Suspension of belief

The curious values of the long twentieth century: a last comment on Brad DeLong's book

I have spent the past few weeks musing about bits of Brad DeLong’s new book (which I also reviewed here). I’ve done that because Brad is one of my favorite writers and thinkers, and because the book is very good. I strongly encourage you to buy and read and reflect on it, if you haven’t already done so. I encourage you to do this because I believe you will find it a rewarding experience, but also because I hope the book does well so that next time Brad hands his editor a 2,000-word epic they publish the whole thing rather than frowning and handing him a pair of shears.

I also said, in my last dispatch, that I would be sharing some final, sweeping thoughts on Slouching Towards Utopia. Brad has been asking readers to tell him what they think he gets really wrong in the book, and I want to give him a good answer. It is not a fair answer, I’m ashamed to say, because it does not judge the book on its own terms but rather suggests it should in fact be a very different book. Worse, it is a self-serving answer, because that different book is one which would share many features with the book that I am currently in the process of writing. But in any case, here it is.

Slouching is an economic history of what Brad calls the long twentieth century. It is an economic history in the traditional sense: written by someone trained in economics, who seeks to explain how the interplay of economic forces shaped the course of events. In addition, he makes the further claim that the history of this long twentieth century was uniquely economic—that it was profoundly influenced by economic developments in a way that simply was not true of prior periods. In other words, many of the crucial, history-altering choices made over this period were taken by figures hanging on for dear life to a world transformed by radical economic change, whereas in prior centuries the economic backdrop was relatively static and history was instead influenced by other forces, like religious tides and the rise and fall of empires.

But Brad’s long twentieth century was also one which was shaped, to an unusual degree, by economic thinking. There had been influential economists before, much as there had been quite significant industrialization and a measurable acceleration in economic growth before. But a sea change occurred around 1870 with the rise of the marginalists and the emergence of a far more mathematized and “scientific” economics. As Brad very well notes, the growth of the long twentieth century was qualitatively different from that of earlier eras because of the deliberate and bureaucratized way in which businesses, and ultimately economies as a whole, pursued innovation and economic development. The rise of economics can be understood as a similar and complementary trend. 

So, it was no longer enough to make economic policy through tinkering and intuition—the sort of approach Britain’s early industrialists had taken to the development and application of their innovations. No longer would economic thinking be pushed ahead by jacks of all trades, publishing tracts when not minding a parish or serving in parliament. Instead, the moment called for professionals. Because the long twentieth century was both unusually economic and purposefully bureaucratic, it provided an extraordinary opportunity to whichever field could provide the most compelling and actionable ideas about how an economy worked. Economics seized its moment.

Now, the evolution of economic thinking is there in the text that Brad has written. It is much more apparent at some times than at others; we get a description of Keynes’s view of the Depression, for instance, and the way his ultimate intellectual victory contributed to the glorious decades following the second world war. The famous names that you expect to read in an economic history of the twentieth century do make their appearances. But Brad’s is not a book which assigns them much of a role in authoring the history of his period of study (Keynes being a notable exception). It is an interesting choice given some other recent scholarship on twentieth-century economic history—by Binyamin Appelbaum and Elizabeth Popp Berman, for instance—which makes the case, convincingly in my view, that economists and economic modes of thinking became ever more influential over time, in very consequential ways.

If the economists aren’t shaping the course of this very economic era, then who is? As most reviews of the book mention, Brad structures his history as a sort of tug of war between Hayekian forces, or people pursuing their interests through the market, and Polanyian ones, through which people resist the market when it threatens to transform individuals and the things they care about into mere commodities or factors of production. But how does this work, exactly? We see the interplay of these forces in the narrative, and come to understand which developments belong to one category rather than the other—because the book tells us. But there isn’t much there to guide someone hoping to arrive at a deeper understanding of this back-and-forth: which might allow for out-of-sample predictions, say. At best we might venture that there is something thermostatic at play: too much market disruption triggers a backlash. But how useful is this when the backlash can mean anything from political mobilization in support of modest reforms to violent uprisings of a radically left- or right-wing nature?

Now, this is unfair; the running argument between Hayek and Polanyi is a narrative device, not an attempt to build a grand theory. Brad is writing an economic history, not setting out to upend the social sciences. I did say I would be unfair, though. And importantly, this matters. It matters why we get one anti-market response rather than another; it matters a lot. Of course, economics has plenty to say about trade and investment flows, industrial organization and productivity growth, the business cycle and its management, and those are a crucial part of the story of the twentieth century. But there are other, epoch-defining parts of the story as well: the things which shape our thinking about the era and which make Brad’s argument that we should place our temporal brackets at 1870 and 2010 a novel and subversive one. What can economics tell us about those?

