A History of American Economic Thought

Mainstream and Crosscurrents

Samuel Barbour, James Cicarelli, J. E. King

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351703598
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This vital addition to the Routledge History of Economic Thought series surveys arguably the most important country in the development of economics as we know it today – the United States of America.

A History of American Economic Thought is a comprehensive study of American economics as it has evolved over time, with several singularly unique features including: a thorough examination of the economics of American aboriginals prior to 1492; a detailed discussion of American economics as it has developed during the last fifty years; and a generous dose of non-mainstream American economics under the rubrics "Other Voices" and "Crosscurrents." It is far from being a native American community, and numerous social reformers and those with alternative points of view are given as much weight as the established figures who dominate the mainstream of the profession. Generous doses of American economic history are presented where appropriate to give context to the story of American economics as it proceeds through the ages, from seventeenth-century pre-independence into the twentieth-first century packed full of influential figures including John Bates Clark, Thorstein Veblen, Irving Fisher, Paul Samuelson, and John Kenneth Galbraith, to name but a few.

This volume has something for everyone interested in the history of economic thought, the nexus of American economic thought and American economic history, the fusion of American economics and philosophy, and the history of science.

1 Setting the table

Introduction

This chapter deals with a potpourri of topics that seem tangential to the main thrust of this book, and yet are integral to the story presented in Chapters 2 through 8. The disparate issues covered range from the deceptively straight-forward but nonetheless decidedly complicated question “Who is an American economist?” to an involved and lengthy response to the question “Why is English the language of American economics?” In between, there is an examination of the demographics of American economists, the scope of their discipline, and a general overview of their political preferences and philosophical leanings. Readers knowledgeable about some or all of these topics can skip what they know and focus on what they don’t, or return to this chapter if motivated to do by the discussion in subsequent portions of the book.

Who is an American economist?

The answer to this query involves breaking it down to its related parts, namely “who is an American” and “what is American economics.” These two seemingly innocuous questions are anything but; consider the first question: who is an American. In order to ensure that no foreign influences would be injected into the American political system, framers of the US Constitution specified that candidates for President would have to meet three criteria: be a natural born citizen (not explicitly defined); be at least 35 years of age; and be an inhabitant of the United States for at least fourteen years. If we take July 4, 1776 as the date that the USA was established, then the eligibility of the first seven persons elected president is questionable on two counts: first, none were born in the United States strictly speaking, and second, it would be 1790 before any one of them would have lived in the country for fourteen years. The first president, a reluctant George Washington was elected in 1789, even though he was born in colonial Virginia, and the election date, April 30, 1789, was eight months shy of 1790. This “close enough” mentality also works when it comes to identifying American economists. As noted in Chapter 7 of this book, a stream of refugees fled Nazi Germany for the United States in the 1930s and 1940s, including many economists, some of whom having already distinguished themselves in the field while living in Germany. For the most part, these individuals were quickly absorbed into the American profession despite the fact that they could also be claimed by other nationalities (Coats 1998, 10). When it comes to identifying American economists, maybe a paraphrase of a response Supreme Court Justice Potter Stewart (1915–1985) gave to a question about pornography would best express our position: We may not be able to define an American economist, but rest assured we’ll know one when we see one.

As for the second question – what is American economics – the answer is also somewhat nebulous. Because of the unusual circumstances involved in the creation of America as discussed in detail in the last section of this chapter, a number of hypotheses have been advanced about the “uniqueness” of American economic thinking, most of which are derivatives of the concept of American exceptionalism (Coats 1998, 11–15). A debatable hypothesis, American exceptionalism is the idea that the United States, conceived in revolution and nurtured in libertarianism, is truly different than most other countries and is a viable, indeed a superior model for other nations, emerging or existing, to emulate (Lipset 1996, 17–23). When it comes to nation building, the ‘exceptionalism’ of the United States is an open question, but with regards to economics it is self-evident that America economics is part of the larger, well-established Western tradition in the discipline and has been for some time. There is, however, one distinctive feature of American economics that is not nearly as evident in other Western countries, namely the continued respect and receptivity of the general public for the points of view coming from so-called amateur economists (Barber 1998, 20). A fairly recent example of this acceptance is the work of the journalist Jude Wanniski (1936–2005) whose 1978 book The Way the World Works became a veritable bible for the school of supply-side economics (Lewis 2006).

