The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War

Abstract

In the quite moving preface to his impressively synthetic The Rise and Fall of American Growth, Robert J. Gordon explains how the book emerged from research questions and scholarly debates with which he has been grappling over his half-century academic career in economics, from his first job as a research assistant in graduate school to his current standing as one of the foremost scholars in the field of macroeconomics. In trying to resolve “one of the most fundamental questions about American economic history,” Gordon set out to explain the uneven pace of economic growth—understood as productivity, and in particular in terms of the standard of living, or productivity per person—since the Civil War (p. ix). Gordon contends that to understand the puzzle of slow economic growth since 1970, one needs to understand those years in a broad historical context. He argues that the years between 1870 and 1970 constituted a “special century” of increasing productivity in the United States, driven in large measure by the technological innovation of the late nineteenth and early twentieth century, which Gordon considers to be both unprecedented and, looking forward, never to be matched again. Gordon grounds what might initially appear to be the abstract concept of growth in the material conditions of everyday life in the United States: food, clothing, shelter, transportation, communications, health care, work, and the financial systems that underpinned these. The majority of the lengthy book (circa 650 pages of text) consists of two sections that follow these components of daily life: first in the period between 1870 and 1940 and then in the period between 1940 and 2015. Gordon's innovation here is not simply to incorporate a comparative historical view but also to acknowledge that the standard of living quantified by economists does not always account for the changes in quality of life as experienced by Americans. The shorter third section looks at more specific explanations for both the period of most impressive American productivity, between the 1920s and 1950s, and the slowing of that growth after the 1970s. The strengths of the former period, Gordon traces to the governmental policies of the New Deal and investments in World War II mobilization, while he roots the slowdown of the latter period in the narrowing scope of innovation, increasing wealth inequality, and other “headwinds.” Finally, Gordon offers policy suggestions for the future.