Until the 1980s, Federal Reserve chairs were not generally regarded as celebrities of the first order. This then changed, perhaps because of the Individual Retirement Accounts made possible by the Employee Retirement Income Security Act of 1974, which gave more Americans an immediate interest in the level of interest rates. Fed chairs became prominent public figures, with nicknames like “Tall Paul” and “the Oracle.” Today the appearance of a book by a former Fed chair is regarded as a signal literary event, at least by close followers of monetary policy.

The two books here, both historical in nature and written together with prominent financial journalists, are very different from one another. The Greenspan–Wooldridge book is a sweeping history of the United States since the War of Independence, focusing on the process of economic growth. The Volcker book is a collection of personal reflections together with a call for stable monetary policy, vigorous financial regulation, and good economic governance.

Capitalism in America is the more self-consciously scholarly of the two. Contributors to this JOURNAL will find their work amply cited. The book’s first part, on the century and a half prior to the Great Depression, is a celebration of American economic growth, although the authors are careful to acknowledge the original sin of American Negro slavery and the disregard by English colonists and their descendants of the political, property and human rights of the continent’s indigenous peoples. The organizational chronology follows the standard undergraduate syllabus, from the development of the United States as a commercial nation and proceeding through the industrial revolution, the making of a national market, and the rise of the multidivisional enterprise following the Civil War.

The most topical part of the story, given current events, is the reaction against laissezfaire capitalism in the late nineteenth and early twentieth centuries. Greenspan and Wooldridge describe how the growth of the railways, as the first large corporations, challenged the founding fathers’ vision of a republic of Jeffersonian farmers and independent tradesmen. Because they transcended state lines, the railways required oversight by a strong national government, something whose existence the founders had sought to avoid. The railway barons were the first crony capitalists, bribing politicians and lobbying for favorable regulatory treatment. Their rise was associated with great concentrations of personal wealth. The reaction against them, and against other large enterprises like the meatpackers and Standard Oil, included the Grange, the Populist Party and Progressive Movement. Together these movements shifted the country’s political center of gravity to the left. Greenspan and Wooldridge portray this reaction as inevitable but unfortunate in that it bred an overly interventionist government and suspicion of, and even hostility toward, private enterprise.

Central to the authors’ account is Schumpeter’s famous formulation of capitalist dynamics. (A more evocative title for the book might have been Creative Destruction.) American capitalism thrives, the authors argue, when innovation is allowed to proceed despite the threat it poses to established producers. This is most likely to be the case when regulation is light, so that the incumbents are unable to stifle innovation by manipulating the political process. The entrepreneur is the hero of the piece: one of the “exceptional men, the innovators, the intellectual giants…not held down by the majority,” to quote from Ayn Rand’s The Fountainhead, a volume familiar to the authors. (Greenspan’s association with Rand is well known, and he and Wooldridge cite Rand in the course of their discussion). The corresponding villain is the professional manager prone to complacency and loss of focus.

The other prerequisite for sustained economic growth highlighted by Greenspan and Wooldridge is stability, by which they mean not just monetary stability but also financial and especially fiscal stability. Stability permits savings to be channeled into productive investment. Turning to the post-WWII era, the authors blame Lyndon Johnson for the productivity slowdown of the 1970s, LBJ’s Great Society and pursuit of the Vietnam War having blown up the federal budget. They point to George W. Bush’s tax cut and neglect of the deficit as setting the stage for the Global Financial Crisis. Perhaps unsurprisingly, they push back against the view that Federal Reserve policies also contributed to the crisis.

Greenspan and Wooldridge channel the work of Claudia Goldin and Lawrence Katz on the importance of human capital formation and of the land-grant college, the high-school movement, and the GI Bill. They engage less sympathetically with Robert Gordon’s view that productivity growth has slowed owing to the limits of technology. But it is worth noting also points that the authors might have developed, given the nature of their argument, but that they fail to advance. If there is reason to worry about the market power of the FAANGs that are the twenty-first century successors to the railways, given how they use their market power to limit competition, then perhaps the solution is more anti-trust enforcement and regulation, not less. If agency problems in financial markets result in misallocation and instability, then perhaps the solution is strengthened transparency requirements and a Consumer Financial Protection Bureau with teeth. If mechanisms for imparting practical knowledge to workers are wanting, then maybe the solution is stronger unions capable of partnering with employers in training and apprenticeship schemes, not the Reagan-era-like policies designed to eviscerate unions that are celebrated here.

