transformation (see Ha-Joon Chang on this particular point). We would hope that the term thus leaves room for visions of the kinds of inclusive, equitable, and sustainable economic restructuring that animate twenty-first-century discussions. In this sense, development need not imply more per capita GDP but instead emphasizes fundamental remaking. Yet as historians we are also realists who acknowledge that development historically has been associated with contest and rivalry over resources and industrial and technological capacities, and that the strong competitive currents and formidable state apparatuses characterizing the international political economy are unlikely to just disappear. This is also why we do not conceive of development as finite or potentially reaching a point of saturation, but in fact ongoing.

What is at stake when we talk about the economics of North American slavery? Over the last 75+ years it has been whether capitalism superseded slavery or whether capitalism and slavery were co-constituted, capitalism to some extent relying on slavery. Part of that discussion has been theoretical and part hinges on whether the exploitation of African-descended Americans is an incidental or an essential part of the economies of English and British North America and the United States over the last four centuries.

To get some perspective, I’d like to look at a sliver of that history and sketch some of its legacies. The 1655 voyage of the slave ship Witte Paard and its aftermath could help bring into focus some of the issues in the ongoing debate over capitalism and slavery. Rather than a discussion of capitalism as an economic system, I’d like to suggest viewing the relationship between forms of capitalism and slavery in terms of economic white supremacy. That is, a sustained yet protean process of disinheriting, dispossessing, and decapitalizing African-descended people. This isn’t a shift in understanding so much as perspective. Where one sits facing a disciplinary, geographic, or chronological boundary tends to influence where one stands on the relationship of slavery to capitalism and the ramifications of those processes.

Sometime in late 1654 or early 1655, Antonio—a Kikongo or Kimbundu speaker—was captured and forcibly transported to the slaving port of Loango in present-day Republic of the Congo. He joined thousands incarcerated in squalid and cramped sites near the harbor. Antonio did not know it, but in 1654, two Dutch merchants had secured permission from the Dutch West India Company (GWC) to sail the Witte Paard (“White Horse”) from Texel to southwestern Africa and buy “Slaves” to sell in New Amsterdam. Records don’t reveal how Antonio, among 455 Angolan and Kongolese captives taken out into the harbor, responded to the sight of the Witte Paard anchored off Loango in the spring of 1655. Did they see it as a floating engine of capitalism? Or a vessel of degradation, suffering, loss, and death?

Before boarding, captors branded each with a red-hot iron, burning a customs stamp on the right breast or shoulder. As the ship sailed across the equator, Antonio and the other captives were probably unaware that Chesapeake tobacco planters had already applied for a share of the human cargo. One in seven died on the months-long passage that brought the survivors to Manhattan, residents complaining of the vessel’s stench filling the harbor.

Antonio languished in a New Amsterdam jail until Symon Overzee, a Maryland planter from a wealthy Rotterdam family, showed up to purchase him. It probably mattered less to Antonio whether Overzee’s economic strategy was capitalistic than the political and social framework that allowed him to claim the fruits of Antonio’s unpaid labor. Overzee took him back to Saint Mary’s City, and when Antonio refused to work as instructed Overzee tortured and murdered him. (You can visit the St. John’s site where it happened.) A Maryland court later acquitted Overzee, sanctioning the violent domination and destruction of Black bound workers. Back in New Amsterdam, other captives had remained incarcerated through the winter as Chesapeake planters showed up to buy them.

Edmund Scarburgh (or Scarborough) of Virginia’s Eastern Shore paid for 41 captives from the Witte Paard early in 1656, fulfilling an obligation he’d made in advance to buy a portion of the human cargo. Virginians like him defied the English Parliament’s 1651 Navigation Act requiring them to ship commodities on English vessels, preferring the reliability of Dutch ships and higher prices for their tobacco in Rotterdam via New Amsterdam than in England. “Colonel” Scarburgh was a thirty-eight-year-old planter and merchant whose diversified enterprise included a fleet of ships, a salt works, malt house, shoe factory, warehouse, an extensive herd of livestock, and tens of thousands of acres worked by scores of bound laborers, mainly English indentured servants.

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He had used family wealth in England—his brother would be court physician to King Charles II—as startup capital in Virginia, paying for headrights (good for 50 acres each) and now enslaved people whom he identified as Angolans. His economic power supported his political ambitions, and he served as speaker of the Virginia assembly and surveyor general of the colony, along with other posts. He embodied the swaggering ambition of the English colonial project. And its racial bigotry. In 1651, Scarburgh had led a private militia to kill the king of the Pocomoke people and in the process massacred Accomacs in a bid to aggrandize land. The king survived. Virginia prosecuted him for the attack, but Scarburgh was too powerful to convict.

Scarburgh’s career seems at first blush like a prelude to what Sven Beckert terms “war capitalism” and an embryonic form of what Walter Johnson terms “slave racial capitalism,” while Antonio’s response to Overzee’s demands illustrates an early assertion of what Daina Ramey Berry calls “soul values.” Scarburgh’s career illustrates what S. D. Smith terms “gentry capitalism,” in a Virginia idiom. But it was also part of a move to support the growth of white wealth by stealing the work product of African-descended people.

Having assembled a bound labor force of Angolans, one of the largest of its kind in Virginia, Scarburgh disembarked 41 survivors of the Witte Paard in Northampton County. He put a number to work in his salt works and claimed all of them as headrights worth 2,050 acres he put in the names of his daughters Matilda and Tabitha. Angolan bodies were at work building intergenerational wealth strategies for the whites who claimed to own them. And in bringing Angolans to labor for an indefinite period in Virginia, Scarburgh prefigured later planters’ reliance on African-descended enslaved laborers to make their crops and grow their fortunes. It “was the moment when the Chesapeake tobacco plantations began replacing British indentured servants with African slaves,” argues Rik Van Welie. Less than a decade later, the Virginia assembly started codifying slavery as a condition inherited through maternity. Survivors of the Witte Paard and slave ships like it—along with their maternal descendants—would be denied the opportunity to earn income and build wealth in the Chesapeake.

The Witte Paard slaving voyage and its aftermath relied on the confidence of those who invested in slaving voyages or bought captives. It relied too on a technology of race, to use a concept elaborated by scholars including Edward B. Rugemer, that made Angolans into “Negroes” as bound workers and property in North America. It may have been a moment in which slavery and capitalism were co-creative, the confidence that lent credit to Scarburgh’s enterprises being as strong as the commitment to hold African-descended people in slavery for life and transfer that status to the children of enslaved mothers. Scarburgh was an early adopter, and fellow planters were soon clamoring for more enslaved workers.

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The economic history of the colonial Chesapeake is broad and deep, its foundations laid by Lorena S. Walsh, Russell R. Menard, John J. McCusker, Allan Kulikoff, Gloria L. Main, Paul A. Shackel, and many, many others, who generally agree that planters plowed resources into headrights and livestock in order to generate returns managed by and for households. Scholars from Edmund Morgan and Ira Berlin to Anthony S. Parent, Jr. have analyzed the shift to slave labor in the Chesapeake as the tobacco economy matured. It was a backwater of the larger commodity complex described by Sidney W. Mintz, Marcy Norton, and others, but Scarburgh’s participation in a knowledge economy linking his Virginia technologies to New Amsterdam and Dutch markets and resources seems to resonate with Joel Mokyr’s contentions regarding modern economic growth.

Yet markets and information about them were unsteady and unreliable. Tobacco prices fluctuated, and the business cycle was about as short as the tragically brief marriages and lifespans that characterized the era. Peter H. Lindert and Jeffrey G. Williamson’s magisterial Unequal Gains argues that the Chesapeake and South in general was the home of high incomes and relative equality compared with England, Holland, and even other parts of English America in the seventeenth century. Enslaved people or “slaves,” they argue, “had higher living standards than did the poorest in England,” even if the English poor were less and less likely to risk death in Virginia as bound laborers. If growth seemed slow it was because colonists were having so many babies who needed care. Economically speaking, Scarburgh and his fellow colonists must have been seizing opportunities and managing resources well. But there was another process that pervaded Scarburgh’s strategy.

Scarburgh’s enslavement of the Witte Paard captives imperiled Black Virginia landowners like Mary and Antonio or Anthony Johnson and their sons John and Richard. The elder Johnsons were Angolans who’d arrived as captives in the 1620s, working their way out of bondage and up the social ladder. In 1656, John and Richard Johnson, together with their parents, owned 1,000 acres in Northampton and (the future) Accomack counties. In 1652, Scarburgh had backed John Johnson in a real estate dispute with a white man (if only to get back at someone who’d prosecuted him for attacking Accomac and Pocomoke people). Scarburgh served as a bank for two indentured servants who bought 200 acres of Anthony Johnson’s land in 1665.

But as Scarburgh and other planters opted for enslaved Angolans, they drove out Black competitors. He cheated Anthony Johnson out of a payment for that land sale in 1667 with a letter he forged saying the Johnsons owed him a debt. From his new home in Maryland, Anthony Johnson declined to sue Scarburgh. And after Johnson died in 1670, the county escheater ruled twice in two weeks to strip the Johnson family’s claim to their Virginia lands because he had been “a Negroe and by consequence an alien,” kicking Richard Johnson and his family off the estate—a highly unusual move. (Scarburgh died without a will in 1671, but no one confiscated his wealth.)

The Witte Paard captives were never permitted opportunities to become property owners, and the Johnsons were pushed to the margins of Chesapeake society. In 1655 they were planters in Virginia. By 1665, most of the family had left for Somerset County, Maryland, where Scarburgh couldn’t cheat them. By the next generation they had moved to Angola Neck, Delaware, and by the fourth generation they were scattered down the coast as far as North Carolina.

For both free and enslaved African-descended Americans, an economic system founded on the theft of Black work product and Black wealth never gave up stealing. There is a deep historical literature on the process by scholars such as Alejandro de la Fuente and Ariela J. Gross, Daina Ramey Berry and Kali Nicole Gross, and many others including Cedric Robinson. Even in places in which slavery was marginal or abolished in the eighteenth and early nineteenth centuries, racism and denial of Black economic opportunity didn’t un-follow slavery.

Two centuries after the Witte Paard captives arrived in Virginia, the complex that became the American South was reliant on expropriating value from enslaved workers. From the perspective of enslaved people, that theft was relentless. Over the last forty years, scholars from Roger L. Ransom and Richard Sutch, Larry Neal, James Marketti to Mary Frances Berry and Thomas Creamer have attempted to understand and estimate the value of stolen labor value of United States slavery, ranging from $5.9 trillion ($2009) to $19 trillion—and some estimates are higher.

Yet those estimates and their significance have not generally been integrated into analyses of slavery’s capitalism. What would it mean if we focused on lost income and wealth in econometric debates such as those featuring Alan Olmstead, Paul Rhode, and Edward E. Baptist? What is owed to the descendants of those tortured and robbed of their labor value?

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Whatever the answer, it seems that capitalism and slavery grew together and grew apart. Varieties of capitalism aren’t always apparent in the view from above or below. Those who investigate connections among capitalist development and the history of racial slavery in North American contexts might well take a page from scholars of religious pluralism. Pluralism goes beyond a recognition of diversity of religious traditions to comprehend commonalities. The Pluralism Project, for instance, is an interfaith effort to understand and engage across exoteric traditions.

If we attempt a similar exercise with historical capitalism, we might glimpse continuities that show disagreements more in terms of perspectives than incommensurable paradigms. Subregions of the South had interlocking but differing economies. Capitalism on the ground looks different than capitalism as an economic system. Treat capitalism as a sectarian process with a clear orthodoxy, and the church of capitalism has few members. Treat it as a sprawling tent, and it may be so broad as to include everything in a marketplace.

Those who identify with the history of capitalism tend to be in the latter camp. Two centuries after the Witte Paard captives arrived, Chesapeake enslavers captured some of that money when they sold descendants of those African arrivals—and the tens of thousands who followed—to other regions of the South. New York merchants, bankers, and shippers provided logistics and financial services essential to commodity chains. My work along with studies by Joshua D. Rothman, Kathryn Boodry, Caitlin Rosenthal, Daniel Rood, and others argues that enslavers were innovators in finance, management, and technology. In the 1830s, for instance, the financial integration of the North Atlantic was accomplished through a credit system linked to slavery.

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Econometric historians investigating agricultural enterprises using enslaved people have long established that enslavers’ coercion of African-descended bondspersons paid big returns on investments, even if in the broader frame the plantation economy of the antebellum South was constrained by capital sunk in lands and bondspersons, characterized by violent labor relations, anticompetitive practices, and devaluing of free labor—what critics call “low-road capitalism.” That general understanding emerged in—and is contested by--an extraordinarily rich body of foundational scholarship by Claudia Goldin, Gavin Wright, Robert Fogel, Stanley Engerman, Ransom and Sutch, Ralph V. Anderson, Fred Bateman, Heywood Fleisig, Robert E. Gallman, Laurence J. Kotlikoff, Robert A. Margo, Donald Schaefer, Mark D. Schmitz, Richard H. Steckel, and Thomas Weiss, among many others.

