The Price of Progress: Public Services, Taxation, and the American Corporate State, 1877 to 1929 (review)

Because "growth of government" and "business-government relations" are familiar themes in American political and business history, it is a rare pleasure to see a book that develops an innovative and interesting perspective on these topics. R. Rudy Higgens-Evenson has written such a work. In The Price of Progress, Higgens-Evenson examines the expansion of state spending and the changing relationship between business and government through the much-neglected prism of evolving state-level tax regimes throughout the United States during the late-nineteenth and early-twentieth centuries. He argues that one can delineate two basic models of state governance during this period: Hamiltonian and Jeffersonian. Hamiltonian, or "corporate states," such as New York, Massachusetts, and California, included those in which the state "took on a whole new range of functions in cooperation with the business community" and moved to incorporate "modern" business methods—most notably, centralization and standardization—into government practices (p. 1). In Jeffersonian "republics," such as Michigan, Kansas, and Mississippi, a decentralized state government, whose authority remained concentrated at the county and municipal levels, continued to offer minimal services and made few efforts to reform government in accordance with business methods.

According to Higgens-Evenson, "economy, institutional structure, and political contingency" were the three basic factors that determined the extent to which a state moved toward one or another side of this spectrum between the corporate and Jeffersonian models of governance (p. 10). A state's economy set out the broad possibilities for change by de-limiting the nature of economic activity and the relative weight of economic interests, while its institutional structures helped shape the outcome of the maneuvering among its political interests by providing different opportunities for influencing the direction of public policy. Where state law allowed them, state referendums proved to be one of the particularly potent mechanisms for mobilizing public opinion in favor of new government initiatives. In the corporate states, the resulting escalation of state spending drove tax reform, which, in turn, brought businessmen, economists, and other "tax experts" into the arena of state-level politics. These were not the "business lobbyists" typical of an earlier era of American history, their influence rested more upon political organization and technical expertise rather than the manipulation and bribery of state officials. To varying degrees, these new players penetrated state structures and helped to bring about the adoption of more stable and predictable tax regimes. In other words, "[i]f business had to pay for an activist state, the activist state would have to be run like a business" (p. 108). While concerns about the rising costs of state government undoubtedly influenced this process, only in a very few cases did the concomitant rise of the corporate state result in significant reductions in overall government spending. Paradoxically, as Higgens-Evenson points out, "capture" by business frequently strengthened rather than weakened state capacity.

Over the last two generations, the expanding size and scope of the federal government during the late-nineteenth and early-twentieth centuries has been the subject of much attention from scholars. As Higgens-Evenson notes, however, although the federal government was largely responsible for establishing the broad framework of corporate capitalism and interstate commerce, "individual commonwealths still governed the conduct of business within their own borders" (p. 7). By bringing the analysis down to the state-level tax-regimes, The Price of Progress thus substantially broadens our understanding of some of the finer details in the growth of government during this important period. Importantly, it does so while still maintaining a national perspective. In this way, it avoids an all-too-frequent tendency among local studies—that of telling us a lot about one particular aspect of state formation without placing the analysis within a larger context. Furthermore, in the process, its analysis brings forth new quantitative and qualitative data from under...