The Market Revolution in America: Liberty, Ambition, and the Eclipse of the Common Good

Cambridge Essential Histories

by John Lauritz Larson

The mass industrial democracy that is the modern United States bears little resemblance to the simple agrarian republic that gave it birth. The market revolution is the reason for this dramatic – and ironic – metamorphosis. The resulting tangled frameworks of democracy and capitalism still dominate the world as it responds to the Panic of 2008. Early Americans experienced what we now call “modernization.” The exhilaration – and pain – they endured have been repeated in nearly every part of the globe. Born of freedom and ambition, the market revolution in America fed on democracy and individualism even while it generated inequality, dependency, and unimagined wealth and power. John Lauritz Larson explores the lure of market capitalism and the beginnings of industrialization in the United States. His research combines an appreciation for enterprise and innovation with recognition of negative and unanticipated consequences of the transition to capitalism and relates economic change directly to American freedom and self-determination, links that remain entirely relevant today.

Genres: History, Economics, American History, Nonfiction, Politics, College

224 pages, Paperback

First published January 1, 2009

About the author

John Lauritz Larson is Professor of History at Purdue University.

Reviews

[Joseph Stieb · Rating 4 out of 5]

John Larson’s The Market Revolution charts the development of a market economy in the United States from the end of the American Revolution to the Civil War. He concisely covers economic changes, the competing ideas and political parties behind those changes, and the profound social effects of economic transformation. His central argument is that the market revolution eroded the traditional emphasis on community and republican virtue with and replaced those values with the “cold calculus of the marketplace” (p. 9). Larson stresses the irony that the champions of the market revolution did not set out to weaken traditional values and social systems. In fact, they were acting in accordance with their understanding of foundational concepts such as freedom and independence even as the market revolution changed the meaning of those words.
Larson offers a clear and concise account of the market revolution in the first and second chapters of this book. He discusses the impact of the cotton gin, the steamboat, the mechanization of economic production in factories, the growth of banks, new systems of credit, industrial printing, the postal system, newspapers, and the building of turnpikes, bridges, canals, and railroads. He stresses that the state facilitated the market revolution by investing in the infrastructure of trade, clearing Indians out of valuable territory, and minimally regulating economic activity. By the start of the Civil War, the American economy had become far more industrial, interconnected, diversified, commercial, and complex.
Larson then examines the social and ideological effects of the market revolution. He contends that the market revolution eroded the values of republican virtue and the common good, replacing these concepts with cold economic calculation that the ignored social costs of economic change. Previous generations of Americans valued a “universal common interest” among free men and expected individuals to eschew self-interest when it conflicted with the common good (p. 7). They also valued a notion of independence that stressed property ownership, individual liberties, local-self government, and a freedom from forces beyond their control. Many of these early American were skilled artisans and yeomen farmers. The market revolution would severely change their positions in the economy, the values they held dear, and the lives of millions of less powerful economic actors.
Larson contends that as the market became larger, more complex, and less personal, a cutthroat capitalist ideology took hold and dramatically transformed the economy. Skilled artisans could no longer compete with the cheap and standardized commodities of industrial production. Employers in factories like those in Lowell, Massachusetts, stopped providing housing and community support for their workers. Instead, under market pressures, they reduced wages, increased the workload and workday, and denied responsibility for the social consequences of these decisions. Independent farmers who used to prize self-sufficiency became subjected to fluctuations in prices and demand and now had to rely on the market for consumer goods. Throughout most of the country, the traditional emphasis on the common good and personal relationships between economic actors declined as “transactions among individuals became routinized, institutionalized, and depersonalized” (p. 98).
The irony of these changes is that the economic pioneers of the market revolution viewed themselves as simultaneously pursuing self-interest while living out the values of the Revolution, including independence from arbitrary controls and the pursuit of happiness. Larson states that many Americans saw the market revolution as embodying the egalitarian and meritocratic ethos of the revolution as “any man…with ambition, industry, and a little bit of capital” could become successful and rise in society (p. 56). Nevertheless, the free market system they created subjected them and everyone else in the system to new and seemingly arbitrary constraints and significantly altered the republican ideals of the Revolution. The new arbitrary power that impacted all citizens was the boom and bust cycle of the market, which instilled a profound distress in Americans who sought to understand the seemingly random processes that could ruin their lives. Independence now meant the unfettered pursuit of profit, even though market forces beyond individual control now bound that pursuit. The essence of freedom became the economic rights to free labor for wages and property ownership for white males. Larson concludes that this shift in values and practices paved the way for the Gilded Age’s embrace of a Social Darwinian-infused free market system that defenders could defend as a product of liberty and nature.
Larson concludes with a thought-provoking if controversial comparison of the politics behind the 2008 financial crisis and the free market ideology of the market revolution. He contends that Americans have long associated capitalism with personal freedom. He traces this viewpoint to Jacksonian Democrats, who conflated political liberty with unregulated economic autonomy. Many lower and middle class people embraced this view, but Larson believes this ideology ultimately worked against them by creating a “vacuum” of government regulation in which “entrepreneurs understandably wrote their own rules and imposed order to suit their comfort and convenience” (p. 177). A seemingly democratic ideology ended up benefitting mainly the elites while ushering in serious social changes. Larson challenges his readers to see this process at work today. He marvels at the “success of this Jacksonian formula” wherein
Candidates advocating workers’ rights and social welfare programs collect a following among elites and the educated middle classes only to be thrashed at the polls by the desperate masses who oppose all efforts to regulate business or tax the rich on their own behalf (p. 178).

