A Tour de Force
Transaction Man

A Tour de Force

New Yorker staff writer and Columbia University professor Nicholas Lemann offers a detailed history of the crucial economic trends and philosophies of the 20th century.

In this illuminating tour de force, New Yorker staff writer and Columbia University professor Nicholas Lemann offers a history of two encompassing economic doctrines, as well as a look at a third now coming into view. Lemann argues that messy, pluralistic democratic processes best serve economies and societies. This engaging tapestry offers readers a solid foundation for understanding a world economy in flux.

Lemann is a long-established, perceptive observer of socioeconomic trends, and his insights brought rave reviews. The Economist wrote, “Ingenious and colorful…There are dazzling passages.” Walter Isaacson, author of Leonardo da Vinci and The Innovators, said, “This fascinating book is destined to become our era’s most important and insightful explanation of the deep forces disrupting our economy.”

Two worthwhile companion works that explore the economic disruptions in US society are Binyamin Appelbaum’s The Economists’ Hour and The Meritocracy Trap by Daniel Markovits.

Organizing Force 

Lemann characterizes the 1890s as a time of uncertainty and unrest: As a new century dawned, Americans faced the question of how concentrated wealth at the top could be consistent with the liberty and well-being of ordinary people. Lemann cites Adolf Augustus Berle, Jr., an architect of President Franklin D. Roosevelt’s New Deal, as one who recognized that corporations had no limit on their size and power and so were not accountable to anyone. They could, Berle thought, provide enormous benefits to communities or cause serious harm. Lemann explains that Berle wanted to regulate corporations to ensure social stability and coherence as well as economic security.

For two or three generations, what to do about big business was the central question of American life.Nicholas Lemann

Lemann recounts that many of Berle’s proposals eventually became law, including separating depositary banks from investment banks, insuring bank deposits, and regulating corporate stock and bond offerings. Lemann notes that Berle believed government had to be more powerful than corporations.


Lemann cites Karl Polyani’s 1942 The Great Transformation, which held that unregulated capitalism leads to social calamity and that governments should make the economy serve society. By contrast, Peter Drucker, author of The Future of Industrial Man in 1944, disagreed with Polyani and Berle. Drucker believed that government should not regulate corporations. These two seminal works, Lemann stresses, influenced US government and business policy for decades.

By the 1950s, Lemann says, large corporations like General Motors took care of their workers, while government and labor unions held corporations accountable. Lemann makes a crucial point when he posits that the corporate era in the United States shifted the American spirit from individualism to conformity.


Lemann recounts the setbacks that the US economy experienced in the 1970s: Japanese car manufacturers bested US producers, the 1972 and 1979 oil-supply crises drove price shocks, and inflation rose. He reminds readers that financial innovations proliferated, with mutual funds offering savers a way to maintain the value of their money, and with junk bonds carrying high risk but promising high returns.

Serving Shareholders

Wall Street and its client corporations, Lemann reveals, changed as well. Investment banks like Morgan Stanley flipped from meeting the needs of “users of capital” like GM to serving the demands of those who provided the capital, such as large institutional investors. Lemann says this helped flip the corporate mission from fulfilling social purpose to serving shareholders, but he bemoans an ominous trend: Corporations augmented executive pay with company shares so that managers would behave more like owners. 

“A Transaction-Based Society”

Lemann tracks the emergence of “transaction man” on Wall Street, characterized by “individual expression, not conformity.” Transaction man tore down government regulations and safety nets. Lemann laments that this ended the US middle class’s upward mobility and increased economic inequality.

Freeing markets from constraint looked like the royal road to bringing a better life to people who needed and deserved one, all over the world.Nicholas Lemann

By the 1980s, corporate breakups, mergers and acquisitions had increased. These changes, Lemann insists, broke the bonds of loyalty between companies and employees. In the 1990s, as the internet made inroads into everyday lives, Lemann notes that “winner-take-all” monopolies proved crucial to financial success in the new interconnected world. 

Pluralist Democracy

Lemann defines “pluralism” as a “messy, contentious system that can’t be subordinated to one conception of common good.” In a democratic process, he explains, distributed political power means no single entity gains overarching control. 

It [is]…useless to try to understand an entire society in terms of one monolithic set of interests being pitted against each other (the left versus the right, for example), or of a contest between special interests and the public interest.Nicholas Lemann

Lemann’s position is that institutions are indispensable in a pluralist democracy. He posits that government should intervene in markets to protect ordinary citizens. He’s passionate that outsized corporations should not dominate the economy and society. Instead, he argues, government should unite with private entities to further the solutions that a diverse and inclusive society demands.

Shared Outcomes

Lemann calls on his considerable and, at times, intimidating understanding of social and economic trends and on his vast, in-depth study of both. At times, he offers almost too many sources for his history of the evolution of American 20th-century capitalism, but he does so to educate readers about the sources of the philosophies, movements and trends that have shaped today’s economy – one that Lemann regards as destructively individualistic and avaricious. He argues forcefully and eloquently for a return to community and to a sense of shared outcomes. His work is not overtly political; his social stance is balanced, but his outrage at corporate greed is plain. This is a worthy, essential overview for students, teachers, businesspeople and citizens seeking to understand the seismic shifts in America’s economy and culture.

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