Book Review

A Commercial Republic Roundtable: Entry 1 from Tim Lacy

The Book

A Commerical Republic: America’s Enduring Debate Over Democratic Capitalism

The Author(s)

Mike O'Connor

Editor's Note

This is entry 1 (of 4) in our roundtable on Mike O’Connor‘s 2014 book, A Commercial Republic. Mike O’Connor was a long-time writer for the S-USIH Blog—one of our original contributors, helping especially with book reviews. A few years ago, after the publication of A Commercial Republic, Mike hung up his history spikes to return to school. For the past few years he has been student at the University of Texas (Austin), where he just completed a Master’s in Public Affairs. After you read these reviews, it won’t be hard to see how he developed an interest in public affairs, policy, and economic development. [Note: Although Andrew Hartman is not a contributor to this roundtable, he helped put it together.]

The Enduring, Unsettled Question of Economic Intervention in American Politics


For a very short time, in the early 1990s, I was an economics graduate student at the University of Missouri (Columbia). Why? Or how did that come about? As an undergraduate at the same institution, I had obtained an “area of emphasis” in economics with my degree. This meant I had earned significant credits in econ, but not quite enough for a minor. Those courses introduced me to John Maynard Keynes, Arthur Laffer, Paul Volcker, Reaganomics, deregulation, Alan Greenspan, and other people and topics. Earning those credits had convinced me that a Master’s in economics might be an interesting academic and career move. Having been friendly with an econ faculty member, and having performed reasonably well in my courses, I was able to obtain admission. It was the best idea I had, at the time, for continuing my studies—which I desperately wanted—and for improved salary prospects.

After a few weeks in my first courses, however, I sensed something was wrong. A month later I was convinced I had made a major mistake. I was unmotivated and, frankly, behind on my studies. The vehicle for a change in fate came, literally, in the form of a vehicle: I was hit by a car while cycling to campus. The injuries resulted in significant absences from class, which enabled a serendipitous withdrawal from the term. It was just as well, because I think I would have failed all but one of my courses. A few months later I also obtained a full-time job with the State of Missouri. With that I permanently abandoned my academic study of economics.

I rarely discuss my adventure in economics, mostly because I was ashamed of my performance and puzzled about why it didn’t work out. Now I realize I was poorly advised and should’ve never been admitted. But I also knew, at the time, that my interest in the field was grounded in qualitative, not quantitative, factors. What I really wanted, in the early 1990s, was to study something like political economy. But, at the time, not a single person correctly identified my deeper interest or recommended political economy when I expressed dissatisfaction with quantitative-based academic economic study. Given my strong interest in questions about political economy, and given my love for intellectual history and the history of ideas, it should come as no surprise that I found large parts of Mike O’Connor’s A Commercial Republic–—which addresses all of those areas—to be deeply engaging. In fact, I was interested in most all of the ideological and political conflicts outlined in O’Connor’s book, especially those from 1930s and after.


Having read A Commercial Republic: America’s Enduring Debate over Democratic Capitalism, I wonder now why I did not tackle it immediately, in 2014? This is superficial, but I think one of the reasons was the title. It conveys neither the book’s relevance nor its central topic. The fact that we live in a commercial republic is something of a given. Even when we consider the subtitle, it seems obvious that we are a nation grounded in capitalism that also loves, or pretends to love, or tells others it loves, its democratic aspects. These things seem beyond controversy. There’s nothing debatable about democracy, our republican traits, our commerce, or our basis in capitalism.

The central topic of O’Connor’s book is as hot and controversial as they come: the issue of government intervention in our economy. How much is appropriate? Who should call for interventions? Why is it so political? When are interventions appropriate? Whose liberty is compromised when an intervention takes place? Various answers to these questions have animated large chunks of American history, but especially, I think, since the 1970s. O’Connor shows the origins of this debate and demonstrates how unsettled questions from the past continue to roil the present.

O’Connor begins by arguing against a “utopian conservative political ideal” (one “read backward into the past”) asserting that the U.S. federal government abstained from intervention before the Great Depression. He opposes, in other words, elements of ideological presentism in the historical analysis of economic conservatives, especially “modern-day libertarian[s]” (p. 7-8). O’Connor shows, definitively, that “for as long as there has been a United States, its federal government has exerted considerable influence on the nature and shape of the national economy” (p. 7). That said, he posits that the animating tension regarding intervention are the forces of democracy and capitalism. Citizens demand interventionist policies that create significant impacts, even while those same citizens display a consistent commitment to private property and market mechanisms (p. 8). Ebbs and flows in those commitments, and historical circumstances, dictate which of the two forces holds sway.