Cotton and other commodities traveled from sites of oppressive production to capitalist enterprises that spun, wove, or otherwise added value, and from which enslavers drew inputs that they sunk into violent enterprises that were ultimately economic dead ends. John Majewski, for instance, points to “Schumpeterian capitalism” in areas of the nineteenth-century United States where free labor predominated, contrasting it with slavery’s capitalism, while Keri Leigh Merritt has documented the price paid by laboring whites in the South for the violent coercion of African-descended Americans. But this didn’t mean that Schumpeterian capitalism was like oil and water with slave-racial capitalism.

Seth Rockman’s research has demonstrated that Schumpeterians shook hands with enslavers, harnessing the creativity supposedly born of an entrepreneurial capitalism to the imperatives of slavery’s capitalism. Massachusetts’s Blackstone Valley thrived on manufacturing slave-made cotton. Justene Hill Edwards’s forthcoming book Black Markets details how enslaved people as petty capitalists developed strategies that both held out the prospect of capturing some of the income they generated while enslavers reinforced their own interests in race-based slavery. Alexandra J. Finley’s new book and Stephanie Rogers Jones’s study of female enslavers broaden the categories as they demand we look outside the cathedrals of one operating paradigm or another.

And if North American slavery’s capitalism seems to have come to a screeching halt with the Civil War and Emancipation, it’s also true that economic structures shaped by racial disadvantages did not come completely undone with the disappearance of chattel slavery. Put another way, if David Brion Davis’s contention that “that racial exploitation and racial conflict have been part of the DNA of American culture” is correct, then that DNA seems to have replicated and mutated to adapt to the postwar and Reconstruction economies. Freedom came in the context of near zero wealth among formerly enslaved people, and income gains arrived in the context of a punishing economy for southern workers generally. Violent white supremacy worked against Black economic aspirations in a system that in many ways mimicked slavery.

Ten generations after the Witte Paard captives were enslaved in Virginia, their descendants were finally free. Yet the system that stole two centuries of income and wealth (not to mention health, dignity, civil rights, and even children) did not stop the plunder. W. E. B. Du Bois contended 85 years ago, “the slave went free; stood a brief moment in the sun; then moved back again toward slavery.” The momentum of generations of institutionalized theft did not halt when chattel slavery ended. Enslavers’ children quickly recovered their family’s lost wealth, according to Philipp Ager, Leah Boustan, and Katherine Eriksson. But Black families did not get a fair shot at economic advancement. Sharecropping and violent anti-labor-organizing dovetailed with convict labor practices explored by Talitha L. LeFlouria and Douglas Blackmon among others. A Jim Crow labor regime that prefigured neoliberal sunbelt capitalism was partly what attracted industries to the South (and still does). Black families in the upper South had high rates of property ownership by 1900, but scholars including Andrew Kahrl and Pete Daniel have detailed the countervailing process of stripping Black land, a process that continues in places like Hog Hammock, Georgia.

Sequella to slavery’s economic destruction included a dialectical process of economic white supremacy that was nimble and protean. Each time African-descended Americans surmounted one obstacle to economic disadvantage, another one appeared. Black Americans fled the South but were subject to predatory lending, redlining, and exclusion from unions. Managed capitalism made social insurance a racial right rather than a civil right. The great compression or “great exception” of the mid-twentieth century provided upward-moving escalators for many, but by the time Black Americans got on them they tended to descend. Keeanga-Yamahtta Taylor terms this predatory inclusion. Remarketized capitalism after 1973 paid workers diminishing returns, and the policies of the 1980s tended to exacerbate racial inequality.

Today, the typical Black family owns 10 cents on the dollar compared to the typical white family, five decades after legal discrimination ended and eight generations after slavery was abolished. The wealth gap is growing, as is the racial wage gap. As Destin Jenkins points out, each time we peel back the layers of time, the yawning gap in income and wealth is still present, though its causes are not immediately apparent. In her study of segregated financial systems, Mehrsa Baradaran points to the fact that Black Americans owned 0.5 percent of national wealth in the mid-1860s and just about 1.5 percent today, despite being a similar proportion of the population. Stratification economists such as William S. Darity and Darrick Hamilton analyze the process with a view to policy solutions.

And over three and a half centuries after the Witte Paard voyage, there seem to be pronounced continuities between racial disadvantage as it formed in the seventeenth century as race-based slavery took shape within a gathering process of capitalist development and what some call “the road to zero wealth” for African-descended families in the United States today. The debate over capitalism and slavery might well take as its anthem Ta-Nehisi Coates’s contention that “The plunder of black life was drilled into this country in its infancy and reinforced across its history, so that plunder has become an heirloom, an intelligence, a sentience, a default setting to which, likely to the end of our days, we must invariably return.”

About the author: Calvin Schermerhorn is a professor of history at Arizona State University and author most recently of Unrequited Toil: A History of United States Slavery.

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Jim Crow as an Economic System

Americans are increasingly aware of the racial wealth gap and the state and federal policies that not only created this inequality, but also deepened it over many generations. Yet conversations about the racial wealth gap have not given segregation, aside from the subject of residential segregation, the attention it deserves. To be sure, residential segregation is part of a broader program of segregation in the United States, a program that made the activities undertaken by African Americans—from renting property to gaining an education—more expensive, while also excluding Black people from opportunities to make economic advances.

Ta-Nehisi Coates has described segregation as “plunder”—as the redistribution of African-American wealth to white people and the institutions that operated to benefit white people. Coates’s understanding of Jim Crow—along with slavery and an unjust incarceration system—as systems of plunder is an important part of his argument in favor of reparations. While many scholars have been aware of segregation as a system with economic consequences for quite some time, they tend to marginalize this aspect, focusing more on its political and psychological effects. Yet Jim Crow was fundamentally an economic system, influencing what work people did, how well they were compensated for their labor, and what standard of living they were able to afford. The impacts of this racialized economic system last to this day.

From Slavery to Segregation

Much has been written on the costs of slavery to enslaved people, who were torn away from their families by sales and subjected to increasingly harsh violence as cotton growers sought to extract more work in order to meet expanding demand. Those who survived slavery left the institution with “nothing but freedom” and little prospect of gaining wealth. Because slavery functioned by stealing the labor of enslaved people and denying them ownership of resources, it makes sense that scholars would understand it as an economic system—one that left African Americans at a deep disadvantage in their efforts to gain wealth. But Jim Crow did these things, too.

Historians tend to treat Jim Crow almost exclusively as a legal, political, and cultural system—shaping where African Americans were allowed to go, whether they voted, and how they acted in public. Let us pause to consider another important aspect of Jim Crow—to think of it as an economic system that imposed financial burdens on African Americans. I will not attempt to tally these costs, but to point to some of their shadows. Rather than focusing on isolated examples, these are elements of a broad system of economic confiscation and exclusion—a system that contributed to the depth and width of America’s racial wealth gap.

Southern states enacted the first Jim Crow laws during Reconstruction and the bulk of them just after the turn of the twentieth century. The segregation of public spaces served a number of purposes beyond ensuring that “social association” did not take place. It worked to mark Black and white people as different—and one as inferior to the other after the institution of slavery had ended. Segregation also went hand in hand with disfranchisement. Wishing to rein in Black voters and their white allies in the Republican and Populist parties, the Democratic leadership envisioned segregation as a way of preventing lower class whites from aligning themselves with Black voters.

Maintaining a hierarchy with one group permanently on the bottom proved beneficial not just for the political adversaries of African Americans, but also for employers. When slavery ended in the United States, white southerners attempted to replace slavery with other methods of controlling the labor of Black people. They forced African Americans to sign labor contracts through Black Codes and lynched thousands of Black people, which worked to create a climate of fear that made sharecroppers and tenants less likely to fight against the terms of their labor, for example. Over time, they came to segregation, which limited the opportunities of Black workers, forcing them to accept the only jobs available to them: agricultural and industrial jobs that paid lower wages to African Americans than to whites in the same roles. Stuck in jobs relegated to people on the bottom tier, with no prospects of advancement, African Americans were made a class of low-paid workers.

Confiscating Wealth from Blacks through Taxes and Residential Segregation

While African Americans were underpaid, they still paid their share of taxes. Segregated public spaces excluded Black people from institutions and amenities that they helped to fund through tax dollars. As contemporary observer Stetson Kennedy pointed out, “virtually all of the public swimming areas in the segregated territory have been reserved for whites only, including those which have been purchased and operated with tax money”—money coming from both white and Black taxpayers. More significantly, Black would-be college students who were denied education at public universities were also robbed of the education their families funded through taxes. African Americans wishing to use public libraries were also confronted with roadblocks. In order to give himself an education using his local public library, Richard Wright borrowed a library card from a white man, then pretended that the books he checked out were requested by this white man. In all of these examples, money was taken from African Americans and funneled into “public” resources reserved for the use of white people.

At the same time these public resources were segregated, urban neighborhoods were also becoming more segregated. Planners were designing segregated suburbs, often utilizing restrictive covenants (private agreements that prohibited property owners from selling their property to nonwhites). Through its various programs, the federal government also reinforced housing segregation. For example, the Home Owners’ Loan Corporation designated Black and mixed-race neighborhoods risky investments (whether the residents were poor or middle-class) in appraising the credit-worthiness of neighborhoods starting during the New Deal. This process, called redlining, not only deterred investment in Black neighborhoods, but also decreased home values for those African Americans who did own their own homes.

Thanks to restrictive covenants, redlining, the unwillingness of realtors to show them properties in white neighborhoods, and other measures, African Americans found themselves living in all-Black neighborhoods. Tax dollars were taken from them directly (as property owners, through taxes) or indirectly (through rent) for municipal services like streetlights and sewage, but little was given them in return; Black neighborhoods provided few services and poor schools compared to those in white neighborhoods.

Black buyers, even while they received fewer municipal services, also found themselves paying above the white market rate for properties. For example, in a tactic called “blockbusting,” realtors purchased properties from a few white people, then sold those properties at inflated prices to African Americans eager to move into better housing stock. As these Black buyers moved in, white homeowners fled, selling their property to realtors at low prices. Those properties were then resold to Blacks at high prices. Through blockbusting, realtors extracted money from both white sellers and Black buyers. Of course, buyers and renters who paid more money for their homes had less money available to spend on their other expenses—including, for buyers, the principal on their property, and for renters, a down payment on a home of their own.

By the 1970s, African Americans became targets of what Keeanga-Yamahtta Taylor terms “predatory inclusion.” The real estate and banking industries sought out poor Black women for high-interest loans, knowing that these borrowers were likely to “fail to keep up their home payments and slip into foreclosure.” It was the poverty associated with living in the “ghetto” that made these borrowers targets of unscrupulous bankers.

The Costs of Segregated Education and Low Expectations

The economic consequences of segregation are visible, too, in education. White southerners did not support universal public schooling for African Americans during the age of Jim Crow. This meant that Black southerners had to scrape together what money they could to educate their children. In many places in the South, there were no schools for Black children. The education of Black children conflicted with the desire of white landowners to use cheap labor to plant and harvest their crops; children were the cheapest workers available, and the crops would not wait for the school term to finish up.

By the 1910s, aware that the desire to educate their children was one factor propelling Black workers to migrate to the North, white leaders in the South had become somewhat more open to educating African Americans. The Julius Rosenwald Fund sent money from the North to help pay for the construction of schools for Black children in the rural South, while African Americans also contributed cash, labor, and tax dollars. By the 1930s, a system of public education was available for African Americans in the South. Outside funding was essential to the project of providing schools for Black children, as white leaders in the southern states would not use the funds contributed by Black taxpayers for Black schools. After disfranchisement, less and less money was put toward educating Black students, as African Americans could not advocate for themselves politically.

Between 1900 and 1910 (the set of years during which disfranchisement was rolled out), less money was spent on Black education per student, school terms for Black students were shortened, and salaries paid to Black teachers were cut in the southern states. Less money was spent on the education of African Americans than Blacks paid in tax dollars; the money that Black taxpayers paid into the system was siphoned off for white schools. This trend meant that African Americans experienced “double taxation,” according to James D. Anderson. “Southern public school authorities diverted school taxes largely to the development of white public education,” and Blacks responded by “making private contributions to finance public schools.”

It is important to note that Black schools, even while they were short on resources, were successful in some ways. They helped to strengthen Black communities and inspired pride in students. But segregated schooling did exact a cost, and it continues to do so. African American students often attend underfunded schools in inner cities, where they receive educations inferior to those offered in nearby suburbs and where they are not prepared to do well in college. Attending these schools, Black students, we can assume, also miss out on the opportunity to cultivate what Pierre Bourdieu calls the “cultural capital” and “social capital” that would allow them to more successfully network with elites once they enter the workforce. Cultural capital includes things like accent, tastes, modes of behavior—qualities that make someone seem to fit within a particular group or class, while social capital describes a person’s social network. It is at the moment of entering the workforce that these other types of capital most directly connect to economic capital. According to sociologist Lauren Rivera, the people responsible for hiring at high-status companies tend to prioritize cultural fit when considering job candidates. How much status and income have been lost to capable African Americans had they been given a decent education and access to this culture?

