Book Review
American Studies in China




FROM THE NEW DEAL

TO THE MODERN ECONOMIC SYSTEM


LIU Xiaoying




Hu Guocheng, Road to US Modern Economic System (Chinese Economi
c Publishing House, 1995)






The New Deal introduced by Franklin D. Roosevelt is a hot 
subject in China¬ðs American study. Discussion in the historical 
circles began in 1980, deepened in the early 80s and reached a high 
tide in the midª²80s. As far as I know, about 100 articles have been 
published on this subject. Early in 1982, Mr. Hu Guocheng took part in 
the discussion with his master¬ðs thesis The Main Economic Measures of 
F. D. Roosevelt¬ðs New Deal and Their Significance. He continued to 
bury himself in this study in the decade that followed and finally had 
his new research monograph published in 1995 by the Chinese Economics 
Publishing House. I was impressed by the book. I am writing this 
article to share the ideas I have drawn from it with its readers and 
author.

      There are not many monographs on American history in China. 
This one, in my opinion,  has three outstanding features.

      1. It has gone beyond the narrow scope of traditional 
historical research and extended the study to include the fields of 
economy and the economic system, which researchers of history attached 
not much importance to in the past. Originally, history as a timeª²
honored traditional science embraced extensive fields of learning. 
However, since the rise of the modern social science at the turn of 
the last century, the domain of history has been continuously 
encroached upon by other subjects, and the political history has 
become the chief concern of historical research. The historical 
circles took notice of this tendency in the first half of this 
century, and history began to find its way into other branches of 
learning and to study their experience. A French 
historian, pointed out, ¡°If history has a particularity of its own in 
comparison with other branches of social science, that 
particularity, to put it exactly, lies in the fact that history has no 
particularity of social science; it tries to probe into all the 
dimensionalities of time.¡± Open history has become the main trend in 
the development of the contemporary history. On the one hand, 
history¬ðs scope of research is continually expanding (not taking back the domai
n encroached on by other subjects, but taking care of these fi
elds 
with the special views and methods of historical research). On the other, it is 
continually assimilating the research achievements and methods of 
other branches of social science. To be objective, this process 
has not gone smoothly. This work by Mr. Hu Guocheng is a valuable 
attempt to reflect this tendency.

      Marxism holds that the economic base determines the 
superstructure, and the superstructure reacts on the economic base. 
But this fundamental principle has not been correctly understood and 
applied by some of the Chinese researchers, who regard economics just 
a setoff of politics. As far as the New Deal of Roosevelt goes, 
economy is undoubtedly its chief content. If there had been no 
economic crisis in 1929 through 1933, if the Roosevelt administration 
had taken no economic measures and made no economic legislation to 
cope with this crisis, there would have been no New Deal at all. While 
many scholars were running after the less important things to the 
negligence of the important ones, Mr. Hu Guocheng firmly grasped the 
economic aspect of the question and attained his research fruits in 
the form of this book. In this book, he makes clear at the outset that 
¡°the main task of this book is to probe, through the study of the 
American economic history from the second half of the nineteenth 
century to the eve of World War II, how the American modern economic 
system came into being,¡± and ¡°the emphasis of this study is laid on 
the connections and relationship between the American state organ and 
its agency ¡ª the federal government ¡ª and economics¡± (p. 1). To combine 
the study of history with that of the economics, or to apply the 
method of historical research to the study of the economic phenomena 
and activities and their relations with the government ¡ª this requires 
a considerable courage and a certain capability on the part of the 
researcher. This attempt made by the author has opened a new aspect 
for the study of American history and a new angle to correctly 
understand the development of American history during this period in 
general, and the New Deal of Roosevelt in particular.