The number of American economists and the scope of their discipline

Unlike pharmacy, law, medicine, and other professions, there is no licensing process for certifying someone is an economist, making a definitive census of the number of economists in the United States problematic. The publically available data on higher education and its constituent parts are inconsistent if not outright contradictory. In one US Bureau of Labor Statistics report titled “Economists” (BLS 2014), the Bureau indicates that “economists” with a typical entry-level education of a master’s degree numbered about 21,500 in 2014, of whom 74 percent work, in descending order, for the federal government, consulting services, scientific research, state and local governments, and finance and insurance. This could imply that 26 percent or approximately 5,600 work in other categories, possibly teaching, but this is not stated explicitly. In another report “Economics Teachers, Postsecondary” (BLS 2015) where the typical entry-level education is a PhD degree, the Bureau indicates that total employment is 13,500, or about 1 percent of all postsecondary teachers in the US (BLS 2015a), with 11,300 of those economists in four-year colleges, universities, and professional schools, and 2,270 in junior colleges.

Higher education in the United States is a huge industry with many colleges and universities employing numerous teachers serving legions of students, but precise metrics on those three dimensions are elusive. Estimates of the number of postsecondary institutions (private, public, for-profit) range from a low of more than 4,400 (Gross and Simmons 2014, 23) to a high of nearly 7,300 (U.S. Department of Education 2016); the numbers for students served run from just over 18.5 million (Alexander 2015) to about 20 million (NCES 2016); and the total teaching and research faculty count in all higher education fields goes from 1.3 million (BLS 2015a) to just about 2 million (CAW 2012). The Coalition on the Academic Workforce (CAW 2012) estimates 25 percent of all faculty members are tenured or tenure track, while the other 75 percent are contingent positions, that is, part-time, adjuncts, full-time non-tenure track, or graduate teaching assistants. Applying those percentages to the BLS estimate of 13,500 total employment of “economics teachers, post-secondary,” suggests that about 10,000 are contingent faculty, while the rest, around 3,500 are tenured or tenure-track. The tenure/tenure track number is significant because these are the economists that we expect will do much of the heavy lifting when it comes to the creation of new economic knowledge, the stuff that eventually becomes the province of the history of American economic thought.

Ironically, we probably know more about the demographics of those underrepresented in the teaching profession – Blacks and women – than those already there. Regardless of the incidence of multiple counting for the category ‘Black and female,’ the composition of the professorial core in economics is decidedly white and male. “African Americans make-up about 12% of the US population, but in colleges and universities, Blacks make-up an estimated 5.3% of the professoriate, a slight increase from 4% thirty years ago” (Smith 2013, 1). The extent of underrepresentation is particularly acute in economics due in part to the low production of Black economists, a problem that has persisted since the late 1980s when about 400 or 1–2 percent of all PhDs in economics were held by Blacks. In absolute terms, the number of PhDs earned by minorities, defined as Blacks, Hispanics, and Native Americans, is relatively small at about three dozen per year (Collins 2000, 146). There is probably no other field where the number of minority PhDs is so low relative to the number of undergraduates who take courses in the discipline (Simms and Swinton 1988, 67). The dearth of teaching faculty is dramatically evident at higher ranking institutions. In a 1994 study, the Journal of Blacks in Higher Education “found only 11 black economists teaching at the nation’s 25 highest ranked universities” (JBHE 2006). Twelve years later, a census of Black economists at the country’s 30 top-ranked universities, which collectively employed 935 economics faculty for an average staff size of 31, revealed little had changed. Nineteen of the top-30 institutions had no Black economists, while the remaining 11 schools had a total of 15 Black economists, with 3 being the most for any school (JBHE 2006). With respect to gender and race, Black males usually represent a greater proportion of Blacks in the academy than females, but economics may be an exception to this general tendency although definitive absolute numbers are hard to come by (Christian 2012, xiii).

