What makes America’s economy different from peer countries, and how are its primary features and fissures a function of the nation’s politics? These questions motivate The American Political Economy: Politics, Markets, and Power, a collection of essential and timely essays from political scientists and economists that is edited by Jacob S. Hacker, Alexander Hertel-Fernandez, Paul Pierson, and Kathleen Thelen (HHPT). The 13 data-rich chapters cover a wide range of important and understudied topics in American political economy. They are bookended by two contributions from the editors—an introduction that provides an overarching, theoretical framework for the book and an epilogue on the COVID-19 pandemic.

The introduction is ambitious. It seeks to set the foundation for the study of American political economy, a nascent subfield that can “[reorient] political science in productive directions” (p. 1). HHPT argue that the field of American politics has focused excessively on narrow topics in politics and failed to scrutinize the deep and intricate ways that politics structures the economy. While the focus is, of course, the United States, the frame of reference is comparative. The starting point is the ways that America’s economy differs from those of other developed democracies, particularly those that are “similarly” market oriented. Some distinctive aspects are the degree of economic inequality, the tattered social safety net, and the impressive but endangered knowledge economy.

HPPT link these outcomes to three main causes. The first is a political system that is highly fragmented, both vertically and horizontally, and that has an unusually powerful judicial system. The second is a set of organizational problems and incentives that arise in such a system; specifically, HHPT emphasize (1) the impediments to interorganizational collaboration and the emergence of national economic organizations, and (2) the incentives for venue shopping, short-termism, and resource hoarding. The third cause is the deep racial cleavage, which undermines broad coalitions and public goods and which motivates discriminatory policies that entrench inequalities.

Writ large, the book argues that these three features affect economic policies and outcomes at all levels, from local to national. But each factor is also individually significant, in part because each has received little attention in the broader literature. For example, while much work in American and comparative political economy focuses on America’s federalism and separation of powers, very little attends to the degree to which America’s judiciary affects economic strategies and outcomes. Similarly, while massive literatures focus on collective action problems and party politics, in HHPT’s organization-focused framework they receive a new kind of treatment. For one, HHPT emphasize that the gridlocked and fragmented environment leads organized business interests to pursue strategies—multitiered, go-it-alone strategies—that are both distinctive and effective. For another, the framework places organizations upstream of political parties—the latter are propelled by the former. As HHPT put it, “[T]he considerable role of organized groups in party politics should thus be seen as one important dimension of the broader role of organized interests in shaping the political economy” (p. 23).

Most of the book’s chapters focus on the political determinants of economic policies and outcomes, while a few focus more squarely on economic developments and their importance for economic and political power. They are organized into four sections. Section 1 discusses national politics, inequality, and the balance of power between business and labor. First, Nathan J. Kelly and Jana Morgan argue that partisan gridlock in Congress has allowed rising income inequality to go unchecked, and furthermore that the types of legislation that pass in such an environment tend only to protect or enhance elite privileges. Then K. Sabeel Rahman and Kathleen Thelen discuss how America’s judiciary offers organized business interests a favorable and impactful policy-making terrain because of its power and its insulation from public pressure. That has been compounded by a conservative makeover of the federal bench, and the authors survey the doctrinal consequences. Finally, Hertel-Fernandez provides a concise but rich history of unions and labor law since the New Deal that identifies various reasons why unions have failed to withstand the modern “conservative counteroffensive.” The reasons include union fragmentation, “businesses’ advantages in cross-state advocacy… [and] state lawmakers’ fears of capital flight” (p. 104).

Section 2 focuses on racial and socioeconomic inequalities in cities, states, and beyond. Chloe Thurston analyzes how the private provision of various social policies, like retirement plans, entrenches racial-economic inequalities and frustrates the provision of more egalitarian systems. Jessica Trounstine connects land-use regulations, racial and socioeconomic segregation, and the unequal provision of municipal services in metropolitan areas. She also considers how select, knowledge-economy cities have been recentralizing and may be inclined to adopt progressive policies. That topic is the subject of Thomas K. Ogorzalek’s chapter, which also tracks and compares urban recentralization in many metropolitan areas. Then, Jacob M. Grumbach, Hacker, and Pierson study the political economies of red states and the disconnects between their economic challenges—which are intensifying in the knowledge-economy era—and the agenda of the national Republican Party.

Politics and policy are less prominent in section 3, which contains three insightful essays on how corporate structure and power have evolved. First, Herman Mark Schwartz connects those outcomes to the rise of intellectual property as a profit source (and the concomitant relative decline of labor and capital in that regard). Benjamin Braun surveys the causes and consequences of “asset manager capitalism,” in which the public ownership of business is now largely in the hands of firms that have “no direct economic interest in their portfolio companies” (p. 273). And Suresh Naidu analyzes developments in the labor market, and argues that employer power over wages has risen with improvements in worker monitoring, supply concentration in various locales, and other frictions that prevent workers from maximizing their wage potential.

Section 4 studies the knowledge economy. David Soskice explains the origins of America’s prominence as a radical innovation driver and argues that that prominence is fading—because of the nation’s “courts-politics-lobbying complex,” which relates to the polarized, urban-versus-rural party system (p. 325). The final two chapters have a comparative focus. First, using evidence from a multicountry quantitative analysis, Lucy Barnes’s chapter argues that America’s political institutions frustrate investments in R&D and higher education. Then, Ben Ansell and Jane Gingrich study public sentiment regarding redistribution in the United States and various European countries. They find that America has the more unified “decommodifying knowledge economy coalition,” but they argue that it has had less success because of America’s electoral system and structural racism (p. 387).

In all, The American Political Economy covers a great deal of ground—though not everything on the subject. For example, it pays little attention to mass and electoral politics, including topics like demographics, mass partisanship, and the media. It also does not engage with or build upon various long-standing literatures in political economy, like those on fiscal politics, electoral cycles, and political macroeconomics. Furthermore, the framework is better suited to explaining modern inequalities than it is to explaining longer-term oscillations in the country’s political economy or the successful provision of collective goods, rare as that may now be at the national level.

But these points do not limit the significance of The American Political Economy. It is a groundbreaking, vital book that identifies many issues of great importance to America’s economy. It shifts our gaze from globalization and polarization and congressional gridlock to other, equally significant economic and political developments. The book indeed points political science in a productive direction, and it will set the agenda of American political economy studies for a good time to come.