Friedrich Hayek (Roger Tillberg/Alamy Stock Photo)

Thomas Robert Malthus was possibly the most pessimistic economist of all time. Writing in the early nineteenth century, he argued that technological advances were ultimately futile as they would not raise living standards. In his telling, any rise in living standards would just lead to an increase in population, which would push per capita income back down to subsistence levels. This is the famous Malthusian trap. Malthus might have been right about most of human history, but things were starting to change just as he was writing. The Industrial Revolution created a way to escape from this trap: output rose faster than population, leading to an increase in per capita output. Living standards rose.

In an impressive new book titled Slouching Towards Utopia: An Economic History of the Twentieth Century, economist Brad DeLong tells the story of the escape from the Malthusian trap over what he calls the long twentieth century—from 1870 to 2010. DeLong argues persuasively that this escape did not happen during the first Industrial Revolution—the revolution of steam power and railways. Rather, it happened after 1870, owing to three developments: the advent of the industrial research lab, which allowed for invention on the back of invention; the emergence of the modern corporation, which allowed the market to harness new technologies; and the expansion of globalization, which led to a massive decrease in the cost of transportation and communications. It was these developments that created what DeLong calls an “economic El Dorado” between 1870 and 1914. DeLong notes that Marx, writing in the middle of the nineteenth century, was on to something when he stressed the immiseration of the working class. But after 1870, Marx’s analysis was simply wrong. There were still serious economic problems during this period, including the extremely high inequality that gave rise to the Gilded Age. But by and large, ordinary people in Europe and North America were finally benefiting from technological progress.

This El Dorado didn’t last. It was unwound by the First World War, then by the rise of fascism and communism, and finally by the Great Depression and the Second World War. The big question DeLong asks is why things went so badly wrong. Why—given our new ability to increase economic output so much—didn’t we figure out a way to distribute that output so that people could have their needs met? DeLong is following a line of inquiry introduced by John Maynard Keynes in a 1930 essay titled “Economic Possibilities for our Grandchildren.” Keynes argued that technology would solve the economic problem so that everyone would have enough—and that, before the end of the twentieth century, no one would need to work more than fifteen hours a week. Keynes was right about the ability of technological change to dramatically increase incomes. But he was wrong that the economic problem would be solved. Debates about the distribution of resources are more contentious than ever. Inequality is skyrocketing, poverty is still with us, and people are still working forty-hour weeks.

What happened? DeLong’s answer is that technology revolutionizes the economy in every generation, and that this is bound to have social and political consequences. Governments find it hard to provide for people’s needs in the face of such constant fomentation. In his most original contribution, DeLong frames this as a struggle between the ideas of Friedrich Hayek and those of Karl Polanyi. DeLong summarizes Hayek’s position as “the market giveth, the market taketh away: blessed be the name of the market.” Hayek argued that the decentralized nature of the market would, if unimpeded, lead to remarkable wealth creation. The state only needed to protect property rights, and the rest would take care of itself. The problem, DeLong argues, is that people demand rights other than property rights. This is where Polanyi comes in. DeLong’s summary of Polanyi’s position is “the market was made for man, not man for the market.” In other words, people’s needs must come first, and these needs are not necessarily met by the market. Polanyi argued that relying on property rights at the expense of other economic rights was bad news. What are these other economic rights, according to Polanyi? As DeLong puts it, they are “rights to a community that gave them support, to an income that gave them the resources they deserved, and to economic stability that gave them consistent work.”

Debates about the distribution of resources are more contentious than ever. Inequality is skyrocketing, poverty is still with us, and people are still working forty-hour weeks.

If these rights were not guaranteed, Polanyi argued, then there would be a backlash. This backlash took many forms over the long twentieth century—some negative, such as fascism, Nazism, and communism; some positive, such as the postwar experience of social democracy. DeLong’s narrative brings home the role of contingency in all of this. It was not inevitable for World War I to break out when it did. But once it did break out, it led to an increasing economic divergence between the United States and Europe—while Europe suffered from economic, social, and political upheaval, the United States enjoyed the Roaring Twenties. It was just luck that Republicans happened to be in power when the Great Depression began; if they hadn’t been, Franklin Roosevelt might never have been elected with a mandate to implement New Deal policies and lay the groundwork for a new economic order. And without the experience of war and the solidarity it generated, social democracy might not have won out in the postwar period.