Some economists would try to explain these other major social or political developments in terms they find familiar and comfortable: with just-so stories about more or less rational people pursuing what they perceive to be their own self-interest. The work such economists tend to produce is rarely of much interest or use, for the important and obvious-to-most reason that people do not merely pursue their own self-interest but rather act in the service of deeply held beliefs, and that furthermore such belief-motivated actions are among the leading causes of history. 

Brad, who is a brilliant scholar, does not fall into this trap; he quotes Weber as saying that material interests may drive the train down the tracks but ideas are the switchmen. Good! But he refers to this quote while discussing the potent nationalism which swept across Europe in the 19th and early 20th century, setting the stage for the first world war and all the horrors that followed. That was a pretty crucial development! The outbreak of World War I is such a fundamental hinge point in history that it very nearly upsets the overarching conceit of Brad’s book, that the period from 1870 to 2010 deserves to be seen as a cohesive whole. 

Other ideas seem quite important too. It feels off to shove the sentiments and world views behind both socialism or fascism under the broad tent of Polanyian backlash. Come to mention it, the institutional innovations Brad credits with helping to launch modern economic growth—the industrial research laboratory and the modern corporation—are themselves made of ideas. The people who work for a big company obviously care about their financial well-being, but they aren’t merely following their own narrow self-interest. They are part of a culture, holding a sense of shared purpose which shapes their identity and helps to motivate their work. Where do such cultures come from? How do ideas spread? Which beliefs will we find ourselves at the mercy of in the years ahead?

Brad’s book does not have the answers to these questions, in large part because economics does not have the answers to these questions. This seems likely to change, I hasten to add. There are exciting new ideas in the field which have not yet managed to transform economics in the way I believe it needs to be transformed, but I remain hopeful. But economic orthodoxy, even when rather generously defined, does not yet tell us much of use about how the currents of belief and thought flow. 

This is a gaping void. The extent to which most economists, or indeed much of the intellectual establishment as a whole, are unaware of it is in fact a fundamental and consequential attribute of our society at this moment. It is an example of how ideas matter. The belief that you can discern most of what you need to know about a society by assuming that people mostly try to maximize their own utility, or the idea that society is something which can and should be engineered through the clever application of incentives: these are strange components of a particular belief system which was not shared by other people at other times and places and which shapes behavior at the individual level and in aggregate. These are views which would leave the great thinkers of the nineteenth century dumbfounded—and I imagine the great thinkers of the twenty-first will ultimately share the feeling.

To be clear: Brad is far more flexible in his thinking and far more open to insights from other social sciences than the typical economist. He has not written a book which tries to shove complex history through an absurd doorframe built of useless economic theory. He has not written a book in which people lack agency or complex inner lives. He has not written a book in which the beliefs people have pale in historical importance relative to hard economic realities like the rate of return on capital. If he had, I would not be telling you how good the book is or how valuable you’re likely to find it. 

Rather, it seems to me that the book embodies something essential about the twentieth century: which is a skepticism that there is much to be gained from a close study of what people believe and why. It is a view which carries an implication that belief is an annoying anachronism, something which must matter ever less as we grow richer and more technologically capable. And the sense of disappointment with which the book concludes has its mirror in the wider world’s dawning awareness that “material wealth is of limited use in building utopia”, as Brad so ably puts it. Beliefs are having their revenge. We are realizing that there is more moral work to do.

What might a different perspective on the long twentieth century look like? Well, one might say that what people believe and how those beliefs are distributed are matters which are and have always been of crucial importance. One might say that the emergence of modern economic growth was in fact rooted in shifting patterns of belief: around the social legitimacy of scientific inquiry and commerce, for instance. One might say that the detached, economistic perspective that has become the default mode of thinking among rich-world elites is in fact its own belief system, rather than some enlightened cognitive endstate which becomes available to those who transcend the normal human preoccupation with beliefs and values. One might say that we are approaching the limits of what that belief system can achieve in the absence of new cultural innovations, and one might say that the world stands to benefit from a concerted effort to understand the dynamics of belief better. In fact I hope to say all of that in my forthcoming book! I did also warn that this note would be self-serving.

So there you are. In truth, I am not upset that Brad’s book does not say those things. It does what it does well, and I am grateful for it. And if he had said those things then I would need to have an uncomfortable conversation with my publisher.