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{{Infobox book
| name = The Commanding Heights: The Battle for the World Economy
| italic title = Force
| image = Commanding Heights The Battle for the World Economy book cover.jpg
| caption =
| author = [[Daniel Yergin]], [[Joseph Stanislaw]]
| country =
| subject = [[Economics]], [[globalization]]
| publisher = [[Free Press (publisher)|Free Press]]
| pub_date = 1998
| media_type =
| pages = 488
| isbn = 978-0-684-83569-3
}}
'''''The Commanding Heights: The Battle for the World Economy''''' is a book by [[Daniel Yergin]] and [[Joseph Stanislaw]] first published as ''The Commanding Heights: The Battle Between Government and the Marketplace That Is Remaking the Modern World'' in 1998. In 2002, it was adapted as a [[Documentary film|documentary]] of the same title and later released on [[DVD]].

''The Commanding Heights'' attempts to trace the rise of [[free market]]s during the last century as well as the process of [[globalization]]. Yergin attributes the origin of the phrase [[Commanding heights of the economy|commanding heights]] to a speech by [[Vladimir Lenin]] referring to the control of perceived key segments of a national economy.<ref>{{cite AV media |title=The Commanding Heights: Episode One: The Battle of Ideas |url=https://www.pbs.org/wgbh/commandingheights/hi/story/index.html |date=2002 |oclc=50427119 |publisher=PBS |medium=Television Production |time=15:47 from the beginning of the episode (4:51 from the beginning of the chapter) |quote="His critics, he said, were fools, were stupid, because the state, the government, the Bolsheviks would control the overall economy: steel, railroads, coal, the heavy industries -- what he called the "commanding heights" of the economy."}}. [https://www.pbs.org/wgbh/commandingheights/shared/minitext/tr_show01.html Transcript for Episode One: The Battle of Ideas].[https://www-tc.pbs.org/media/commandingheights/ch_p01_03_qt_300.mov Video for Chapter 3: Communism on the Heights <nowiki>[6:16]</nowiki>] (Quicktime 5 format).</ref><ref>{{cite web|url=http://www.dlc.org/ndol_ci.cfm?contentid=1570&kaid=125&subid=162|title=The Harder They Fall|last=Siegel|first=Fred|publisher=[[Democratic Leadership Council]]|archiveurl=https://web.archive.org/web/20120224204911/http://www.dlc.org/ndol_ci.cfm?contentid=1570&kaid=125&subid=162|archivedate=February 24, 2012 |quote="Lenin coined the phrase "the commanding heights" in 1922 when he temporarily relaxed government controls over Soviet agriculture even as he maintained a tight grip on big industry."}}</ref>{{failed verification|reason=the source author makes this assertion without attributing it to the book|date=February 2018}}

== Overview ==
The authors take the thesis that prior to [[World War I]], the world effectively lived in a state of [[globalization]], which they term the First Era of Globalization. The authors define globalization as periods in which [[free market]]s predominate and countries place few, if any, limits on [[export]]s, [[immigration]], [[import]]s, or [[information exchange]]s. Overall, they see globalization as a positive movement that improves the [[standard of living]] for all the people connected to it, from the richest to the poorest. According to the authors, the rise of [[communism]] and [[fascism]], not to mention the [[Great Depression]], nearly extinguished [[capitalism]], which rapidly lost popularity.

After [[World War II]], the authors note that the work of economist [[John Maynard Keynes]] came to be widely accepted in Western economies. Keynes believed in government regulation of the economy, which the authors underline as Keynes' great influence and prestige. The authors consider that the so-called [[commanding heights of the economy|commanding heights]] were often owned or severely regulated by governments in accordance with Keynes' ideas.

The authors then discuss how the political changes of the 1980s ushered in accompanying changes in economic policy. The old trend changed when [[Margaret Thatcher]] became [[Prime Minister of the United Kingdom]] and when [[Ronald Reagan]] was elected [[President of the United States]]. Both leaders parted ways with [[Keynesian economics]] and governed more in the tradition of the works of [[Friedrich Hayek]], who opposed [[government regulation]], [[tariffs]], and other infringements on a pure free market and those of [[Milton Friedman]], who emphasized the futility of using [[inflation]]ary [[monetary policy|monetary policies]] to influence rates of [[economic growth]]. In practice, Hayek's policies were applied only selectively, as [[Tax Reform Act of 1986|Reagan's 1986 income tax reforms]] substantially increased [[taxation in the United States|taxes]] on the lowest quintile of wage-earners but dramatically [[Tax cut|decreased rates]] for the upper two quintiles. In contrast to Hayek's ideas, Reagan's policies also continued and expanded tax [[write-off]]s, [[tax refund|rebates]] and [[subsidies]] for many [[big business|large corporations]]. Friedman's monetarism was also abandoned in practice as [[national debt of the United States|government-issued debt]] [[Debt-to-GDP ratio|as a percentage of GDP]]{{where|date=February 2016}} rose dramatically throughout the 1980s. While Thatcher, Reagan, and their successors made sweeping reforms, the authors argue that the current era of globalization finally began around 1991, with the [[collapse of the Soviet Union]]. Since then, they assert countries embracing free markets have prospered on the whole, and those adhering to [[central planning]] have failed.

