How Economics Became a Right-Wing Field

Richard Ely

Conservatives never include their beloved Economics departments in their denunciations of left-wing academia because what they actually want is the whole of the university to reflect Economics and providing intellectual justifications for greed and the personal predilections of the wealthy. Economics has not always been that way and it’s always had a minority who took a more honest view of the field. Marshall Steinbaum and Bernard Weisberger on the origins of the right-wing take over of the field in the Gilded Age:

Meanwhile, Ely’s economics colleagues were moving in the other direction, and not simply under duress, as Adams had been. University presidents seeking stature for their institutions appealed to rich donors among the period’s Robber Barons, and that appeal was unlikely to be successful when rabble-rousers in the economics department were questioning the foundations of American capitalism, in particular the monopolization and labor exploitation that made the Robber Barons rich in the first place. At the same time, some of the more moderate members of the economics old school were making overtures to moderates in the new, recognizing the threat that manifestly improved scholarship posed to their authority in the field. Also in 1886, Charles Dunbar, the chair of the Harvard department, brought out the first issue of the Quarterly Journal of Economics, an alternative peer-reviewed channel to the AEA’s Proceedings (now the American Economic Review, to date the leading journal in the field), which was under Ely’s iron grip. His opening essay welcomed the empirics of the AEA’s cohort but denounced any tendency to political or social reform—a direct challenge to Ely.

Between 1886 and 1892, Ely’s control over the AEA weakened. Adams and Clark plotted to oust him from the Secretaryship in 1887, though they were dissuaded, and in 1888 the organization’s platform was modified to be more conciliatory over Ely’s objection. In 1890, a publications committee was put in place, expressly removing him from sole authority over the Proceedings. The final straw came in 1892, when Ely made a bid to re-assert authority by holding the AEA’s summer meeting at Chautauqua itself. That appeared to signal a public partnership between the professional organization and a popular reform movement. A compromise was brokered wherein at that meeting, Ely surrendered the Secretaryship and left the organization. The new regime was led by Dunbar himself.

What had happened was that economists realized there was much to be gained in terms of professional stature and influence from making themselves appealing to the establishment, so they banished those elements that tainted them by association. In 1895, one of Ely’s students, Albion Small, the founding chair of the new, Rockefeller-endowed University of Chicago’s Sociology Department, did not come to the aid of another Ely student, Edward Bemis, after the latter’s public criticism of the Chicago traction [streetcar] monopoly brought down the wrath of the university’s president William Rainey Harper and its conservative chair of economics, J. Laurence Laughlin. Despite episodes like those of Adams and Bemis, economics was by no means as conservative then as it eventually became starting in the 1970s, but neither would it countenance a direct challenge to the economic status quo nor affiliate itself with radical elements in organized labor or elsewhere. Even Ely himself eventually came around after his own notorious trial before the Wisconsin Board of Regents in 1894. He returned to the AEA as its President in 1900, and though he was long affiliated with the “Wisconsin Idea” and its progressive exponent, Governor Robert LaFollette, he was careful not to stray far from the new, milder orthodoxy.

What was lost in the eclipse of radicalism at the AEA? The economic tracts of that era began to enshrine the perfectly competitive market at the center of the intellectual firmament in economics—work then being formalized mathematically overseas by Leon Walras and Alfred Marshall, to be imported to the US by the likes of Clark and Irving Fisher and embellished by their successors in the mid-to-late 20th century. There has always been disagreement within the academic economics establishment, but it has largely adhered to the establishmentarian bent set down in 1892—and won itself great intellectual prestige in so doing. What political involvement there is in the field is almost exclusively on the Right, as attested by recent cases of donor influence on economics departments at Florida State, Kansas, and numerous others, aimed at routing out any challenge to free market orthodoxy. Much more notable than those cases of overt politicization is the broader alliance of economics with the country’s business establishment, in the form of lavishly funded business schools and research programs to the benefit of the field, far and above what’s available to any other discipline.