The Upswing: How America Came Together a Century Ago and How We Can Do It Again

by Robert D. Putnam

Economists have shown that (as is clear from Figure 2.1), the slope of this upward curve in economic prosperity has been remarkably constant at 2 percent per year since the beginning of the Industrial Revolution. Indeed, over the century after 1871 the only visible deviation from the steady pulse of the American economy was the Great Depression (when GDP per capita fell nearly 20 percent in four years), followed by the World War II catch-up boom. However, as economist C. I. Jones reports, “To me this decline stands out most for how anomalous it is. Many of the other recessions barely make an impression on the eye: over long periods of time, economic growth swamps economic fluctuations.”3 Economists have devoted much thought and energy to explaining this continuous growth—which was once considered “a stylized fact,”4 that is, a fact so widely accepted that almost no one disputes it. More recently, the growth rate seems to have slowed significantly after 1970, falling below the long-term rate of 2 percent a year, perhaps because technological innovation is no longer leading to steady growth in productivity.5 That discovery should dampen any cheery optimism about the 2 percent “stylized” growth rate continuing into the future. But for most of the period we cover in this book material progress seemed steady and assured.