While strongly in favor of this trend, the authors worry that globalization will not last. More specifically, they believe that if [[international inequality|inequality]] in economic growth remains high and if [[Third World]] nations are not offered the proper opportunities and incentives to support capitalism, the movement will end just as the first era did. The authors place so much emphasis on narrowing economic gaps because they believe, contrary to many of the people who are interviewed, that there is no [[ideological]] support for capitalism, only the [[Pragmatism|pragmatic]] fact that the system works better than any other, as they remark:
{{quote|The market also requires something else: legitimacy. But here it faces an ethical conundrum. It is based upon contracts, rules, and choice—in short, on self-restraint—which contrasts mightily with other ways of organizing economic activity. Yet a system that takes the pursuit of self-interest and profit as its guiding light does not necessarily satisfy the yearning in the human soul for belief and some higher meaning beyond materialism. In the Spanish Civil War in the late 1930s, Republican soldiers are said to have died with the word "Stalin" on their lips. Their idealized vision of Soviet communism, however misguided, provided justification for their ultimate sacrifice. Few people would die with the words "free markets" on their lips.|sign=|source=}}

== International analysis ==
In the book, the authors examine briefly many different nations and regions and their economic development since World War II. (In the case of [[industrialized countries]], they often begin before the war.) Admitting that the book cannot touch on every single aspect (Yergin remarks that the topic of their book constitutes an entire new academic discipline), the authors make many assertions.

=== United States ===
The [[robber baron (industrialist)|robber barons]] were often condemned in the press, but the [[United States]] had much more commitment to [[industrialization]] and [[free markets]] than did other countries in the late 19th and the early 20th centuries. Unlike many countries after World War I, [[Roaring Twenties|the 1920s saw great economic expansion for upper-income individuals and a growth in median income]]. However, [[labor unrest]] continued to mount throughout the 1920s and the 1930s because of the lack of [[labor rights|wage and hour rules]], [[child labor]] protections, [[unemployment insurance]], [[freedom of association#Organized labor|right to organize]], [[occupational safety and health|workplace safety]] requirements, and [[social security]], which all continued to exacerbate the discontents of the substantial numbers of [[working poor]].

The [[Great Depression]] caused massive [[unemployment]] and massive public distrust of corporations and wealthy individuals. In response, the [[New Deal]] of President [[Franklin D. Roosevelt]] went into effect with massive public support. Many lawyers and economists, influenced by Keynes, worked under the New Deal and believed that free markets would lead to disaster without proper regulation.

The [[Economy of the United States|American economy]] [[post–World War II economic expansion|boomed for about 30 years after World War II]] with the benefit of [[Keynesianism]], robust [[Competition law|antitrust regulation to promote competition]] and [[financial regulation]]s preventing the most volatile forms of [[market speculation]], [[union density|high unionization rates]] and [[protectionism|protections promoting the growth of domestic industry]]. However, during the 1970s, [[stagflation]] was brought on by the [[1973 oil crisis]] and the shift from the [[gold standard]] to [[fiat currency]], which discredited the [[post-war consensus|policy consensus]] that was set in place by the [[New Deal Coalition]]. Eventually, [[Ronald Reagan]] was [[1980 United States presidential election|elected as president in 1980]], and many of the statutes and organizations created by the New Deal were dismantled.

=== United Kingdom ===
[[London]] was the center of the so-called First Era of Globalization because of the power and resources of the [[British Empire]]. However, World War I severely weakened Britain, causing massive unemployment. The [[United Kingdom]] successfully held out during World War II and emerged victorious, but the war effectively caused the dismantling of its empire.

