DeLong narrates world history from 1870-2010 as a sort of push and pull between the perspectives of Hayek and Polanyi, which he gives these pithy summaries for:
- Hayek = “The market giveth, the market taketh away; blessed be the name of the market”
- Polanyi = “The market was made for man, not man for the market”
He highlights the period of 1938-1973 as a golden age of social democracy in the G-7 countries, with exceptionally rapid economic growth, reduction in income inequality in the US, and strong welfare systems in the other countries. But the growth rate started to fall, and governments shifted to neoliberal approaches in the hope (among other reasons) of restoring it. DeLong notes that this did not work—the growth rate only improved for the wealthiest citizens—and he clearly views this shift as a big mistake.
Some random claims/facts I found interesting:
- Until around 1870, most technological improvements ended up being used to allow society to support a larger population, rather than increasing the quality of life of the population.
- DeLong thinks the Industrial Revolution was an unlikely occurrence compared to the alternative possibilities “of semipermanent gunpowder empires and sail-driven global commerce”.
- He pins the Great Depression on the money supply being too tight while there was an excess of all other goods.
- The word “Nazi” originated as “a dimunitive nickname for Ignatz” which “was a stand-in for a what in English is a country bumpkin: someone rural, foolish, and awkward.”
- Japan felt forced to attack the US in WW2 because the US “had essentially embargoed exports of oil to Japan—all oil, not just oil from the United States.”
- DeLong insists that the housing market crisis did not make the Great Recession inevitable, arguing that “the major mistake” was allowing “Lehman Brothers investment bank [to] collapse in an uncontrolled bankruptcy without oversight, supervision, or guarantees” in a misguided attempt “to prevent Wall Street from profiting from the crisis”.