Bradford DeLong’s career opus, Slouching Towards Utopia, is a very long – although, in my view, consistently illuminating and entertaining – work of economic history that only very briefly, for a few pages here and there, touches on the history of taxation. Why, then, do I regard it as offering a highly suitable subject for a Jotwell Tax column?
The broader answer to this question is that historical context is vital to understanding tax (like other) institutions and ideas and yet often is ignored, other than by tax historians. The narrower answer, illustrating this broad proposition, pertains to the particular context of the great intellectual shifts that have occurred over the last thirty-plus years, not just in legal academic thinking, including in tax, but in American intellectual and political life more generally.
Slouching Towards Utopia concerns what DeLong calls the “long twentieth century,” which he views as having run from roughly 1870 to 2010. He argues that these 140 years were “the most consequential of all humanity’s centuries” (P. 1), above all because – despite disasters along the way, such as two world wars and the Great Depression – they featured startlingly high rates of annual per capita economic growth. During this period, he estimates that annual growth averaged 2.1 percent per year, as opposed to 0.45 percent over previous centuries (P. 3), and perhaps 0.6 percent in the years since 2010 (P. 516). This rapid growth rate triggered a more than an eightfold increase in world income per capita from the beginning to the end of the “long century” – despite an immense concomitant rate of population increase – transforming everyday life around the world for the (at least materially) better, by reducing dire poverty and allowing luxury goods to be widely available, rather than being limited to people at the top of the income distribution.
The causes of high growth, as DeLong views it, were not predominantly rooted in government policy, except insofar as it established stable conditions and got out of the way. Rather, the growth explosion reflected technological developments that gave rise, for example, to “full globalization, the industrial research laboratory, and the modern corporation” (P. 3). Moreover, growth’s then abating was probably not, in the main, due to policy failures towards the end of the “long century,” as these did more to worsen equity than efficiency or growth. While these are not entirely novel claims, DeLong particularly emphasizes both (P. 1) just how transformative and historically unprecedented the technology-fueled growth was, and (P. 2) how little it was affected by prominent policy levers (although it could affect them).
This brings us, however, to the great policy shift that occurred about thirty years before the high-growth era’s end (albeit, during a period of economic stress). As DeLong notes, starting in the mid-1970s “[t]here was a sharp neoliberal turn away from the previous order – social democracy – of 1945-1973. By 1979 the cultural and political energy was on the right. Social democracy was broadly seen to have failed, to have overreached itself. A course correction was [seemingly] called for” (P. 429). The likes of Reaganism and Thatcherism provided it in the public political realm, although their efficiency payoff, if any, proved starkly disappointing (P. 443).
What explains the great neoliberal turn? To DeLong,
the greatest cause was the extraordinary pace of rising prosperity during the Thirty Glorious Years [of post-World War II social democracy], which raised the bar that a political-economic order had to surpass in order to generate broad acceptance. People … had come to expect to see incomes relatively equally distributed (for white guys at least), doubling every generation, and they expected economic uncertainty to be very low, particularly with respect to prices and employment…. And people then for some reason required that growth in their incomes be at least as fast as they had expected, and that it be stable, or else they would seek reform (P. 429).
The late 1970s’ apparent failure, relative to these high expectations, led to an intellectual shift that proved highly stable, for decades to come, despite its failure to provide anything close to the promised benefits.
DeLong also notes racism’s contribution to the rightward turn (in politics, whether or not in legal scholarship). He writes, for example, about Nobel laureate George Stigler’s angry insistence, in the face of impending civil rights legislation, that racial inequality was almost entirely Black people’s fault (P. 438) – a product of what he viewed as their intellectual and moral inferiority, and made worse by their rising “insolence.” As DeLong rightly notes: “The word ‘insolence’ is truly the tell” (P. 439).
While DeLong does not address the tax or other legal scholarship of either that or more recent eras, a rightward and neoliberal turn arose (and then abated) in such scholarship as well. Early law and economics writings, heavily inflected with “Econ 101ism,” seemed to show that various types of regulation, ranging from rent control to antitrust to corporate governance, were almost invariably naïve and counterproductive. In tax policy, analogous views spread as to imposing high marginal rates, or indeed imposing any tax at all on “normal” returns to capital. There has since been a shift in both fields back towards restated versions of the views that neoliberalism had seemingly cast aside.
Slouching Towards Utopia is far too broad and rich in its coverage of the last two centuries of (mainly American and European) economic, political, and even military history for it to be reduced to merely a discussion of neoliberalism’s rise and disappointing fruits. The main reason for reading it is to enjoy and reflect on DeLong’s broader, and highly varied, historical and intellectual themes, spanning much of the last two centuries. But its reaching that topic, among many others, gives particular food for thought to tax scholars who are interested in the last few decades’ course of the field.
