Unfinished Business: Part III
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A Brief, Incomplete, & Honest Attempt to Understand American Economic Motivations & Influences from Reconstruction to 9/11
In Part II of Unfinished Business, we explored the United States' emergence as an imperial power through the Spanish-American War, the expansion of American influence under Theodore Roosevelt, and the Progressive Era's efforts to address the social and economic consequences of rapid industrialization.
Part III now turns to the next stage of America's unfinished business, where the question of America's role on the world stage and the consequences of global conflict would come to define the nation's experience in World War I.
The War to End All Wars*
Although the First World War had raged in Europe since 1914, the United States initially remained officially neutral. Many Americans favored isolationism, and millions of recent immigrants from Germany, Austria-Hungary, Ireland, and other nations involved in the conflict had little desire to see the United States enter a war that might require them to fight against friends, relatives, or their ancestral homelands. Despite this military neutrality, however, the American economy became increasingly tied to the Allied cause through trade, manufacturing, and extensive financial loans, particularly to Great Britain and France. President Woodrow Wilson sought to protect American interests while maintaining neutrality, but he also increasingly framed the conflict as a struggle to make the world "safe for democracy."
In practice, this vision extended beyond political ideals. A stable international order built upon democratic governments was also viewed as one more likely to sustain free trade, protect American investments, preserve access to global markets, and secure the economic conditions upon which the nation's growing prosperity depended. As unrestricted German submarine warfare intensified, the Zimmermann Telegram was revealed, and America's economic and cultural ties with Great Britain deepened, neutrality became increasingly difficult to sustain. The United States entered the war in 1917, and Allied victory firmly established the nation as a leading international economic and political power.
In Over Here: The First World War and American Society, David M. Kennedy argues that America's growing financial commitments, commercial relationships, and strategic interests made neutrality increasingly untenable, while William Appleman Williams, in The Tragedy of American Diplomacy, contends that the protection and expansion of American trade and investment abroad became a defining objective of U.S. foreign policy.
Furthermore, Kennedy emphasizes how the war transformed American society through industrial expansion, increased federal power, and closer cooperation between government and business. Other scholars focus specifically on financial ties to the Allied Powers, particularly the massive loans and trade connections organized through firms like J.P. Morgan & Co., arguing that an Allied defeat could have threatened American economic stability.
Research on Liberty Bonds and wartime mobilization also shows how the federal government expanded its role in managing the economy and financing war production. At the international level, historians argue that the conflict shifted global financial leadership away from Europe and toward the United States, leaving America as the world’s leading creditor nation after the war. While the idea that America became involved in World War I strictly for economic reasons is a limited one, the reality is that economic interests undeniably formed at least part of the pull toward intervention.
The Allied victory in 1918 confirmed the United States as the world's leading economic power, yet it did not produce a lasting commitment to international engagement. Disillusioned by the immense human and financial costs of the war, Americans largely returned to a posture of political and military isolationism during the interwar years, a stance that would endure until the attack on Pearl Harbor drew the nation into another global conflict. Europe, meanwhile, emerged from the war socially, economically, demographically, and spiritually devastated.
The punitive provisions of the Treaty of Versailles, coupled with political instability, crippling reparations, hyperinflation, and economic collapse, left many Germans feeling humiliated, abandoned, and desperate for national renewal. Amid this atmosphere of uncertainty, resentment, and declining confidence in liberal democracy, Adolf Hitler claimed that he alone possessed the answers to Germany's economic hardship, political disorder, and wounded national identity. For this reason, many historians have suggested that the period from 1914 to 1945 can be understood as a single prolonged European conflict punctuated by a twenty-year armistice, rather than two entirely separate wars.
From this perspective, the unresolved political, economic, and territorial grievances left by the First World War became the very conditions that gave rise to the Second. The consequences of those promises and unresolved tensions would soon reshape Europe and once again compel the United States to confront the unfinished business of freedom, economics, and global leadership.
The Russian Revolution
Shortly after the United States joined the Allies in 1917, Russia withdrew from the war following the Russian Revolution. At first glance, emphasizing Russian history in a series focused on American freedom and economics may seem out of place. Yet it is essential. The emergence of Soviet communism would become the principal ideological and economic rival to the American system throughout much of the twentieth century, making an understanding of its origins indispensable to understanding the development of the United States itself.
