History And The American Economy: Where Have We Been? Where Should We Go? Part 1 of 5

Part One --- Part Two --- Part Three --- Part Four --- Part Five As I've noted before, I'm a fan of Thomas Friedman, and in particular his call for a "green" economy. He argues that the climate crisis is real, it demands our immediate attention, and that repairing the crisis will, can, and should stimulate the American economy. Going green will produce jobs and fix the planet. (*1)

The New York Times recently ran a piece about one aspect of the shift to a green economy: Silicon Valley venture capitalists are investing money in green enterprises designed to transform American energy use, demands, and needs. It's worth reading, if only because, as the author points out, too often we think about fundamental economic change/repairs in terms of government leadership, whether through federally funded research or through subsidies.

As this article points out, however, private investors aren't waiting for government. They're already investing in this new engine of economic growth.

It's a fascinating piece, but of course I'm a historian, and I think both it and Friedman's plea for a green economy will make more sense if we can place them in historical context. Ditto for the current meltdown and various other problems plaguing our country and the planet.

So, let's take a tour of American economic history.

After the American Revolution and up to about 1870 or so, Americans focused on settling and transforming the continent: Moving west to the Mississippi, and laying out towns and farms. Land speculation. Building canals that could carry grain and other raw materials. Manufacturing on a small scale. They also began laying the groundwork of a metals- and machine-tool based manufacturing sector.

In the late nineteenth century, starting about 1870 (give or take), the pace of "industrialization" accelerated. There are lots of reasons: Inventors developed a way to make steel in large quantities. Foreign investors dumped billions into the American economy. The pace of railroad construction accelerated. Etc.

Historians describe the late nineteenth century as an era of a "producer" economy: Economic growth (and jobs) came from making things like railroad ties, engines (first steam and then internal combustion), machine tools, electrical wire. Yes, Americans also manufactured fabric, shoes, food, and furniture, but the fuel for growth was the manufacture of basic producer goods, the kind of stuff needed to build an infrastructure.

Next time: the shift from a producer economy to a consumer economy. [As always, I'm breaking this into multiple parts not so I hope you'll come back (although I do!), but because I'm aware that most people's days are broken into ten-minute increments. Ya got ten minutes today. You'll have another ten tomorrow.........]


*1: See in particular his new book Hot, Flat, and Crowded.