[[Winston Churchill]] was influenced by the work of Hayek and opposed heavy [[economic interventionism|government interference]] in the [[British economy]]. However, the [[Labour Party (UK)|Labour Party]], led by [[Clement Attlee]], came to power in force after the [[1945 United Kingdom general election|1945 general election]] and was dedicated to government controls to prevent another [[economic crisis]]. The [[economic history of the United Kingdom#Nationalisation|United Kingdom's major industries were nationalized]] over the following decades (including the [[Bank of England]], electricity, water, [[British Gas plc|natural gas]], [[British Rail|railways]], mining, bus transport, [[Post Office Telecommunications|telecommunications]], along with large portions of the oil, shipbuilding, aerospace, automotive, and steel industries. Basic human services such as [[National Health Service|healthcare]] and university education were brought under government control and made available for free, while rents in the private housing market were regulated and [[Public housing in the United Kingdom|council housing]] provided homes for around a third of the population by the late 1970s. Meanwhile, practically all occupations and wages were heavily [[regulatory economics|regulated]] and [[trade union|unionized]].

The practices became so prevalent that even [[Conservative Party (UK)|Conservative]] governments elected after the initial wave of nationalisations in the late 1940s kept them. However, during the 1970s, massive [[strike action|strikes]] by unions (see the [[Three-Day Week]] and [[Winter of Discontent]]) and other economic woes, such as the [[1973 oil crisis]], almost ground the British economy to a halt. Thatcher, an ardent admirer of Hayek, began [[eonomic history of the United Kingdom#1979–1990: the Thatcher era|privatizatizing industries]]. While her results were initially mixed, the [[Falklands War]] brought on a nationalistic fervor that kept Thatcher in office long enough to keep her reforms in place. Even when the [[New Labour|Labour Party later came back to power]], it did not attempt to challenge the key principles of [[Thatcherism]].

=== Soviet Union and Russia ===
Within a few years of the rise of the [[Russian Revolution]], the [[Soviet economy]] went into a major crisis. Lenin responded with the [[New Economic Policy]], a program that allowed limited capitalistic activity, which resulted in what he would call [[state capitalism]], and the economy began to improve. Lenin's commanding heights speech was his attempt to defend himself against accusations that he sold out the principles of the revolution by implementing the new policy.

Under [[Joseph Stalin]], the [[agriculture in the Soviet Union|Soviet agricultural]] and [[heavy industry|heavy manufacturing]] sectors were largely centralized. During the 1940s to the 1970s, the Soviet economy grew at a rate that outpaced that of Western European nations.

By the 1980s, however, the Soviet economy was in shambles. Because of a lack of incentives and, ironically, a more tolerant central government, workers did not put much effort into their duties. Nonetheless, the [[Soviet Union]] continued to build the [[military]] even though at times such spending took up half the country's revenue. [[Mikhail Gorbachev]] tried to reform the economy, but he took only limited steps (see [[perestroika]] and [[glasnost]]). When he lifted the [[Brezhnev Doctrine]] and allowed [[Polish People's Republic|Poland]]'s [[Solidarity (Polish trade union)|Solidarity]] to usurp that [[Polish United Workers' Party|country's communist regime]], the entire [[Warsaw Pact]] collapsed, soon followed by the Soviet Union itself.

However, even with the fall of the Soviet Union and the rise of the relatively free market-minded [[Boris Yeltsin]], former members of the [[Communist Party of the Soviet Union]] maintained much power in Russia, blocked free-market movements, and forced the resignation of Yeltsin's free-market allies such as [[Yegor Gaidar]]. During the [[1996 Russian presidential election|1996 presidential election]], Yeltsin was forced to accept support from [[Russian oligarchs]] to counter the growing power of the [[Communist Party of the Russian Federation]]. While Yeltsin remained in power, the [[pivatization in Russia|privatization of industries]] proceeded extremely unequally.

=== Germany ===
As had been predicted by Keynes, the [[hyperinflation]] caused by the [[Treaty of Versailles]] devastated the [[German economy]] and created political instability. In addition to widespread unemployment, the hyperinflation effectively wiped out the country's [[middle class]]. That environment made it easy for the [[Nazi Party]] to gain power. The authors also argue that the Nazis practiced central planning although [[Economy of Nazi Germany#Privatization and business ties|industries were privatized en masse]].

After the war and the [[Allied-occupied Germany|division of Germany]], [[East Germany]] came under the rule of the Soviets, and [[West Germany]] remained part of the Western powers. When economic conditions in occupied West Germany failed to improve, [[Ludwig Erhard]] completely destroyed [[price controls]] in 1948 without consulting the occupying powers. [[Wirtschaftswunder|Western Germany underwent a fast massive economic recovery]], but such free-market reforms were largely confined to that country for many years.

By the time of [[German reunification]] in 1989, West Germany was an economic power, and East Germany faced many problems because of the collapse of the [[Economy of East Germany#Central planning|central planning]] authority.