O’Connor’s topical reach extends to the founding of the Republic—to the ideas and proposals of John Locke, James Madison, Alexander Hamilton, and Thomas Jefferson. Hamilton, however, is the star of show. O’Connor’s Hamilton is not the hot-headed tomcat, glory-seeking war hero, nor star of the Constitutional Convention as portrayed in Lin Manuel-Miranda’s musical. Rather, the Hamilton of A Commercial Republic is a “policy wonk,” sort of an economic gradgrind (p. 43). His call for intervention by diversification reveals a Hamilton out-of-sync with the prevailing mood of his agrarian, small-government times. Even so, his economic nationalism proved prescient, for O’Connor argues that “nearly all of Hamilton’s recommendations would eventually be implemented” (p. 46). Indeed, Hamilton’s financial system anticipated debates of the Jacksonian era, and prefigured aspects of Henry Clay and the Whigs’ “American system,” which prominently included support for a national bank (p. 63-65, 70). O’Connor’s first chapter on Hamiltonian economic stewardship perfectly sets up the events of chapter two, focused on Andrew Jackson and the divorce of federal affairs from private economic matters (p. 50, 61).

Later, in chapter four, O’Connor’s narration and analysis of New Deal initiatives, in the context of employment, caused me to think anew about economic interventionism in the 1930s. While the Roosevelt administration’s initiatives receive due attention, I was most interested in O’Connor’s threading between Herbert Croly, John Dewey, Herbert Hoover, Thurman Arnold, John Maynard Keynes, and Henry Wallace. The chapter shows how fighting inequality became an ideal for the liberalism that emerged from the Progressive Era (pp. 124-13). For liberals, minimizing unemployment became an obvious, viable political goal during the Great Depression when political viability depended on jobs. O’Connor also relays how the goal of “full employment” never became an option, and how politicians were never given (or never grabbed) the tools necessary to promote that ideal (p. 119-120).

In telling the story of the New Deal, I expected to see some links to Keynes, and debates about how much Keynes influenced the policies of Roosevelt and his administration. O’Connor obliges (pp. 145-150). Without O’Connor’s focus on employment, however, I am not sure the casual student of Roosevelt would have seen just how prominent the “state guarantee of a job” was taken for granted by the president and his supporters (p. 152). That development is truly remarkable in relation to the ideology of the popular Jackson administration a century earlier. It was direct economic intervention in the form a near-promise to individuals. To echo FDR’s most famous State of the Union address, full employment would help free individuals and families from want.

But what was most pleasing to this reader was the author’s full accounting of the influence, or lack thereof, of Henry Wallace. For some reason I had not encountered (or had forgotten) much about Wallace’s background and commitments. O’Connor backs Louis Hartz, Sean Wilentz, and Brinkley (perhaps) in seeing Wallace as heart and soul of New Deal efforts to focus on full employment and the “guarantee” of a job, especially through Wallace’s 1944 book, Sixty Million Jobs (p. 153, 157-160). Wallace’s “progressive capitalism” was meant to fix “the broken free market system” by providing both conditions to maintain it and to effect full employment (p. 155, 158). Indeed, “greater government involvement in the economy,” writes O’Connor channeling the goal of Wallace’s book, “would not spell the end of American capitalism” (p. 158).

That precise message from Wallace, of balancing capitalism with employment security, should be shouted from the rooftops to recent conservative ideologues. Given the travails relayed by O’Connor of his time as an itinerant lecturer (a journey which I shared, for a time) and of Americans generally after the Great Recession of 2008—which formed the conditions under which this book was written—it seems plausible that these passages on Wallace form not only the crux of this chapter but also the beating heart of A Commercial Republic. I suspect Wallace is something of a tragic hero to O’Connor, even though the “hero” designation is, I’m sure, as fraught for O’Connor as it is for all historians.