This is a fascinating historical parallel about how connecting the free market to notions like freedom and independence can dupe poorer and less educated citizens to vote against their self-interest while masking the manipulations of the elites. Writing in the late 2000’s, Larson may be trying to add some historical background to the rise of populist free market groups like the Tea Party. However, his explanation of voter behavior during the market revolution and the recent past must be scrutinized. The political stratagem he outlines may indeed exist, but it would be reductive to explain electoral “thrashings” as products of such trickery. Moreover, his hypothesis would not explain the electoral successes of free market skeptics from the Progressives to the New Dealers to contemporary Democrats.
The Market Revolution is a succinct, balanced history of a key period in American economic history. Larson fairly accounts for the benefits, costs, and profound changes this process engendered without falling back on a hero-villain dynamic. Rather, he skillfully tells a story of the unintended and largely unforeseen costs of economic modernization and the changing values that both followed and drove this process. The intended undergraduate audience as well as any scholar of American history will benefit from this crisp and cogent study.

[Katie · Rating 4 out of 5]

One of the only compelling arguments I've read against capitalism. Larson positions the market revolution in such a way that history almost makes the argument for him.

[Amrita Kohli · Rating 4 out of 5]

The Market Revolution in America: Liberty, Ambition and the Eclipse of the Common Good by John Lauritz Larson aims to give readers insights about the Market Revolution, as the name suggests, that occured around the civil war period. The book’s central theme is the Market Revolution, that caused people to “enter an era of capitalist relations,” viewing everything in impersonal, economic or monetary terms, instead of through the lens of traditional values. The main aim of the book is to understand what aspects of human psychology, socio-political philosophy and world history led to this economic transformation. Larson got his PhD from the well-acclaimed Brown University, and is a History professor at Purdue University. He specializes in “U.S. History, U.S. Political and Early National, U.S. Business, U.S. Environmental History” and was the co-editor of the Journal of Early Republic. He teaches a course titled “From the Great Depression to the Great Recession,” which runs with the theme of the book in discussion. His book flows much like someone narrating a story to a young adult, and is hard to not recommend.

Larson’s introductory chapter effectively sets the tone and mood for the entire book. In the introductory chapter of the book, Larson briefs readers about early American history. His summarizing skills are exemplary; he managed to fit every aspect of American History in a few short paragraphs. He also describes the economic conditions of the colonial era and how they compared to those of nineteenth century capitalism. He makes readers realize how different classes of people divided over public policy. While the colonists did incorporate certain aspects of capitalism such as money, for-profit motive and contracts, traders were punished for being excessively greedy and contracts that only advantaged one party or were unfair would not be enforceable. This is the opposite of what is seen in capitalism. The British crown was regulating money and the British nobility were treated preferentially, making it easier for them to make money. Americans were sick of the British tyranny and believed the only solution was a republican government, that is to say, a law and order system where the rules were made by people’s directly chosen representatives. He writes, “When they (Americans) cried out for liberty and equality, they instinctively imagined a greater degree of economic freedom as one of the objectives of regime change.”

