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Ulf Zimmermann on the Commanding Heights: the Battle Daniel Yergin, Joseph Stanislaw. The Commanding Heights: The Battle Between Government and the Marketplaces That Is Remaking the Modern World. New York: Simon & Schuster, 1998. 457 pp. $26.00, cloth, ISBN 978-0-684-82975-3. Reviewed by Ulf Zimmermann Published on H-PCAACA (August, 1998) Lenin made his antepenultimate public ap‐ down to government regulation in the United pearance to defend his desperate readmission of States. private trade and agriculture in 1922, declaring India's independence from British rule as of that the state would, after all, retain control of 1947 marked the beginning of the end of colonial‐ what he christened the "commanding heights." ism, and all the newly emerging countries, like In‐ Yergin and Stanislaw are concerned to explain dia, saw state control as the only alternative. (It why the control of these heights has increasingly had, after all, worked in industrial latecomers like shifted from the state to the market in recent France and Germany, but, mutatis mutandis, years. They do this by giving not just a global many of these new nations did not let go of their gazetteer of twentieth-century politics and eco‐ industries when they could go it on their own-- nomics but also an equally insightful guide to the and ultimately strangled them.) Indian policymak‐ ideas and individuals behind this shift. ers, for example, eventually recognized the great With the failures of capitalism in the 1920s entrepreneurial successes Indians were achiev‐ and 1930s, and the initial successes of govern‐ ing, as in the U.S., were possible only once they ments east and west, both in the New Deal and in were out of India and its overregulated economy. Soviet central planning, and in the war, govern‐ Where most of these purely state-centered ef‐ ment seemed, after that war, the unequivocal so‐ forts failed, many of Asia's countries succeeded lution to problems such as the unemployment the through a mix of government intervention and market had earlier permitted. Countries around market forces. Where India was the model for the the globe adopted a variety of government-man‐ "Third World," Japan and its Ministry of Trade aged approaches to running their economies, and Industry demonstrated that there could in‐ from the Soviet extreme and its many imitations deed be such a mix as Confucian Capitalism-- Max to strategic nationalization as in Britain and gov‐ Weber's claim to the contrary notwithstanding. As ernment-business-labor corporatism in Germany we know from the current headlines, though, this H-Net Reviews approach seems to have succumbed to the debili‐ the time, today Britain is far behind the continent tating excesses of inbreeding. in its unemployment rate. In the U.S. government regulation had be‐ Just how badly excessive state control stifles come necessary, frst to control the railroads in initiative and innovation and hence prevents real the late 19th century, and then in banking and economic growth was best revealed by the fall of other fnancial industries. But by the end of the the Berlin Wall which allowed more than the oc‐ 1960s, after innumerable new regulatory agencies casional peeks the rest of the world had had be‐ had been created--several, ironically, by the Nixon hind the Iron Curtain. The exposure of the East administration--many perceived free enterprise to German economy--that much-touted exemplar of be straitjacketed by regulation, and it was, just as communist economic progress--showed palpably ironically, Ted Kennedy who started the deregula‐ just how poorly the politics and economics of cen‐ tory trend in Congress with the airline industry. tral planning had worked and showed the truth of Direct state control seemed to have shackled what the workers said of their workers' states: industry altogether in Britain, and in getting the "They pretend to pay us, we pretend to work." government out of business it thus became the The implosion of the Soviet system thus dis‐ model for the market reform that has been credited all kinds of statism, and that sped up sweeping the world in the nearly two decades trends towards markets already underway. With since. Here as elsehwere Yergin and Stanislaw denationalization in Britain and deregulation in nicely bring in those theories and personalities the U.S., their economies are booming, and coun‐ which compelled action. To give but one pivotal tries everywhere are increasingly following suit, example, Keith Joseph, a member of parliament, from continent to continent, as Yergin and Stanis‐ had turned into the "mad monk" who preached law richly depict. Yet they rightly wonder whether relentlessly about entrepreneurship and initiative markets will really deliver the goods in terms of and the wealth these created for everyone in the economic growth, employment, and higher stan‐ nation. He found intellectual support in the eco‐ dards of living for all. nomic theories of Friedrich von Hayek and Milton While they are partial to the market case, Friedman, which are at the center of this shift to they do not neglect the signal cautionary tales of markets, and created a think tank to develop and regulatory laxity that can be spun from, say, the broadcast their ideas the length and breadth of sorrily underpublicized savings and loan debacle. what was left of the British empire. Most impor‐ While there may have only been some of us who tant, Joseph persuaded parliamentary colleague understood and weren't happy with how that was Margaret Thatcher to reread Hayek--and soon handled, there'll be many more of us who'll un‐ enough she would be leading the party with this derstand and won't be happy with what we're get‐ ideology, and shortly thereafter the whole coun‐ ting in health care. As these cases demonstrate, try. markets don't always exercise the self-restraint Initially, of course, all her reforms, chiefly pri‐ we might like them to, and Yergin and Stanislaw vatization, were unpopular in the extreme. But therefore see government stepping in more as a her Falklands victory seemed to vindicate her and referee than a major player itself. So now the enabled her to press on with them. (Argentina's question is, What are the rules of the game it must defeat, meanwhile, likewise prompted its leader‐ enforce? The way health care is going, it seems ship to redirect its economic policies in the same clear that the public will ultimately demand more way--with great success.) While Thatcher's radical regulation (as it may perhaps in the fnancial mar‐ belt-tightening created much unemployment at 2 H-Net Reviews kets that are increasingly dictating not just our economic well-being). Having interviewed practically the whole pantheon of intellectual and political leaders in‐ volved in these developments around the world, Yergin and Stanislaw are able to dramatize politi‐ cal history and even the dismal science: character, atmosphere, and the telling anecdote make their volume, compendious as it is, into a compelling read for students and lay readers. Even academics will fnd much here, though they may wish for a bit more critical analysis of a politics that leaves government as mere referee between those who control the markets and those who have no choice but to shop in them. This review is copyrighted (c) 1998 by H-Net and the Popular Culture and the American Cul‐ ture Associations. It may be reproduced electroni‐ cally for educational or scholarly use. The Associ‐ ations reserve print rights and permissions. (Con‐ tact: P.C.Rollins at the following electronic ad‐ dress: [email protected]) If there is additional discussion of this review, you may access it through the network, at https://networks.h-net.org/h-pcaaca Citation: Ulf Zimmermann. Review of Yergin, Daniel; Stanislaw, Joseph. The Commanding Heights: The Battle Between Government and the Marketplaces That Is Remaking the Modern World. H-PCAACA, H- Net Reviews. August, 1998. URL: https://www.h-net.org/reviews/showrev.php?id=2245 This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License. 3.
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