Wallace, in his near-socialist advocacy for full employment and robust belief in the public good, sets up a liberal conundrum in the postwar era. In O’Connor’s words, do postwar liberal intellectuals (a) explicitly support a robust conception of the public good and risk the “communist” label, or (b) do they follow an alternate, somewhat disguised path to protect the New Deal welfare state? The answer, O’Connor asserts, was the latter. In the Cold War context, they defended liberal democratic capitalism by avoiding ideology (p 165). But their consensus pragmatism proved less than compelling for a populace increasingly distracted by international affairs—particularly the war in Vietnam—and racial trouble at home. In the postwar chapter, focused on the idea of inequality and intellectual history, O’Connor makes a convincing case that John Rawls’ A Theory of Justice (1971) serves as a too-late culmination of the postwar liberal defense of the welfare state (pp. 165, 190-200). I have never seen a better summary of that book, nor had I been aware of Rawls’ rejection of blunt equality as a political ideal (in favor of his “difference principle”) and advocacy of market mechanisms (pp. 195-196).

After his exploration of postwar intellectuals and Rawls, O’Connor’s penultimate chapter meditates on taxes and conservatism from the 1960s to roughly 1980. O’Connor successfully builds narrative tension in showing how conservative politicians, beginning with Barry Goldwater, flirted with an anti-tax message until the late 1970s. That message was somewhat implicit in the writings of Friedrich von Hayek’s Road to Serfdom (1944), Milton Friedman’s Capitalism and Freedom (1962) and his A Monetary History of the United States (1963, with Anna Schwartz), and Goldwater’s Conscience of a Conservative (1960) (pp. 203-213). But until the stagflation crisis of the 1970s, and politicians fished for an alternative to Keynesianism, the idea of progressive taxation remained stable and universally legitimate.

An alternative appeared in the form of the “Mundell-Laffer hypothesis,” constructed by Robert Mundell and Arthur Laffer. That hypothesis became known as “supply-side economics” (p. 226). Jude Wanniski evolved as the primary proponent in writings from 1974 to 1978, culminating in his 1978 book The Way the World Works. When Irving Kristol and Ronald Reagan voice support for Wanniski’s book and for the tax cuts implicit in supply-side economics, the Republican Party became the political vehicle for making the “Santa Claus” tax-cut message a popular reality (pp. 232-233, 239). That move began in California with Howard Jarvis and Proposition 13, but became a wider American reality after Reagan’s election.

A Commercial Republic successfully places the anti-tax movement in a long context of debate about how, or whether, the government should intervene in economic matters. While historians and historical thinkers want our past events to feel strange in relation to the present, to help us maintain critical distance, O’Connor demonstrates that Proposition 13 and the anti-tax movement would not have been surprising to careful students of America’s historical political-economic debates. Taxes and tax cuts are just tools representative of the ideas animating the long discussion about intervention. Since the 1970s voters have, in democratic fashion, consistently, if ironically, supported the withdrawal of support for the bureaucratic institutions that form the welfare state. These contractionary pressures have more or less continued up to the publication of O’Connor’s book and beyond.


In his conclusion, O’Connor reminds the reader that the American experiment has always served its liberty with healthy doses of equality, or egalitarianism. Using the work of Amy Gutmann and Robert Dahl, O’Connor reminds us that government is sometimes called to restrict freedom in the interest of expanding equality (pp. 244-245). The economic freedom, proposed for all by capitalism, has to be activated or catalyzed, at times, by intervention and redistribution.

Finally, the author proposes three important takeaways from his long look at debates about economic interventionism. First, laissez faire economics is “neither theoretically neutral nor historically primary.” Stewardship is always on the table, says O’Connor. Put another way, the American economy, despite its capitalist basis, does not require, philosophically or practically, a posture of nonintervention. We are free to manipulate the economy in whatever way fulfills our social and ethical sensibilities. Second, not only is stewardship always an option, historically American politicians and intellectuals have consistently used politics to shape the economy. History says there’s never been a period of non-intervention. Third, politics, then, and not some supposedly objective technocratic leadership, should shape and designate the purpose of the economy. Democratic politics should determine what the nation is trying to achieve (pp. 246-247).