And what are the economic consequences of a feeling of inferiority, or of what Nell Irvin Painter calls “soul murder”? In The Fire Next Time, James Baldwin describes the low expectations that white society held for African Americans: “You were not expected to aspire to excellence: you were expected to make peace with mediocrity.” The effect of low expectations, of course, is that often one is unable to see oneself in positions beyond the lowest ones. By putting Black people on the lowest level of society and expecting that they stay there, Jim Crow dampened their aspirations. While it may be impossible to measure the cost of low aspirations—the lost esteem and pay due to the doctors and lawyers and professors who might have been—it is worth noting that there is indeed a cost.

Measuring the Costs of Jim Crow

Why is it that the economic aspect of Jim Crow does not get the attention it deserves, outside of the scholarship on residential segregation? Part of the problem is that there are incorrect or inadequate assumptions at play: that Jim Crow was driven by racism alone, by a distaste for African Americans and fear of intimacy with them. Racism is not sufficient in explaining this program. The larger story includes financial advantages to whites—to elites who maligned and segregated African Americans in order to justify disfranchising them and underpaying them in the jobs set aside for them, as well as poor and middling whites who enjoyed elevated standing in their communities compared to African Americans and with this, access to better jobs.

Surely, too, evidence can be difficult to access. For example, while enslavers left account books showing how much labor they stole each day from their enslaved workers, it is difficult to quantify the wages lost due to a system of segregation that labeled certain jobs “Black-only” and others “white-only.” The larger problem is that the most significant costs of segregation are related to activities that never happened, because segregation prevented them from happening—such as, for example, African Americans taking advantage of better schools and networking opportunities to advance in society. Ascertaining the economic toll of Jim Crow is a daunting task, but an essential one for those of us who wish to understand the extent of inequality in America and the myriad ways that white supremacy impoverished African Americans over the generations.

About the Author: Elizabeth A. Herbin-Triant, an associate professor of Black Studies and of History at Amherst College, is the author of the essay “In Search of the Costs of Segregation,” published in Reckoning with History: Unfinished Stories of American Freedom, from which this article has been adapted, as well as the book Threatening Property: Race, Class, and Campaigns to Legislate Jim Crow Neighborhoods.

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What’s even more challenging, though, is finding articles that situate current issues within their historical context. To help you save time and showcase some interesting recent work, this first issue of This Week in Economic History, includes:

• Historical Highlights

• Recent Essays & Reviews

• CFPs, Conferences, & Upcoming Events

• Funding Opportunities

• Jobs

Instead of skimming a handful of updates from half-a-dozen newsletters, This Week in Economic History is a weekly digest that brings it all together. To get full access to the weekly update, consider becoming a paid subscriber.

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Historical Highlights

America’s First Copyright Law

On May 31, 1790, George Washington signed into law the first U.S. Copyright Act, establishing federal protection for authors and creating the foundations of American intellectual property rights.

Forced Transfers and Removals

On May 28, 1830, Andrew Jackson signed the Indian Removal Act, authorizing the transfer of millions of acres in the Southeast for white settlement and reshaping the economic geography of the Old South.

The Rise of an Indicator

On May 26, 1896, former journalist, Charles H. Dow, published the first Dow Jones Industrial Average. With his colleague Edward Jones, Dow previous published the Dow Jones Railroad Average, which tracked 11 stocks—primarily railroad companies such as the New York Central and Union Pacific.

Oil Discovered in the Middle East

On May 26, 1908, the Anglo-Persian Oil Company, a British Oil Company, found oil in in Persia—a region that later became known as Iran. “It's the first big petroleum find in the Middle East,” as Randy Alfred writes, “and it sets off a wave of exploration, extraction and exploitation that will change the region's — and the world's — history.”

The End of an Era

On May 26, 1927, the last Ford Model T rolled off the assembly line in Ford’s factory in Highland Park, Michigan. Around 15 million cars were produced in that factory over a period of 17 years.

• In “The Model T,” their recent article for the Journal of Economic History, Shari Eli, Joshua K. Hausman and Paul W. Rhode “ask why the United States adopted the car more quickly than other countries before 1929. The answer is in part the Model T.”

Recent Essays & Reviews

Dana Frank, “Dangerous Products and People,” Boston Review

In June 1982, as employment in the U.S. auto industry continued to plummet, two white autoworkers, one of them recently laid off, started harassing a Chinese American man named Vincent Chin in a Detroit strip joint. “You little motherfucker, you’re the reason we don’t have jobs,” one of them, Ronald Ebens, spat out. When Chin, there to celebrate his upcoming wedding, confronted them, a fight broke out. Chin left the club, but the two men later found him in a McDonald’s, chased him down the street, and beat him to death with baseball bats…

Michael Kazin, “What America Made of Marx,” The New Republic

The young cigar maker in New York City attended a few socialist meetings in the 1870s. But he longed to hear “constructive” ideas about how to achieve a better life for himself and his fellow workers. Then an older craftsman, who was a veteran of the European left, offered to take him through “something tangible” that “will give you a background philosophy.” That something was The Communist Manifesto…

Adelle Waldman, “How Part-Time Jobs Became a Trap,” The Atlantic

One of the great achievements of 20th-century American labor law was to set limits on how many hours of work an employer could demand from its employees. In recent years, however, working-class Americans have become susceptible to a different sort of exploitation. Instead of assigning employees too many hours, large corporations routinely give them too few, hiring multiple part-time staff in place of one full-time worker…For millions of American low-wage workers today, the problem is not overwork—it’s underwork.

Mary Tone Rodgers review of Seven Crashes: The Economic Crises That Shaped Globalization, by Harold James, EH.net

James’s central argument in Seven Crashes is that new institutions, whether they be market innovations or state capacities, generally arise out of responses to a particular kind of disruption: supply crises associated with a crash (p. 2). He constructs the argument with a comprehensive exposition in his Introduction, followed by seven chapters, chronologically analyzing the seven titular crashes. He covers the 1840s famines, the railroad and political reunification shocks of the 1870s, the first World War, the Great Depression, the Great Inflation of the 1970s, the Great Financial Crisis of 2008-2009, and the COVID lockdowns of the 2020s…

Danny Robb, “Electric Fish and the First Battery,” JSTOR Daily

In the eighteenth century, Italian scientist Luigi Galvani connected severed frog legs to metals and made the legs dance. This led him to conclude that living things possessed an “animal electricity,” an idea he explored through other scientific experiments. But fellow Italian Alessandro Volta was doubtful, and his attempts to prove his alternative theory of electricity led him to invent the first electric battery: the “voltaic pile.”

Noah Smith, “Globalization Did Not Hollow out the American Middle Class,” Noapinion

But the master narrative of protectionism is simply much more myth than fact. Yes, Chinese import competition hurt America a bit in the 2000s. But overall, globalization and trade deficits are not the main reason that manufacturing’s role in the U.S. economy has shrunk. Nor has globalization hollowed out the middle class — because in fact, the middle class has not been hollowed out.

Tommaso Giommoni, Gabriel Loumeau, and Marco Tabellini, “Extractive Taxation and the French Revolution,” CEPR

Extractive taxation is considered one of the main causes of the French Revolution. This column exploits regional variations in the French salt tax, which accounted for 22% of royal revenues in 1780, to document that areas of France burdened by a higher tax rate experienced more revolts in the years leading up to the Revolution. These effects were amplified by droughts that increased food prices and activated latent discontent. It suggests that when taxation is imposed without representation, it can become a catalyst for popular unrest, especially after negative economic shocks.

Popular on TEH

1. Gavin Benke, “Asking Enron Why 25 Years Later”

2. Peter Coclanis, “The Wright Stuff”

3. Stephen Campbell, “Bankrolling the Republic”

4. Charlotte Moy, “What Was the Lowell System?”

Podcasts & Interviews

• Charles Hecker on Zero Sum: The Arc of International Business in Russia (Oxford UP, 2025), Economic & Business History Podcast

• Latin American Development Since Independence, The Economic History Podcast

• Erik Baker on the Entrepreneurial Century, Who Makes Cents? A History of Capitalism Podcast

• Q&A with Caitlin Rosenthal, “Capitalism, Slavery, and Power over Price”

CFPs, Conference & Upcoming Events

• June 13: Public Debt & Financial Stability: From the Spanish War of Succession to the Present Day

• June 27: 52nd Annual Meeting of the History of Economics Society, Richmond, Virginia (Registration closes: June 13, 2025)

• July 15, 2025 (deadline): Call for papers for a new Special Issue in the Journal of Transport History.

• July 28: 20th World Economic History Congress (WEHC), taking place in Lund, Sweden. Register here.

• September 4-6: 4th International Conference on Indian Business & Economic History The call for submissions is open till June 10, 2025.

• September 25-26: Political Economies of Mining in the Early Modern Word

• October 3: Playing with Scale: Digital Mapping at Hyde Park Barracks

• October 9-11: 2025 Pennsylvania Historical Association Annual Meeting

• October 10: Hagley Library Fall Conference: The Power of Energy (Call For Papers deadline is June 1, 2025)

• October 23-24: Business and the Natural Environment in the History of Central and Eastern Europe

• November 20-21: From Insurance to Chartered Companies: New Developments in the History of Business, Slavery, and Colonialism

Funding Opportunities

• Hagley Library Oral History Grants (Deadline: June 1, 2025)

• British Academy / Leverhulme Small Research Grants (Deadline: June 4, 2025)

• Royal Historical Society Masters’ Scholarships (Deadline: June 6, 2025)

• H. Roger Grant Award for Outstanding Scholarship in Railroad History (Deadline: July 1, 2025)

Jobs

• The Historical Economics and Development Group (HEDG), Department of Economics at the University of Southern Denmark (SDU) invites applications for a three-year Assistant Professorship in Economic History, starting 1 September 2025. Deadline: June 1, 2025.

• Tenured or tenure-track position in Economic History, Faculty of Political Science and Economics, Waseda University (Shinjuku, Japan). Deadline: July 24, 2025.

• Princeton University, Society of Fellows in the Liberal Arts, Associate Research Scholar. Deadline August 5, 2025.

• University of California - San Diego, Lecturer in Economics 2024/2025 Academic Year. Deadline August 31, 2025.

• Part-Time Faculty- ECN 203 Economic Ideas and Issues (Summer Session 1), Syracuse University (Online). No Deadline.

• University of Michigan - Ann Arbor, National Center for Institutional Diversity, Research Fellow, Inclusive History Project. No Deadline.

• Tulane University Global Humanities Fellow. No Deadline.

• Asian University for Women, Postdoctoral Fellow in Humanities (Andrew W. Mellon Fellow). No Deadline.

Jackson’s War Against the “Monster Bank”

A common refrain among astute observers holds that the United States has in recent decades descended into a “New Gilded Age” that explicitly recalls the income inequality, class conflict, monopolization, and corporate malfeasance of the late-19^th century epoch dominated by unscrupulous robber barons. Yet, as this article shows, fears of corporate money corrupting democratic elections predate the Civil War and may even go back to the country’s founding.

President Andrew Jackson’s political conflict with the Second Bank of the United States (BUS)—the “Bank War”—was a case in point. In an issue that both defined his presidency and contributed to the development of mass political parties, Jackson drew up a grocery list of objections to the BUS akin to Jefferson’s world-famous tirade against King George III.

According to Jackson and his followers, the Jacksonians (later, Democrats), the Bank was an unconstitutional state-sanctioned monopoly that violated states’ rights, widened class divisions, undermined equal opportunity, stimulated sectionalism, rewarded foreign stockholders, and privileged rapacious speculators and creditors at the expense of hard-working farmers and artisans. One of the most common indictments of the “Monster Bank” was that it could wield its formidable financial resources to interfere in the electoral process by bribing members of the press and Congress.

Even historians inclined toward a charitable treatment of the BUS and its stewardship under the Philadelphia patrician, Nicholas Biddle, recognize that Jackson’s fears on this point had at least some basis in reality. But how much money did the Bank spend in its ultimately futile attempt to prolong its existence and avoid the wrath of Andrew Jackson?

Biddle’s Campaign

My book, The Bank War and the Partisan Press: Newspapers, Financial Institutions, and the Post Office in Jacksonian America, offers an updated and more detailed response to this question while characterizing Biddle’s efforts as one of the earliest interregional corporate lobbies in the nation’s history. Evidence from numerous manuscript collections, bank balance sheets, newspaper editorials, minutes of BUS board meetings, internal memoranda between bank officers, and records of legislative debates, sheds light on the ways in which the Second Bank propagated a positive message through space and time.

