A History of Capitalism Done the Right Way

In Fear City, Kim Phillips-Fein has created a blueprint for how to write an inclusive and accessible study within the ascendant “history of capitalism” field. The history of capitalism is often seen as a kind of amalgam of business history, which puts companies and markets at its center, and labor history, which centers workers, their communities, and their organizations. The history of capitalism is supposed to offer us a larger and more holistic view, one that looks at all the moving parts and crosses methodological boundaries. The way the field has developed, however, often neglects waged workers and labor as historical actors, perhaps, in part, because of the field’s roots in the history of slavery, or perhaps because of the weakening of the labor movement in our own time.1 Workers, however, are fundamental to capitalism and any complete history of it must take labor seriously as an analytical category.In Fear City, workers’ history is not an add-on, but rather is woven throughout, and labor unions are central to the narrative. We learn, for example, that unions and worker struggles were key forces behind the creation of the generous local welfare state that undergirded New York’s “urban liberalism,” and that working people then deeply contested neoliberalism’s assault on those services in the 1970s. We meet Adam Veneski, a laid-off bottle factory worker who organized his Greenpoint-Williamsburg neighbors to occupy the local firehouse for over a year rather than see it closed. The group of mostly white ethnic workers blocked the firehouse entrance with a sofa, brought in the kids and the vodka, and proceeded to hold polka parties and host showings of the radical labor film Salt of the Earth. We meet Ramón Jiménez, a Harvard-trained lawyer of Puerto Rican descent who organized a coalition to save Hostos Community College, a school expressly designed to serve the bilingual population through classes in English and Spanish. The students and community occupied the campus, including setting up a childcare center in the president’s office, and blocked traffic by dragging classroom chairs into the middle of a major nearby highway. We discover that the “Welcome to Fear City” leaflet that inspired the book’s title was part of a campaign by local firefighter and police unions to scare tourists and so pressure the city into forgoing cuts.Phillips-Fein could have written this book a different way. As the city’s fiscal crisis unfolds, we might have only heard about the bankers, politicians, bean counters, and fiscal experts. In the pivotal chapter that takes us into the heat of the crisis in 1975, for example, we might have met only Felix Rohatyn, the Lazard Frères banker who, along with three other corporate leaders, created the Municipal Assistance Corporation (MAC), which allowed the state to issue bonds on behalf of the city. Instead, Phillips-Fein artfully pairs Rohatyn with Victor Gotbaum, the head of District Council 37, the city’s largest public sector union that staged a ten thousand–person rally aimed not at the city government but at what they saw as the source of the problem, First National Bank. They targeted the bank for stoking the New York fiscal crisis when it demanded that the local, state, and federal government support worker layoffs and cuts. We learn equally about both men, their backgrounds, motivations, and machinations.We also see unions struggle with their contradictory role of both trying to protest layoffs and wage cuts while also trying to prop up the economic structure that undergirds their members’ employment. At one point, we find ourselves watching an impromptu late-night meeting in American Federation of Teachers (AFT) president Al Shanker’s apartment, after New York Governor Carey and a wealthy realestate developer came knocking on his door to plead that he urge the trustees of the teachers’ union to agree to a major bond purchase. Shanker reluctantly agreed and saved the city from default, at least temporarily. Likewise, after Ford finally decided to offer a series of short-term “seasonal” loans to the city in late 1975, unions’ decision to purchase $2.5 billion of the city’s debt with their pension brought in more than a third of the needed revenue. But unions paid a price for bailing out the city; when they became the city’s major creditors, they had less room for radicalism. By the end of 1977, Gotbaum no longer protested outside First National Bank with a crowd of thousands, but instead met regularly with its executives to discuss the city’s future and to protect its members’ pensions investments.Like many works in the history of capitalism, Fear City aims to make visible the myriad forces that actively shape capitalism’s development, but often seem so hegemonic. Phillips-Fein correctly argues that New York City’s fiscal crisis ultimately was created, not natural, and that the kind of austerity and vast wealth inequities that mark the city today were not inevitable. She claims that the real power lay with the state and federal government, not the city, and that numerous policies undergirded New York City’s decline. She highlights the federal subsidies for homeownership and investment in highways that sent residents to the suburbs, coupled with white people’s racial fears. National trade policies and state economic development campaigns facilitated manufacturing’s migration overseas or to the South.However, Fear City leaves these larger forces largely underdeveloped and underexplored. All authors must make choices in writing books, and Phillips-Fein has chosen to dig into the ins and outs of the financial crisis itself, and the result is a masterful account of that crisis. Yet that choice to focus on the crisis itself leaves a fundamental tension in the book about just how inevitable the crisis really was. In fact, there are many points throughout Fear City when she highlights the growing sense of inevitability. When Mayor Abraham Beame in 1974 chose to take on more debt, for instance, “there seemed to be no other choice” (58). As the state Emergency Financial Control Board (EFCB) and federal government demanded city budget cuts, “the result was a sense of slippage and chaos, a constant downward spiral” (208). Phillips-Fein’s point here is that neoliberal solutions took root in the soil of what seemed like an inevitable crisis, when in fact there were alternatives. Fear City’s argument would be strengthened, however, by more effort to unpack what those alternatives really were.In order to really challenge the inevitability of neoliberalism’s