Huntsman Alumni Magazine Spring 2013

Spring 2013

Legacy: The Seminal Book on American Entrepreneurship, The Vital Few

Jonathan Hughes is described respectfully as “the dean of American economic historians” by
Huntsman School of Business Professor Dwight Israelsen.

Hughes, a 1950 USU graduate in economics, became a Rhodes Scholar and got his Doctorate of Philosophy degree in economics in 1955 at Oxford University. His book “The Vital Few” was published in 1966 by Houghton Mifflin, and then in paperback and in an expanded second edition in 1986 by Oxford University Press. The full title is “The Vital Few: The Entrepreneur & American Economic Progress.”

The book touches on a number of issues central to the raging political debates that have bedeviled the American system in recent years, and the book also relates to the intense newfound interest in the history of capitalism, especially the history of the capitalists, “the bosses, bankers and brokers who run the economy.”1 Hughes’s book is wonderfully written, and a new read offers many insights for us today.

Hughes wrote his book to help readers “understand the American economy’s development and prime motive force.” He set out to “come to grips with the dog-eared problem of ‘the role of the individual in history,’” since he views the American economy as resulting from “the past actions, successes, and failures, of individuals engaged in eco- nomic enterprise of all sorts.”

Five Stages and Ten Entrepreneurs

He posits five stages that can occur simultaneously in different industries, with two individuals who typify each stage:

  • Idealism, represented by William Penn and Brigham Young
  • Invention, with Eli Whitney and Thomas Edison
  • Innovation, with Andrew Carnegie and Henry Ford
  • Organization, with Edward Harriman and Pierpont Morgan
  • Stagnation and decline, with Marriner Eccles and Mary Switzer

Hughes agrees that “the question of economic growth is the question of the mobilization of resources.” He continues, “In capitalist America,this mobilization has mainly been done through the market mechanism by individuals acting upon their own motives—and that is what this book is about.” He writes that entrepreneurship has gotten short shrift in academic economics, particularly in neoclassical microeconomics, which he says is “really mathematics. Business firms in that system are merely formulas, ‘production functions.’ There are no people, no institutions; it is a timeless paradigm of resources shifting back and forth according to changes in relative prices and costs. This has meant that entrepreneurship, the most forceful, dramatic, and obvious phenomenon in all of economic life has perforce been ignored by theoretical economists in their story of how economic events happen.”

Interestingly, his views accord with a newly arisen interest in “the history of capitalism,” as documented in the New York Times, April 6, 2013—an effort to understand “the relationship between democracy and the capitalist economy.” The new field “marries hardheaded economic analysis with the insights of social and cultural history.”

Brigham Young’s Economic Missions

In his description of “the taking of the Continent,” Hughes writes that Brigham Young and the Mormons were “a kind of distillation of several main strains of American utopianism. These included the New England village, the Puritan millennialism, the social experimentation of Oneida, Brook Farm, New Harmony, and a hundred other frontier settlements.”

Just one small example among many of Brigham Young’s creative economic innovations was that, “Economic missions were sent to grow cotton and flax; to erect and operate textile mills; to dig and smelt iron. He [Brigham Young] especially recruited workers from Britain’s industrial districts—textile workers from Lancashire, miners and iron workers from Wales and the Midlands. In the 1850’s dozens of his pet manufacturing projects were set going throughout the length and breadth of Zion.” (p. 105)

Andrew Carnegie and J. Pierpont

Hughes reminds us that Andrew Carnegie didn’t invent anything in the technology of steel, yet “he was a mighty pioneer in the steel industry and his pioneering paid off in astronomical figures.” J. Pierpont Morgan, the investment banking genius, on the other hand, “acted partly as a lover of order (mathematics) using the rules of an ancient art (finance) to change a world of vigorous activity created by men of elemental and sometimes undisciplined force.”

Jon Hughes' Accomplishments

The author himself grew up in Twin Falls, Idaho, the same home town as Leonard Arrington, the USU economic historian who became Hughes’s mentor. After Hughes graduated from Utah State and went to Oxford as a Rhodes Scholar, he worked for the Federal Reserve Bank of New York, for Purdue University, Columbia University, the University of California at Berkeley, and then he spent 30 years as a professor of economic history at Northwestern University in Evanston, Illinois. He published a dozen books and more than one hundred professional articles.

On top of all that, he was a Guggenheim Fellow, a Ford Foundation Faculty Fellow, Fellow of All Souls College at Oxford, and president of the Economic History Association. In 1990 he was awarded an honorary doctorate from Utah State. In that same year, his former students and colleagues published a celebration of his work called, “The Vital One: Essays in Honor of Jonathan R.T. Hughes.”

He died in 1992, in Evanston, Illinois, and Leonard Arrington presided at his funeral in Twin Falls, Idaho.