Biddle’s Campaign achieved a nationwide presence primarily because he deployed large sums of cash; because he mobilized an impressive array of branch officers, state bankers, lawmakers, intellectuals, voter counters, and confidential agents; because he communicated a relatively uniform message to disparate geographic locations; and because advancements in transportation and communication, in combination with the peculiar institutional structure of the Bank in the form of branch offices, enabled one man to reach scores of correspondents separated by hundreds of miles of distance.

Spinning the Press

In response to Jackson’s first public criticism of the Bank during his annual message to Congress in December 1829, Biddle authored an anonymous piece defending the Bank’s currency. A Senate Finance Committee report issued the following March replicated Biddle’s language in stating that the Bank provided “a currency as safe as silver; more convenient, and more valuable than silver, which…is eagerly sought in exchange for silver.” The House Ways and Means Committee followed suit a few weeks later.1 To ensure that these reports reached a wider audience, Biddle asked the Bank’s board of directors to appropriate some of the institution’s funds for printing and dissemination. The board, which was comprised of Biddle and like-minded colleagues, agreed.2

In addition, the board approved funds for printing and distributing articles and pamphlets written by former treasury secretary Albert Gallatin and George Tucker, a professor of political economy at the University of Virginia.3 Using the Bank’s funds for self-promotion was risky because it threatened to confirm Jacksonians’ worst fears and cause political blowback. Yet because Bank defenders believed that Jacksonians manipulated public opinion through gross exaggerations and demagogic rhetoric, they were willing to take the risk.

The Bank’s business model, according to a little-known internal report circulated among the Bank’s stockholders and directors, “derive[d] much of its advantages from its credit, and its general reputation for solvency.” Too many unanswered attacks in partisan newspapers might erode borrowers’ trust in that reputation, triggering a devastating bank run.4

Secret Loans and Shadow Networks

In the early months of 1831, the contours of an interregional corporate lobby began to take shape. Biddle dispatched confidential agents with bank funds to state legislatures in Pennsylvania and New York in order to procure pro-BUS resolutions.5 One of Biddle’s agents, Jacksonian newspaper editor John Norvell, wrote in March that he was “very hospitable” to a number of legislators in Harrisburg, inviting them to dine at his place, “lending five, ten, and twenty dollars to them,” which he never expected to get back.

Norvell told Biddle, “your hundred dollars are pretty well exhausted,” and worried that their secret arrangement would invite scrutiny. The editor closed with a stern plea: “For Heaven’s Sake, throw this letter into the fire as soon as you have read it. It contains some things not to be disclosed to the world.”6

The core of Biddle’s lobby was the financial assistance he extended to partisan newspaper editors for circulating Bank reports, internal documents, letters, balance sheets, and editorials. Duff Green of the United States Telegraph, James Watson Webb of the New York Courier and Enquirer, and Thomas Ritchie of the Richmond Enquirer were some of the most high-profile editors that received substantial loans from the Bank. The National Intelligencer, edited by Joseph Gales, Jr. and William Seaton, was Biddle’s preferred medium.7

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Bribery or Business as Usual?

Such loans became the subject of acrimonious congressional hearings in the spring of 1832 that threatened to derail the Bank’s hope of a new charter. A special select House committee headed by the anti-BUS Representative Augustin Clayton of Georgia pummeled Biddle’s relationship with the press in a report issued in April 1832, claiming that the bank had abused its powers because it issued loans of unusually long duration to editors without adequate security.

A $15,000 loan to Webb, in particular, exposed Biddle to charges of bribery, especially because the latter had taken this sum out of his own personal funds without recording the transaction in the bank’s account books. Nor had Biddle presented Webb’s loan application before the bank’s board as required. Although Biddle retained support among a majority of representatives and senators in Congress, at least one of Biddle’s colleagues and closest allies, BUS director Thomas Cadwalader, disapproved of the unilateral and secretive manner in which Biddle propped up editors.

When Cadwalader left Philadelphia on business in early 1832, Biddle single-handedly expedited loans to some of his preferred editors, including “an accommodation to Gales and Seaton, of several years standing.” Cadwalader contemplated resignation. While he recognized that Biddle’s behavior stemmed from his “zeal for the interests of the Bank,” he emphasized to the BUS president in no uncertain terms, “do me the justice to acquit me of all knowledge of, or participation in [these] transactions.”8

Counting the Cost of Corporate Campaigning

Historians have yet to systematically calculate Biddle’s spending and loans from January 1830 to July 1832, the period in which he was lobbying most intensely. When writing about the presidential election in the fall of 1832, famed Jackson biographer Robert V. Remini stated, “Although it can not be determined precisely…it is likely that something approximating $100,000 was spent by the institution to defeat Andrew Jackson.”

The unapologetically pro-Biddle historian, Thomas Payne Govan, wrote, “During 1831 and 1832 the Bank had spent a total of eighty thousand dollars for the preparation, printing, and circulation of documents.” Though Govan was generally detailed in his research, he only cited Henry Gilpin’s diary in this section. While his estimates for Bank expenditures on printing and circulation are roughly in-line with my own, Govan did not estimate the loans to members of Congress and editors.9

It is possible to improve upon these estimates with greater clarity and detail, though not without recognizing significant challenges and demanding a careful analysis of sources. Financial statements are scattered and contain incomplete information. Antebellum era financiers and politicians had yet to develop a standardized terminology to describe credit instruments and Biddle did not record some of his more clandestine maneuvers in the bank’s account books.

Sorting out the difference between loans that clearly had a corrupt intent and those that were merely providing convenient credit facilities, moreover, can be more of an art form than science. A list of the Bank’s “advancements” to members of Congress in one government report led one political scientist to affirm the Jacksonian charge of bribery, but closer inspection shows that the advancements were more likely just standard payments to members of Congress for their salary. The BUS, as the Treasury Department’s fiscal agent, facilitated the collection and distribution of all public moneys, including payments to public officials.10

To move beyond what previous historians have done, it is important to distinguish between loans and expenditures.11 Lending was often the sole function that enabled a bank’s continued profitability and existence. We do not gain much insight in terms of the Second Bank’s influence by adding up the total dollar amounts of various loans over time since a mere summation cannot tell us whether each loan was repaid, renewed, or defaulted.

Biddle’s secret loans to editors certainly warranted criticism and evinced bribery, but most loans to editors and members of Congress did not constitute a grievous threat to democratic institutions in the way that Jacksonians claimed.12 Our interpretation changes, however, when we consider the Bank’s spending, particularly since much of the spending was intended to influence voter behavior, the terms of debate, or the character of the public sphere. Even Biddle’s political allies in the Whig-led Senate of 1834 criticized the instances in which the Bank spent its own money to secure a new charter.13

The best available evidence I have gathered indicates that the bank spent somewhere between $50,000 and $100,000 from the start of Jackson’s first term to the veto in July 1832.14 This sum included payments to various agents (confidential and otherwise) and orders for the printing and dissemination of sundry reports, articles, treatises, pamphlets, editorials, and other documents. In the same period, the bank loaned about $150,000 to $200,000 to members of Congress and perhaps $100,000 to editors.15

One hundred thousand dollars in 1832 would be equivalent to several million dollars today, though there are many caveats to any estimate ranging over such a long period of time. For comparison, we might consider that the size of the U.S. economy in 1830, as measured in gross domestic product (GDP), was approximately $1 billion. The U.S. federal budget for 1832 was $34.6 million, which was about the same amount as the bank’s paid-in capital stock.16

The Long Shadow of the Bank War

If Biddle spent and lent so much money in an effort to secure a new charter, why did he fail? For one, his chief media allies — Webb, Green, and Gales and Seaton — were poor businessmen and lacked the energy and enthusiasm of their anti-BUS rivals.17 And because of Jackson’s opposition, Biddle needed a two-thirds majority in both houses of Congress to obtain a new charter, an exceedingly tall order with a popular president and a nation increasingly polarizing along partisan lines.

As I’ve written elsewhere, the Jacksonians appropriated publicly-funded patronage networks in state and federal bureaucracies to counter the Bank’s prowess. An unnamed BUS officer at the branch office in Richmond, Virginia provided an additional reason: corporate lobbying could backfire. In his view, if Biddle sent pro-BUS material there, “certain demagogues in the district” would “indulge in the most shameless misrepresentations, and invectives against the Bank.”18 Not only was this a lesson that public relations campaigns could backfire, but that donations and favorable media coverage in and of themselves, whether in 1832 or in the twenty-first century, do not guarantee any particular outcome, even if they shape political behavior in powerful ways.

About the Author: Stephen W. Campbell is a historian, author, and lecturer who teaches in the history department at Cal Poly Pomona. He holds a master’s degree in history from CSU Sacramento and a doctorate in history from UC Santa Barbara. A California native and early-19^th US scholar who specializes in political and economic history, Campbell has authored several peer reviewed articles and has been teaching college-level history courses since 2007. His book, The Bank War and the Partisan Press: Newspapers, Financial Institutions, and the Post Office, has recently been published by the University Press of Kansas. You can find him on Twitter at @Historian_Steve.

Although the “speculative bubble” is one of few financial concepts to regularly show up in popular culture, in academic financial economics it is a remarkably controversial topic. There are unresolved debates surrounding what constitutes a bubble, whether bubbles actually exist, whether central banks should take action in order to ‘prick’ bubbles, and why, exactly, bubbles often lead to economic recessions.

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What Is a Bubble, Really?

Even the use of the word “bubble” can provoke the ire of economists: Peter Garber describes it as “a fuzzy word filled with import but lacking any solid operational definition”, whereas Eugene Fama simply states that “the word ‘bubble’ drives me nuts”.

Assuming that bubbles actually exist as a recurring phenomenon, how should they be defined? Charles Kindleberger defined a bubble as any substantial upward price movement followed by a crash. This, however, feels incomplete: if an industry grew due to unforeseeable good news, before shrinking due to unforeseeable bad news, it would not seem accurate to describe the event as a bubble. Peter Garber therefore proposes defining a bubble as “a price movement that is inexplicable based on fundamentals”, which seems more consistent with the popular understanding of the word.

A problem with Garber’s definition is that, although it is more precise, it renders bubbles impossible to identify with certainty. This is because testing for market efficiency always invokes a ‘double hypothesis’ problem: one can never tell whether prices were truly inconsistent with fundamentals, or they just appear to have been because the pricing model used for the test was incomplete.

One solution is to avoid using the word ‘bubble’ at all. But given how frequently the concept appears outside of academia, it would be absurd if academic finance had nothing to say on the subject at all. In practice, the most sensible solution is often to revert to Kindleberger’s definition.

Why Bubbles Matter

Why are economic historians interested in bubbles? There are purely historical reasons to be interested in these events: they have often played a central role in the development of financial markets and corporate law, most notably with the Bubble Act of 1720. However, this is also a field in which the past can directly inform the present.

The potentially severe economic consequences of bubbles makes their study essential, but they are also rare events, and acquiring an overview of the subject is almost impossible without a historical perspective. Economic history has therefore recently contributed to three areas of contemporary, policy-relevant debates surrounding bubbles.

The first area is the central question of whether bubbles represent examples of market irrationality. The historical evidence on this point is somewhat mixed. Qualitative evidence has been used to suggest that bubbles result from mass irrationality, or, as Charles Mackay put it, the ‘madness of crowds’.

Madness or Model Error?

However, closely analyzing share prices during famous episodes often contradicts these stories. That doesn’t mean prices at the peak were “correct,” but in hindsight, they often appear justifiable given the models investors used at the time. For example, Gareth Campbell has shown how prices during the British Railway Mania, although inaccurate in hindsight, were generally consistent with the pricing models widely used at the time. In practice, these models overestimated the sustainability of high initial dividends. But this is a long way from the ‘madness’ described by Mackay.

The evidence from historical bubbles suggest that, while prices might not always have perfectly reflected underlying fundamentals, the popular characterization of bubble investors as naïve fools absorbed by a speculative frenzy is inaccurate.

To Prick or Not to Prick: Central Banks and the Politics of Prevention

The second area is the question of whether central banks should raise interest rates in order to ‘prick’ a bubble, thereby preventing adverse economic consequences if it is allowed to grow. There are strong economic arguments for and against this point, but historical evidence generally suggests that it is a bad idea. Ben Bernanke, among others, has argued that the attempts of the Federal Reserve to burst the asset price bubble on the eve of the Wall Street Crash were partly responsible for the Great Depression. Hans-Joachim Voth has convincingly shown that a similar mistake was made in Germany in 1927, with even more severe political consequences.

The counter-argument put forward by Nouriel Roubini is that these particular examples involve monetary policy which was ‘botched’, and more well-informed efforts to influence asset prices could be effective. This is theoretically possible, but any historical examples seem insignificant in comparison to the severe consequences of the aforementioned attempts to burst bubbles in the 1920s.