=== India ===
Unlike [[Mahatma Gandhi]], who supported a village-centric economy, after [[India]]'s [[Indian Independence Act 1947|independence in 1947]], its first [[prime minister of India|prime minister]], [[Jawaharlal Nehru]], promoted industrialization. However, he supported government-controlled [[economic development|development]] and the [[bureaucracy]] that developed stifled innovation (the authors of ''The Commanding Heights'' sarcastically claim that the [[British Raj]] was replaced by a [[permit Raj]]). Bribery and delays became common in the [[Indian economy]] while many prominent economists studied the country and attempted to finetune its central planning.

By the 1990s, the Indian government began to relax these stringent regulations mainly under the influence of [[Minister of Finance (India)|Finance Minister]] and later Prime Minister [[Manmohan Singh]]. The [[economic liberalisation in India|Indian economy bloomed]] under the effects of [[export]]s and [[outsourcing]], and political parties since then have continued to promote those changes. The free-marketer Singh was appointed prime minister when his party won the [[2004 Indian general election|elections in 2004]] although he was not the victorious [[United Progressive Alliance]]'s stated candidate, and the general expectation was that [[Sonia Gandhi]] would take the seat.

=== South America ===
Under the influence of [[dependency theory]], a [[Marxist international relations theory|Marxist approach to international economics]], many Latin American countries attempted to industrialize by limiting imports of manufactured goods and subsidizing their own industries. However, companies had little incentive to become efficient or innovative in the absence of competition and because of government subsidies. By the 1980s, the economic problems of the countries became obvious, and much of the West's [[investment]] was lost.

[[Chile]] unwittingly became an experiment in free markets when [[Augusto Pinochet]] called in followers of Friedman to evaluate the economy, the so-called [[Chicago boys]]. The authors argue that the [[Miracle of Chile|economic reforms proved successful]], but since Pinochet was a [[dictator]] who [[1973 Chilean coup d'état|came to power in a coup]] and [[human rights violations in Pinochet's Chile|had many political opponents murdered]], the whole idea of free-market reform became linked to [[fascism]]. The authors and Friedman claim that the reforms eventually promoted [[Chilean transition to democracy|democracy]], they acknowledge that the issue and their interpretation of events are extremely controversial.

[[Bolivia]] was hit with hyperinflation as well. During the 1980s, economist [[Jeffrey Sachs]] was sent as a consultant and new [[President of Bolivia|President]] [[Gonzalo Sánchez de Lozada]] reined in [[inflation]] in the 1990s by severely cutting government spending. While Bolivia remained a very poor country, the authors argue that it is better off now because its inflation was curtailed. They also argue that Bolivia's example vindicates the bad reputation that free-market economics acquired in Chile as Bolivia's reforms came after a democratic election.

=== Other countries ===
The authors argue that [[Africa]]'s economic development was severely hindered by central planning, socialist ideas, and political dictatorships that promoted warfare and other conflicts.

While [[Japan]] was seen for many years as an [[Japanese economic miracle|economic success story as late as the early 1990s]], the authors argue that [[Japanese Recession|its ongoing recession]] since then resulted from its governments refusal to stop subsidies to many of its industries and companies (the issue is ongoing).

[[Poland]]'s [[Balcerowicz Plan|free-market reforms]] pushed by Solidarity and [[Lech Wałęsa]] were initially mixed and criticized by its citizens, but by the late 1990s, the [[Polish economy]] was doing much better than other former [[communist state]]s in the [[Eastern Bloc]]. One feature of the Polish economy that makes it different from other capitalistic countries is that it is dominated by [[small business]] rather than [[corporations]] or [[conglomerate (company)|conglomerates]].

[[China]] is another major ongoing issue. While [[Deng Xiaoping]], after the death of [[Mao Zedong]], [[Chinese economic reform|gradually freed the economy]], he did not promote [[civil liberties]] or other [[political freedoms]], as was demonstrated by his willingness to [[Tiananmen Square protests of 1989|crush pro-democracy demonstrators]]. While the authors hope according to Friedman's ideas that free markets would eventually promote a free society, it has not yet happened although [[China's economy]] continues to grow.

== Documentary ==
In 2002, [[PBS]] aired a six-hour documentary based on the book. This documentary was later sold on DVD and is available to view for free at PBS's website.<ref>Each of the chapters, ranging from about 1 to 9 minutes, is available in the Quicktime 5 format (extension .mov) and so it is necessary to have a player that supports that format. One can download them manually and then use a playlist to watch an entire episode without needing to switch for each chapter, or alternatively write a small script to automate the downloads. Episode 1 has 19 chapters, Episode 2 has 21 chapters, and Episode 3 has 23 chapters. The general URL is <nowiki>https://www-tc.pbs.org/media/commandingheights/ch_pPP_CC_qt_300.mov</nowiki> where PP is the episode number (01, 02, or 03) and CC (01-23) is the chapter number. It may not be necessary to have a playlist at all if the player automatically moves on to the next file in the directory in lexicographic order.</ref> The documentary is narrated by [[David Ogden Stiers]].