Unlike the situation for Blacks and other minorities where supply is a contributing factor in underrepresentation, it does not appear to be the case for women. As recently as 2012 when women earned 46.2 percent of all doctorates, 32 percent of PhDs in economics went to females, down from a historic peak of 38.8 percent in 2000 (Cronin 2014), but appreciably more than the 4.2 percent in the 1950s, an era in which the environment for women in academe generally and economics in particular was especially hostile (Forget 2011, 19–20). Nevertheless, women economists, especially in academe, still face particularly stiff headwinds when it comes to career advancement in the field (Romero 2013), a journey that is even bleaker for Black women (Benjamin 1997, 9). Numerous statistical studies using a variety of analytical techniques to partition the causes of the limited success of women in the economics profession prompted this conclusion in 1995: “As other explanations fail, it becomes more likely that gender differences are the result of discrimination, either direct or subtle, against female colleagues” (Kahn 1995, 202). Anecdotal evidence suggests little has changed in the intervening 25 years (Kimball and Anonymous 2015).

Besides the sheer number of economists, oblique yet meaningful indicators of the scope and magnitude of the discipline in America are the country’s plethora of associations related to the subject, and the volume of research and publications in the field. There are at least 50 societies and associations in the United States that are dedicated to the advancement of economics in general or a specific topic area therein. At the national level, the most prominent societies are the American Economic Association with over 20,000 members, and the National Association of Business Economists with about 4,600 members. Regional associations representing specific geographic areas include the Eastern Economic Association, the Southern Economic Association, the Midwest Economic Association, and the Western Economic Association, while some large-population states such as New York support state-wide groups. Numerous topic- or philosophy-specific societies exist including but not limited to the Cliometric Society, the Association of Christian Economists, the Union for Radical Political Economics, and the Cato Institute. Irrespective of orientation, membership in virtually all of these organizations is open to anyone, nationality and educational credentials notwithstanding. Naturally, some economists may be members of multiple associations, and some may not belong to any.

The substantial growth in the number of American practitioners in the discipline is also reflected in the increase in the volume of economics literature over time. In 1961 the American Economic Association began publishing a series of volumes titled Index of Economic Journals listing all journal articles classified by subject and in alphabetical order by the name of the author(s). Volume I of the Index covered the period 1886 to 1924, ran 112 pages, listing approximately 5,600 articles or roughly 150 per year. The second volume of the Index covered 700 articles per year for the time period 1925 to 1939, indexing 90 journals, 49 of which were fully indexed including 21 (43 percent) published in the United States. By 1968, 81 journals were completely indexed, 30 of them (38 percent) being American, with over 10,000 articles and book chapters indexed in 1968 alone. The series was discontinued in the early 1990s, having been rendered obsolete by the use of computerized databases; nevertheless, the number of economics journals continues to expand to this day with over 45 identified with American institutions such as a university or professional association. The significance of economics publications is also evident in books published. In 2013 about 309,000 books were published in the US, with about 30,000 or approximately 10 percent being in the combined fields of sociology/economics; that represented the third largest category of books printed that year, the first being ‘fiction’ with around 50,000 volumes and the second ‘juvenile’ at 32,000 (Bowker 2014). Supply-side data, specifically the 1993 National Survey of Postsecondary Faculty, also indicates that American economists are a prolific lot. The study of over 25,000 faculty members from 817 colleges and universities showed that on average each of the 368 economists surveyed produced during his or her career 10.7 refereed journal articles, 5.2 non-refereed journal articles, and 0.7 books (Hartely et al. 2001).

