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Subject Area: Political Theory

‘Political’ Economists - Leonard P. Liggio, Literature of Liberty, Spring 1982, vol. 5, No. 1 [1982]

Edition used:

Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.

Part of: Literature of Liberty: A Review of Contemporary Liberal Thought, 20 vols. 19781-982

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


‘Political’ Economists

William J. Barber

  • Department of Economics, Wesleyan University

“The United States: Economists in a Pluralistic Polity.” History of Political Economy 13 (Fall 1981): 513–547.

In the United States “the participation of professional economists in government has swollen with the extension of the state's jurisdiction in economic life.” Barber's essay (with a useful bibliography) conveys the flavor of the interactions between professional economists and federal officialdom, especially as those interactions are peculiar to the American system. In part, this distinctiveness derives from the American central government's diffusion of political power which creates conflict among interest groups and rules out long-term coherence in monetary, fiscal, and economic policy in general. Tracing the history of the growing involvement of American economists in shaping government policy, Barber assesses the ethical and technical problems of professional intellectuals serving the state.

Although systematic linkages of economists and government began in 1946 with the creation of the President's Council of Economic Advisors (CEA), this merely culminated a trend of more than three decades. A landmark formulation of the alleged governmental responsibilities of “ivory tower” academic economists was contained in Irving Fisher's presidential address to the American Economic Association in 1918. The First World War collaboration of economists and state planners was extended into peacetime in the hope that state economic experts would spur on the efficiency of the private sector. The depression of the 1930s intensified the call for governmental planning of the economy, but without significant staffing from the aloof academic economists. With the 1937–38 recession, however, the younger breed of “Keynesian” economists gained a “beachhead” on newly created federal posts. The popular climate might suspect experts, but it politically de manded government macroeconomic intervention to prevent a recurrence of the 1930s' depression.

The Employment Act of 1946 with its Council of Economic Advisers accorded, for the first time in America, institutional standing to the economists at the pinnacle of national decisionmaking. The CEA was intended to be a clearinghouse of social and economic “science” in order to create “maximum employment, production, and purchasing power.” From a consultant-coordinator role, the CEA was transformed (under Walter Heller in the Kennedy Administration) into “policy advocacy.” “The economics profession in the United States had probably never enjoyed higher public esteem that it did in the afterglow of the 1964 tax cut.” Government “fine tuning” successes were short-lived, and the prestige of state macroeconomic strategists has declined since the mid-1960s because the Keynesian tools of aggregate-demand management could not vanquish inflation, unemployment, and sluggish growth. During the 1970s the prestige of the CEA suffered further attrition in its macroeconomic policy role, paradoxically at the same time that professional economists were raised to positions of honor on the Federal Reserve Board of Governors.

Other topics discussed by Barber are: statistical analysis of the “growth” labor market for economists in government, the ideological distinctions among macro-economists (between the “salt water” neo-Keynesians from Harvard, M.I.T., and Yale, and the “fresh water” monetarists from the University of Chicago), and the prestige-rivalries between economic bureaucrats and “outside” academic consultants to government. Finally, the author briefly examines the political behavior of government economists in suppressing and distorting data, as well as their renewed efforts to involve central government planning even more systematically in the economy.