It is emblematic of a scholarly prejudice that Chloe Taft’s impressive book about Bethlehem, PA does not mention the name of my hometown in its title. I can imagine why it’s not there. Sounds too parochial, too place-specific, too wrapped up on a single city’s problem. Professors compiling their reading lists in American Studies (Taft’s graduate field and my shadow-major as an undergraduate) would be reluctant to include it for those reasons.

But the virtue of focusing on the experience of a single place is that she can get behind the statistical averages that necessarily dominate a more general study of several cities. Her book is about how Bethlehem’s workers and civic institutions fared in the city’s transition from a heavy-industry powerhouse to a service-industry knock-about player. The representative of the latter is the Sands casino, a full-scale gambling resort built in the center of the derelict steel works. A more dramatic emblem of the transformation of the American economy from the production of tangible stuff to ephemeral services could hardly be found, and Taft deserves credit for seizing the opportunity to examine the sociology of the economic transformation. She did have some family connections with the city, but she could have studied other places, and she did not fall for the convenient charms of New Haven, Conn., where she got her doctorate from Yale.

My wife and I grew up in the Bethlehem area and went to school with the sons and daughters of steelworkers. We probably know many of the people Taft interviewed for her ethnographic study. I worked briefly for “the Steel,” as everyone called it, in the corporate public affairs office before going to graduate school in 1969, and my father worked as an engineer for the company during World War II and later dealt with many of its mid-level executives in his contracting business. I can attest that the voices Taft records sound authentic, even though she reveals the names of only a few (mainly public officials) of the 76 people she interviewed.

Steel’s social contract / The weak point of her book is economics. In my introductory macroeconomics course, the economy is modeled as a giant machine that produces tangible stuff. I duly point out, however, that more than three-quarters of the American economy, and the economies of almost all other affluent nations, consists of nontangible services: airline travel, internet service, doctor’s appointments, and entertainment such as visits to casinos. Technical progress has made producing commodities easier, allowing richer countries to produce and consume more services. My excuse for using production lines as examples—I sometimes use steelmaking—is that it is easier to envision the processes.

Taft makes much of the difference between the structural beams that the Steel once produced and the gambling entertainment provided by the Sands. For economists, though, the difference between services and commodities is immaterial. Gross domestic product is neither better nor worse for consisting more of services than commodities. Hers is not unlike the distinction that the Physiocrats—the original economists of France—made between agriculture and manufacturing, the former being both morally and materially more important than the latter. Balderdash, say modern economists. Goods and services have the value that consumers put on them, period. A bag of groceries and a turn at the baccarat table get their value from the preferences of the purchasers. Other methods of valuation don’t respect the autonomy of ordinary people.

Fortunately, Taft has other insights about the shift from making stuff to providing services. Her interviews and archival research highlighted the strong sense of community that had developed around Bethlehem Steel. Workers could invest in local social capital because of the apparent permanence of the Steel. They knew that their neighbors and their children and other relatives were likely to be around to benefit from their effort at creating a Little League, a parish school, and public art project because the Steel would always be there to provide good jobs. Steel executives felt the same way. They led United Way fund drives and supported much of the public decoration that illuminated (literally) Bethlehem’s self-appointed role as America’s Christmas City. Taft refers to this reciprocal commitment as a “social contract.”

The perceived permanence of the Steel also affected local institutions. Taft’s strongest stories concern the development of ethnic churches that provided much of the social capital for workers and their families. The churches did not just supervise life events. Priests and ministers also mediated between the Steel’s executives and workers in their parish, often acting as labor recruiters in their home counties and quelling the more extreme labor disputes. (The Steel was nonunion until World War II, when the Roosevelt administration leveraged the largesse of government contracts to induce the industry to accept unionization.) The bonds that workers formed with their churches were stronger because of the permanence of the major employer. Hungarian or Polish workers could commit to local social institutions allied with their church because they thought that their jobs would last for generations.

Transformation / But by about 1970, there were reasons to believe that Steel’s prosperity and permanence would not last. The precipitating event was the 1959 industry-wide strike. It lasted almost four months, and the city was traumatized by it. Businesses that depended on the Steel and their workers’ expenditures suffered along with the strikers. The strike’s settlement, more or less dictated by federal mediators, was highly favorable to the labor unions. Management had wanted to change work rules to allow firms to reduce the number of workers for each task, which would have made it easier to take advantage of the technical advances that their international competitors had adopted. The unions would have none of it, and what many called “featherbedding” continued well into the rest of the century. The strike also opened the door to steel imports, and buyers of steel discovered that imported beams and sheet metal were as good as the domestic product and much cheaper.

Goods and services have the value that consumers put on them. Other methods of valuation don’t respect the autonomy of ordinary people.

Wages at the Steel continued to outpace those of other local industries, and Taft mentions some of the resentment by non-steel workers of the supposedly cushy jobs inside the plant. I had toured the mills, though, and concluded that the hot, dangerous, and dirty work many did certainly warranted higher pay. In any case, steel management was either unwilling or unable to renegotiate the terms of the 1959 labor contract after it became evident that their industry’s prominence was at risk.

