It has recently been suggested that the economic departure of the United States after the Civil War marked a ‘Second Great Divergence’. Compared to the ‘First’, the rise of Britain during the Industrial Revolution, this Second Great Divergence is curiously little understood: because the United States remains the template for modernization narratives, its trajectory is more easily accepted as preordained than interrogated as an unlikely historical outcome. But why should development have been problematic everywhere but the United States? This Viewpoint argues that a robust explanation for the United States's rise is lacking: it can neither be found in an economic history literature focused on factor endowments nor in internalist Americanist historiography, which often reproduces overdetermined accounts of modernization inspired by Max Weber. The most promising avenue of inquiry, we argue, lies in asking how American political institutions configured what should properly be called an American developmental state. Such a perspective opens up a broad comparative research agenda that provincializes the United States from the perspective of development experiences elsewhere.
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In what sense are we living in a “New Gilded Age”? Facile analogies between the late nineteenth century and our own era have proliferated in recent years. Pundits such as Paul Krugman inserted this analogy into the public conversation in the early 2000s, drawing on empirical work by economists Thomas Piketty and Emmanuel Saez. In underscoring a parallel between the two “gilded” eras, these commentators sketched out two periods marked by economic inequality, with several “anomalous” decades of relative equality in the middle of the twentieth century. This basic U-shaped narrative template has inspired commentators in numerous venues, from The Nation to The Economist, to imagine the shifts of recent decades simply as “a return” to an earlier age. Evoking social, political, and cultural resemblances, these accounts have stressed the resurgence of unfettered markets, economic volatility, government inaction, and the plutocratic reign of money.
In the last decade, political economy has moved from the margins to the mainstream of the historical conversation in the United States. Galvanized under the banner of the "history of capitalism," a new generation of historians was inspired to reconsider business, labor, society, politics, and ideas as they related to economic change. Unlike earlier work in the fields of business and economic history, which tended to be internalist and technical in nature, this current scholarship deploys a broad methodological approach. It shifts away from preoccupations with profits and efficiency to embed the realms of "business" and "the economy" in society, culture, and the state. It bridges conceptual divides between cultural and materialist histories, interrogating how ideological commitments shaped market trajectories, and vice versa. Most importantly, it underscores the political nature of economic change, uncovering the contentious and ever-shifting institutional arrangements that underpinned market transactions. 1 As a revitalized field of study, the history of capitalism now generates a steady (and much commented on) stream of monographs, roundtables, edited collections, journal articles, and specialized conferences. Surprisingly, the conversation about political economy has largely shied away from what had once been the linchpin of economic, business, and labor histories of the United States-the Gilded Age and Progressive Era. With some important exceptions, recent work has mostly focused on earlier and later periods, especially the Early Republic and the post-World War II decades. 2 One strand of scholarship has revisited the antebellum South and the relationship between slavery and American economic development. Far from an outmoded and moribund institution, historians in this vein argue, American slavery was on the cutting edge of nineteenth-century capitalism in its embrace of scientific agriculture, rationalized accounting practices, and methodical labor management, including the calibrated use of violence. 3 Another group has explored the rise of neoliberalism in the late twentieth century. This seismic political-economic shift, these scholars show, did not simply materialize from the crisis of the New Deal order. It was, rather, the result of decades of tenacious political, organizational, and intellectual mobilization that ranged from corporate boardrooms and legislative arenas to universities, think tanks, and a host of grassroots organizations. 4
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