DeLong is at heart a social democrat. In his telling, the postwar social-democratic era in both Europe and the United States was the closest thing to economic utopia we have ever experienced—with economic growth rates surpassing even those of the 1870–1914 period, all in the context of low inequality and strong financial stability. Even before the war, the countries that did best during the Great Depression were the social-democratic (and mainly Scandinavian) countries.

For DeLong, social democracy is best seen as a “shotgun marriage” between Hayek and Polanyi, blessed by John Maynard Keynes with his commitment to full employment. I would argue that social democracy is an even bigger accomplishment than this formulation might suggest. As Thomas Piketty argues in his most recent book, A Brief History of Equality, social democracy marked a decisive shift in economic history. Something new was afoot—a huge expansion in the social-assistance state and progressive taxation over the latter half of the twentieth century.

DeLong recognizes an element of tragedy in the story of social democracy. As a system, it had proved its mettle. But by the 1970s, people started to lose faith in it. They began to take prosperity for granted, expecting ever-high growth rates. When growth faltered, redistribution became more controversial: without growth, some people had to get less in order for others to have more. On top of this, the experience of inflation during the late 1960s and ’70s undermined public confidence in the ability of social-democratic policymakers to deliver stability. In DeLong’s telling, this was what spurred the neoliberal turn of the 1980s, which defined the final period of his narrative.

But neoliberalism turned out to be a failure. It did not deliver the return to rapid growth that it promised, but it did lead to much higher inequality—and, in countries like the United States, to a second Gilded Age. This went hand in hand with a technology-induced decline in manufacturing employment. Globalization and market reforms did benefit the developing world, especially in Asia, but this was little comfort to people suffering from neoliberal policies in the deindustrialized West. So why, despite its failure, did neoliberalism prove so enduring? DeLong’s answer is that capitalism was perceived to have won the Cold War, and there was a triumphalist, end-of-history ethos around neoliberalism.

DeLong recognizes an element of tragedy in the story of social democracy. As a system, it had proved its mettle. But by the 1970s, people started to lose faith in it.

DeLong’s narrative ends in 2010, right after a global financial crisis destroyed the credibility of neoliberalism and led to populist and nativist backlashes. Here, he faults Barack Obama for switching immediately to austerity when unemployment remained high and recovery had barely begun. Given the political climate at the time, it’s hard to know if Obama could have pursued a different policy. But the story ends too abruptly to really draw this out, and one wonders why DeLong did not choose a later endpoint for his narrative.

Slouching Towards Utopia presents a compelling narrative and a fine overview of more than a century of economic history. It’s well written and doesn’t require any special training in economics on the part of the reader. Still, the book has its flaws. Especially in its early chapters, DeLong tends to get sidetracked with barely relevant vignettes and extraneous details. He devotes too little attention to the developing world and to the rise of China. Climate change gets only a passing mention, despite its looming importance for economies throughout the world and the particular challenge it poses to neoliberalism. But for a book that covers as much ground as this one does, these are minor quibbles.

Finally, what about that title? Are we still slouching toward utopia, or sliding away from it? There are few signs that our economic situation is about to improve any time soon. Technological advances continue, but we still haven’t learned how to divide the fruits of those advances equitably—how to make sure that everyone has enough and how to value everyone’s contribution. We need to think hard about what the next Polanyian backlash might look like, and what a twenty-first-century revival of social democracy would require.

Slouching Towards Utopia
An Economic History of the Twentieth Century

J. Bradford DeLong
Basic Books
$35 | 624 pp.

Anthony Annett is a Gabelli Fellow at Fordham University and a Senior Advisor at the Sustainable Development Solutions Network. 

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Published in the July/August 2023 issue: View Contents
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