book cover imageSeparating Fools from their Money: A History of American Financial Scandals,
by Scott B. MacDonald and Jane E. Hughes
(Transaction Publishers, 264 pp., 2007).

In the early 2000s a series of corporate and financial scandals rocked the business world. For months newspapers assiduously reported the falls of wealthy companies such as Enron, WorldCom, and Arthur Anderson, and of their once wealthy executives. These scandals sparked enormous public outrage and forced the government to take steps to regulate corporate excess. These events, as MacDonald and Hughes describe, are merely the latest manifestations of corporate scandal that have appeared routinely throughout American history: “In many regards the history of great American financial scandals is cyclical.”

MacDonald and Hughes vividly recount the most nefarious financial scandals in four different epochs of American history: the early days of the Republic, the Gilded Age, the Roaring Twenties, and the 1980s through the present. By comparing the larger than life financial players whose greed and hubris boldly transgressed the laws and standards of their times, the authors show that “the extent of the commonalities underlying all of these scandals is truly remarkable.” While chronicling an individual scandal, they identify historical parallels throughout: they compare William Duer, assistant to Alexander Hamilton, to Enron’s Kenneth Lay for his connection to a high ranking government official, and they note that the feverish railroad speculation at the end of the nineteenth century resembles the chase of technology stocks at the end of the twentieth century.

In recounting events such as the infamous scandals surrounding Presidents Grant and Harding as well as corporate excesses of recent decades, MacDonald and Hughes helpfully identify both the negative reactions that followed as well as the tangential benefits, such as the creation of a national railroad system and the expansion of the junk bond market. But above all they conclude that the regulation movement that inevitably follows every scandal cannotstop “the Darwinian aspect of business” since “innovation and greed run counter to control.” Readers seeking to gain perspective and understanding of recent scandals will thoroughlyenjoy this book.

book cover imageAmerican Agriculture in the Twentieth Century: How it Flourished and What it Cost,
by Bruce L. Gardner
(Harvard University Press, 388 pp., 2002).

“Agriculture,” de Tocqueville wrote, “is, perhaps, of all the useful arts, that which improves most slowly amongst democratic nations.” The often prescient de Tocqueville, however, never could have imagined how the technological boom of the twentieth century would transform agricultural production. Although American agriculture certainly had its difficulties last century, Gardner’s impressively researched and carefully documented book illustrates that despite its problems “the development of U.S. agriculture in the twentieth century is on the balance a great success story.”

Gardner meticulously harvested data and statistics from throughout the century to identify the roots of the American agricultural boom. He identifies productivity growth and the rising incomes of farm households as the two major achievements of the century as a result of four factors: the development and diffusion of technology, the expansion of the agricultural commodity market, the growth of off-farm income for small farms, and governmental policies of regulation and investment in infrastructure. Through his examination of aggregate and local data, Gardner concludes that in the twentieth century “the overall trend was one of strong productivity growth, declining real food costs for consumers, and a rising and more equally distributed standard of living for farm households.”

Gardner addresses the hardships suffered by farmers over the century, but he focuses particularly on the small farmer since World War II. Although today fewer farms account for larger portions of agricultural production, “farm households have on average since 1950 experienced a faster rate of growth in their off-farm incomes than in their incomes from agriculture.” This diversification of income has helped small farmers continue to keep their farm while improving their standard of living to coincide with nonfarm workers. Gardner’s research and thoughtful analyses make this book an excellent resource for readers seeking to understand the immense changes to agricultural life in the twentieth century.

As the commentary on Rod Dreher’s book on “crunchy conservatism” has demonstrated, there is an audience for books exploring and examining those who have tried to forge a way of life apart from modern capitalism. In this new book, Carlson, perhaps one of the foremost family scholars in the nation and president of the Howard Center, illustrates that this tradition has long roots, and that there have been repeated efforts to repudiate the excesses of both capitalism and socialism for at least the last century and a half. Whether these efforts will bear fruit in the present century depends in part on whether we canlearn from them.

Third Ways features several critical episodes of this lost history, and shows how the legacy of various European agrarians, peasants, and distributists lives onto the present, and separates the crucial lessons from this tradition from their failed strategies. Starting with the British distributist movement, including an analysis of Hilaire Belloc’s classic The Servile State, Carlson devotes three historical chapters to movements in Bulgaria, Sweden, and Russia that sought to restore (or retain) an economic system that properly preserved the family against the depredations of the market. Carlson also includes three thematic chapters, on “the family wage,” the Christian democratic movement, and the thinker Karl Polanyi. Carlson examines with a sympathetic but critical eye these various attempts; as he rightly concludes, “[m]ost of these schemes ended in failure,” partly through lack of planning, party because these family and local economic advocates were simply not as ruthless as their adversaries.

Nevertheless, the battle over the future of capitalism and globalization is not over. As Carlson reminds us, less than one hundred years ago much of Eastern Europe was a peasant society, and that history can be changed. Third Ways closes with six elements necessary for a family-centered political and economic structure, which with any luck will shape politics for the coming century.

book cover imageAn Outline of the History of Economic Thought,
by Ernesto Screpanti and Stefano Zamagni
(2nd ed., Oxford University Press, 559 pp., 2005)

The rationalist economic man is dead, if he ever were alive, but most economists still write as if this utilitarian and materialist individual were still the model for economic analysis. As it happen, there has been a revolution in economic thinking in the past generation, most of its in Europe. In Outline, Screpanti and Zamagni, professors of economics at the University of Siena and University of Bologna, respectively, recast western economic history to de-emphasize the dominant theory. Instead, they seek a new way to understand the actions and behavior of homo economicus.

In one sense, Outline is simply an excellent introductory history to economic thought. Beginning with the close of the middle ages, the authors cover all the major movements and controversies in economic thinking, such as mercantilism, Marxist theories, and the Austrian school, as well as in-depth analysis of particular figures, in an elegant translation of language suitable for a non-specialist.

However, the book does have an argument: to herald the end of neoclassical economics, and its vision of the human person as one of “Olympian rationality . . . exogenous preferences, [and] complete information.” Recent research across a number of disciplines has challenged each of these assumptions, which research has been slow to make its way into mainstream economics. The authors contend that overthrow of this reductionist paradigm will lead to a fuller understanding of economics and its place in the search for the good life. This is an important book for anyone seeking a way out of the dead-end of contemporary economic theory.