Economics in the Age of Fracture

I’ve started re-reading Daniel T. Rodgers’ Age of Fracture.  I glanced at it in the final run-up to my PhD comps, but it didn’t make much of an impression.  Then Jane Kamensky mentioned it during her closing talk at The Historical Society’s recent conference, and I thought I ought to pick it up again. 
This closer reading led me to a couple of thoughts.  First, that there’s probably a whole lot more in many of those books we powered through in grad school; it’s probably worth revisiting some of them and digesting them slowly.  Second, what doesn’t seem relevant when you’re under the gun and trying to absorb the historiography of a field may be really useful when you’re thinking about teaching or writing – especially for the public.
I’ve only scratched the surface of Age of Fracture so far, but it strikes me as a very interesting attempt to argue a complicated point for a more-or-less general audience.  This fascinates me, since I think historians really need to help us all understand how we got to where we are today.  I hope to pick up some ideas about how to do this, especially about where the boundary is between assertion and explication: how much of an argument you can carry with an authoritative voice and how much you need to demonstrate with evidence and analysis.  At one point, for example, Rodgers says, “What precipitates breaks and interruptions in social argument are not raw changes in social experience, which never translate automatically into mind. What matters are the processes by which the flux and tensions of experience are shaped into mental frames and pictures that, in the end, come to seem themselves natural and inevitable: ingrained in the very logic of things” (Kindle Locations 125-127).  This is an interesting claim; very close to the idea I just found in Giambattista Vico’s New Science (another book I picked up as a result of the conference), “Every epoch,” Vico wrote, “is dominated by a ‘spirit’, a genius, of its own. Novelty, like beauty, recommends certain faults which, after fashion changes, become glaringly apparent. Writers, wishing to reap a profit from their studies, follow the trend of their time” (quoted in Anthony Grafton’s Introduction).  It’s a provocative idea, and it obviously has a lineage – but is it true?  And can it be used to explain social change over time?

Another thing Rodgers does, in the early pages of
Age of Fracture, is to provide a schematic for a “historiography” of the field of Economics.  Beginning with Alfred Marshall (Principles of Economics, 1890), Rodgers traces the development of economic thinking (and college economic teaching) through Paul Samuelson (Economics, 1948), and then into the variety of competing interpretations resulting from the failure of macro-economic prediction in the 1970s and 80s.  Along the way, Rodgers mentions many of the relevant texts in this development: popular texts such as Milton Friedman’s Capitalism and Freedom and F. A. Hayek’s Road to Serfdom as well as academic titles like Ronald Coase’s “The Problem of Social Cost” and Richard Posner’s Economic Analysis of Law.  It would be interesting to organize a syllabus around these titles, and read them one after another.  In addition to tracing the development of economic theory, the themes of such a class might be to examine whether theory or contingency really moved society, and more importantly to test the point made above by Rodgers and Vico: to see if the explanations offered by economists in their historical moments contain “faults which, after fashion changes, become glaringly apparent.”  

A digression into money

Made a side-trip today, into the history of money in the U.S. Read:

John Jay Knox, United States Notes: A History of the Various Issues of Paper Money by the Government of the United States, 1894

A. Barton Hepburn,
History of Coinage and Currency in the United States and the Perennial Contest for Sound Currency, 1903

Wilford I. King, “Circulating Credit: Its Nature and Relation to the Public Welfare" American Economic Review 10:4 (Dec 1920)

Started a couple of more recent things, that will take a couple of days. The whole point of this detour, is for me to try to get a handle on the way people used money and credit in the 1840s through the late 1860s. After this, there’s a “period” shift -- we’re suddenly into the “greenback” era and the fights over bi-metalism and money that animated a lot of the Populists and ultimately led to the establishment of the Federal Reserve system after the Panic of 1907.

BUT...there seems to be a link missing in this change. The historiography seems to jump right from the “market transition” to the gilded age and its money problems, and in doing this I think it misses an intermediate period that lasted two or three decades in some places. So I’m trying to get a handle on what I think goes into this “financial transition” -- and to see if somebody really has said something about it, and I just haven’t found it yet.

Panic of 1857

Paul L. Huston, The Panic of 1857 and the Coming of the Civil War, 1987.

Huston examines the economic events leading up to the Crisis in a very cursory fashion, then spends a fair amount of time discussing political and press reaction to it. This leads him to some conclusions about the role of the Crisis in foregrounding some economic issues in the sectional debate that led to the Civil War, although Huston is quick to qualify these claims and place them in a generalized “blame-everything-on-slavery” context. Interestingly, he misses the point that Republicans may have used this blaming technique as a way not only of focusing attention on issues they wanted to address, but as a way of diverting attention
away from issues they wanted to ignore. The Lynn strikes, for example, were recast (by Greeley and others) as an opportunity for western expansion that (darn those southerners!) was imperiled by expansion of the slave southwest. Republican “labor policy,” the idea that low wages were due to the “degradation of labor,” diverted attention to the specific abuses of (rich Republican) capitalists, as well as to systemic problems caused by the growth of corporate (as opposed to small-producer) capitalism. The irony is, early Republicans had warned of this, but had been pushed to the sidelines.

Huston’s conclusion is that "Economic issues did not have to play a role in the election of 1860. By their own intransigence,” he says, “Democrats allowed Republicans to take advantage of the economic questions that the Panic had reinvigorated." (266) Did they? Or does his story suggest that these economic policies were not hard-wired into either party's DNA, but were arrived at contingently and maybe a little opportunistically?

One thing that does come out clearly, is the sectional nature of the Panic of 1857. It had a much less lasting impact on the South and the Northeast than it did on the West. This is interesting, for my work. Also, the really clear causal role of wheat exports on the Crisis, and the impact of the Crimean War on overproduction and then collapse in the West, is helpful. I wonder how the rebound in grain shipments to Europe ("in the fiscal year ending June 30, 1859, the United States exported 3,002,000 bushels of wheat; in fiscal year 1860 the total was 4,155,000; but in the fiscal year ending June 30, 1861, the amount grew to 31,238,000." 214) effected Western politics and the 1860 elections?