The documentary series consists of three x two hour episodes:
Episode 1: The Battle of Ideas Produced and Directed by William Cran.
Episode 2: The Agony of Reform Produced and Directed by William Cran, Co-Producer [[Peter Sommer (British director)|Peter Sommer]], Co-Director [[Greg Barker]].
Episode 3: The New Rules of the Game Directed, Written and Produced by [[Greg Barker]].

Appearing some time after the book allowed the documentary film to address many of the items that Yergin and Stanislaw missed in their original book, including the [[1997 Asian financial crisis|collapse of Asian economies]], the [[anti-globalization movement]] and the [[September 11 attacks]]. All told, two of the documentary's six hours (the entire final third) address things that happened since the original book was published. They also include free market solutions to international poverty that were not included in the book, and they interview economist [[Hernando de Soto (economist)|Hernando de Soto]], whose book on the subject was not published until after the initial printing of ''The Commanding Heights''.

Like the book, the documentary attracted more support and criticism. One example is the anti-globalization movement, which argued they were portrayed unfairly. In the documentary, [[James Wolfensohn]], then President of the [[World Bank]], is interviewed and says that such protesters are attacking people "who are devoting their lives to addressing the very questions that these people claim to be addressing". The documentary includes a scene of Wolfensohn getting hit in the face with a [[pie]] by a protester.

Unlike the book, the PBS documentary is far more wary of the possible end of the current era of globalization. For example, they include a parallel between [[radio]] stocks of the 1920s and [[Dot-com company|dot com]] stocks of the 1990s: both were industries built on new [[technology]] that had little [[capital (economics)|capital]], but fell prey to a [[stock market bubble|market bubble]]. Likewise, the documentary draws an unsettling parallel between the terrorist attacks of September 11, 2001 and the terrorist [[assassination of Archduke Franz Ferdinand]] in 1914.

The documentary is also accused of further oversimplifying the so-called battle of ideas between [[John Maynard Keynes]] and [[Friedrich Hayek]]. For example, in the DVD version, Keynes is named together with [[Karl Marx]] and [[Vladimir Lenin]] as supporters of controlled economies. However, Keynes saw himself as a [[liberalism|liberal]] in both the [[Liberal Party (UK)|political party]] and the [[economic liberalism|economic]] senses of the term.<ref>Keynes sat on the Liberal benches and even Hayek wrote, "Keynes believed that he was fundamentally still a classical English liberal and wasn't quite aware of how far he had moved away from it. His basic ideas were still those of individual freedom" (in ''Reason Magazine'', "The Road to Serfdom, Foreseeing the Fall". Hayek interviewed by Thomas W. Hazlett).</ref>

The production was financed by donations from [[Electronic Data Systems]], [[FedEx]], [[BP]], [[The Pew Charitable Trusts]], [[John Templeton Foundation]], [[Smith Richardson Foundation]], and the [[Corporation for Public Broadcasting]].

== Notes ==
{{reflist}}

== External links ==
* [https://www.pbs.org/wgbh/commandingheights/hi/index.html Official Commanding Heights Site at PBS (High-Bandwidth)]
* [https://www.pbs.org/wgbh/commandingheights/lo/index.html Official Commanding Heights Site at PBS (Low-Bandwidth)]
* [https://www.pbs.org/wgbh/commandingheights/hi/story/index.html Link to view all three episodes at PBS website (High-Bandwidth)]
* [https://www.pbs.org/wgbh/commandingheights/lo/story/index.html Link to view all three episodes at PBS website (Low-Bandwidth)]
* [https://www.amazon.com/The-Commanding-Heights-Battle-Economy/dp/068483569X The book's Amazon page]

{{DEFAULTSORT:Commanding Heights: The Battle for the World Economy, The}}
[[Category:1998 non-fiction books]]
[[Category:Books about globalization]]
[[Category:Books about capitalism]]
[[Category:Documentary films about globalization]]
[[Category:Films based on non-fiction books]]
[[Category:Free Press (publisher) books]]
[[Category:Manmohan Singh]]
[[Category:Jawaharlal Nehru]]
[[Category:Books about the economy of India]]

The Commanding Heights - Revision history

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