Throughout the rest of the book, Larson goes over all the historical events and conditions that shaped the evolution in the markets. In the first chapter, he speaks about how the reformed constitution and the electoral college system were formed, wherein the national government took control of interstate commerce under George Washington. The government started to regulate banks and the credit or debt system started to form not just based on people’s current assets, but also the prospect of growth for the money invested. He then talks about how the civil war paved way for the Market Revolution with a brief narrative on all the events that led to it. The second chapter uncovers how the New York Port rose and became significant. New York had built the largest canal in the shortest amount of time for the least amount of money, as it had money saved up before the Panic of 1819 to afford the project. This canal caused New York to breakthrough economically - the whole country’s economy grew to favor New York. It’s painted almost like an entrepreneurial renaissance. People started doing business with people of “character”, making dealings with strangers safer. Craftsmen started to take notes of repetitive processes and divided labor - principles of management that are taught to this day. People started to find ways to manufacture expensive necessities for cheaper. Newspapers were in the hands of common people due to the improvement of the paper production process which boosted business overall by circulating information. Alongside the canal network, the railroad system also developed. Because of improved transportation, the postal service became available throughout the country. “Space and time, it seemed, truly had been obliterated." All of this led to the formation of the capitalist economic system as we know it today. Development seemed to have no limits as “mother nature seemed willing to gratify her children no matter how much they demanded." The third chapter speaks about the “heartless markets” under capitalism and “heartless men”, i.e. the entrepreneurs. It talks about how capitalism impacted farmers, artisans, women and non-white peoples and also describes the challenges entrepreneurs faced as risk-takers. In the pre-modern era, it was believed that a man should only take as much risk as he could afford to lose. The credit system had to change such that debt had to lose its stigma and had to be seen as an outcome of any entrepreneurial activity and that it wasn’t a burden on society. Patent laws tried to reduce competition for innovative goods but wasn’t quite effective due to rapid development. All of this led to the evolution of a commercial society. The final chapter answers the question of how the market revolution can be explained and interpreted, explaining the free market theory. The final chapter recaps events mentioned in the previous chapter and links them with philosophical thought to lead to what the market revolution really meant. Over time, the meaning of wealth to Americans wasn’t just ownership of property, but other material criteria. Larson concludes that the American economy became one of conflict that wanted to enjoy “community and autonomy, equality and liberty, prosperity and independence”.

Larson’s assumptions of the reader’s knowledge of history do not affect the readability of the book. Larson probably expects those who read this book to be somewhat knowledgeable in American history and European history. Being in an Early American History class, I found it easy to connect to the terms, events and philosophies mentioned in the book. There were some aspects I did not know about that did not hinder my ability to comprehend and read the book. Larson, being a history professor, does a great job at simplifying intense historical events. He doesn’t use much jargon at all and instead focuses on the impact of each chapter of history, rather than on the hard details. He paints an overall picture such that even if one doesn’t know exactly what’s being talked about, they can get an idea of what happened. One thing the author misses, however, is illustrations. Perhaps the usage of maps would have made the geography of the continent clearer to someone who doesn’t quite know the structure of America.

The book is structured much like a short story making it an easy read. This 225-page book has only four chapters that are rather abruptly divided and include “interlude” chapters that describe Panic years that took place in between, highlighting significant events and serve the purpose of creating an effective link between chapters. The book also has sections that separate main topics from one another, increasing the readability overall. Despite having sections and chapters, this book needs to be read cover to cover to get the whole depth of the material, or it would be like skipping chapters of a mystery novel. I believe this approach taken by Larson is advantageous as it lets people go over everything instead of making assumptions that they already know about things. It also makes it easy for people to come back to the book to refer to specifics once they have already read it. I had no trouble reading this book non-stop for the most part.

Sometimes parts of the book can get excessively informative, but that aligns with and serves the purpose of the book. Chapters at times feel overloaded with information and event after event that could be monotonous to some readers. While Larson does his best to keep it interesting, in some parts he just isn’t as successful. All of this information, however, is important for one to understand the subject matter, even if it feels like too much. Larson is right in his regard to have included every relevant element and not eliminated any big or small details, so that one can truly learn about the Market Revolution in America. The interlude sections help put all of the excessive information together. The author incorporates some sarcasm and humor here and there which keeps the momentum of the book up.

