Book Review: “The Political Economy of American Industrialization, 1877-1900” by Richard Bensel

Bensel, Richard Franklin. The Political Economy of American Industrialization,   1877-1900. Cambridge: Cambridge University Press, 2000.

In this monumental work of political economy, Richard Franklin Bensel seeks to explain how the United States rapidly industrialized from 1877-1900 while simultaneously preserving its democratic processes and institutions.

Bensel’s main hypothesis is as follows: Industrialization was carefully orchestrated by the Republican party through its pursuit of the “developmental tripod”: a series of economic policies that redistributed wealth from the West and South (the “peripheral” zones) to the North (the “core” zone) while masterfully deflecting popular opposition. These policies included the tariff, the gold standard, and the creation of a national market.

According to Bensel, the tariff helped take wealth from the mainly agrarian peripheral zones and funnel it into the core by protecting industrial interests. Most importantly, however, it served as the “glue” that held together the Republican party coalition, enabling it to pursue the other, more important legs of the tripod. To this effect, the tariff was allowed to operate in the Congress.

Adherence to the gold standard, meanwhile, was important because it served to stabilize American exchange rates, thus attracting foreign investment into the core. Because adherence required daily administration, this leg of the tripod was placed in the hands of the executive branch, which also served to keep it one step removed from public opinion.

Finally, the creation of the national market was absolutely essential for industrialization, leading to the creation of the modern business firm and a huge comparative advantage for the United States in the world economy. As such, it was placed in the hands of the Supreme Court, whose members were carefully vetted by the Republican party to ensure the policy would be supported. This also served to protect the policy from popular opposition, since the S.C. is the most insulated of the three branches.

Thus, the argument goes, the Republican party relied on careful central state planning to ensure the necessary build-up of capital in the core zone that unlocked industrialization, while avoiding the use of brutal, authoritarian measures to ram through reform (epitomized by Russian industrialization under Stalin), thus preserving democratic processes.

You will learn A LOT about the industrialization of the United States by reading this book, and especially about the extremely uneven regional development that occurred. Still, the underlying contention that it was largely political power that shaped this development seems questionable. Besides necessitating a nigh-omniscient Republican party, it seems more likely that economic change was primarily what shaped the political landscape, rather than vice versa (an example: was the drain on Southern wealth really the result of intentional policy, or was it mostly the result of the collapse of slavery and the destruction of the Southern banking system after the Civil War?). In any case, the link between politics and economics is clearly bidirectional. Bensel just chooses to emphasize the political side more than most.

Advertisements

Leave a comment

Filed under Book Reviews

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s