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When the Bubble Bursts

The most consequential question may be what comes after a bubble: why do so many end in economic crisis? Here there are two plausible mechanisms: the ‘wealth effect’ and the ‘debt effect’. The wealth effect argument is that the bursting of the bubble inflicts heavy losses on investors, who respond by decreasing spending, thus reducing aggregate demand. The debt effect argument is that, after the bubble bursts, demand is reduced because the public are less inclined to borrow, and banks are less inclined to lend.

A 140-year study by Óscar Jordá, Moritz Schularick, and Alan Taylor finds that, while both of these mechanisms seemingly occur, recessions are much more severe when the bubble was accompanied by a high level of leverage. John Turner in his book Banking in Crisis, has suggested that bubbles which are driven by indebtedness, such as the housing bubble of 2006-07, are particularly dangerous for banking systems and economies.

This article was originally published by The Long Run and is reprinted here with permission of the Economic History Society.

By Gavin Benke

In 1999, Enron – the Texas company that famously imploded in accounting fraud – launched its “Ask Why” advertising campaign. When the commercials aired on channels like CNBC, viewers were bombarded with seemingly disconnected images that included everything from Ghandi to the NASA space shuttle. Music played in the background that Enron’s internal marketing literature described as both “urgent” and “haunting.” In other words, Enron’s “Ask Why” campaign was deeply weird.

Along with the images and music, the commercials featured artificially manipulated voices chanting the word “why.” From this odd din, an occasional declarative phrase would pop out. In one TV spot titled “Ode to Why,” a voice explained to the viewer that “why” was a “sharp and abrupt word, which can bring years of conventional assumptions to a jarring halt.”

Unlike many ad campaigns, Enron’s marketing people had apparently decided against an upbeat message, preferring a far more unsettled visual sensibility. Case in point: one commercial focused on a beleaguered man weighed down by a business suit made entirely out of metal.

The symbolism was, of course, hard to miss. As an article in the employee magazine explained, the metal suit was intended as a “metaphor for the conventional constraints that block change.”

It’s easy to by cynical about these ads. As many now know, not much about Enron seemed to be real, least of all its profits. For years, a number of financial and accounting schemes made Enron seem like a far healthier company than it actually was. When this fraud finally came to light in 2001, Enron quickly fell into bankruptcy, with jail sentences for its leadership soon to follow. Given this history, one might be tempted to dismiss the commercials as more evidence of the emptiness at the heart of the company. But in some ways, these odd little slices of television, and the history behind them, can tell us a lot about American business culture at the end of the twentieth century.

The television commercials were genuine expressions of Enron’s corporate culture. The team at Conquest (the advertising firm behind the campaign), began work for their client by interviewing Enron executives and developed the marketing strategy from this research. Consequently, the ad campaign mirrored a deep sense of purpose inside the company. As internal communications explained to employees, the commercials were meant to reflect Enron’s “restless dissatisfaction with the status quo and its ability to quickly grasp how most things can always be improved.”

While that statement was full of a brash confidence, recent experience seemed to justify such posturing. Under the leadership of Jeff Skilling in the early 1990s, the company had successfully developed complex financial instruments that could be used to buy and sell natural gas. Among the lessons the company’s leadership took from that triumpth was a conviction that the solution to a business problem could be found in unconventional approaches, instead of deep knowledge of any particular industry. In the years that followed, Skilling led Enron into markets such as wholesale electricity and Internet broadband. Fatefully, though, the company was unable to recreate its first success and hid its failures through fraudulent accounting.

Big Business as Radical Disruptors

Still, Enron became a celebrated business case study. In the late 1990s, business writers touted the Houston company’s freewheeling environment, where employees were given a lot of room to experiment and build new businesses. One management book described Enron as a “nuclear reactor” where workers frenetically bounced ideas off each other. In many ways, the “Ask Why” commercials offered viewers outward expressions of the corporation’s ostensibly radical approach to business.

“Ask Why” was not Enron’s first attempt at advertising, but earlier marketing efforts did not begin to approach the scope and ambition of the commercials that started airing on February 6, 2000. Ultimately, “ask why” was meant to “become the rallying cry of a new generation of business.” Certainly, the timing was right for a company like Enron to run ads that seemed more like manifestoes than anything else.

The rise of the Internet in the middle of the decade did more than introduce new technologies, but also ushered in a cultural revolution in American business. No longer the province of button-downed up-tight company men or sleazy Wall Street traders, business was now radical and anti-establishment. Clay Christensen’s 1997 book, The Innovator’s Dilemma helped introduce “disruption” into the corporate executive’s vocabulary. In the pages of Wired magazine, writers were proclaiming “new rules” for a “new economy.” The very names business magazines that started publishing in the 1990s - Fast Company, eCompany Now, and Business 2.0 - all suggested the same sense of impatience with conventional wisdom that informed both the “Ask Why” campaign and Enron’s corporate culture. The Internet revolution in California may have been the center of the action, but the Texas company had no trouble fitting in.

However, if a booming stock market seemed to be proof that this new way of doing business had succeeded, there were problems growing beneath the surface. Business culture in the 1990s was awash in buzzwords and proclamations of revolution, but such excitement came at the expense of precise business strategies. It was all enough for the business school professor Michael Porter to warn about a drift away from concrete thought in the pages of the Harvard Business Review. In early 2001, Porter wrote that “words in the Internet lexicon” could “also have unfortunate consequences” such as “faulty thinking and self-delusion.” It is a deep irony that Jeff Skilling, the CEO who was largely credited for transforming Enron, was featured in a Business 2.0 cover story that ran as a rebuttal to Porter’s argument. As it turned out, Enron was the worst possible example one could offer in defense of this new business scene.

In fact, the lack of precision and “faulty thinking” that Porter wrote about had taken hold at the Texas company. For example, Enron’s 1999 annual report admitted that the company was “moving so fast that sometimes others” had “trouble defining” what it did – before suggesting that such confusion was actually a virtue instead of a concern. At the end of the decade, Skilling acknowledged (with some sense of satisfaction) that it was getting harder and harder to come up with a vision statement – that pithy explanation of a company’s ethos. Skilling told interviewers for a business school case study that meetings about a new vision statement tended to be wide ranging conversations that included “things about markets; things about new things; things about innovation;” and “things about creativity.” Ultimately, such a lack of clarity would be fatal.

In fact, the very same month that the Harvard Business Review ran Porter’s essay, Fortune magazine published an article questioning Enron’s high stock price alongside its penchant for “vague” and “grandiose” language. As 2001 wore on, the questions about Enron’s business grew, clearly taking a toll on Skilling. In fact, the increasingly embattled executive publicly called a skeptical equity analyst an “asshole.” (Claiming exhaustion, Skilling himself would resign from the company that summer). After that incident, a few Enron workers had shirts printed that read “ask why, asshole.” Such a defiant posture, though, was in retreat. Internal surveys revealed that many employees had lost faith in Enron’s “ask why” ethos. As one employee put it in 2001, “What people are defining as chaos now we would probably have defined as creativity and entrepreneurship a year ago. But the bloom is off the lily right now.”

The Fall of Enron

The real turning point, though, arrived in October 2001, when Enron’s management announced a billion dollar loss. From there, the series of derivatives deals that were moving losses, assets, and debts on and off the company’s balance sheet became public knowledge. Enron completely fell apart by the end of the year, becoming (for a time) the largest bankruptcy in U.S. history. Perhaps inevitably, the inherent drama of those final months transformed Enron into an iconic example of white collar crime.

The company’s swift demise might have been a shock to some; but the hints of impending collapse can be found in one of the commercials from the “Ask Why” campaign. With the high-pitched “whys” humming in the background, the ad opens on equity analysts from investment banks taking their seats in a drab, windowless hotel meeting room to hear a presentation from some fictional company’s management team.

In the bathroom, a nervous CEO practices delivering the bad news about the stock’s performance. Staring into the mirror, he tries out a smile that might be appropriate to the moment – contrite, but also pleasant and calm – before delivering the line: “This was a challenging fiscal year for the company.” In keeping with the unsettling aesthetic that typified the entire campaign, the commercial cuts to metal ducks moving along in a shooting gallery. Soon, the CEO’s head appears in the row before being knocked down by a shooter the viewer never sees.

Watching the commercial, two decades after it first aired, it’s easy to imagine Jeff Skilling, instead of that fictional executive, staring into that bathroom mirror. Much like the vignette in the commercial, Enron’s leadership would soon have to do quite a bit of explaining to investors, stock analysts, journalists, and prosecutors. In those last desperate months of the company’s existence, perhaps Skilling realized all the ways in which the same business culture that he and others at Enron had so completely embraced in the “Ask Why” campaign had helped push the company towards “faulty thinking” and, finally, its own demise.

About the Author: Gavin Benke is the author of Risk and Ruin: Enron and the Culture of American Capitalism, published by the University of Pennsylvania Press in 2018, and a Lecturer in the College of Arts and Sciences Writing Program at Boston University. His current book project explores corporate visions of the future in the second half of the twentieth century. Follow him on Twitter: @GavinBenke

By Peter Coclanis

This essay grew out of a conference session honoring Gavin Wright held at the 2024 meeting of the Western History Association in Kansas City, Missouri. At the session, four economic historians—Naomi Lamoreaux, Paul Rhode, Warren Whatley, and I—examined various aspects of Wright’s work over the course of his long career, and Wright offered some remarks of his own. My task at the session was to discuss Wright’s work on the U.S. South since the time of the American Civil War. The author would like to thank Gavin for help with some of the biographical details below.

An Unintended Turn Toward the South

If economic historians were asked to name the scholar who has contributed the most to our understanding of the southern economy, I am quite confident that Gavin Wright would be their overwhelming choice. He took only one U.S. history course as an undergraduate at Swarthmore and “never set out to be a regional specialist,” so it is seemingly ironic that his work has reshaped our understanding of the American South and the field of economic history more broadly.1

Under closer scrutiny, however, irony yields to biography and to “event analysis,” as it were. Not event analysis in a formal social science sense, but in the sense that Wright’s focus on southern economic history reflects what many economic historians would see as path dependency—whereby certain aspects of his background powerfully influenced his intellectual trajectory. Though he has veered off this path from time to time, he has always returned. I am not saying his path was determined in any hard and fast sense—Wright is anti-deterministic by temperament and open to contingency—but there does seem to be a clear pattern in his career, a pattern that grew out of a path established early on.

A few biographical details are needed to demonstrate my point; but first a disclaimer. I first met Wright more than 40 years ago in Charleston, South Carolina at the annual meeting of the Southern Historical Association, where Wright offered a blistering critique of my work. We have stayed in touch intermittently over the years and (despite our first encounter) have a friendly professional relationship, though I can’t say that I know him all that well in personal terms. However, most of the biographical details below come not from my personal recollections but from Wright’s published work, and from a very interesting and informative five-part oral history he did with the Stanford Oral History Program in 2016.2 These sources are sufficiently revealing to allow us to trace—and I would argue help to explain—his principal scholarly path.

The Making of an Economic Historian

Wright was born, auspiciously, in New Haven, Connecticut in 1943. His parents were liberal Quakers with firm commitments to social justice. His father spent his career in various capacities in the social work community, mostly in Minneapolis, while his mother was a teacher. Wright, together withhis three siblings, grew up in a white middle-class neighborhood in that progressive Minnesota city.

After graduating from a public high school in Minneapolis, Gavin went off to college at Swarthmore, an elite Quaker college in suburban Philadelphia. Wright did well there, majoring in economics. At Swarthmore, he was particularly influenced by Joseph Conard, an economist whose “Quaker-based” perspectives proved intellectually and temperamentally appealing. These values presumably included some of those comprising the well-known acronym regarding Quaker values, SPICES: simplicity, peace, integrity, community, equality, stewardship.

Wright was also involved in liberal political activities at Swarthmore, encountering students who were even further to the left. Two of Wright’s most powerful student experiences during this period came not in the classroom or in campus politics, but in summer programs. In the summer of 1963, he participated in a project with the American Friends Service Committee in Warrenton, a small town in the poor, majority black, tobacco-belt county of Warren, North Carolina. Working with a team of students from around the country (as well as a few international students), Wright’s assignment was to increase black voter registration in that small town. A year later, in the summer of 1964, he participated in a skill-enhancement program for underserved youths of all races in the greater Philadelphia area. In towns like Chester, a small city near Philadelphia, the project developed into the Upward Bound program that still exists today. In Chester, Wright deepened a keener appreciation of the role of class in America. And in Warren County, located in the northeastern part of the North Carolina piedmont, Wright encountered the poor rural South for the first time—an experience that sparked questions about race and poverty.

Eager to refine his thinking about economic and social issues and develop analytical tools that would allow him better to explain them, he enrolled in the PhD program in Economics at Yale. In New Haven, he encountered luminaries such as James Tobin, and he enjoyed his general coursework, albeit without any sense of exhilaration.

