Economists of the World, Unite!

tags: economics

BERNARD A. WEISBERGER is the author ofThe LaFollettes of Wisconsin: Love and Politics in Progressive America and many other books and articles. He was formerly a professor of history at the University of Chicago and the University of Rochester. MARSHALL I. STEINBAUM is a research economist at the Washington Center for Equitable Growth, where he researches inequality and the labor market.

When some 13,000 members of the American Economic Association (AEA) gathered for their annual convention in San Francisco during the first week of January, few of them may have been aware that their organization turned 131 this year. Fewer still would probably have ever read the organization’s 1885 “platform.” The original draft of that founding document stated the group’s objectives as the encouragement of economic research and of “perfect freedom in all economic discussion.” Then it went on:

We regard the state as an educational and ethical agency whose positive aid is an indispensable condition of human progress. While we recognize the necessity of individual initiative in industrial life, we hold that the doctrine of laissez-faire is unsafe in politics and unsound in morals; and that it suggests an inadequate explanation of the relations between the state and the citizens.

We do not accept the final statements which characterized the political economy of a past generation. . . . We hold that the conflict of labor and capital has brought to the front a vast number of social problems whose solution is impossible without the united efforts of Church, state, and science.

This undisguised manifesto of rebellion against the economic orthodoxy of the Gilded Age raised eyebrows among the established preachers of “political economy.” The state as an “ethical agency” whose aid was “indispensable”? The “conflict of labor and capital”? Even after the denunciation of laissez-faire as “unsafe in politics and unsound in morals” was removed from the final document, lest it appear that the new association had any motives beyond scientific advancement, the AEA was still understood as a challenge to the status quo.

Indeed, the AEA was founded both to conduct scientific research and to agitate for reform, both inside academia and in the public sphere. At its start, the two missions were inextricably linked. The old economics claimed to have discovered immutable laws governing the distribution of wealth, derived from a theoretical construction of an abstract, idealized economy. The founders of the AEA, on the other hand, looked first to study economic outcomes as they found them. Treating income, wealth, work, wages, depressions, trade, and so on as contingent realities as opposed to abstract truths naturally led to the conclusion that they could be altered by policy. That implication clashed with the political bulwark against so-called “class legislation,” namely any attempt to alter the social hierarchy through collective action or public policy. At all levels, therefore, this approach defied the intellectual foundations of classical economics. ...

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