A rebuke from Alan Greenspan, the economic president who commanded the world.
A nation that supports companies that overcome crises is the driving force behind capitalist growth.

From the first venture capital whaling to the future beyond Silicon Valley—
An intellectual journey that explores America's past and future for paths to innovation.

Alan Greenspan and Adrian Wooldridge (journalists for The Economist) tell a comprehensive and brilliant story of America's miraculous success, focusing on three themes: productivity, creative destruction, and politics.
As you read "A History of American Capitalism," you will clearly see the spirit of creative destruction and innovation that has continued from the 18th-century merchant republic to today's internet revolutionaries.


However, prosperity has always been accompanied by side effects such as monopolies, inequality, and social conflict, and the history of American capitalism is also a history of overcoming obstacles.
Ultimately, the authors seem to be asking this question:
“Is the future still bright for this pioneering nation, where challenges from competitors are rife outside and the sound of conflict is loud within?”

The history of American capitalism, vividly depicted by Alan Greenspan and others, will serve as a useful guide for nations, companies, and individuals seeking the path to innovation.

This book will tell the story of American capitalism, focusing on three themes: productivity, creative destruction, and politics.
Productivity is the ability to increase output with given inputs.
Creative destruction refers to the process of increasing productivity.
Politics responds to the aftermath of creative destruction.

--- From the "Preface"

The United States, a country of remarkable openness and dynamic culture, was a remarkable example.
America's founding fathers embodied the zeitgeist of the new culture.
Benjamin Franklin said, “A farmer on his feet is higher than a gentleman on his knees.”
Thomas Jefferson said, “The people are not born with saddles on their backs, nor the privileged few with boots on their backs to ride them.”

--- From "Chapter 1: The Commercial Republic: 1776–1860"

Growth raised people's standards of living.
Until the early 19th century, economic growth was as 'broad' as population growth.
After the War of 1812, there was a period of 'intensive' economic growth.
That is, the economy began to grow faster than the population.
Economists estimate that real output per capita grew by 0.24 percent annually from 1800 to 1820, compared to 1.25 percent from 1820 to 1860.

--- From "Chapter 1: The Commercial Republic: 1776–1860"

From 1776 to 1865, the various subgroups that made up the United States were divided into two opposing camps over the course of American history.
These were the camps that pursued industrial modernization and the camps that pursued an agricultural society based on slavery.
The conflict between the two camps began with an intellectual debate between Alexander Hamilton, the first Secretary of the Treasury of the United States, and Thomas Jefferson, the first Secretary of State and third President of the United States.

--- From "Chapter 2, Two Americas"

For 70 years after its founding, the United States was divided into two distinct economic zones: the capitalist economy of the North and the slave economy of the South.
New England had water-powered textile mills, and the South had slave-powered plantations.
This division became more pronounced over time as the North invested in buying new machinery and the South invested in buying more slaves.

--- From "Chapter 2, Two Americas"

There have been many great moments when America 'came together' as one nation.
It was the moment in 1869 when Leland Stanford connected the vast West to the old East by striking the golden spike with his silver hammer at Promontory Summit, Utah, uniting the Union Pacific and Central Pacific railroads. Or the moment in 1986 when workers finally completed I-80, the first transcontinental interstate highway, stretching from the George Washington Bridge in Manhattan to the western end of the San Francisco-Oakland Bay Bridge.
But no moment was more significant than the moment when the South surrendered to the North in the Civil War, marking the end of a once-divided nation's destiny as a fully capitalist republic.

--- From "Chapter 2, Two Americas"

The productivity revolution transformed the face of rural America.
Women and children were gradually liberated from back-breaking labor.
Women focused on housework, aided by new machines like sewing machines, and inspired by new trends like 'scientific housework'.
Children spent more time learning.
The productivity revolution also transformed the entire United States.
Cattlemen and cowboys transformed beef from a luxury food enjoyed by the wealthy, as it still is in Europe, into a food enjoyed by the masses.
Wheat farmers provided the nation with cheap bread and flour.
The price of wheat fell by half in just four years, from 1868 to 1872.
The diet became richer and less monotonous.
Americans could eat staples like Midwestern beef and New England cod, as well as Georgia peaches, Florida oranges, and California asparagus.
The word "dietitian" (a portmanteau of "diet" and "physician") first appeared in 1905, as people began to worry about eating too much rather than too little.

--- From "Chapter 3 The Triumph of Capitalism: 1865–1914"

The revolution on an organizational scale was also a revolution on a human scale.
The people at the center of this revolution were true giants, brimming with energy and ambition.
They wielded more power than anyone except the kings and generals of the past.
It was also conceived on the largest possible scale.
No dream was too grand, no ambition too extreme.
They are a small group of businessmen comparable to Alexander the Great, Caesar, and Napoleon.
--- From "Chapter 4: The Age of Giants"

These great entrepreneurs earned their place in history not by inventing new things, but by organizing them.
This work involved three elements.
It was about capturing innovations with the potential to transform industries, combining factors of production, often across long distances, and integrating previously disconnected economic activities from raw material production to finished product sales.

