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Regulating a New Economy: Public Policy and Economic Change in America, 1900-1933.

In this work, Morton Keller provides us with the first installment of a projected three-volume sequel to his Affairs of State (1977). Based on a critical reading of historical works and thorough immersion in the periodical discussions of the time, the book seeks to reconstruct and describe the complex interplay between economic change and regulatory action in the years from 1900 to 1933. The period, Keller argues, witnessed the rise in America of a new economy, but the regulatory response was far less innovative. To a large extent, the nineteenth-century state of courts, parties, and local autonomy was adapted to deal with the forces of change, not displaced by a new administration or corporate state. And even where change occurred, most of it was toward "an increasingly pluralist American polity" characterized by "an expanding, roiling aggregate of interests, issues, institutions, |and~ ideas" (p.3), not toward concentration of authority in more powerful public or corporate hands. "Persistence" and "pluralism," he insists, are the most descriptive themes, and these are the themes he will pursue in subsequent volumes on social policy and political activity. In addition, a subtheme of American exceptionalism runs throughout, highlighted in places by comparisons with European polities.

In presenting his findings, Keller subordinates chronology to a topical organization highlighting varieties of regulation and noting how experience in each bears out the themes of persistence and pluralism. After examining the main features of the new economy (big business, technological innovation, mass consumption), he devotes four chapters to the regulatory responses, looking in turn at the regulation of "trusts," utilities, new technologies, and commercial practice. He then turns to the "factors of production," devoting a chapter each to the regulation of unions, the countryside, and the city, and ends with a chapter on "trade, capital, and revenue" and an afterword arguing that the essentials of the period's regulatory system are still with us. Along the way we are treated to an impressive display of detailed knowledge, bringing out the specifics of particular regulatory activities and underscoring both the immense complexity of the system and the usefulness of history in making sense of it.

In support of his central themes, Keller makes a number of telling points, which together leave little doubt that nineteenth-century arrangements did persist and that the American polity kept acquiring more rather than fewer organized interests. In three respects, however, the emphasis on these realities tends to obscure important features of the regulatory apparatus being created. One thing largely missed is the extent to which policy-making was being shifted into administrative, judicial, and privatist arenas less accountable to popular forces and less affected by the kind of interest-group action possible in legislative assemblies. Pluralism there was, but, as E. E. Schattschneider once observed, the chorus of the pluralist heaven sang with a distinctively upper-class accent. Another aspect deserving fuller treatment is the extent to which critics of pluralism--as "waste," "disorganization," "chaos," and "fragmentation"--were successful in establishing new agencies committed to the tasks of standardization, simplification, coordination, and integration. These were also part of the regulatory regime, and their place in it deserves exploration and analysis, not marginalization or dismissal. Finally, more is needed on the extent to which administrative professionalization was creating space for a stunted kind of administrative state. One of the most interesting questions about the apparatus concerns the compromises being struck among pluralist, statist, and corporatist components, but a view seeing only pluralism cannot tell us much about these.

Keller's use of "corporatism" as a label for political service to big business is also unfortunate. It means that his repeated findings of "no corporatism here" are largely irrelevant to the question of whether the corporatist model of social harmony, functional representation, and public-private interpenetration had any appeal or influence among those devising and seeking legitimacy for new regulatory machinery. My reading of the evidence convinces me that it did, and I would have appreciated seeing the issue explored rather than shunted aside through the definition adopted.

Still, this is an important and useful book. One can quarrel with some of the interpretative commentary and doubt that the goal of comprehensively describing the "very complex interplay between the economy and the polity" (p. 6) has been fully achieved. But the book is grounded in thorough research, prodigious learning, sound scholarship, and an impressive mastery of the relevant historiography. It is also lucidly and engagingly written, and it should be highly useful both for those seeking the facts about regulatory action and for those who would understand its historical complexity. It should also serve as a compelling corrective to views stressing the rise of an American administrative state and ignoring the ways in which American organizational development has continued to generate an unruly pluralism capable of thwarting the projects of administrative and corporate state-builders.

Ellis W. Hawley is professor of history at the University of Iowa. He is the author of The New Deal and the Problem of Monopoly (1966) and The Great War and the Search for a Modern Order (1979). His latest publication is "The Constitution and the Presidency in the Depression Era," in The Constitution and the American Presidency, ed. Martin Fausold and Alan Shank (1991).
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Author:Hawley, Ellis W.
Publication:Business History Review
Article Type:Book Review
Date:Dec 22, 1991
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