These lessons from O’Connor’s conclusion, and others from the book, hold up in relation to events since the 2014 publication of A Commercial Republic. The Republican Party’s attachment to tax cuts reappeared in the Trump’s administration’s one major accomplishment thus far: the “big, beautiful” $1.5 trillion tax cut package (HR-1, or Public Law 115-97).[1] Despite the deep unpopularity of Trump and his administration, this is the one thing that all Republicans could get behind. Indeed, the success was such that Trump recently floated he is considering a “Phase 2” where he teams up with Kevin Brady, the Texas Republican who sponsored the first tax cut bill, to introduce a new round of cuts.[2]

No one in the current iteration of the Republican Party—despite their negative rhetoric about “picking winners” through policy—objected to interventionary provisions in the bill favoring the fossil fuel industry, craft brewers, private school attendees, and the rich who faced estate taxes. [3] Furthermore, the current administration has not yet received fatal protests from industries that have benefitted from the North American Free Trade Agreement (NAFTA) despite the fact that Trump has continually threatened to attempt to cancel or rework its provisions. Finally, the recent invocation of steel and aluminum tariffs by the Trump administration has met little on-the-ground resistance.[4] Apart from GOP members, everyday citizens also do not seem concerned, in a negative fashion, with this kind of intervention. If anything, a lack of market intervention by Republicans today might fatally damage a Trump administration dogged by high staff turnover, accusations of white supremacy, general ethical problems, and the Russian election scandal.


The topic of tariffs is largely absent from A Commercial Republic. That omission points to a larger elision. Namely, the complete story of debates about domestic economic intervention cannot be told without situating the American economy in the world. Global economic factors—trade policies, raw material supplies, imports, boycotts, tariffs, competing labor markets, banking trends, capital flows, war, climate change, and natural disasters—determine Americans commitment to market forces, private property, and even our democratic criteria shaping the domestic economy. Cries for intervention and interference in market forces may follow from perceived human rights abuses, injustices between two foreign entities, and United Nations agreements. Likewise, a call for respecting free market prices and diminishing protectionist policies may derive from a fellow feeling based on news about a foreign country. Citizens sometimes voluntarily decide, as a group, to favor a foreign product for a season based on circumstances. Courtesy of Marx, scholars have long known that capitalism has a voracious appetite for new markets around the globe. But O’Connor generally ignores international factors that might dictate the domestic appetite for economic intervention.

Other factors could also be considered. Cultural commitments, such as our historical and mythical commitment to economic mobility, has also dictated the strength of our American commitment to liberty, the market, and private property. Without having studied the matter fully, I would guess that cries for intervention and interference, from both politicians and the populace, flow from perceptions about the feel of economic mobility. The material version of the American Dream, or fantasy, is very much anchored in feelings about the ability to “get rich,” or to at least achieve middle-class security. But economic myths, dreams, and fantasies do not figure into O’Connor’s long-term calculations about the viability of, or controversies around, political interventions. Democratic culture, in a word, doesn’t figure as much into democratic capitalism as one might expect. But I sense this interplay is a function of my intellectual and historical interests rather than necessary to O’Connor’s analysis.

As a reviewer I generally avoid getting too deep into the weeds of particular passages of text. I confess, however, that a sentence deep in chapter six (on taxes) struck me as so incongruent with the rest of O’Connor’s analysis that I want to parse it.

In the section on “The Growing Influence of Supply-Side Economics,” which generally fleshes out the significance of Jude Wanniski, O’Connor begins with a discussion of the specific economic conditions of the mid-1970s in relation to the inflation (p. 230). High inflation is largely, and convincingly, attributed to “expansive” Federal Reserve policies. They were ineffective in relation to the recent supply shocks in oil, gas, agriculture, and food. The end result was, of course, stagflation: inflation concurrent with unemployment and economic regression. Bringing this to bear on taxes, O’Connor states (italics and bolds mine): “Most important, however, was the fact that marginal income tax rates were, by modern American standards, exorbitant.” And then this follows: “For comparison’s sake, the highest top marginal rate since 1986 has been 39.6 percent; from 1968 until 1981, it was 70 percent” (p. 230).