Although he spent a good bit of time in political activism while a graduate student—especially relating to the civil rights movement in New Haven—Wright gradually found his academic footing, first in William Parker’s required course in economic history. He later joined Parker in the summer of 1966 to work on a research project at UNC-Chapel Hill. Along with Parker, Wright also worked with my late colleague, Robert Gallman—the greatest empirical economic historian I’ve ever encountered apart from Paul Rhode. The key deliverable from this project was, of course, the famous Parker-Gallman census sample of the southern cotton economy in 1860. The data proved vital not only to Wright’s dissertation but also to generations of southern economic historians. Though the project wasn’t completed in 1966, Wright’s experience on the project and his engagement with Gallman led him to embrace economic history.

It was in Chapel Hill that Wright’s personal history, interests, values, and temperament came together in a project on slavery and the economy of the Old South. To be sure, the way these factors came together was complicated. He wasn’t seeking to find a linear connection between what he saw and experienced in Warren County, N.C. in the summer of 1963—or the condition of blacks in New Haven in the 1960s for that matter—with the economic history of the South. But he came to see both as fundamentally related in an evolutionary way to the South’s antebellum history and its later status as “a locus of backwardness in the midst of prosperity.”3 And it was with the South’s anomalous economic status in the “Land of Abundance” that Wright devoted much of his professional career. As this essay originated from a conference session that aimed to honor and assess the career contributions of an economist, it was organized, appropriately, via a division of labor. Regarding Wright and the American South, Paul Rhode, who drew first straw, handled Wright’s work on the antebellum period, and I provided commentary on some of his work treating the long period thereafter.

Wright may not have been completely convinced that he had received systematic training in economics at Yale, but he came away from the program with the requisite analytical and technical skills to succeed in the discipline. Working with Parker at Yale sparked a growing interest in southern economic history, which, as suggested above, further developed during his stint in Chapel Hill, but also during a postdoc at the University of Chicago between 1971 and 1972. At Chicago, Wright not only worked with Robert Fogel and his research group examining the economics of slavery, but he also began collaborating with scholars such as Howard Kunreuther, a decision scientist who was also interested in the South. Kunreuther and Wright, of course, went on to produce several thought-provoking articles in the 1970s. In these articles, they sought to explain the complex role of risk considerations in the crop mix farmers produced in the postbellum South.4

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Institutions and Inflection Points

While Wright’s work in the 1970s centered around the antebellum period, his collaborations with Kunreuther, his award-winning 1974 essay in the Journal of Economic History, and his last chapter of The Political Economy of the Cotton South (1978), all foreshadowed his later work on the postbellum South. And at the very end of the decade, he turned his attention to the question of labor in the southern textiles industry, which industry began to emerge in its modern form after 1880.5

There were several key takeaways from Wright’s work in the 1970s regarding the postbellum southern economy: the change in the political economy and institutional basis of agriculture due to the war and emancipation; the rise of tenancy and sharecropping; the decline of self-sufficiency among southern farmers; and most important of all, the declining rate of growth in the global demand for cotton, which hamstrung the institutional development of the South for generations. To understand another very important development—the rise of the southern textiles industry in its modern form—Wright emphasizes the quantity of cheap labor in the region, which became especially decisive after 1875.

While still at an early stage in his career, Wright was already demonstrating the scholarly characteristics for which he is justifiably known today. Such as? Detailed empirical research, of course, but also an uncanny ability to spot trends, perceive undervalued developments, ask new questions, and frame clear arguments with boldness and originality. Seen from the standpoint of 2025, it is also fair to say that his early work was generally more formal and technical in nature than his later work.

Though Wright was initially eager to show that he had mastered econometrics and other methods associated with the new economic history, it didn’t overshadow his interest in institutions, historical contingency, and human agency. Indeed, his reception within the historical world was strongly positive at a time when many other economists working in southern economic history were ignored or vilified by scholars trained in history. Wright wasn’t just respectful toward historians; he was also interested in pursuing a mutually beneficial dialogue with them—perhaps another consequence of his Quaker values. This is not to say that Wright should be seen as a kumbaya-type academic promoting harmony at all costs, though his mentor Bill Parker may have been correct in describing Wright as “Gavin the Just” in a memorable book blurb.6 Wright is open and accepting, to be sure, but he isn’t a pushover. He can dish it out when he feels the call, as he has done on occasion—whether writing on the deficiencies of Fogel and Engerman’s Time on the Cross in the 1970s, or those of the new historians of capitalism today. Indeed, as suggested earlier, I was once the recipient of a “rough ride,” as it’s known in police jargon, that Wright initiated long ago. Ouch—it hurt then (and even thinking back on it now), but in retrospect the ride was probably deserved. Maybe “Gavin the Just,” after all.

From Isolation to Integration

Wright has made numerous contributions that have shaped our understanding of the modern South, but one that stands out is Old South, New South: Revolutions in the Southern Economy Since the Civil War (1986). Almost forty years after its publication, Old South, New South remains the standard work on the region’s economic history since the time of the Civil War, and it was no surprise that it won the 1987 Owsley Award from the Southern Historical Association, which recognizes the best book on the South. In this study, Wright not only provides a deft summary of the work of other economic historians, but he also fills in numerous gaps in the literature in the service of a bold, strikingly original interpretive intervention into the political economy of the region from the antebellum era through the “long” postbellum era (c. 1865-1930). He not only calls attention to structural changes in the South—revealing a shift in power from labor lords to landlords—but he also reveals the broader political, institutional, cultural, and even moral concerns of this long era. Old South, New South was truly a work of political economy, auguring the renewal of interest in that approach among an increasing number of scholars in recent years.

Insights, large and small, abound in Old South, New South, but most readers would agree on two of the most important takeaways—both related to institutions—that together give structure to the book’s narrative arc. The first takeaway is that the southern labor market was isolated for many decades after the Civil War. This institutional development was reflected and reinforced in laws, policies, standards, and practices that functioned to establish and sustain a low-wage, low-skill, low-productivity regional economy—a “lock-in” mechanism of a sort, in other words. The second takeaway is centered around the powerful institutional role of the federal government during the Great Depression and World War II. The government established and enforced a policy regime that not only worked to boost southern incomes, but also to integrate the southern labor market—a process that finally diverted the isolated and impoverished region from the deeply-rutted and flawed economic path it had long followed.

Most scholars agree that the New Deal initiatives under Franklin Roosevelt reshaped the South, but whether these changes were revolutionary is still being debated. Some scholars, for example, view the changes as occurring more gradually, while others attribute the changes to somewhat different forces; and still others downplay the magnitude of the changes altogether. That said, no one denies that Wright’s focus on institutions and institutional changes that emerged during the New Deal changed the way we think about and periodize the southern economy in the twentieth century.

One can spend hours discussing and debating other questions raised in Old South, New South. Wright’s take on Woodward’s “colonial economy” thesis and Gavin’s provocative argument regarding the fragility of the southern textiles industry—which in his view never had a golden age—are cases in point.Moreover, I know that I’m skipping over other hugely important work, such as Wright’s numerous comparative studies on the textiles industry done in collaboration with Gary Saxonhouse. But space is limited, and Wright’s career has been long, so let us forge ahead.7

Rights and Redistribution

After the publication of Old South, New South, Wright wrote on many different themes pertinent to the modern South, but he devoted more and more of his attention over subsequent years to the confluence of race, economics, and politics. In a sense, then, he was returning—whether as an act of intellectual reversion or scholarly consolidation and career fulfillment—to the themes that originally sparked his interest in studying economics at Swarthmore and Yale.

The principal deliverable from this era of Wright’s work was, of course, his 2013 book Sharing the Prize: The Economics of the Civil Rights Revolution in the American South, which won the EHA’s Alice Hanson Jones Award for best book in North American economic history. In this monumental study, Wright both reveals the complicated economic, political, social, and institutional factors that expanded economic possibilities in the American South, and demonstrates how these developments shaped the civil rights revolution. While the federal government played a critical role, he also emphasizes the agency of African American activists, who rendered emerging economic and political possibilities into reality. Together, the”feds” and African American activists helped integrate southern labor markets, improve economic outcomes for Blacks, and desegregate schools and public facilities. Along with these efforts, they also contributed to the startling rise in black voting in the South, which materialized in a significant increase in the number of black officeholders in the region. While Wright shows how changing laws were central to this revolutionary era, he also shows how the credibility of governmental commitments to enforce them was equally important. And in an age of considerable Afro-pessimism, it is important to note that in Wright’s view, the civil rights revolution succeeded. Since the 1950s and 1960s, the southern black community has made significant economic, social, and political gains, which did not come at the expense of whites.

In his more recent work, Wright has continued to demonstrate his breadth of vision and empathies regarding black and white southerners. In one particularly interesting thread, he challenged the widespread notion that southern whites immediately and overwhelmingly abandoned the Democratic Party in response to the Civil Rights movement. Instead, he argues that the abandonment process was slow and piecemeal. Instead of an abrupt response to the Civil Rights movement, he shows how globalization and trade liberalization drove many blue-collar whites into the Republican fold, where they remain to this day. Rather than rooting this political shift primarily in racial politics, Wright places more emphasis on the economic factors that left many southern whites asking questions that Republicans seemed to have an answer for.8

A Margin of Hope

We have gained a better understanding from Wright’s analysis of both the South’s political shift to Republican control and the disappointing economic results of the shift. In recent years, Wright points out, we’ve seen stagnating incomes, stagnating communities, and declining public services in many parts of the region.9 But Wright is too open to contingency as a scholar and too committed to liberal ideals to believe that the current situation can’t change again. One source of optimism is the Hispanic population, whose increasingly important economic and political role in the region could be a vehicle of change. After all, there have been precedents before, most notably the powerful changes the South experienced during the Great Depression and World War II—changes facilitated by the federal government, which helped pull the region out the pernicious path it had previously followed. In Wright’s rich scholarship on the American South, then, there is always a margin of hope, even when things seem bleak.

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Q&A with Caitlin Rosenthal, Associate Professor of History at the University of California, Berkeley. She is a historian of 18th and 19th century U.S. history with a focus on the development of management practices, especially those based on data analysis. Her first book, Accounting for Slavery: Masters and Management, was published by Harvard University Press in 2018.

This Q&A explores her article entitled, "Capitalism when Labor was Capital: Slavery, Power, and Price in Antebellum America,” which was published in Capitalism: A Journal of History and Economics.

Johnny Fulfer: Could tell readers a little bit about your new article? What inspired you to write it and what are your main arguments?

Caitlin Rosenthal: The word capitalism often brings more confusion than clarity. I teach an economic history class called “The History of American Capitalism,” and one of the first things we do is to debate the definition. The point of the debate is for students to recognize how many different assumptions people bring to the word and how different assumptions can lead to conflict and confusion. So, when writing my recent book, Accounting for Slavery, I mostly avoided the word. The book is about the history of business practices on slave plantations, and I didn’t want my argument — that slavery was highly compatible with quantitative management practices, and that slaveholders blended sophisticated record keeping with violence — to be lost in broader debates about the relationship between slavery and capitalism.

And yet, the debate about the relationship between slavery and capitalism has continued, sparking particularly virulent disagreement between historians and economists. I think that some of these disagreements could be avoided if we were clearer about what we meant by capitalism. So this paper offers a definition of capitalism that is related not to markets, but to capital. Specifically, I argue that capitalist economies are those where capital is concentrated in the hands of a small class of people, giving them disproportionate market power, including the ability to treat labor as a commodity. I then bring this definition to late antebellum slavery, arguing that slaveholders’ calculations reflect the extent to which they regarded enslaved people as fungible commodities.

To make this argument, the article explores four case studies of how enslaved people were priced and valued. The first three show the process of commoditization, revealing how slaveholders regarded enslaved people not as individuals but as fungible units of capital and labor. These included (1) inventories of enslaved people, (2) graded price lists that sorted the enslaved into marketable categories, and (3) a system of fractional hands that rated enslaved people as ¼, ½, ¾, or full hands — units that could be summed up and standardized, which allowed slaveholders to make comparisons across diverse groups of people. The section of the paper (4) explores self-purchase, examining how pricing worked when enslaved people themselves participated in markets to purchase their freedom. This last genre of negotiation shows that planters turned their power over enslaved people into monopoly power, using it to extract above-market prices from those seeking to purchase their freedom. This case shows that slaveholders actually abandoned commoditization when it suited their interests.

The overarching goal of the paper is to push us to think more about how the ownership of capital — here human capital — shapes markets to give capitalists tremendous power. In capitalist systems, we don’t just have markets, we have markets dominated by capital.

JF: How did you become interested in this area of research?

CR: I became interested in the history of valuation and quantification after working as a management consultant with McKinsey & Company. As the person tasked with building the models, I became interested in the history of how businesses and other large organizations rely on quantitative technologies like spreadsheets to make decisions. By reducing workers to numbers, managers and investors can make sense of scale, but lots of important information is excluded from these calculations. I started looking at plantation account books after realizing that their records were often just as extensive and complex as those kept by the free factories that initially sparked my interest. In some cases, slaveholders actually kept more complete records of things like labor productivity because they didn’t have to worry about workers quitting. This led me to think more deeply about how control over labor — so extreme under slavery — enables both the collection and use of data.