Top management was in no position to lecture workers about excessive pay, as executive compensation at Bethlehem was among the highest in a high-paying industry. But apparently the paycheck wasn’t big enough for them. In my six-month stay in the Steel’s public affairs department, I discovered that the top executives were using the stockholders’ money to buy themselves honorary degrees from their alma maters. My boss would write internal memos justifying the business purpose—often hard to see—of the secret deals that the executives made with their universities’ fundraising offices. The donations were buried in the public affairs department’s budget, and shareholders would be none the wiser. My distaste for both sides of these transactions—the universities hid them under the humble-sounding “anonymous” donations—has ever since made me look a bit askance at honorary degrees.

Both of these ongoing dysfunctions—featherbedding by union workers and self-dealing by top executives—were symptoms of a prosperous industry whose stakeholders knew it was in decline. The social contract was eroded by a sense that steel people should take what they can while the ship was still afloat. That attitude had its upside. My high school friends whose parents worked for the Steel were told to get a good education instead of depending on a career at Bethlehem Steel. The adults thought that the good wages were not likely to last another generation. They were right.

Bethlehem’s civic elite also foresaw the decline of steel. Starting in 1959—the big strike year—they systematically established industrial parks to attract a more diverse industrial base. When the Steel finally went down, Bethlehem’s civic leaders worked to establish a diversified research and entertainment district in the shadow of the dramatic symbols of the industrial past, the massive row of blast-furnaces. Bethlehem landed the Sands in a competition with its neighbor, Allentown. The Pennsylvania legislature proposed to allow one casino in the Lehigh Valley, but it let cities make a case for its specific location. Allentown, as I understand it, argued solely for its own needs. It had lost its Mack Truck plant to South Carolina, and it sought to replace the lost tax revenues (and redeem itself from the Billy Joel song “Allentown”) with casino revenues. Bethlehem was founded by communitarian-minded Moravians, and perhaps their traditions shaped its response: Give us the casino, and we will share the extra tax revenues with Allentown. Bethlehem got the casino.

The casino, though, is not the Steel. It employs less than a tenth of the labor force that steel had in its 1950s heyday. Bethlehem residents are still a little embarrassed by it despite the Sands’ clever ploy of adopting a steel-mill theme and preserving several steel-related structures. Even if gaming (the nice term for gambling) were a larger presence in Bethlehem, it is unlikely that it would foster the kind of social capital that the Steel once did. Taft emphasizes that the Sands’ major sources of revenue are its Macau and Las Vegas operations. Bethlehem is, in this context, a minor locus of profit and does not command the company’s full attention. Steel executives lived in Bethlehem and were responsive to local opinion. Sands is a conscientious corporate citizen, but it is not a matrix for local social capital.

Taft points out that the Sands is part of the worldwide flow of financial capital, just as Bethlehem Steel was. Both had their most profitable operations in other cities. She is aware that capital mobility is hardly new, and it cannot account for the negligible influence of the Sands on Bethlehem’s social capital. The difference, I would argue, is due to the special circumstances that made the Steel so prosperous. World War II left America’s steel industry stronger than it was before the war, while much of the rest of the world’s mills had been destroyed by the same event (in some cases, surely, with armaments manufactured in Bethlehem). A recovering world needed steel, and Bethlehem and other American steelmakers enjoyed a seller’s market for several decades.

When the rest of the world caught up in steelmaking, America no longer had a comparative advantage in this messy industry. And even if the Steel had won all the protection from foreign competition that it sought (pursuant to which my Volkswagen was banned from the corporate parking garage), it would have had to deal with domestic demands for environmental improvements, which also raised costs and induced buyers to find substitutes. The computer revolution would have eventually introduced the labor-saving technologies that have greatly reduced the demand for labor in all manufacturing.

Taft does not address how the post-war era of steelmaking prosperity could have been extended. She often blames “neoliberal” policies for the Steel’s decline without being specific about how alternatives to such policies would work. She complains that federal funding for urban programs has declined in the last 30 years, but Bethlehem’s most prominent federal urban renewal project was a misconceived plan that decimated the city’s main shopping street by attempting to turn it into a pedestrian mall. And she neglects the home-grown bright spots. The flashy alternative employer—the Sands casino—is a colorful hook for her study, but it overlooks jobs with new firms in the area’s industrial parks and the growth of such successful Bethlehem-based employers as Just Born candies, the maker of marshmallow Peeps.

Bethlehem is like a lot of other medium-size cities that enjoyed a temporary prosperity and then had to fall back on a variety of activities. The city’s Moravian heritage, dating from the 1740s, perhaps made it more adept in adjusting to the Steel’s demise, since the city had a history that predated the steel industry and knew that life was possible after it was gone. The city’s proximity to New York and Philadelphia also helped it grow enough business to avoid the population losses that have crippled other steelmaking towns. The city does not look in bad shape—I have visited regularly over the years—and the air is a lot cleaner.

Taft does give voice to some of those she interviewed who were upbeat about jobs with the Sands, but she treats them in a slightly patronizing way. Her enthusiasm is greatest in interviews with old-timers who were nostalgic about the Steel. We Bethlehem natives don’t begrudge the permanent residents their nostalgia, but most of those I knew did not pretend that there was a path that could have preserved that brief era when the American steel industry ruled the world. We need to get over the notion that it can or should be recreated.