The author is quite objective in his approach and doesn’t skip any harsh realities. The author discusses through anecdotal evidence, the conditions of women, minorities and slaves. He talks about how women would be hired in factories as they were seen as surplus, and would not be remunerated appropriately and were treated harshly. Women who did the same jobs men would do were paid half, simply due to their gender. A similar pattern followed for people of color. For most women, working outside the home meant working in someone else’s home. The domestic tasks they performed at other people’s home never had a fixed price as it was not accorded any “market value”. This made prostitution and sex trade more common. “These women sometimes found that the sex trade returned a better income, more personal freedom, and little more degradation than they confronted in occupations that earned only pennies by comparison.” As a woman, these anecdotes were eye-opening and made me indulge in deep thought about my purpose in life. Even the Cherokees are referenced, who tried to be like white men and followed their own written law, had a constitution and were self governing; they did everything the way white men did. When Georgia annulled all Cherokee laws and claims and got set on stealing their wealth, the US Supreme Court declared Georgia’s actions to be illegal. This showed how it wasn’t Natives being “savage” that bothered the white; it clearly was race that was the barrier. He also talks about slavery and its impact on slaves. Mentioning the minorities and their contribution to the economical revolution exemplifies the author’s integrity and credibility.

The mix of philosophical point of view creates a perfect narrative. Larson references the works of various philosophers that influenced the thought and opinion of the people in the nineteenth century. By doing so, he broadens the reader’s thinking to various viewpoints that people were exposed to and lets them create a picture of what people were dealing with in those times. He references the free market theory, Charles Darwin’s theory of evolution time and again to iterate the importance of perspective and opinion. This creates an impeccable representation of how the Market Revolution took place and what ran in the minds of people that caused it. It helps readers see the whole picture rather than rejecting ideas that don’t make sense to them.

I believe this book is a must-read for every budding American entrepreneur to realize what the American dream truly occurred as only a few centuries ago. This book is a reminder of the spirit of Americans of the antebellum times and helps understand the mindset and events that caused the turn of the economy from a mercantilist to a capitalist one. As a business and economics enthusiast, I am glad to have read this book to supplement my course in Early American History, as it included an economic and business perspective that went a little beyond just the social and cultural aspect of American history. I think it’s safe to say that I finally know what makes America America.

[Alison · Rating 4 out of 5]

When I was assigned this book as part of a Core Themes in U.S. History class I was not excited. Economic history holds little interest for me. I was suprised at how much I liked this book. It provides a really readable history of the market revolution. Larson does a good job of including social and cultural history with the economic making it much more readable. The only thing that bothered me was his inclusion of a "essay of sources" that listed his use of sources rather than footnotes. Good quick read on early U.S. economic history.

[Mark Cheathem]

Using this book in my Jacksonian course in the spring. A much better explanation of the market revolution than Charles Sellers' incomprehensible tome on the subject. The final chapter addressing the 2008 economic meltdown isn't very good; Larson doesn't make the historical connections that I think he thinks he made.

[Hillary Borders · Rating 2 out of 5]

Read for Jacksonian America

[Josh · Rating 3 out of 5]