      2. Because the method of historical research has been applied 
to the study of economic phenomena, the thread running through the 
entire book is clearly discernible. On the basis of fully assimilating 
the Chinese and foreign research achievements in the fields this book 
covers, the author has arrived at many views and important conclusions 
of his own. Macroscopically, the book stresses how the New Deal was 
adopted and how America¬ðs modern economic system came into being. But 
in tracing the origin of the New Deal along the line whether the state 
intervened the economy or not and to what length it went if it did, 
the book finds out some evidences showing that at the close of the 
nineteenth century some early symptoms of American monopoly 
capitalism had already appeared. The book analyses the influence of 
the state intervention and control of the economy during World War I 
on the adoption of the American modern economic system and elaborates 
on the efforts to ¡°restore prosperity¡± after the war and the 
resurgence of laissezª²faire, especially the limited intervention 
Herbert Hoover was compelled to enforce at the time of the great 
crisis while adhering to the principle of laissezª²faire, thus 
foreshadowing the momentous historical change, the New Deal. The 
author makes an allª²round analysis in the book and holds that the New 
Deal discarded altogether the principle of laissezª²faire which the American gov
ernment f
ollowed from the period of nonª²monopoly capitalism to that of the ordinary run 
of monopoly capitalism and ¡°built a state intervention and control 
system over the economic life in a width and depth never known in the 
United States before and turned the American economic system into one 
of state monopoly capitalism¡± (p. 11), i.e., the American modern 
economic system. He lays bare a clear thread of development: the nonª²
monopoly capitalism (a laissezª²faire economy) ¡ª the ordinary run of 
monopoly capitalism (state intervention coupled with laissezª²faire) ¡ª 
the state monopoly capitalism (allª²round state intervention and the 
formation of the modern economic system). What merits our attention 
here is that he consistently views the historical phenomena in the 
light of economic laws. For instance, he stresses the relationship between 
the first upsurge of enterprise annexation and the Antitrust Act in 
dealing with the earlier state intervention and emphasizes, in probing 
the formation of the New Deal, such background as the second upsurge 
of enterprise annexation, the economic crisis and the enterprises¬ð 
request for government intervention. Macroscopically speaking, the 
book has some characteristics of its own. Its allª²round elucidation 
and study of the New Deal, for instance, can be said to have attained 
the highest level among works by Chinese scholars on this question. 
His analysis of the state intervention at the earlier stage and his 
comprehension and appraisal of the 1937 economic crisis indicate that 
he is a capable researcher. Microscopically speaking, the author has 
his own way of doing research. There are a great amount of instances 
in the book to prove this. In short, the book has an outstanding 
content, system and thread of presentation and is full of enlightening 
views.

      3. The book has the substantial backing of documentary 
evidences. A book of no more than 260,000 Chinese characters should 
have used materials from over 120 Chinese and foreign numerical 
statements, historical documents, recollections, biographies, 
monographs and books to support its arguments, and there are as many 
as 510 notes. References and cross references are given virtually for 
all the important points. This meticul approach is indeed rare and 
admirable and shows a spirit of devotion devoid of worldlyª²mindedness. 

      Of course, there is room for improvement on certain questions. 
A case in point is the analysis and elucidation of the American 
economic theory and thoughts. True, the United States is a pragmatist 
country, where practice is rarely guided by theory, and Mr. Hu 
Guocheng has pointed out that the formation of the American modern 
economic system should be attributed to ¡°basically the requirement of 
the economic development¡± and ¡°no guidance by any economic theory born 
really in America¡± was present (p. 1), but he has said at the same 
time that, corresponding to this historical process, a main 
theoretical and ideological thread, ¡°mercantilism ¡ª physiocracy and 
classical economics ¡ª Keynesian economics,¡± did exist (p. 2). However, 
the book makes no analysis of the relations between these schools of 
thought and theories and the development of the American economic 
system and has hardly mentioned them. In spite of the fact that none 
of these schools of thought and theories ¡ª including the neoclassical 
economics that held sway in Western economics at the end of the 
nineteenth century and the first half of the twentieth century ¡ª was 
born in the United States, they had different degrees of influence on 
the American economic practice after all. An analysis of this 
influence would have enriched the content of this book. Another point is 
though the New Deal paved the ground for the later establishment of 
the American modern economic system and enhanced the economic function 
of the state, can it be said that, under the specific historical 
condition of the time, the state, while acting as the arbitrator and 
mediator in the economic operations, involved too much in the actual 
operations of the market? Also, as a history of ¡°the formation of the 
American state monopoly capitalism,¡± this book seems to lack a brief 
account of the American modern economic system formed later and ends 
too abruptly. Besides, using an intellectual analytical terminology 
would have added color to the simple, prosaic style of narration, and 
attaching a bibliography at the end of the book would have helped 
those readers who want to read more on this subject.

      Notwithstanding these deficiencies, Road to US Modern Economic 
System is a good book worth reading. It is a new achievement in the 
Chinese study of American history.

(Translated by Wang Huaiting)