Berle’s pro-regulatory stance won him an introduction to Franklin D. Roosevelt, and he became an influential New Dealer. But his vision truly triumphed after World War II, when regulation of corporate behavior was supplemented by the rise of labor unions. In the winter of 1945–46, more than 300,000 members of the United Auto Workers union staged a successful strike at General Motors that lasted 113 days, and a few years later, in 1950, the company resolved that further confrontations would be too painful. In what became known as “the Treaty of Detroit,” GM’s bosses granted workers regular cost-of-living pay increases, a measure of job security, health insurance, and a pension—benefits that were almost unheard-of. General Motors had “set itself up as a comprehensive welfare state for its workers,” in Lemann’s succinct formulation.

Berle celebrated the Treaty of Detroit by propounding a pro-corporate liberalism. The corporation had become the “conscience-carrier of twentieth-century American society,” he marveled. Many contemporaries agreed. “The large mass-production plant is our social reality, our representative institution, which has to carry the burden of our dreams,” the rising management theorist Peter Drucker wrote. Anticipating the “end of history” triumphalism of a later era, the sociologist Daniel Bell feted the corporatist order in a book titled The End of Ideology.

Of course, corporatism proved less robust than these writers expected. Berle’s “clash of the titans” liberalism, built on checks and balances among big corporations, big government, and big labor, fell afoul of American individualism. Conservatives railed against big government for stifling freedom. Liberals denounced big corporations for reducing employees to automatons. Both sides came to see big labor as the protector of special interests. In 1965, as Lemann reminds us, the novelist Norman Mailer had one of his characters interrupt a lovemaking session to pluck out his partner’s diaphragm—“a corporate rubbery obstruction.”

Yet the chief threat to Berle’s vision came not from America’s suspicion of concentrated power. It came from economics.

Appelbaum opens his book with the observation that economics was not always the imperial discipline. Roosevelt was delighted to consult lawyers such as Berle, but he dismissed John Maynard Keynes as an impractical “mathematician.” Regulatory agencies were headed by lawyers, and courts dismissed economic evidence as irrelevant. In 1963, President John F. Kennedy’s Treasury secretary made a point of excluding academic economists from a review of the international monetary order, deeming their advice useless. William McChesney Martin, who presided over the Federal Reserve in the 1950s and ’60s, confined economists to the basement.

Little, Brown

Starting in the 1970s, however, economists began to wield extraordinary influence. They persuaded Richard Nixon to abolish the military draft. They brought economics into the courtroom. They took over many of the top posts at regulatory agencies, and they devised cost-benefit tests to ensure that regulations were warranted. To facilitate this testing, economists presumed to set a number on the value of life itself; some of the best passages of Appelbaum’s fine book describe this subtle revolution. Meanwhile, Fed chairmen were expected to have economic credentials. Soon the noneconomists on the Fed staff were languishing in the metaphorical basement.