34 SEPTEMBER 2019 THE ATLANTICThe Trump
administration
and its foreign
analogues
have largely
dispensed
with economic
advisers.community and stability and shared purpose BOOKS
that gave millions of lives their meaning. Berle
had viewed the corporation as a social and polit-
ical institution as much as an economic one, and
the dismembering of corporations on purely eco-
nomic grounds was bound to generate fallout
that had not been accounted for. Meanwhile, Jen-
sen’s market-centric mind-set permeated finance,
enabling opaque risks to build up in banks and
other trading houses. As the collapse of Enron
and other corporate darlings revealed, a good
deal of non-market-related accounting fraud com-
pounded the fragility. Even before the 2008 crash,
Jensen disavowed the transactional culture he had
helped to legitimize. Holy shit, Jensen remembers
saying to himself. Anything can be corrupted.T
HE WI DE R S T O R Y of the market-
centric worldview provides the meat of
Appelbaum’s narrative. It is a tricky tale
to tell, because many of the myths of the era fall
apart on close inspection. Contrary to common
presumption, the economics establishment in the
1990s and 2000s did not believe that markets were
perfectly efficient. Rather, influential economists
took the pragmatic view that markets would dis-
cipline financiers more effectively than regulators
could. Alan Greenspan, the Fed chairman who
is often painted as the embodiment of the pro-
market age, had been preoccupied with the desta-
bilizing inefficiencies in finance since the 1950s.
Lawrence Summers, the Harvard economist who
became Treasury secretary under Bill Clinton, had
contributed to the aca demic literature on the lim-
its of market efficiency. The fact that such sophis-
ticated people presided over a dangerous buildup
in financial risk suggests that something larger was
at work than a naive faith in markets.
Appelbaum’s strength is that he generally
acknowl edges these complexities. He is happy to
state at the outset that market-oriented reforms
have lifted billions out of poverty, and to recognize
that the deregulation that helped undo Berle-ism
was not some kind of right-wing plot. In the late
’70s, it was initiated by Democrats such as President
Jimmy Carter and Senator Ted Kennedy.
But Appelbaum makes it his mission to highlight
instances where the market mind-set went awry.
Inequality has grown to unacceptable extremes in
highly developed economies. From 1980 to 2010,
life expectancy for poor Americans scandalously
declined, even as the rich lived longer. Meanwhile,
the primacy of economics has not generated faster
economic growth. From 1990 until the eve of the
financial crisis, U.S. real GDP per person grew by a
little under 2 percent a year, less than the 2.5 percent
a year in the oil-shocked 1970s.
As Appelbaum shows, economists have repeat-
edly made excessive claims for their discipline. In
the ’60s, Kennedy’s and Johnson’s advisers thought
they had the business cycle tamed. They believed
they could prevent recessions by “fine-tuning” tax
and spending policies. When this expectation was
exposed as hubris, Milton Friedman urged central
banks to focus exclusively on the supply of money
circulating in the economy. This too was soon dis-
credited. From the ’90s onward, economists over-
sold the benefits of targeting inflation, forgetting
that other perils—the human cost of unemploy-
ment, the destabilization wrought by financial
bubbles—might well be worse than rising prices.
Meanwhile, Greenspan and Summers ducked the
political challenge of buffering new kinds of finan-
cial trading with regulatory safeguards. To be fair,
the Wall Street lobbies presented more of an obsta-
cle to regulation than critics acknowledge. Still,
Greenspan and Summers miscalculated.
The upshot was the whirlwind of the past
decade: the greatest financial crash in recent
memory, and a crisis of legitimacy in the world’s
advanced democracies. After decades in which
economists’ influence expanded rapidly, the strik-
ing thing about the Trump administration and its
foreign analogues is that they have largely dis-
pensed with economic advi sers. The United States
has lived through the era of corporatism, the era of
transactional ism, and the economists’ hour. The
intellectual marketplace awaits a fresh approach to
the structuring of work and the good society.L
EMANN AND APPELBAUM wisely
don’t pretend there are easy solutions.
The benevolent corporatism of the Treaty
of Detroit reflected a world in which American
indus try faced little foreign competition and new
technologies were generally developed by firmly
established businesses. By contrast, today’s fierce
international competition and disruptive innova-
tion oblige businesses to cut costs or go under. The
dilemma is that, even as they compel efficiency,
globalization and technological change exacerbate
inequality and uncertainty and therefore the need
for a compassionate social contract.
Lemann explores one response to this dilemma
through the figure of Reid Hoffman, who founded
the online professional network LinkedIn and is
the third starring character in Lemann’s history of
grand conceptions. It is an inspired piece of cast-
ing. As a stalwart of Silicon Valley, Hoffman hails
from the complex of start-ups that are intent on
disrupting what remains of the old-line corporate
establishment. At the same time, as the creator of
LinkedIn, he represents a purported antidote to
the insecurity that results from the disruption.
The promise of online professional networking is
that, by building a raft of cyberconnections, workers
will safely navigate the rapids of the new economy.
Each person’s network, not any one firm, will be the