Alongside America's growing role in World War I came the Russian Revolution, an event that set the stage for the future economic and ideological struggle between the United States and the Soviet Union. As Carroll Quigley argues in Tragedy and Hope, many of the assumptions underlying Karl Marx's economic theories were already being challenged by technological and economic developments occurring throughout the industrialized West. Quigley contends that production increasingly depended upon inanimate sources of power, machinery, and technology rather than solely upon human labor. As a result, mass production required fewer workers while simultaneously creating a need for mass consumption, spreading goods and technologies across broader segments of society and raising standards of living, particularly within the Western world. Yet despite the technological and economic developments that challenged many of Marx's assumptions in the industrialized West, communism and the revolutionary movements it inspired continued to spread across much of Europe, Asia, Latin America, and Africa for decades, profoundly influencing the course of modern history and becoming one of the defining forces of the twentieth century.
The ideas of Karl Marx, most clearly articulated in The Communist Manifesto, would become the ideological foundation of the Soviet state and the principal challenge to the American capitalist model. Marx argued that history was fundamentally an economic story of class struggle, in which each age was defined by conflict between those who owned the means of production and those whose labor was exploited. Because he believed capitalism would inevitably concentrate wealth and deepen inequality, Marx concluded that its contradictions could not be reformed but only overcome through proletarian revolution. He called for the abolition of private ownership of the means of production, the elimination of inherited wealth, the centralization of credit and communication under the state, and ultimately the creation of a classless society through collective ownership.
These principles stood in direct contrast to the American tradition of private property, free enterprise, competitive markets, limited government, and the belief that individual liberty and economic opportunity were best preserved through private initiative rather than state control. The resulting ideological rivalry between communism and capitalism would shape global politics, economics, and competing conceptions of freedom throughout much of the twentieth century.
Antony C. Sutton's controversial work Wall Street and the Bolshevik Revolution adds another dimension to this story by arguing that elements of Western finance and industry indirectly assisted the Bolshevik regime through financial relationships, commercial contacts, and technological transfers. While many historians dispute Sutton's broader conclusions and caution against overstating the influence of American financiers on the success of the Bolshevik movement, his work nevertheless highlights the complex and often paradoxical relationship between global capitalism and revolutionary socialism. Rather than existing as entirely separate systems, capitalist and communist economies frequently interacted in ways that blurred ideological boundaries even as their governments remained geopolitical rivals.
At the same time, as Carroll Quigley argues in Tragedy and Hope, the industrialized West was developing in ways that challenged many of the assumptions underlying Marx's economic theory. Technological innovation, mechanization, and mass production increasingly relied upon machinery and inanimate sources of power rather than human labor alone. These developments also produced a growing managerial and professional class responsible for organizing increasingly complex economic systems, making Marx's predicted polarization between the proletariat and the bourgeoisie less pronounced. Instead of collapsing into two irreconcilable classes, much of the industrialized West witnessed the expansion of a substantial middle class enjoying rising standards of living, greater economic opportunity, and broad participation in consumer society. This divergence became one of the defining economic and ideological distinctions between capitalist democracies and communist states throughout the twentieth century.
Meanwhile, the continued advancement of industrial technology and modern production in the United States fundamentally altered the economic landscape envisioned by Marx. As industry expanded, mechanization, mass production, and technological innovation increasingly reduced reliance on human labor alone while creating new demands for skilled managers, engineers, administrators, and professionals capable of organizing increasingly complex economic systems.
Rather than collapsing into two irreconcilable classes of capitalists and laborers, the American economy witnessed the growth of a substantial middle class that enjoyed rising standards of living, greater economic opportunity, and broader participation in an expanding consumer society. This evolution became one of the defining economic and ideological distinctions between the United States and the Soviet Union throughout the twentieth century, as America generally relied upon private enterprise, competitive markets, and mass consumption while the Soviet Union pursued centralized economic planning and state ownership.
While the Soviet Union proved to be a necessary American ally during World War II, the ideological divisions unleashed by the Russian Revolution resurfaced after Nazi Germany’s defeat and hardened into the Cold War. The revolution created a communist rival that profoundly shaped American foreign policy, military strategy, economic development, and domestic politics throughout much of the twentieth century. The Cold War was therefore not simply a contest between capitalism and communism, but between two competing visions of modernization and world order. In installments to come, we will revisit these themes and explore how the Russian Revolution transformed not only Russia but also America’s role in the world. But first, Unfinished Business, Part IV will turn to the 1920s and the Great Depression.
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