--- From "Chapter 4: The Age of Giants"

After the 1880s, angry workers joined angry farmers.
In the first half of the 19th century, unions were virtually non-existent, as the majority of workers were craftsmen who sold their work directly to customers.
However, just as labor disputes became commonplace throughout industrialized countries, they also became commonplace in the United States after the Civil War.
For example, from 1881 to 1905, 37,000 strikes occurred.
Although most strikes occurred in the construction and industrial sectors, the most severe labor-management divisions were in the railway and steel sectors, which were at the heart of the Second Industrial Revolution.

--- From "Chapter 5 Resistance Against Laissez-faire"

The golden age of management that began in the 1920s lasted until the mid-1970s.
During the Gilded Age, managers had to comply with the demands of their owners.
In the first two decades of the 20th century, it was necessary to follow the demands of bankers (as was still the case in continental Europe).
On the other hand, minority shareholders had no choice but to leave day-to-day management to experts.
The downside of this structure was that managers could enrich themselves at the expense of the owners.
The corporate hierarchy has also become more complex.
On the other hand, there was also the advantage that managers could attempt to create a business environment with a long-term perspective.

--- From "Chapter 6 America's Main Business is Business"

The Great Depression was worse than any other depression experienced by any other country.
At the height of the Great Depression, about a quarter of the working population lost their jobs.
Moreover, the period was long, lasting for over 12 years.
The U.S. economy did not fully recover its productive capacity until it began to increase production during World War II (1941–1945).
There is also controversy over the claim that the United States experienced not one Great Depression, but two Great Depressions separated by periods of sluggish recovery.
According to this argument, the first Great Depression lasted for 43 months, from August 1929 to March 1933, and the second lasted for 13 months, from May 1937 to June 1938.
The recovery that took place in the meantime was sluggish.

--- From "Chapter 7 The Great Depression"

The United States emerged from World War II as a giant among dwarfs.
A country with 7 percent of the world's population produced 42 percent of the world's manufactured goods, 43 percent of its electricity, 57 percent of its steel, 62 percent of its oil, and 80 percent of its automobiles.
… During the 25 years following the war, the American economy was booming, and Harvard economists, looking for a point of criticism, began to focus on the problems of affluence.

--- From "Chapter 8: The Golden Age of Growth: 1945–1970"

The worst economic record has been broken.
In 1971, the United States recorded its first trade deficit since 1893.
In 1974, the inflation rate reached 11 percent.
Stock prices in the late 1970s remained at the same level as they had been in the early 1970s.

The cause behind the domestic problems was a sharp decline in productivity growth.
During the 13 years from 1960 to 1973, output per hour increased by 51 percent across all business sectors.
On the other hand, during the 13 years from 1973 to 1986, the growth rate was less than half that.

--- From "Chapter 9 Stagflation"

Amidst all the talk about a "new economy" and a "productivity miracle," Clinton left office in a state of euphoria.
In his 2000 State of the Union address, he said this in an attempt to build consensus on a new economic policy that would last as long as the postwar consensus on managed capitalism.
“We are so lucky to live in these times.
“Never before has our country enjoyed so much prosperity and social progress without internal crisis and external threats.” Indeed, there were more jobs and higher wages than ever before.
The fiscal deficit turned into a fiscal surplus, and the stagnant productivity growth rate soared.
Outdated ideologies—the Republican ideology that all government intervention was useless and the Democratic ideology that all jobs were protected from economic fluctuations—have been replaced by a new pro-growth consensus.
The United States was leading one of the world's most exciting technological revolutions, applying information technology to an increasingly broad range of areas.
“My fellow Americans, we have crossed the bridge into the 21st century,” Clinton declared.

--- From "Chapter 10: The Age of Optimism"

But Bush's luck soon ran out.
His tenure was marked by economic crises such as the Enron bankruptcy, the severe post-9/11 recession that shattered projections for budget surpluses and widened deficits, the "China shock" and the global financial crisis.
The other side of Bill Clinton's "bridge to the 21st century" turned out to be much more difficult than anyone imagined.

--- From "Chapter 11: The Great Depression"

As I write this, signs are growing that the United States is in the early stages of stagflation.
The dangerous combination of stagnation and inflation initially stimulates the economy, but eventually causes massive damage, as in the 1970s.
Record low unemployment rates put pressure on wages.
Meanwhile, the legacy of historically low productivity growth, with nonfarm output per hour increasing by less than 1 percent annually from 2011 to 2016, continues to haunt the economy.
Despite the current upturn, the deeper causes of America's dynamism decline remain unresolved.

--- From "Chapter 12: The Dynamism of a Declining America"

So far, the United States has repeatedly overcome previous failures.
In the 1930s, the United States suffered the longest and deepest depression in its history.
Then, after the end of World War II, it emerged as the world's leading economic power and enjoyed 20 years of continuous growth.
In the 1970s, the American economy suffered from stagflation, and companies were losing out to German and Japanese companies.
Then, in the 1980s and 1990s, it seized the opportunities presented by the IT revolution and globalization to regain its status as one of the world's most dynamic economies.
There is good reason to believe that the United States can demonstrate the same capabilities again.

--- From "Conclusion"