Author: NOAH MACIVER

America is a relatively new nation compared to other nations around the world. Studying its history is an interesting process because it is objectively the most successful nation in history specifically in relation to business and economics, which was the focus of this class. The different chapters of America show a nation that was imperfect, but which nation has ever been perfect? All nations have showed their own unique struggles and issues. The American timeline shows a country that was founded after a righteous rebellion against an oppressive ruler which was the British empire. The struggles and adversity that America encountered were identified and were subsequently addressed, although the extent of the success of some of these issues that were worked on is unclear and left to a subjective analysis as are all sociological assessments of a respective country or phenomenon. Today, America still has issues, and many are debating exactly what they are and what is wrong and how should they be tackled. 

As previously mentioned, this class is an emphasis on American history through a Lense of business and economics, but sociological phenomenon is intrinsically tied to this and was also spoken about in class, and I find it relevant to this post. 

It was interesting to access this class through a business prospect because it is certainly the most if not one of the most important ways to do so. Historically, and especially on the macro level, America is the most successful economic force ever and also in contemporary times. Evaluating this through the course of its history offered interesting insight. 

What I found particularly interesting, and it is what I wrote my last paper on was the consumer culture that has defined American economic doctrine post WW2 and up to today. Economic prosperity after the war was driven by massive consumption which in economic terms is increasing aggregate demand which in turn makes supply keep up with this demand and increases employment and this cycle is what American prosperity of the time and the so called “American dream” was built on. This was enabled by American dominance on the global stage after the war as well as the massive domestic abundance of resources in the country. This American prosperity has certainly decreased in recent decades and especially in the past few years, but it is still present in relation to many other countries who aren’t as well off. How to remedy the decline is a complicated but necessary topic to address, but certainly too complex for this blog. 

The great depression as the title suggests was a bad time to say the least. A massive recession was seen not only in the United States but across much of the world and especially the western world. The stock market crash of 1929 and the collapse of international trade had left many people with less wealth which increased unemployment, the destruction of wealth led to less consumption which led to less wealth and higher unemployment, the economic circular flow had been severely impeded. 

The system of classical economic theory which explains that the mechanisms of supply and demand will eventually bring the economy to an equilibrium and closer and closer to full employment were being questioned. This school of thought had been correct in the past, but the issue is that its effects weren’t immediate and took an indefinite amount of time to work. The economists of the time believed that this time frame was too long and that something that could work faster was needed. 

The most prominent proponent of this theory was John Keynes who, as previously mentioned, believed that the issue of lack of consumption could quickly be remedied by increasing aggregate demand. The way in which this would happen was through the injection of currency into the economy through such things as lowering interest rates and increasing government spending. 

The new deal adapted this way of thinking and began to do this through various methods. The new deal successfully increased aggregate demand by extending the money supply. FDR lowered interest rates and also set limits to how much gold Americans could own and required them to Exhange their gold for American dollars. He also tried to tackle unemployment by creating many workers programs such as the Civilian Conservation Corps (CCC). He protected American financial stability by creating the Federal Deposit Insurance Corporation (FDIC) and he regulated big business by creating the Securities Exhange Commission (SEC). 

These policies did create economic growth of on Average 8% to 10% per year and drastically lowered unemployment. The issue with this Keynesian approach is that of course if you give money to people they will spend more and then more jobs will be created and more and more economic participants will be better off and consume more goods and services. This can only work in the short term because this wealth is artificially inflated, and it isn’t determined in real terms. 

 The essential problem is that by having too much money chasing too few goods and services, the prices must go up to prevent shortages. It isn’t about how much money one has but about how many resources one can consume. Printing more money doesn’t create more resources but only increases the prices. It isn’t about how much money one has but the percentage of money one has in relation to the total amount in circulation. Because of various factors such as banks being the main distributors of money creation through loans, this printed money is given back to the top 10% or 1% percent of the economy and eventually what is seen is middle and lower classes worse off than they were previously and wealth inequality is increased. They have less wealth and prices are very high which in turn causes a recession because there ends up being less aggregate consumption as a result of people simply not affording to buy many of the things, they used to be able to. 

This phenomenon is the biggest problem with such an increase in money supply as well as the issue of an increase in government intervention. The Keynesian approach was adapted during Covid, and we are now in a recession that will only get worse. One could say that FDR was saved of this issue in many ways by the outbreak of WW2 which created massive amounts of real demand and job creation that seems to have offset many of the medium- and long-term issues of the Keynesian monetary and fiscal policy that he had enacted. 