Volcker’s book, as an autobiography, covers a more limited period and range of issues. It provides a clear sense of the man, something that will be of value to scholars conscious that individuals can shape the course of history. It conveys Volcker’s self-deprecating manner, which provided cover for forceful statements and actions. It describes an abiding commitment to public service inherited from his father, long-time city manager of Teaneck, New Jersey. It explains Volcker’s limited interest in personal enrichment: The author recounts how his father cut his own salary by 75 percent in the depths of the Great Depression.

Volcker resembles a quick-witted Forrest Gump, present whenever history, specifically monetary history, is made. He was at the U.S. Treasury in the 1960s, when officials fought a rear-guard battle to save the Bretton Woods System of pegged-but-adjustable exchange rates. He was president of the Federal Reserve Bank of New York in the 1970s, when the petro-dollar-fueled lending boom to emerging markets was in full swing. He was chairman of the Federal Reserve Board in the 1980s, when the Latin American debt crisis erupted and inflation had to be subdued. After an extended spell in the private for-profit and nonprofit sectors, he reemerged in 2009 as chair of the President’s Economic Recovery Advisory Board, enabling him to make the case for more rigorous financial regulation, including limits on proprietary trading by commercial banks known in his honor as the Volcker Rule.

A centerpiece of the book is Volcker’s efforts, as Treasury Department staffer and Undersecretary for Monetary Affairs, to salvage the Bretton Woods System. As a student of the international monetary system and the Bretton Woods System specifically, Volcker was “almost bred to defend it,” as William Safire once wrote. For Volcker, reform meant changes in economic structure and policy aimed at sustaining, not abandoning or replacing, the prevailing system of pegged rates. His formula for saving Bretton Woods had three elements. First, agreement by other countries to revalue their currencies against the dollar to redress competitiveness problems. Second, issuance of a newly created international instrument, Special Drawing Rights, to supplement the dollar as a source of international liquidity. Third, a commitment by governments to intervene in foreign exchange markets and take other steps to hold their currencies within agreed target zones.

Volcker’s vision of international monetary reform seems to have changed little since the policy discussions in which he was centrally involved in the 1960s and 1970s. What that vision fails to take on board is the fact of international capital mobility. In a world of free international capital flows, foreign exchange market intervention must be backed by supportive changes in monetary policy in order to have sustained effects. Elsewhere in the book, Volcker warns of the dangers that arise when central banks direct monetary policy toward goals other than their principal objective of price stability. But why directing monetary policy toward stabilizing exchange rates does not raise these very dangers is not adequately addressed. This is not a circle that policy makers have succeeded in squaring in nearly 50 years since the ill-fated Smithsonian Agreement that Volcker helped to broker in 1971.

The book’s other centerpiece is an account of Volcker’s efforts to tame inflation. The key step, he argues, was shifting from the interest rate to the monetary supply (specifically, to bank reserves at the Fed) as the intermediate target for Fed policy. Volcker argues that the traditional approach of small changes in interest rates no longer sufficed once inflation spiraled out of control. This much convinces. But would not large increases in interest rates have had the same dampening effect on inflation as large reductions in the rate of growth of bank reserves? It may be that interest rate announcements had lost credibility once inflation exploded, so a new target was required as part of an effective confidence-building strategy. Or perhaps the prior relationship between interest rates and inflation, as captured by the Fed’s econometric model, broke down at high inflation rates, rendering the traditional intermediate target unreliable and forcing policy makers to experiment with alternatives. Volcker does not tell us.

The chapters on this period are vivid, although most of the stories are well known: how farmers, protesting against high borrowing costs, encircled the Board building with tractors; and how homebuilders, dismayed by high interest rates, mailed Volcker sawed-off two by fours. One of the new anecdotes concerns a 1984 White House meeting involving Volcker, Ronald Reagan, and James Baker, the president’s chief of staff. The meeting took place outside the Oval Office, presumably in order to avoid being captured by its taping system. Baker bluntly delivered the message: “The president is ordering you not to raise interest rates before the election.” Volcker saw Reagan as exceeding his authority and threatening the Fed’s Congressionally mandated independence. His response, effective insofar as the instruction was not repeated, was to get up and leave the room without a word.

As this episode and others in the book make clear, attempts by the White House to interfere with the conduct of monetary policy are not new. The message for Jerome Powell is: do not rise to the bait. That said, Volcker was fortunate in that it was not, in fact, his intention to raise interest rates in the second half of 1984, given the recent collapse of Continental Illinois Bank and weakness of the economy. Under other circumstances, his decision to leave the room, objections unvoiced, might not have had such a happy result.

Both books touch, but only in passing, on President Donald Trump and his characteristic economic policies. These sit uneasily with Greenspan’s commitment to free trade, Volcker’s commitment to good governance, and the importance attached by both men to the independence of the Federal Reserve. One cannot help but sense that the last chapters of both accounts remain to be written.