JF: As you mentioned in your article, historians of capitalism have avoided trying to define capitalism. Why do you think historians have avoided this and why is it important to define capitalism?

CR: Definitions can be really limiting. If you set out with a narrow definition then it may lead you to exclude certain things before you get started. For example, if scholars assume slavery could not be capitalist, then they run the risk of ruling the possibility that it could out before they even start to understand how the economy works. So I understand the field’s reluctance to define capitalism. Starting without a definition was a good way for the field to reframe questions in powerful ways. It made it easier to see that many of the things we usually call capitalist (like cotton mills and banks) were closely connected to things we do not usually associate with capitalism — here chattel slavery.

But now, well over a decade since people started trumpeting this new field, our conversations need more clarity. What is distinctive about the system we are describing? And how can we share our findings if we don’t write precisely? This is what I try to do in the paper. I came to my definition by thinking about how capitalism changes the conditions of workers. One way of identifying capitalism historically has been to point to the rise of wage labor — something changed when an hour of labor could be bought and sold without reference to individuals. But wage labor obviously excludes slavery, so I wanted to see if I could think more broadly about what wage labor and slavery had in common, which is how I arrived at my focus on commoditization. Wage labor is highly commoditized. This paper argues that — setting aside the wage — a similar kind of commoditization characterized the variety of slavery that emerged in the late antebellum United States.

JF: You write that “leaving capitalism undefined has contributed to ongoing misunderstandings between historians and economists.” How can a shared definition of capitalism among historians and economists create a productive dialogue?

CR: I go into much more detail about the slippery politics of the word “capitalism” in my article, but one thing that I particularly push against is reducing capitalism to markets. I see capitalism as being about how capital shapes markets in ways that are often invisible but fundamentally important. Markets are rarely (perhaps never!) equally “free” for everyone — slavery is an extreme example where the market freedoms of enslavers were more important than basic human freedoms for the enslaved. Slaveholders did not see abolition as the triumph of the free market — they saw it as the expropriation of their property and they argued that it infringed on their rights to buy and sell that property as they pleased. They saw the abolition of slavery as encroaching on their own economic freedoms.

Much has been made about how much historians can learn from economists, and I think that this is an area where economists could learn a lot from historians. We are trained to look at things from multiple perspectives and to understand complex contexts. We are trained to read sources against the grain. The field of economics trains people to think about markets in the abstract, and that can lead to them to overlook how essential context (like the history of race-based slavery) continues to shape and distort markets.

JF: In your article, you wrote that one of the central conflicts between history and economics is the different ways these fields frame their questions. This is an important point, so I was wondering if you could say a little more about this. What is the primary difference in the way economists and historians frame their questions and why is it important to acknowledge this difference?

CR: I am not sure if we will ever agree on a single shared definition, but I am optimistic that offering a clear definition will help economists to understand what I am arguing. For me (and for many other historians) the goal is not to answer whether capitalism could theoretically have emerged without slavery. That is an interesting question, but it is not the question my research is seeking to answer. Rather, recognizing that capitalism actually emerged in a world where huge segments of the economy were connected to slavery, I want to understand how those connections shaped capitalism today.

These different questions also reflect different goals and methods. Economics focuses on causal questions and on economic growth — so they are interested in whether, in theory, slavery was necessary for economic growth. To me, the answer to this question about a hypothetical economy is much less useful than understanding the effects of racism and violence on our economy today. Focusing too narrowly on causality can lead you to miss the big picture. The big picture here is simply that slavery mattered, and if our goal is not just growth but equitable growth, then we have to reckon with slavery even if it didn’t “cause” capitalism.

JF: In their critique of specific books within the new history of capitalism subfield, Alan Olmstead and Paul Rhode (along with John Clegg and Bradley Hansen) point out that cotton produced by enslaved people was not the central driver of economic growth in the United States. Olmstead, Rhode, and Clegg say it accounted for only 5 percent of the national income, while Hanson writes that it was more like 9 percent. For them, slavery couldn’t have been the central driver of economic growth because it only made up a small proportion of the total national income. The tone of their critique comes across as if they are surprised why historians are saying that slavery was such an important part of American capitalism if cotton only made up a small proportion of the national income and thus couldn’t have been the central driver of economic growth. I thought this focus on cotton’s role in the national income was interesting because they are essentially implying that economic growth is capitalism. Historians of capitalism, as you state in your article, are more interested in how slavery shaped capitalism, not whether it was the central driver of economic growth. I think this distinction between economic growth and capitalism is important. What sort of issues you see with the notion that capitalism=economic growth? And did cotton have to be the central driver of economic growth for slavery to play an important role in shaping American capitalism?

CR: I think that this is an area where our failure to agree on the question is leading to a lot of misunderstanding. Are 5 percent and 9 percent big numbers? That depends on the question you are trying to answer. I would argue that those are big numbers — anything that is 5-9 percent of national income today would be considered an exceptionally important part of the economy. Does this mean slavery caused economic takeoff? Not necessarily. But it does support the contention that slavery powerfully shaped the economy we are living with today.

Since my paper is about capital, I think capital offers a useful data point for thinking about how big slavery was. On the eve of the civil war the amount of capital invested in enslaved people was between $3.1 and $3.6 billion dollars. This is about as much as was invested in other non-land domestic capital — so all of the factories and equipment that were driving industrialization. And the records that I analyze in this paper suggest that slaveholders thought about the people they owned in similar ways to how manufacturers thought about other kinds of invested capital, taking inventories and appreciating and depreciating value over time. Does that mean slavery was the central driver of growth? Again, not necessarily. But it certainly meant that the owners of all this human capital wielded tremendous power not only over the people they owned but also over the shape of the economy.

And, as I suggested above, if our goal is not just economic growth but economic justice, then we need to grapple with the legacy of slavery. Is our most important goal really to understand what causes growth in narrow terms? Or can we think more broadly about how to create growth that helps us to overcome the effects of slavery —effects that were perpetuated by conditions like Jim Crow and redlining and have resulted in the persistence of the racial wealth gap more than a century and a half after the civil war.

I am hopeful that both economists and historians can move beyond questioning whether slavery was important to answering more specific questions about how it was important and what enduring effects it created. I would love to see a research agenda that focused on questions of how and how much rather than whether slavery shaped the economy.

JF: In an interview about their critique of the new history of capitalism on Economics Detective Radio, Paul Rhode said, “In some part, it was good that historians were returning to the material world and that the cultural turn in history that began 30 years ago or so was ending and some people were returning to material conditions. In the case of slavery, it was good that people were moving away from the agency view of slavery…but they were not engaging with what economic historians had learned.” I was wondering what you think of Rhode’s statement about the new history of capitalism as a shift away from the cultural turn toward the material world. While the notion of a historiographical “turn” is problematic, as this forum in the American Historical Review demonstrates, do you think the new history of capitalism is actually centered around the analytical frameworks utilized in cultural histories? If so, do you think that some of these critiques might be overlooking the broader picture of what historians are doing, which is analyzing power dynamics and denaturalizing capitalism?

While I understand why economic historians have been critical of historians that haven’t engaged with the more quantitative economic history literature, there seems to be a bit too much focus on what the new history of capitalism is lacking and no focus at all on what it actually contributes to our understanding of capitalism. If understanding the way power works in a capitalist society is important, then it seems like economic historians will have to not only acknowledge the value of analytical frameworks that historians of capitalism utilize, but also engage with this type of historical analysis as well. Do you think I’m wrong to think this? It seems like a constructive dialogue should go both ways and right now, some economic historians have assumed that historians of capitalism are the only people that need additional training.

CR: I think both sides could use more training. But even more, I think we need more dialogue — we need to sit in the same room and get a feel for each other’s questions and priorities. I am a regular at our economic history workshop here on campus (in economics) and that workshop along with the economic history workshop I attended as a graduate student have helped me to communicate more effectively across disciplinary boundaries. But it took a lot of time, not only figuring out the questions but also the norms (historians sit quietly and listen, economists less so!).

Right now, the two fields feel like they are miles apart. If you look at how grad students are trained, one field is all math and formal modeling the other is all close reading and historiography. By the time people are interested in collaborating, they have really narrowed their questions and speak totally different languages. It’s going to be an uphill battle.

One other thing to note here is that neither field is actually united. To give just one example, economic historians in economics have imagined that the new history of capitalism is a united group working together when really we include a very diverse range of scholars asking a range of questions.

JF: I thought your definition of capitalism was interesting. You argue that capitalism isn’t just turning people and things into commodities, it is the ability of those who have accumulated capital to commoditize people and things at will. Southern planters, for instance, could turn enslaved people into commodities when it suited their interests and then say the same people were “irreplaceable” when it didn’t support their interests. This ability to choose how and when to commoditize gave them the power to determine price. While a commoditized slave was sold at the market price, the plantation owner could easily increase the price if the enslaved person wanted to purchase their own freedom and then justify this price increase by saying the enslaved person was irreplaceable. Did I get that right? While I think your definition really captures the power that capital has over labor, especially enslaved laborers, I was wondering if you could explain this power over price in a modern context.

CR: This is exactly right — I kind of glossed over this above when I gave the definition. Basically, I argue that the commoditization of labor is a sign of capitalism, but that the real story of capitalism is about how capitalists exercise power through markets. It’s about how the accumulation of different kinds of capital — from dollars and machines to racial capital — can dramatically shape the operation of markets. It’s about exposing how coercion — whether due to unequal distributions of capital or to the overt threat of violence — dramatically shapes the operation of markets. Studying markets while ignoring the context they are embedded in can lead them to seem neutral when they are not.

The paper explores the ways power shapes markets in the case of self-purchase. We know — both from price data and also from slave narratives — that many enslaved people had to “overpay” for their freedom. That is, they had to pay more than the commodity price for themselves and their children. I argue that slaveholders’ ownership of capital turned them into monopolists, and they used their ownership over enslaved people to extort these higher prices. As a result, even when enslaved people could raise the funds, they could not access fair prices.

I have been thinking a lot about these issues as we have watched the protests for black lives unfold over the past few weeks. Videos of police violence are a powerful reminder of how overt violence — and the threat of violence — is still a powerful force in our economy. The protests show police protecting property (capital) and the owners of that capital over people. These conditions not only threaten lives, but they also make supposedly neutral markets hostile and unequal places.

JF: After reading some of the critiques of the new history of capitalism, it is clear that economic historians want historians of capitalism to engage more with the quantitative economic history literature. Beyond this, what other kinds of obstacles make it challenging for economic historians and historians of capitalism to create a constructive dialogue and how do you think scholars can overcome those obstacles?

CR: I do wish more historians would use data. This doesn’t have to be complicated modeling — in fact, I think simpler is often better. As one of my favorite economists, Trevon Logan — someone who takes questions of race and power really seriously — has often tweeted that “counting” is a powerful economic tool. Even when we cannot agree on the questions, I think that economists and historians can collaborate on descriptive research, both qualitative and quantitative. And the more we collaborate, the better we will be at understanding each other’s questions — even if we end up choosing different ones.

Rosenthal’s Publications & Works in Progress

Cultural History of Business: The Age of Enlightenment (c.1650-1800), coeditor with Siobhan Talbott, under contract with Bloomsbury Press.

Accounting for Slavery: Masters and Management, Harvard University Press, August 2018

"Capitalism Where Labor Was Capital: Slavery, Power, and Price in Antebellum America" (link is external) Capitalism, a Journal of History and Economics (2020)

"Balancing the Books: Convergence and Diversity of Accounting in Massachusetts, 1875–1895," Journal of Economic History (2020)

"Abolition as Market Regulation,"(link is external) reply to Walter Johnson in the Boston Review (2017)

"Numbers for the Innumerate: Everyday Arithmetic and Atlantic Capitalism," Technology & Culture (April 2017)

"Seeking a Quantitative Middle Ground: Reflections on Methods and Opportunities in Economic History," Journal of the Early Republic (Winter 2016)

“Slavery’s Scientific Management: Accounting for Mastery,” Slavery's Capitalism. Eds. Seth Rockman, S. Beckert, and D. Waldstreicher. University of Pennsylvania Press

"In the Money: Finance, Freedom, and American Capitalism," American Quarterly (March 2016)

"From Memory to Mastery: Accounting for Control in America, 1750-1880," Enterprise & Society (December 2013)

“Storybook-keepers: Numbers and Narratives in Nineteenth-Century America,” Common-Place (April 2012)

“Fundamental Freedom or Fringe Benefit: Rice University and the Evolution of Academic Tenure, 1935-1963,” Journal of Academic Freedom (2011)

Popular Writing, Interviews & Press Coverage

"The Perils of Big Data: How Crunching Numbers Can Lead to Moral Blunders," Washington Post (Feb 18, 2019)

"How the History of Slavery in America Offers an Important Labor Day Lesson," TIME (August 30, 2018)

“Big Data in the Age of the Telegraph,” McKinsey Quarterly (Q1 2013)

"Plantations Practiced Modern Management," Harvard Business Review (September 2013)

"The Messy Link Between Slave Owners and Modern Management,” HBS Working Knowledge (January 2013)

“The long, controversial history of for-profit education,” Bloomberg Echoes (October 2012)

President Ronald Reagan (1981-89) heralded entrepreneurs as capitalist heroes, yet for the most part the policies his administration promoted did not help real-life entrepreneurs, including both small business owners in traditional sectors and venture founders in high technology.  The Reagan administration officials’ neoliberal ideology impaired their ability to promote entrepreneurship because they viewed support for entrepreneurs primarily in negative terms as the removal of government tax and regulatory burdens rather than in positive terms as the cultivation of a dynamic market infrastructure.

