Wednesday, September 27, 2006

An Empire Of Wealth by John Steele Gordon

This book is far more interesting and engaging than one would expect from its subtitle, "The Epic History of American Economic Power." Economics isn't exactly the most colorful subject matter, but Gordon does a good job of making it not only entertaining, but also easy to read for those without background in the field. Gordon retells the familiar story of American history from an economic perspective. To every reader's relief, he does this without resorting to even one chart or graph. He also has a knack for injecting an interesting factoid or two whenever the story starts to drag a bit.

His description of early settlements and agriculture from an economic perspective sheds new light on the standard narrative. Gordon highlights and explains the wisdom of Alexander Hamilton's central bank, along with Andrew Jackson's foolishness in dismantling it and the economic instability its absence caused for decades afterward. He takes issue with the portrayal of men like Cornelius Vanderbilt and J.P. Morgan as "robber barons," observing that the original robber barons of medieval times were more like muggers who simply collected money, whereas Vanderbilt and Morgan created wealth and contributed to America's economic power. Gordon details the financial aspects of the Great Depression well, and he explains the tactics used by Hoover and Roosevelt to try to stabilize the economy. He tells how Donald Nelson, chairman of the War Production Board, "changed the world's largest capitalist economy into a centrally planned one," playing a critical role in winning World War II.

An Empire Of Wealth is not without flaws, though. Most glaring is Gordon's strong bias toward the East. The Midwest and the West are practically ignored. Chicago doesn't merit a mention until Samuel Insull's arrival in the 1890s. It seems peculiar that an American economic history would leave out a critical development like the Chicago Board of Trade and how it revolutionized commodity trading. Even the Great Depression is almost exclusively an east coast issue. The California Gold Rush and the first transcontinental railroad are just about the only economy-oriented events to occur west of the Mississippi by Gordon's reckoning.

Although the author's back-of-the-book material expresses distaste for partisan economic writing, Gordon contributes his share. In An Empire Of Wealth he makes several pointed jabs at Democrats, liberals, and especially "intellectuals." He uses a humorous, non-partisan quote from The Nation, and yet he needlessly brands the publication as "leftist." Toward the end of the book, he gives Reagan far more credit than he deserves for defeating inflation and the Soviet Union. At the same time, Gordon portrays the Democratic Congress negatively even though they implemented ideas credited to Reagan -- some of them during Carter's administration!

Gordon also makes the ridiculous claim that economic classes don't exist in America, contending that they are simply arbitrary definitions created by intellectuals. Here is one of his weakest supporting statements: "For generations now, more than 90 percent of Americans have defined themselves as 'middle class.'" Self-perception is notoriously flawed. Just look at polls where people overwhelmingly describe themselves as "good drivers" despite accident data to the contrary.

Alas, by its very nature, An Empire Of Wealth is the story of the victors of capitalism, not the victims or even the foot soldiers. And like most history books, it unravels a bit at the end -- it is impossible to put the events of recent decades into proper historical perspective. But from the arrival of the first Europeans to the 1970s, An Empire Of Wealth is a very informative and surprisingly entertaining book.

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