This bothered me. That 30.4 percent difference is large, to be sure. But why compare ahead chronologically, to 1986 and after? In so doing, one cedes the argument to conservatives. That group surely believed that 70 percent rate “exorbitant.” But to what “modern American standard” is O’Connor referring? Here are the top marginal rates for some select years from 1913 to 1968: 7% (1913), 77% (1918), 25% (1928), 79% (1938), 82% (1948), 91% (1958), and 75% (1968). When you scan the 55 years from 1913 to 1968, the lowest rates are roughly 25 percent for 7 years from 1925 to 1932. Everything else is generally above 70, with rates above 90 for 12 years from 1951 to 1963—a period generally considered the heart of the post-war economic boom.[5] The “modern” post-1918 standard, I conclude, is to levy high top marginal taxation rates. Only from the second term of Reagan, over the last 34 years, has it been anything otherwise. We are currently, then, living in an exceptional era of low tax rates—and disinvestment, austerity, etc.


Despite this one bit of detailed pushback and my few notes of criticism, O’Connor’s book succeeds in its thesis and presentation. A Commercial Republic provides a lively, well-written historical tour of economic manipulation and intervention. There can be no doubt that the norm for American politicians is to be hands-on rather than hands-off.

The economy is a human construction, not manna from heaven, nor a golden calf to which we must all bow. The only “sacred” economic principle is to have that construction serve the actual people who made it. Or rather, to invoke that document often cited by some conservatives, let’s abide by Article 1, Section 8, of the U.S. Constitution and have the economy, as it consists of “taxes, duties, imposts and excises,” work for an expansive, inclusive version of our “general welfare.”


[1] “H.R.1 – An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.” Here:

[2] Peter Baker and Jim Tankersley, “Flush Over Tax Cuts, Trump Says ‘Phase 2’ is Coming,” The New York Times, March 14, 2108,

[3] Jesse Drucker and Alan Rappeport, “The Tax Bill’s Winners and Losers,” The New York Times, December 16, 2017,

[4] Ana Swanson, “Trump to Impose Sweeping Steel and Aluminum Tariffs,” The New York Times, March 1, 2108,

[5] “Historical Highest Marginal Income Tax Rates,” Tax Policy Center: Urban Institute and Brookings Institution, Accessed March 22, 2010,

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  1. I agree that Mike’s book (which I read in early 2016) is highly relevant in today’s political environment. I think the economic-policy sphere is now one of the clearest examples of the classic “ideas have consequences” phenomenon that is a core justification for intellectual history. Is it merely a coincidence that both the winner and the honorable mention titles of this year’s S-USIH book prize dealt with economic topics? Three other nominees also focused on the political-economic connection. Here are a few (almost random) points that play off of your interesting post:

    Laissez-faire has never been a reality in the United States. More often it has been an ideological slogan employed as a (falsely philosophical) defense against certain specific government activities that regulate the prerogatives of business managers, investors, or wealthy individuals.

    The idea that unfettered markets controlled by capitalists (enabled by laissez-faire) will reliably produce optimal economic performance (commonly measured by total income growth, regardless of its distribution or the real-world veracity of the statistics) has become widely accepted even though it is not empirically defensible. The more fundamental idea that “free markets” are “natural,” and therefore government interference is “unnatural,” which is close to being “immoral,” or at the very least is misguided, has in recent decades solidified into common sense. Such thinking unleashes deregulation and supply side economics (and trickle-down policies).

    Not too long ago alternative ideas were current. For instance, beginning in the Progressive Era (championed by TR, among others) the idea that government must act as a countervailing power against big business (trust and monopolies, later corporations and Wall Street) grew in acceptance during the New Deal and WWII; by the time J.K. Galbraith coined the term early in the postwar period it was already common sense. Likewise the Keynesian idea (based on his “multiplier” effect and his “propensity to spend or save” ratios) that getting as much money as possible into the hands of the masses—as opposed to the wealthy—drives growth and broad-based prosperity, was accepted wisdom among the (all-but-economic-libertarian) initiated.

    Why one set of ideas has been replaced by another and whether or not the process can reverse should be the crucial concern. Either way there will be consequences

    One smaller point: Statutory tax rates are not the important issue. Effective rates of actual payment are what matter. Few if any millionaires paid 70% income taxes because so many shelters (loop holes) were available. Likewise, for all the drama about the Republicans lowering the corporate tax rate from 34% to 22%, most large, profitable companies paid and will pay MUCH less because of loop holes (this in addition to the local and state tax concessions they are able to extract from smaller taxpayers). I could write more about these issues, but I fear I’ve already exceeded the site’s limit!

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