Notice & Comment

Industrial Policy, Warfighting, and the Creation of the Modern American State, by Ganesh Sitaraman

*This is the eighth post in a symposium on William Novak’s New Democracy: The Creation of the Modern American State. For other posts in the series, click here.

Bill Novak has written a terrific book, filled with important contributions. Three big ones stand out. The first appears in his conclusion, titled “the myth of the New Deal state.” Novak shows persuasively that the period from the Civil War to the New Deal was not one defined by laissez-faire, a weak state, an attempt to restore a bucolic Jeffersonian society, or corporate capture, but a period of energy, flux, and above all creation. Leaders were constantly working to adapt old principles to a new context. The New Deal, on this story, was a culmination, not a starting point. The second is that while Novak’s uses revolutionary rhetoric in telling a story about transformation (see Sophia Z. Lee’s contribution to this symposium), my read is that his evidence is largely evolutionary. Novak’s chapters show how the modern state evolved and expanded over time, even if its development was an extraordinary event. Certainly, it was not as limited in its temporal scope as the constitutional moments of Reconstruction and the New Deal. The third is Novak’s focus on public utility and the importance of regulated industries for antimonopoly. His work in these areas is not only important to policy debates today about the bounds of antitrust law and the possibilities for regulating tech platforms, but it also contributes to the revival of the study of “regulated industries,” which lost vibrancy more than a generation ago.  

Each of these contributions is important on its own, and all are critical for telling the story of the emergence of the modern American state. But there are some areas Novak could have given greater emphasis. Criticizing an author for emphasis is always unfair, as there is only so much that can be done in a single book and choices must be made about where to focus. So in the spirit of integrating Novak’s work into a larger set of ideas and stories, I want to note two areas that I think are not just important on their own terms, but important for Novak’s own agenda.

The first is industrial policy. The desire for economic growth and development across the vast geography of the United States was a common theme from the Founding generation onward—think of the Northwest Ordinance, Hamilton’s economic plans, or Clay’s American system. This ambition persisted through the 1866-1932 time period that is Novak’s focus. Importantly, the ambition for growth made the modern American state a developmental state not just a regulatory state.

Consider two examples: communications and the tariff. During the 19th and early 20th century, public policy pushed the expansion of communications technologies—the postal system, the telegraph, the telephone—throughout the country. Public policies made these technologies widespread and facilitated commerce and democratic connections. At times, they involved public-private partnerships (e.g. the government didn’t run the telegraph or telephone) and at times they were exclusively public (the postal system). Indeed, the Post Office’s expansive network meant there was a federal government outpost even in the furthest flung parts of the country—a symbol of the presence of the American state. The federal government also promoted economic development within the country through tariffs, and it built the bureaucratic capacity to help. Congress created a special commissioner of the revenue in 1866 to report on tariff rates, and in 1882 established a Tariff Commission. Indeed, one of the Supreme Court’s important cases upholding a congressional delegation of power to the Executive was Field v. Clark (1892)—a case about the McKinley Tariff.

Importantly, the emerging regulatory state that Novak describes was itself also a developmental state. The law and policy of regulation in industries like radio, maritime shipping, and airlines was partly motivated by building up domestic industrial capacity. Proponents of regulation in these areas wanted protection from foreign ownership and control, and in some cases, they justified regulation on the need to prevent ruinous competition to ensure capital investment. Regulation acted as a form of industrial policy.

The second issue is warfighting. As Charles Tilly observed, “War made the state, and the state made war.” Warfighting is not a major theme in Novak’s story of the creation of the modern American state. And yet during Novak’s timeframe, the country was almost constantly waging war. First were the wars against Native Americans, which required complex logistics and led to development of capacity at the Department of the Interior and the health services, among other things. The second was the Spanish-American War and the occupation of the Philippines. This war, as many have noted, marked the emergence of new American ambitions on the global level (even if Americans were equivocal for some decades more). Empire shaped the American state at home too. As one example, consider Alfred McCoy’s work showing that the Filipino occupation led not only to the migration of policing and surveillance techniques in the United States but influenced the rise of the national security state.

World War I, of course, was a third major conflict, and it too was transformative. Novak gives the war a few paragraphs, but his account left me wanting more. The War Industries Board not only mobilized and organized American industrial capacity, but also set the stage for joint government-industry planning during Franklin Roosevelt’s administration. The national security state expanded domestic policing. And of course, Wilsonian self-determination—a critical consequence of the war—brought forth the idea that modern states everywhere had to be connected to their people, raising interlinked issues of democracy, nationalism, and the state around the world.

Why does emphasizing these themes matter? First, one of Novak’s contributions is to show how regulation is not something that happened to the laissez-faire market with the New Deal, but that market and state are intertwined and the laissez-faire period never existed. Throughout the book, he shows how economic and legal thinkers understood this. The industrial policy goals, to my mind, make this point even more sharply. Entire American industries, markets, and commercial activities were built by the state and private industry together. The state was part of economic growth from the start, even if it was sometimes appears “submerged,” to use Suzanne Mettler’s phrase.

Second, while wars are often seen as revolutionary moments—and thus might seem to counter Novak’s evolutionary story about the rise of the modern American state—the nature of these wars and the transmission mechanisms for state-building have some evolutionary features as well. Long wars and occupations (the West, the Philippines) meant change over time, and statist technologies were adopted over time as well. The wars also further his argument about the myth of the New Deal State, as the Wilsonian State was both precedent and model for some of Roosevelt’s actions.

Matters of emphasis are always necessary—no author can include everything. And while I might have added more on these topics, their comparative absence does not detract from a fantastic book. Bill Novak has done us all an extraordinary service in bringing together so many ideas, practices, laws, and policies into a single, beautifully-written, energetic, erudite volume that will surely reshape how we and subsequent generations see the creation of the modern American state.

Ganesh Sitaraman holds the New York Alumni Chancellor’s Chair in Law at Vanderbilt University Law School.

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