The Commanding Heights (Book)

I finished reading "The Commanding Heights: The Battle for the World Economy" by Daniel Yergin and Joseph Stanislaw, originally published in 1998, and then republished in 2002.  The authors present an outstanding review of economics in the 20th Century around the world in terms of the struggle between free markets and government control, as reflected in the original subtitle, "The Battle Between Government and the Marketplace That Is Remaking the Modern World."

Daniel Yergin

The book focuses on this battle through the ideas of the two leading economists of the 20th Century, Frederick Von Hayek and John Maynard Keynes.  Hayek, shaped by the Austrian School of Economics, argued for free markets since, he said, the price system provided an efficient mechanism for communicating vital and pertinent information to all market participants.  He argued against central planning since the planners can never gather enough information to have enough knowledge to base decisions upon.  Keynes, fearing a communist takeover, argued that market forces, left alone, always leads to disaster, and needs to be reigned in by government control in order to survive.

Joseph Stanilaw

Free markets largely reigned at the start of the 20th Century.  However, the world retreated from them with the shock of both World War I and then the economic upheavals that followed, especially in Germany, but then spreading in worldwide depression.  Leaders began imposing more government controls to reign in the free markets.  Keynes became more prominent and while Hayek became more ostracized.

However, well into the later half of the 20th Century, this trend reversed as government control seemed to cause more harm than good.  Leaders began undoing many government controls and relied more upon the free markets to solve economic problems.  Hayek became more prominent and Keynesian economics became more suspect.

The authors do not write in generalities.  They delve into how these ideas played out in country after country
and region after region over vast time periods, in England, India, the United States, Germany, Russia, China, Japan, the Third World, Asia, Africa, South America, during each decade of the 20th Century.  The sweep and vastness of the study is stunning.  They also tell the stories of the many leaders involved in leading and directing their economies.

Little wonder, Daniel Yergin is a Pulitzer Prize winning author for a previous book he wrote about the history of the oil industry, The Prize: The Epic Quest for Oil, Money, and Power, which I mentioned in the Introduction to this blog, and some observations from it on the Oil Crisis which I later posted.

I highly recommend reading The Commanding Heights.  I hope the authors come out with another book that updates it.  PBS made this book into a documentary series which I plan to later post about.