Reagan stressed themes of innovation, self-reliance, and freedom in his speeches and public statements as president – freedom from government, not freedom secured by government.  In his second inaugural address, for example, he linked entrepreneurialism to freedom and small government:

At the heart of our efforts is one idea vindicated by 25 straight months of economic growth: Freedom and incentives unleash the drive and entrepreneurial genius that are the core of human progress. We have begun to increase the rewards for work, savings, and investment; reduce the increase in the cost and size of government and its interference in people’s lives.

The Myth

Yet the image of an entrepreneur who thrives in the absence of government support was fundamentally flawed.  Since neoliberal leaders viewed markets as naturally occurring and spontaneously evolving, they failed to grasp how governments, industry and individuals create and sustain the market environment in which entrepreneurs flourish.  Since they situated free markets as a universal ideal, they did not recognize the range of government regulations, business practices, and social norms that govern markets, and how this governance varies across time and space.  And since they conceived of markets as a realm of freedom and regulations as constraints, they did not appreciate how much real-world markets are characterized by imbalances of power and status that constrain entrepreneurial opportunity for less privileged groups.

The irony is that the policy agenda adopted in the name of entrepreneurs – including lower taxes, lower social spending, less regulation, financial liberalization, and weaker antitrust enforcement – hurt entrepreneurs more than it helped them.  These policies helped large firms more than small firms, and financial institutions more than manufacturers.  They enabled incumbent firms to garner “rents,” meaning returns in excess of value created.  They set the stage for a sustained increase in economic inequality, whereby growth no longer benefited most entrepreneurs.  And they undermined economic opportunity and social mobility for would-be entrepreneurs, especially racial minorities and immigrants.  Startups declined steadily in the United States beginning in the 1980s (see figure).  The share of firms less than five years old in the economy decreased steadily, from about 50% in 1980 to about 35% today.

Start-up and Exit Rates for U.S. Firms

What explains the gap between the political commitment to entrepreneurs and the actual policy benefits for entrepreneurs?  In a nutshell, “neoliberal” reforms tended to favor incumbents over challengers.  Table 1 illustrates how various types of market governance constitute balances of power.  Neoliberal reforms have moved in the direction (to the right on the table) of the more wealthy and powerful, from challengers to incumbents, stakeholders to shareholders, employees to employers, etc.  Entrepreneurs require an opportunity to compete, and the government has to foster that opportunity.  As Adam Smith recognized, businessmen would prefer to collude than to compete, given the choice.  Incumbents engage in outright collusion, such as fixing prices, and more subtle anti-competitive practices, such as exclusive dealing arrangements with business partners, to fend off challengers.  So governments have to press businesses from value extraction strategies toward value-creation strategies.

Market Governance and Market Power Relationships

The free-market ideology resonated with many small business owners, who believed in self-reliance and resisted dependence on the state.  But it also served as a convenient smokescreen for policies that favored incumbents.  In fact, the Reagan policy agenda was riddled with contradictions.  It claimed to reduce regulation, but increased it.  It vowed to limit the power of the state, but marshalled the power of the state to advance its goals, from attacking labor unions to restructuring the financial system.  It promised to un-rig the economy from capture by special interests, but re-rigged it in favor of the wealthy and the powerful.  And it claimed to champion entrepreneurs, but undermined entrepreneurship.

Market Governance

Let us review this thesis by briefly surveying specific policies from the Reagan era, beginning with market governance and then proceeding to the broader policy agenda.

Antitrust

The Reagan administration shifted decisively from the proactive U.S. antitrust policy of earlier decades toward the more laissez-faire Chicago School.  It drastically cut the number of attorneys, eased enforcement, and loosened merger review. As mergers boomed, the increase in market concentration meant there were fewer small firms with less ability to challenge incumbents.

Intellectual property rights

IP protection – such as patents, copyrights, and trademarks – provides a critical incentive for innovation.  Yet it can also impede inventors, who must avoid violating the exclusionary privileges of existing IP holders.  The Reagan administration exacerbated this problem by extending patent protection to new products, such as software and business methods.  This produced a patent “thicket”: a dense web of patent rights that companies must hack through to commercialize new technology.  And it fostered non-practicing entities (“trolls”) that would buy up huge numbers of patents (largely for software),  search for possible infringements, and demand financial settlements or seek judgments through litigation.  In the process, these trolls impeded the development of new products, increased costs for businesses and consumers, and clogged the judicial system.

Financial Liberalization

The Reagan administration accelerated a process of financial liberalization that began before it and continued after.  These reforms produced a financial sector that was more competitive and less stable, facilitated financial innovation, fueled a sustained increase in the financial sector’s share of national income, exacerbated economic inequality, and permitted a major consolidation of the sector.  This eliminated many small financial institutions, weakening a major channel of finance to small businesses, which often relied on close personal ties to local lenders for credit.  The reforms also fueled the savings and loan crisis of 1986-95 and set the stage for the global financial crisis of 2008.

Deregulation

Many small business owners felt that much government regulation was expensive, unnecessary, and placed a disproportionate burden on them.  And for Reagan administration officials, attacking red-tape fit nicely with their reverence for self-reliance and economic freedom.  Yet regulations bestow benefits as well as costs.  The Office of Information and Regulatory Affairs (OIRA) has consistently found that the net benefit of regulations exceeds the costs.  And regulations do not actually impair entrepreneurship at the aggregate level.  Alex Tabarrok, a libertarian economist, designed a study to test whether the increase in regulations caused the decline in economic dynamism over the past 30 years in the United States, including the reduction in business startups and the pace of job reallocation – but he found that they did not.  To his credit, he changed his perspective on the relationship between economic regulation and economic dynamism and published his negative results, to considerable acclaim.

The Broader Policy Agenda

Let us now briefly review some other Reagan era policies and consider their impact on entrepreneurs.

Taxes

Reagan centered his attack on high taxes and big government.  His advisers proclaimed that lower taxes would boost growth and innovation.  With several decades of data and research now in hand, however, the evidence does not support that view.  The level of taxation is less important to entrepreneurship than its mode and distribution.

Welfare Services

Reagan vowed to shrink the welfare state, although the actual reforms were more modest than advertised.  Neoliberals claim that lower taxes and spending help entrepreneurs.  Yet public provision of health care insurance and pensions can benefit small businesses because it puts them on an even footing with large businesses and relieves them of some administrative costs.  Research confirms that welfare programs can promote entrepreneurship by moderating risks.

Public Investment

The Reagan administration proposed drastic cuts to the federal education budget, although Congress pared back the cuts.  In 1983 the National Commission on Excellence in Education released a report, A Nation at Risk, warning that mediocrity in education threatened the future of the American nation and its people.  Reagan responded by prioritizing education issues in his re-election campaign, but he did not devote greater resources to education in his second term.  The Reagan administration also selectively cut other types of public investment, including transportation and water infrastructure.  But these are precisely the types of public investments that could help entrepreneurs.

Small Business Support

The Reagan administration’s approach to small business focused on negative measures such as tax cuts and regulatory relief rather than positive measures such as preferential lending.  In fact, it reduced small business assistance by 27% from 1980 and 1985.  It then sought to disband the Small Business Administration (SBA), which provides preferential lending, legal advice, and consulting services to small businesses, including support targeted at socially disadvantaged groups.  But it relented due to strong resistance from Congress and the small business lobby.  In a remarkable rebuke from this ostensibly favored constituency, the New York Times reported that delegates at the 1986 White House Conference on Small Business booed Chief of Staff Donald Regan and lashed out at the administration for abandoning them: “Owners of small companies from around the country expressed frustration today with President Reagan’s treatment of small business and complained that while Mr. Reagan had devoted much oratory to the importance of small business his policy initiatives did not reflect that concern.”

Industrial and Technology Policy

This brings us to another irony: the Reagan administration supported entrepreneurs the most when it deviated from its neoliberal ideology.  It objected to industrial policy in principle, but sometimes adopted it in practice.  For example, it created the Small Business Innovation Research (SBIR) program in 1982 to provide research funding for small independent firms.  The program has supported some of the most innovative American startup firms, and guided the transition from laboratory to marketplace.

Neoliberals have bestowed exalted status on entrepreneurs as folk heroes, but their ideology has impaired their ability to design policies to support real entrepreneurs.  The ideology of the free market and the heroic image of the self-made entrepreneur served as smokescreen for policies that served the interests of the wealthy and the powerful at the expense of the broader public.  A dynamic entrepreneurial economy requires not a withdrawal of government intervention, but rather an active government that empowers entrepreneurs to challenge incumbents.

About the author: Steven K. Vogel is Chair of the Political Economy program, the ll Han New Professor of Asian Studies, and a Professor of Political Science at the University of California, Berkeley, and the author of Marketcraft: How Governments Make Markets Work, from Oxford University Press.  This essay is based on a working paper on “Neoliberal Ideology and the Myth of the Self-Made Entrepreneur.” Follow him on Twitter @StevenKVogel

The Tariff of 1816 was the first tariff in American history designed primarily to protect domestic industry rather than simply raise revenue. It emerged from the economic pressures of the post-Revolutionary War period, especially a mounting national debt and a fear that Britain might flood American markets with cheap goods to undercut the country's fledgling manufacturing sector. In response to these concerns, Congress turned to a protective tariff, a tax on imports designed to make foreign goods more expensive and give American producers a competitive advantage.

Origins of the Tariff of 1816

The plan for a new tariff was introduced by Secretary of the Treasury Alexander Dallas, on February 13, 1816. In his report to the House of Representatives, he recommended three classes of duties on imported goods:

1. Goods that were already produced in the US (including glass, carriages, and paper).

2. Goods that were relatively new US industries (including axes, nails, and buttons)

3. Luxury goods that weren't produced in the United States.

The idea of a protective tariff, which helped national industries by making imported goods more expensive, was not a new idea in 1816. Alexander Hamilton promoted the idea throughout his tenure as the first Secretary of the Treasury under George Washington. Hamilton supported the Tariff Act of 1789 had a protective intent for American business at its core. But to this point, no tariff had put protection at its core.

Unlikely Support for the First Protective Tariff

A surprising source of support for the Tariff of 1816, which was also known as the “Dallas Tariff” after Alexander Dallas, came from the South Carolina congressional delegation and other parts of the South. In general, Southern politicians were not in favor of tariffs, which they felt forced them to pay more for goods and helped suppress the development of the region’s manufacturing sector. There was also an argument that low tariffs kept more money circulating in the US economy, which in turn gave Southerners more borrowing power to invest in land, slaves, and other domestic investments.

As the House debated the details of the final version of the tariff and readied for a final vote on the floor, South Carolina’s John C. Calhoun stepped up as a vocal supporter. Calhoun’s support seemed to stem mostly from a sense of nationalism sparked by the War of 1812. He argued that the Dallas Tariff provided for the “security of the county,” and urged that it be passed.

This support came back to haunt Calhoun during the battle over the 1828 “Tariff of Abominations,” which he emphatically did not support, to the point where he threatened “nullification,” an act that might well have sparked a constitutional crisis. Opponents challenged his inconsistency with his position in 1816. His answer was, essentially, that he had gotten caught up in the moment.

Voting for the Tariff of 1816

After hammering out the final details, the bill passed in the House by a vote of 88-54. The Senate made a weak attempt to kill the bill by moving to delay the vote ahead of a planned adjournment, but the motion failed, and the bill passed by an unrecorded vote.

The final version set average tariff duties at 20-25 percent ad valorem (meaning a percentage of the value of the import.) The rate varied by industry; for example, the duties on iron imports were doubled, which gave the small-but-growing domestic iron industry a definite advantage. In all, though, duties were slightly lower than they had been during the war.

Although Americans often have extraordinarily strong opinions on tariffs, the Tariff of 1816 drew little public interest and little debate. It expired in 1819.

Sources:

Bolt, William K.. Tariff Wars and the Politics of Jacksonian America. United States, Vanderbilt University Press, 2017.

Peart, Daniel. Lobbyists and the Making of US Tariff Policy, 1816-1861. United States, Johns Hopkins University Press, 2018.

Skeen, C. Edward. 1816: America Rising. United States, University Press of Kentucky, 2014.

Cover Image: Alexander James Dallas, c. 1790