Welcome to the Hard Course series. This new course offers a concise history of the American economy. The over two-century story of the United States constitutes a significant portion of modern history, with the other half largely unfolding in Britain and Europe. Providing a complete account of U.S. economic history is a complex task due to its vast scope, encompassing themes such as national independence, political systems, territorial expansion, immigration and racial issues, the Civil War, industrialization, railroads and technological revolutions, trust formations, social crises, the Great Depression, interventionism, two world wars, economic stagflation, information technology, modern finance, the dollar and fiat currency, globalization, and the international order. Each of these elements represents a major field of study and is deeply intertwined with the nation's economic development. It can be argued that, apart from not undergoing a democratic revolution, America's economic history incorporates nearly every element of a nation's modernization, which underscores the value of studying it.
This course will use the theme of the free market as a central thread to analyze American economic history. We will explore historical issues related to this theme. For instance, how did the American political system serve the free market? How did industrial technology emerge from free competition? What is the relationship between free markets and monopolistic enterprises? Was the Great Depression a failure of the free market?
Many believe the rise of the United States was inevitable. However, prior to the mid-19th century, few held an optimistic view of the country. In its early years, the nation faced containment by Britain and was largely dependent on France. In 1837 and 1857, the U.S. experienced severe economic crises. The subsequent Civil War nearly led to the nation's fragmentation. Therefore, when examining U.S. economic history, we must avoid an omniscient perspective and the fallacy of historical inevitability.
To better understand this history, the course incorporates two analytical methods. The first is methodological individualism, viewing America's economic journey through the lens of strategic interaction. The nation's economic ascent was not a pre-designed outcome by its founders or industrialists. In reality, the growth process was fraught with conflicts, including disputes over founding principles, partisan strife, wars, racial tensions, and class struggles. Yet, why did the U.S. not fracture or decline amidst these conflicts? As we will discuss in the first lecture, a unifying historical narrative has existed since the nation's founding. The cornerstone of this narrative is the U.S. Constitution. Importantly, the Constitution was not designed by a single individual but emerged from intense negotiation, repeated bargaining, and continuous debate among founders representing diverse interests at the 1787 Philadelphia Convention. Even at the moment of signing, some delegates from Virginia refused. It took the mediation of General Washington, who had remained largely silent, and a moving persuasive speech by the eldest founder, Benjamin Franklin, to forge a consensus, driven by the threat of civil war and anxieties over separatism. The establishment of the Constitution was merely the beginning of the American style of strategic interaction; its economic history is a history of such interactions. On this constitutional foundation, every individual—be they worker or entrepreneur, politician or scientist, white or Black, indigenous or immigrant—has engaged in struggle and negotiation based on the principle of maximizing self-interest, leading to consensus, transactions, and cooperation. This is the perspective of methodological individualism.
The second method employed is the analytical approach of the New Economic History, pioneered by Douglass North and Robert Thomas. The primary distinction from traditional economic history lies in methodology. The New Economic History utilizes econometric analysis, methodological individualism, and theories of institutional change. A key difference in this course compared to other histories of the American economy is our application of economic theory to analyze each historical stage. While numerous works cover U.S. history, such as John Gordon's "The Great Game" and William Manchester's "The Glory and the Dream," the historical events they document are seldom viewed from an economic perspective. Through this course, we aim to examine various stages of U.S. economic history to identify what aligns with economic theory and principles, and what does not. Strictly speaking, this course could be titled "A Brief Analytical History of the American Economy."
Currently, Sino-American relations are tense. Viewing America's present through the lens of economic analytical history can provide clarity. The year 2020 in the U.S. witnessed numerous events—the pandemic, the Black Lives Matter movement, and a contentious election—all intertwined with historical patterns of conflict while also presenting new issues like fiat currency and the global order. How should we view these issues? What do they signify for America? Furthermore, for China, where does it stand on its modernization path? How much further must it go? Which aspects align with economic logic? Does U.S. economic history offer any lessons? From a traditional historical viewpoint, focusing merely on events and experiences—such as cycles of division and unity or the rise and fall of nations—may offer limited value. However, an economic analytical perspective, seeking to understand the underlying economic logic of American history, can provide valuable insights for contemporary China. Examining economic history through the logic of economics represents an intellectual advancement and a pleasurable exercise in thinking.
Finally, this course primarily references three historical sources. The first is "The Cambridge Economic History of the United States," edited by Stanley Engerman, Robert Gallman, and others. This is a substantial multi-author work with detailed content, though the quality of chapters and analytical methods vary. The second is "American Economic History" by Jonathan Hughes and Louis Cain, an introductory text employing the New Economic History approach. The third is "The Rise of American Civilization" by Charles Beard and others, a historical work with strong leftist ideological leanings that can broaden our perspective and offer cautionary insights.
Course Outline:
01 | North American Independence: The Common Historical Narrative
02 | A Century's Foundation: America's Financial Cornerstone
03 | Westward Expansion: Completing the National Territory
04 | The Gilded Age: The Rise of the Industrial Economy
05 | The Era of Oligarchs: A Fractured Social Fabric
06 | Economic Crisis: The Interventionism of the New Deal
07 | Superpower: The Post-War Boom Cycle
08 | Stagflation Crisis: A Period of Economic Difficulty
09 | Reagan's Reforms: The Revival of Liberalism
10 | The Monetary Era: An Imbalanced Global Order
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