The Commanding Heights

By Eli Schuster, PhD candidate in Political Studies, Queen’s University

Daniel Yergin and Joseph Stanislaw, The Commanding Heights (New York, NY: Simon & Schuster, 1998) $36.00, 457 pp

Last November, during my MA year in Political Science at York University, I was asked to write an essay on the fairness of the global economy. Those familiar with the Political Science department at York know that enthusiasm for free markets doesn’t exactly run wild among the faculty, so I wished to present the best case for capitalism I could by consulting a variety of sources. Certain works such as Robert Gilpin’s The Political Economy of International Relations, Richard McKenzie and Dwight Lee’s Quicksilver Capital, and The Fraser Institute’s Economic Freedom of the World 1975-1995 were helpful, but I felt my bibliography lacked something. I wanted a book which could discuss the recent worldwide shift from state ownership and planning to markets in simple, historical terms, and not view the trend as the worst calamity to ever befall mankind. Finally, I believe I have found the book I searched for in vain a year ago: The Commanding Heights, by Daniel Yergin and Joseph Stanislaw.

Inspired by a conversation at a large, outdoor market on the outskirts of Moscow with Sir Brian Fall, the British Ambassador to Russia, The Commanding Heights takes its name from former Soviet leader Vladimir Lenin, who defended his relatively pro-market New Economic Policy in 1922 by saying the state would still control the “commanding heights,” or most important sectors of the economy. Since that time, many nations have decided to follow Lenin’s decision, often with disastrous results.

While reading through The Commanding Heights, I was reminded of Benjamin Constant de Rebecque, who once told the world, “in certain historical periods one has to make the full circle of follies in order to return to reason.” Yergin and Stanislaw’s work spans five continents (six, if you count the brief section on New Zealand) and relates the simple, yet powerful story of the rise and fall of big government in the latter half of the twentieth century. The authors’ conclusions are bound to raise the ire of left-wing academics, as Yergin and Stanislaw find that all around the world, from India to China, from Western Europe to Latin America, and from the United States to Southeast Asia, free market capitalism works, while state ownership and government interference breed corruption, inflation, stagnation, and at times even starvation and national bankruptcy.

Its message aside, The Commanding Heights is a pleasure to read because it is simple (but not simplistic), engaging, and informative. The Commanding Heights is the best kind of economic history; it acknowledges the importance of individuals, politics, and particular circumstances over vast, impersonal forces in the making of history. It is, for example, highly questionable to suggest that Britain would have enjoyed an economic renaissance in the 1980s without the intellectual groundwork provided by Margaret Thatcher’s “closest political friend” Keith Joseph, or Britain’s Institute of Economic Affairs (IEA).

As Yergin and Stanislaw recognize that history is made by people, and not by race, social class, or capital, their book is loaded with far more interesting short anecdotes than could be gleaned from a hundred standard university textbooks. Among them are accounts of James Landis, an architect of the American New Deal, who later became a fierce critic of government regulations; Jean Monnet, a founding father of the future European Union, who thought up the phrase “arsenal of democracy” for US President Franklin Roosevelt; and the great liberal economist Friedrich Hayek, who after a private meeting with the soon-to-be Iron Lady is reported to have said to the entire staff of the IEA, “she’s so beautiful.”

Are there problems with the book? Only a few. For starters, the authors give little mention of institutions such as the World Bank and the International Monetary Fund (IMF), and present them as pro-market, positive organizations. Yergin and Stanislaw ignore a wealth of criticism from American free-marketeers, who suggest that the IMF often gives bad, anti-market advice to developing countries. Also ignored is the tough criticism of the “shock therapy” policies enacted in Eastern Europe and Russia, and of individuals such as Jeffrey Sachs by American supply-siders Jack Kemp and Jude Wanniski.

As well, the book makes almost no mention of the importance of political culture in determining acceptable economic choices. The authors make much of the fact that the United States developed a highly regulated system of capitalism rather than full-blown socialism, yet never explain why things happened the way they did. One explanation, the Hartz-Horowitz “fragment thesis” (which should probably be taken with more than just a grain of salt) suggests that thanks to its protestant British heritage, America’s political culture “congealed” into a classical liberal framework untouched by the collectivist nature of English “toryism.” As such, leftism can succeed in America only if it presents itself in liberal, rather than socialist garb. American critics of capitalism such as Richard Gephardt, Ralph Nader, and others, have therefore appeared as “welfare liberals” instead of as home grown versions of Neil Kinnock or Alexa McDonough. This might be nit-picking, but cultural explanations are used to an increasing degree in modern academia, and the authors would have done well to have at least addressed the subject.

Still, it should be remembered that The Commanding Heights is a very “big picture” book. Its central focus is not on side issues such as suspicion of the IMF, or the role of culture in determining economic policies, but rather on the near-universal collapse of confidence in state planning and the world’s return to reason. Books such as this can help prevent the world from making another full circle of follies.

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Last Modified: Wednesday, October 20, 1999.