Scholars respond to a review of their work and expand on the book’s lessons for the future.
We thank Professor Balleisen for his careful and detailed summary of our book. He reads the book as repackaging “several longstanding themes in American political, policy, and legal history.” Although we do build on the work of many other scholars, we see our history as taking issue with a “longstanding theme” concerning the country’s political economy.
Louis Hartz and others have placed markets at the center of American history, with government as an occasional, but useful intervenor. We do not. As we document, the country started with a mix of government and markets—which tilted strongly toward government—and government has been present and has expanded during all eras. The expansion has, at times, been incremental, as with the Affordable Care Act, enacted during the Obama Administration, the Inflation Reduction Act, enacted during the Biden Administration, or in a more extensive and dramatic way, during the New Deal and President Lyndon B. Johnson’s Great Society.
Professor Balleisen reasonably notes that our history skirts important aspects of American governance. To this, we plead guilty, but we contend that our more general summary of the history of government is nevertheless responsive to the aspects of history that he identifies as missing.
First, we agree with him that steamboat and mail fraud regulation provided a context in the 19th century for “more vigorous national policy enactments.” In addition to the article and book he cites, there is the impressive history of early administrative law by Jerry Mashaw.
Those developments are consistent with our claim that there have been continuous additions to government, many incremental, in periods when the political economy favored markets over government. Moreover, we specifically support Brian Balogh’s description of the 19th century as having a “government out of sight.” As we detail, government was deeply involved in important developments, such as populating of the West, despite the general antipathy to government in the Jacksonian era.
It is also correct that we did not point out the unique American path to responding to the problem of natural monopoly, which has employed cost-of-service regulation, while elsewhere the state used public ownership to protect the public. As Steven Kelman pointed out long ago in his book Regulating America, Regulating Sweden, that development was a function of the core values of the United States as compared to Europe. As our book establishes, America’s core values favor both markets and government, and the tilt towards one or the other is limited by the adherence to the other institution.
We therefore also agree that Americans are inclined to “address regulatory challenges without compromising core aspects of capitalist enterprise,” which can lead us away from strong forms of regulation. President Jimmy Carter’s deregulatory efforts, which we described, is an example of government regulation that moved away from earlier command-and-control regulation and opened competitive markets. We are much less sanguine about the extended deregulatory strategies from the Reagan through Clinton Administrations. And, as Professor Balleisen points out, that commitment can be seen in additional ways that the book does not acknowledge, such as a preference for trading rights, the use of self-regulation, and quasi-public governance.
As a third constructive criticism, Professor Balleisen points to states’ enactment of general incorporation statutes, which addressed the problem of powerful insiders gaining special privileges. This development, he notes, paved the way for “truly massive corporations” to “reshape legal doctrines and legislative outcomes to their liking.” Although the book does not specifically develop that link, we would argue it does account for it.
As Professor Balleisen indicates, our book “makes clear that the history of American political economy has had a dialectical character.” The switch to incorporation laws was when it occurred, and remains today, a significant contribution to the growth of the economy. But the consequences of that change in later eras were not knowable at the time it was made, and though there is the considerable downside that he mentions, there is also the upside that we just noted.
More to the point, the book is clear about the ways in which the massive power of corporations has resulted in outcomes that are inconsistent with our core values. As one example, we discuss how the massive tax cuts in Republican administrations have contributed to the economic inequality now found in United States. And, as just discussed, corporations have been able to call on American’s commitment to markets to blunt stronger regulation. And, we fear, worse is to come.
Professor Balleisen opens and closes his review by considering the efforts of the Trump Administration “to upend basic assumptions of American governance.” Like us, he sees the dialectic character of America’s political economy as a potential “sizeable roadblock” to the Administration’s aims. As he notes, “it is hard to envision the professed Trump Administration agenda delivering lower inflation, stronger economic growth, or a significant decline in economic inequality.”
At the time of this writing, we are five weeks into the second Trump Administration, and the fire hose of executive orders, firings, tariffs, and proposed regulations are, quite frankly, overwhelming. Nevertheless, given our basic thesis that a sound political economy requires a healthy mix between government and markets, it seems clear, at this point, that such a healthy mix will be lacking.
As we mentioned in our first essay, however, the activism of both political figures and ordinary citizens can rebalance the mix of government and markets. They can achieve this by reminding Americans of our core values and putting forward a credible agenda to rebalance the mix of government and markets.
We again thank Professor Balleisen for his thoughtful review and criticisms. We hope our engagement with him provides additional context and insight to the government’s role in building the country.
This essay is part of a series, titled “Looking Back on How Government Made America.”