American economists: their philosophical leanings and political preferences

There is little publicly-available information about the philosophical and political attitudes of economists which is too bad because there are lots of misconceptions about both aspects of those teaching the dismal science, especially among their academic peers who register as Democrats vs Republicans at far higher ratios than do economists (Langbert et al. 2016). Other academics generally perceive economists as philosophically conservative and politically Republicans, yet the available evidence, admittedly limited, suggests that neither characterization is accurate. Before reviewing the survey data, two caveats are in order: first, the sample sizes are small, and second, the samples are not necessarily random. Still, a national survey summarized in Table 1.1 of 153 academics (22 percent of whom were economists) in six disciplines at 84 American colleges and universities revealed that philosophically speaking, economists are overwhelming libertarians compared to their peer groups. This intimates that American economists are fiscally conservative but socially liberal, the latter trait apparent in the collective attitude toward same-sex marriage which 79 percent of the economist in the survey supported, the highest among the six academic groups surveyed, with Philosophy a distant second at 36 percent (Shields and Dunn 2016, 144).

Table 1.1 Self-identified libertarians by discipline

	Libertarians (%)	Number
Economics	77	30
Philosophy	29	14
Literature	26	23
Political Science	22	37
History	19	26
Sociology	0	12
Number Responding		142

Source: Shields and Dunn (2016, 144)

The one-sidedness in the philosophical leaning of economists is not apparent in their political preferences as registered in a 2007 survey of 1,097 academics from 26 disciplines. The 18 economists surveyed divided themselves evenly with respect to party identification: 6 Democrat, 6 Independent, and 6 Republican (Smith et al. 2008, 77). When asked if they identified with “left, liberal” only 5 economists (22.7 percent) replied in the affirmative compared to 85 percent in English (n=53), the most of any field surveyed (Smith et al. 2008, 76–77). This disconnect between the degree of philosophical liberalism and dispersion of political identification among economists is partially a reflection of the nature of their field. As one economist cogently put it:

We’re more focused on, ‘Did you ask interesting questions? Did you do the model well? Did you understand the method?’ … It’s a science thing. People’s view of the science may be affected by their underlying values, but there is a common language, a common framework, a common methodology.

Shields and Dunn 2016, 137

A 1950s study of 2,451 social scientists (23 percent economists) teaching at 165 American colleges and universities found that two-thirds considered themselves more liberal than those in the community at large (Lazarsfeld and Thielens 1958, 133); a majority also voted Democrat in the 1952 presidential election. Since then the entire professoriate has probably moved somewhat to the right (Gross and Simmons 2014, 32) which, given their propensity for being fiscal responsible and socially tolerant, would place the politics of the median economist in the category of ‘liberal Republican,’ in other words, a person who would be comfortable with the political viewpoint evident on the editorial page of The New York Times.

Why is English the language of American economics?

From the perspective of the twenty-first century it is obvious that English is the language of American economics, and that the British intellectual tradition played an important if not dominant role in shaping the development of economic thought in the United States (McCloskey 2011, 61). These truths were not self-evident in the sixteenth and seventeenth centuries when North America was first discovered and explored. Then, several European countries, notably Spain, France, the Netherlands, Sweden, and Great Britain, actively competed with each other to lay claim to America or some portion thereof, and thus, its intellectual futur...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of illustrations
• Acknowledgements
• Preface
• 1. Setting the table
• 2. Economic thought among American aboriginals prior to European contact
• 3. Economic thought in America’s protohistorical period
• 4. Economic thought in eighteenth-century America prior to independence
• 5. Economic thought in the new nation, 1776–1885
• 6. Economic thought in an era of abundance and anxiety, 1886–1928
• 7. Economic thought from the Great Depression through the golden age of economic growth, 1929–1973
• 8. Economic thought from stagflation and sustained growth to the Great Recession and beyond, 1974–2017
• Name index
• Subject index