The Rise and Fall of American Growth

Starred review from November 15, 2015
A comprehensive analysis of "one of the most fundamental questions about American economic history." Gordon (Social Sciences/Northwestern Univ.; Macroeconomics, 2008, etc.), a respected macroeconomist, provides a groundbreaking contribution to political economy. His emphasis is quite different from the familiar concerns of budget deficits and quarterly profits. He compares the growth of real wages, living standards, and innovations in technology over two periods: 1870 to 1940 and 1940 to 1970. The author identifies advances in lifestyles, and he establishes that New Deal labor policies, which caused real wages to rise faster than productivity, laid the foundation for "the Great Leap Forward" in the middle of the 20th century. The author also shows how horse-drawn streetcars and steam-powered trains expanded urban activities, and he examines how electrification and the internal combustion engine powered the Second Industrial Revolution. Gordon is primarily concerned with the quality of these successive improvements--which, he writes, "are missing from GDP altogether"--as well as the consumer price index, which tracks current sales and prices. "Our measure of capital input," he writes, "is newly developed for this book and adjusts for the unusual aspects of investment behavior during the 1930s and 1940s." The author uses his fresh methods to back his argument for the primary significance of the reforms that took place during the New Deal. These policies, many of which are now considered failures, are thus shown to have provided the groundwork for what was to come. This Great Leap Forward generated the momentum that continued into the 1970s. The book is not for general readers, but students and scholars in economics and American history will find within these pages much illuminating interpretation of a massive amount of data. A masterful study to be read and reread by anyone interested in today's political economy.

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December 1, 2015

Gordon (economics, Northwestern Univ.) indicates that after the Civil War there was an economic revolution that changed the American standard of living, but that the rate of technological change has been slowing down. Coverage begins in 1870; there was little economic growth prior to that, as peasant life remained basically unchanged. Electricity, internal combustion engines, running water, indoor toilets, communication, entertainment, chemicals, and petroleum--these have created a tremendous growth in the American economy. Owing to medical discoveries, the life expectancy between 1870 and 1970 increased from 45 to 72 years. However, that century didn't have an aging population, the increasing debt of college student loans, rising inequality, and stagnating education. The author warns of forthcoming change and increasingly tough times: the younger generation might be the first not to increase their standard of living. VERDICT This specialized book will interest the individual scholar and to a lesser extent the general reader. Patrons might also consult American Economic Growth and Standards of Living Before the Civil War, edited by Robert E. Gallman and John Joseph Wallis.--Claude Ury, San Francisco

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