solutions, Fear City would have to do more to analyze the multilayered infrastructure that under-girded New York City’s “urban liberalism,” and how those supporting structures were weakened or destroyed. While she points to federal and state policy as “where the power really lay” (6), in fact corporations were growing more activist and political in this period and certainly were major brokers in neoliberalism’s creation as well. For instance, while Phillips-Fein acknowledges organized labor’s key role in the New York power structure, we never hear about the corporate attack against unions and union organizing in the 1970s, and how that may have impacted the crisis. In fact, this is the decade when companies began to break and bend labor law at a new level, rendering nearly meaningless federal labor law’s worker protections. Corporations developed and honed a new set of techniques for fighting unions and breaking strikes, and relied on a vastly expanded union-buster industry. The corporate campaign was effective. In New York State, for instance, workers won 61 percent of the union elections in 1970, but by 1978 won only 48 percent, a pattern that mirrors national trends. With nearly 40 percent union density in New York state in 1978, unions were a cornerstone of New York city’s “urban liberalism.”2 In Fear City, while we see banks and corporate leaders standing off with public sector workers, we might also ask whether the city’s private sector workforce also faced union busting. If so, what impact did this have on the labor movement’s ability to fight the city’s demands for austerity and cuts?Phillips-Fein could have done more to bring in the increased politicization of the nation’s largest businesses during this decade, a key point in her first book, Invisible Hands. We see First National City Bank’s Walter Wriston sitting on the Business Roundtable, for instance, but there is only a brief description of the Round-table as “formed in the 1970s to augment the power of business in politics” (78). In fact, as Phillips-Fein demonstrates in Invisible Hands, the 1970s were a heyday for the nation’s conservative business movement that launched new political action committees, think tanks, and public relations campaigns in order to roll back regulations and oversight.3 Phillips-Fein chose to deemphasize the national politicization of business in her close-up, local study on New York, yet it is a major development that deserves more attention. To what extent did business use that new archipelago of conservative political organizations to further their vision for a “new New York?”One of Fear City’s great insights is that small manufacturers had an incentive to support New York’s generous social welfare system because it, in turn, supported their workers. Finance and the real estate industry, however, had no such incentive because they didn’t have large workforces. But why were small manufacturers losing out to finance in the first place? Phillips-Fein mentions federal trade policy as one force that may have weakened New York City, but never explores which trade policies mattered, or how they had an impact. In fact, in the 1950s New York City was the center of the fashion industry, most of which was heavily unionized. But postwar US foreign policy encouraged the growth of other nations’ garment industries as a tool to contain communism. For example, under Section 807 of the Tariff Schedule of the United States, implemented in 1963, some clothing items could be sewn in certain countries tariff free. Small garment manufacturers came under increased global pressure in the 1970s, and New York’s garment industry suffered badly. By 1980, there were only 140,000 garment jobs in New York City, down from 340,000 in 1950.4More global context might have deepened Phillips-Fein’s analysis of the crisis’s inevitability. Did London or Paris, Frankfurt or Tokyo also face increased market pressures and demands for social cuts, especially after the effective end of the Bretton-Woods agreement in 1971 that had stabilized world currencies? If they suffered the same pressures, did they also go bankrupt and, if not, why? I suspect that such an inquiry would reveal the United States’ weak, largely privatized and balkanized social welfare state as a central, unexplored player in New York City’s demise. Other countries may have had more of a central, federal cushion when disaster struck.Phillips-Fein points to the myriad urban bankruptcies today as one way that New York City’s “Fear City” moment continues to resonate. She correctly points out that these bankruptcies are often unnecessary and reflect a politically conservative answer to “unresolved questions about what kind of society we want to have, about who will pay for certain kinds of social provisions and whether we will have them at all” (10). Yet there is another legacy to the story she tells here. Today, urban areas are once again laboratories for democracy and economic justice, leading the way with fights for new minimum wages, fair scheduling laws, family leave policies, and a myriad of other progressive labor reforms.5 New York was long the lived reality for such a progressive urban vision that’s re-percolating today, and even though Phillips-Fein’s story is about that vision’s defeat, local activists today take from Fear City a fresh understanding of their struggles’ roots. These kinds of local-level fights will become especially important as the nation’s public sector unions face the impact of the Janus v. AFSCME Supreme Court case that strips public sector unions of the ability to charge all workers fees for union services.It takes heavy lifting for a historian to investigate real working people alongside bankers, elected leaders, and fiscal policy analysts, and Phillips-Fein pulls it off. Fear City richly reveals the contestation over ideas and policies that shaped neoliberalism and so gives class struggle its due in this pivotal chapter of capitalism’s history

Business history · Capitalism · Economic history · Labor history · Labor relations · Narrative · Oral history · Political economy · Political science · Politics · Sociology · White (mutation · History · Labor Movements and Unions · Law · Political Economy and Marxism

• Making Sweatshops

  Ellen Rosen, Ellen F Rosen•Making Sweatshops•2002

  Add to list

• Invisible hands

  Cynthia Pearson, Chad Pearson•Business History•2009

  Add to list

• Interchange

  Sven Beckert, Angus Burgin et al.•Journal of American History•2014

  Add to list

• Knocking on Labor's Door

  Jane Berger•Journal of American History•2018

  Add to list