 

White explores the multi-faceted ways in which railroads in 19th century North America had an impact on expansion, society, economics and politics. Railroads were able to effectively integrate the western part of the continent by creating meaningful networks of transportation capable of mass transit and resettlement of these areas. Being able to interconnect a continent in such a way was a never seen before major advancement for the time and served as economic stimulus in the post-civil war period. White acknowledges the importance and success of the railroads, but he critiques its flaws and inefficiencies. 

What is particularly interesting is his critique of the collusion between these railroad companies and the government as well as the financiers who were at the very top of these hierarchies and who through mechanisms of greed, corruption and technicalities made money off these companies and eventually led them to fail. 

The collusion and interdependence between the railroads and the government is undeniable. The government incentivized the building of railroads through subsidies and the allocation of land to these companies. The collusion between big business and government created a culture in which interdependent influence peddling began to arise as a phenomenon in North American society, particularly in America. What is now called lobbying and an unfortunate fundamental part of American politics has significant roots from the railroads and business culture from the time, according to White. “Having helped both to corrupt and to transform the political system by creating the modern corporate lobby” (xxiv). 

What is also interesting is his scrutiny of the mismanagement at the very highest levels of the corporations. As with the influence peddling spoken of in the previous paragraph, a culture of accumulating wealth through corruption and speculation and even manipulation of markets began to form during this time. White says, “they employed rational managers” but that “financiers made money through subsidies, the sale of securities, insider companies…land speculation…” (xxviii). Wealth created through these means, according to him, began to have a significant presence during this time. Conducting business by not actually creating a good or providing a service is very much present in contemporary society, especially in the west, so it is interesting to read about his take on it. 

In essence, what is of particular interest to me in White’s readings are his descriptions of the beginnings of an American culture in which big business and government collude in what most believe to be unethical practices, especially lobbying, but that is to this day part of orthodoxy in American business and government. Furthermore, what is also present in contemporary America is the widespread wealth accumulation through means of market manipulation, speculation and other various technical methods. The massive amount of wealth that can be gained from not actually creating a product or offering a service is interesting, to say the least, when considering traditional economics and the way in which wealth is most often created. White’s readings are an interesting examination into its historical roots. 

The United States has existed for 244 years, at first glance that seems like an eternity, the average lifespan is nowhere near that, and no one is contemporary America can even remember the early 20th century, let alone the formation of America. Recorded human history goes much farther than the lifespan of America and so it can be concluded that this is a relatively new country. 

In the reading “Wealth and Power in the Early Republic”, a young nation struggling with ambitions of a brighter future and traditions of the past is portrayed. When examining human history, one common theme can be observed, and that is the ruling by the few over the many. More specifically, societies organized themselves time after time by way of centralized power by small elitist groups over the much larger populations. Monarchies and dictatorships who were often brutal were the norm for many centuries. The oppression of the lower classes wasn’t only done by force, but also through low expectations. The aristocracies ruled by self-proclaimed superiority and strongly propagated a culture of God given rights to elitism. 

This is the struggle that America was faced with in its early stages and there were many proponents of the old ways of governance as well as numerous others who spoke about the ideological revolution which was the importance and strength of the individual. The idea that the individual could achieve the highest accomplishments through hard work and determination and that equality of opportunity was in this case, the god given gift and right. 

The chapter explains various historical events in order to give an in-depth perspective into this struggle. There are many quotes to illustrate both philosophies, but these are well encapsulating. “People think, act and speak here precisely as it prompts them… every man expects at one time or another to be on a footing with his rich neighbor” (Mandell, P.79). This quote by Johann Schoepf provides an outsider view into the revolutionary thinking in America at the time. It really shows the strong sentiments of equality of opportunity and the confidence of the individual. The fact that this surprised Johann is a testament to how new this type of thinking was at the time. 

This quote, although not explicitly advocating for an elitist and aristocratic government, shows the thinking that many had at the time in terms of their belief in the old way of governance. “Almighty god has established an order in human affairs, reflected in differences in wealth that resulted from ability, industry, inheritance and god’s favor, and Americans needed to respect that arrangement in order to achieve political happiness” (Mandell, p.84). Nicholas Collin doesn’t overwhelmingly propose rule by the few elites, rather he expresses some truths which are that some people are born with certain skills and other various advantages that would benefit them and bring them in a better socioeconomic situation than others but given the context and the manner in which this is said, it is spoken in an oppressive and condescending way that mimics those feelings of low expectations elitists historically held, as previously mentioned. 

It is important to distinguish theory from reality. This response is mostly an examination of the revolutionary thinking at the time in America, rather than what really took place. It was a new way of thinking that laid the foundation for contemporary society, not only in America but in the Western world as a whole.