...“Anyone who regards economic history,” caution Greenspan and Wooldridge, “as history with the politics left out is reading the wrong book.” America’s economics would have been impossible without its politics, and the latter were, the authors emphasize, profoundly shaped by the happy timing of the country’s founding, born in the age of enlightenment. Although they do not explicitly say so, the variant of the Enlightenment that weighed most on the Founding Fathers, for ancestral as well as intellectual reasons, was British, the fruit of an incremental process dating back to (at least) 1688, rather than its more radical French alternative. Moreover, it was buttressed by having inherited what Greenspan and Wooldridge refer to as “many of Britain’s best traditions,” from the common law to a certain respect for individual rights. In that sense, “the American Revolution was only a half revolution.” The nascent republic was marked by a suspicion of both monarchical rule and unrestrained popular government. Commerce was able to slip through the gaps, helped by, as the authors explain, the insights of Adam Smith, the prohibition of internal trade barriers, and — a critical incentive for the enterprising — the strong defense of property (including intellectual-property) rights enshrined in the new Constitution.
...And what allowed America’s inventors, innovators, and entrepreneurs to make so much of this opportunity was the extent to which creative destruction (to Greenspan and Wooldridge, “the ‘perennial gale’ that uproots businesses — and lives — but that, in the process, creates a more productive economy”) was allowed free rein. In this heroic retelling — Howard Zinn, avert your eyes — of America’s expansion (the Gilded Age is rechristened “the Age of Giants”), creative destruction — the hammer in the invisible hand — is the mightiest hero of all, “the principal driving force of economic progress.” The government’s job, the authors note approvingly (did I mention that Alan Greenspan was a part of Ayn Rand’s circle?), was to protect property rights and the sanctity of contracts and then, rather than “tame” creative destruction, enable it and get out of the way. Less was more: “The old nations creep on at a snail’s pace,” wrote Andrew Carnegie. “The Republic thunders past with the rush of an express.”
While praising America “as a huge positive” not only for itself, but for what it has given the wider world, the authors don’t gloss over the darker side of “numerous disgraces” that have marred its rise. Slavery was a system resting “on foundations of unfathomable cruelty” that brought riches to the South but condemned it to economic backwardness as well as moral squalor. They also acknowledge that the state played a more active role in America’s economic explosion than it might be polite to mention in Galt’s Gulch. Railways, in many respects the Internet of the era (though, in a testimony to a time of remarkable innovation, there’s also the telegraph to think of), benefited — as, subsequently, did the Internet itself — from Uncle Sam’s largesse. Vast land grants offered railway companies the chance to risk a fortune building rails “in the middle of nowhere” in the hope of making a fortune by turning a “piece of nowhere into a part of the global economy.”
...But as the country grew richer, its politics changed, reflecting the growing electoral clout of those at the rough end of creative destruction, mounting alarm at escalating oligarchic and corporate power and its abuse (Teddy Roosevelt’s “malefactors of great wealth”), and a broader shift in opinion away from laissez-faire. This transformation in sentiment was accelerated by the Depression and two world wars but was well under way from the beginning of the 20th century, not least due to the size, complexity, and problems — “pollution,” relate Greenspan and Wooldridge, “on a terrifying scale” — of a country growing at an astonishing rate, a new kind of society that, it seemed self-evident, required steering by more than an invisible hand. There was also an early flowering of what has become an endemic phenomenon: “By producing prosperity, capitalism creates its own gravediggers in the form of a comfortable class of intellectuals and politicians” able to use the negative side of creative destruction to sell their own agenda.
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