Progressivism and Political Economy

The new corporate economy - concentration of economic power

• mass production

• multi-unit firms

• managed competition

  • consolidations, mergers and trusts

    • trust - separate companies are managed by a single board of trustees

  • trade associations

Immigration

• three waves

• urban problems

• unskilled labor - barrier to unionization

• growth of political machines

Organized labor

• government policies - anti-monopoly sentiment

  • liberty of contract

  • anti-trust laws and injunctions

  • open-shop

• dual unionism

  • craft - AFL

  • industrial - National Labor Union

• Growth of unions

  • AFL and Samuel Gompers

  • militancy and strikes

  • growth in union membership

The Progressive Movement

Reform movements - late 19th century

• early populist movement - agrarian interests

  • reform of trusts - Sherman Anti-trust Act

  • concentration of economic power

• defeat of Bryan in 1896 ended national partisan politics

• muckrakers

• problems of industrialization

• agrarian populists - limit economic power and exploitation

• Social Gospel movement

• elitist and populist

Election reform

• at-large election

• Australian ballot

• initiative, referendum, recall

The new economy

• The role of the state (should the state have a role)

  • limited role - Taft

  • New Nationalism - Roosevelt - partnership with corporations

  • Wilson - more adversarial relationship

Characteristics of pure market economies

• information is complete and available

• exchange is without transaction cost

• actors must be price takers

• markets must exist for all goods

• no externalities

• no collective goods

State intervention to correct market failure

• Tariffs - protect domestic industry from foreign competition

  • reduced under Wilson

  • bi-partisan Tariff Commission - 1916

  • isolationism following WWI

• Interstate Commerce Commission - rate regulation

  • Interstate Commerce Act - 1887 - railroad regulation

  • "reasonable and just charges"

  • limited powers - Maximum Rate case - 1897

  • expanded powers

    • Elkins Act - 1903 - schedules and rates

    • Hepburn Act - 1906 - extended authority

    • Commerce Court - eliminated in 1913

  • shift

    • Transportation Act of 1920 - profits for industry

• Antitrust

  • Sherman Anti-trust Act of 1890 - restraint of trade, monopolies illegal

  • Clayton Act of 1914 - specific illegal activities

• Federal Reserve

  • history of financial crises

  • Federal Reserve Act - 1913

  • decentralized system of 12 regional banks

  • impose reserve requirements on member banks

  • lender of last resort - discount rate

  • open market operations

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