John Lauritz Larson’s The Market Revolution in America offers a broad narrative and synthetic assessment of the Market Revolution and our current understanding of how it developed and continues to shape our world today. Two themes lie at the heart of Larson’s analysis: how Americans dealt with the increasing anonymity of the market and fluctuating social-class relations, and how Americans reconciled Republican “virtue” with individual self-interest. From this proceed two arguments that tie the work together. Larson first argues that Americans experienced “impersonal market forces [that] disabled the fabric of personal, familial, and cultural connections (9) and precipitated severe tensions between Northerners and Southerners, factory workers and managers, wage earners and shopkeepers, and the middle class and working class. Secondly, he contends that while Americans created the market through their adherence to Republican ideals of freedom and liberty, they unknowingly exchanged principles of the Declaration for the meager right to “free labor” and subsistence consumption—a treadmill that entrapped most Americans in the perpetual cycles of the market, unskilled labor, and dependence upon manufactured goods. It was only in hindsight that Americans perceived how the market affected social relations and constrained their liberty and freedom of choice. Reactions during the formative decades of the free market were largely mixed and negative sentiment briefly coalesced during the economic panics of 1819 and 1837.
Larson’s organization introduces the reader to his gradual declension narrative as the book’s four chapters detail the rise of the free market, its consequences for Americans, and the subsequent ideological scuffles during the later nineteenth century that set the stage for a Gilded Age based on social Darwinist beliefs. Two interludes—the Panic of 1819 and the Panic of 1837—come between the first, second, and third chapters. These brief passages analyze how Americans responded to the first economic crises of the free market and foreshadow an epilogue that takes the 2008 Financial Crisis and subsequent recession as its topic. Readers will get a sense for the various internal improvements, technological innovations, and legal measures necessary for the development of a free market in the United States, while simultaneously gleaning an idea of how the market affected Americans unequally throughout the period.
In the first chapter, Larson suggests that mercantilism during the colonial period primed the future United States for its foray into capitalism and the free market. For example, the legacy of mercantilism’s emphasis on the state directed economy caused Americans in the Early Republic to turn toward political science for an explanation of economic woes. During the Panic of 1819 Americans of different ideological persuasions clamored for the Federal government to alternatively solve their economic problems by shutting down the Second Bank of the United States, facilitating the movement toward yeoman farming and a “moral” economy, or establishing the internal infrastructure and legal mechanisms necessary to elaborate “interdependencies, specializations, and divisions of labor that made the capitalist system effective” (43). Again during the Panic of 1837 most Americans did not understand from whence economic downturn, unemployment, and inflation originated. Again they fell back on the tradition of political science to encourage the Federal government to either relax their regulation of the economy or implement new legislation to protect economic welfare. Either elected officials would exercise their “visible hand” (to borrow a term from Alfred Chandler’s magisterial book) to control the ill effects of the market, or completely step back and allow Adam Smith’s “invisible hand” to govern American fortunes (95-97). The latter eventually won out as politicians effectively convinced Americans that government intervention only served vested interests and always harmed the people.
While mercantilism, Adam Smith, and later Karl Marx provided frameworks for understanding how the market operated—and whether it was a natural phenomenon or subject to human control—the United States implemented several significant internal improvements between 1776 and 1861 that greatly facilitated the emergence of the market. Throughout the first two chapters, Larson details the construction of bridges, canals, locks and dams, the steam engine, locomotives and railways, roads and turnpikes, the nascent industrialism in textile mills, Eli Whitney’s cotton gin, and the innovation of interchangeable parts that collectively created and lubricated the early free market. Larson carefully reminds us that Americans did not foresee the market, nor were they consciously working toward that end. Instead, Americans pursued the happiness and liberty at the heart of the Declaration of Independence. Ironically, in the pursuit of these Republican ideas Americans eventually circumscribed their freedom, property rights, and socio-economic potential.
Larson uses chapters three and four to detail the largely negative consequences of the market revolution for most Americans and how pundits defended and critiqued the market during the later nineteenth century. The market effaced the available choices for women, African-Americans (free and enslaved), Native Americans, factory workers, artisans, farmers and entrepreneurs. Farmers serve as a useful example of the declension. Those whom Thomas Jefferson envisioned as the “perfect citizenry” of the Republic found themselves bound to the market by the mid-nineteenth century. While cash transactions for manufactured goods sold by third parties replaced the bartering system, mono-crop economies that sought maximum profits for minimal investment eclipsed subsistence agriculture. Both transitions placed farmers at the mercy of vagaries in the market and climate, and during economic winters yeoman became dependent on their wives and children for “putting out” homemade goods.
Larson’s book makes for a great supplement in undergraduate and graduate classrooms. His accessible writing style and sweeping narrative introduces students to complex economic changes and his epilogue connects the contemporary free market liberalism to similar patterns during Jackson’s presidency. Some may question Larson’s ominous assessment of capitalist labor and his rosy portrait of pre-industrial cooperation between farmers, apprentices, and entrepreneurs. For example, his narrative doesn’t explain why Franklin Roosevelt’s initiatives during the New Deal sustained working class politics through the 1970s. Nor does his assessment of peaceful pre-industrial class relations square with the sometimes violent clashes that occurred over economic issues during the 1780s. Still, Larson offers intriguing ideas about ideological continuities between 1825 and 1900.

[Evan Ash]

say innovation one more time John I dare you

[Tim Williams · Rating 5 out of 5]

By far the best explanation of the market revolution I've read. Larson beautifully synthesizes the vast literature on the topic, connects antebellum industrial capitalism to colonial and early national trends, and, most importantly, makes economic stuff palatable and understandable for my cultural history self!

[Tommy · Rating 2 out of 5]

Interesting, but a very dry read.