Nick Romeo on the Profound—and Scary—Influence of Economic Ideas

In 1990, the American economist Paul Samuelson wrote, “I don’t care who writes a nation’s laws—or crafts its advanced treaties—if I can write its economics textbooks.” Samuelson’s Economics, first published in 1948, became America’s best-selling economics textbook for decades, selling millions of copies and helping introduce the concepts of John Maynard Keynes to America. He defined strategic areas of the intellectual landscape for millions of students in the twentieth century; these students became politicians, parents, diplomats, teachers, voters, taxpayers, and businesspeople. It’s easy to see why he would claim a status superior to legislators.

As economic historian Roger Backhouse has shown, other powerful people were just as aware of the influence of economic ideas. When MIT was considering using Samuelson’s text in the late 1940s, a member of the MIT Corporation complained about Samuelson in a letter to the school’s president. “It is perfectly obvious that the young man is socially-minded if not strictly communistic.” The letter’s author worked at the Bell Telephone Company. A second concerned letter also came from the business world: this one from an MIT graduate who worked for the chemical company DuPont. He felt it was essential for any text adopted by MIT to be “thoroughly objective and mature” and worried that Samuelson lacked these traits.

The “objectivity” desired by the businessmen was an unwavering commitment to a small-government vision of unbridled capitalism, precisely the sort of arrangement that would most swell their profits. The vice president of the MIT Corporation, responding to one of the critics, reassured him that “there is no question but that every member of our Economics Department is a wholehearted advocate of the free enterprise system.” It’s hard to imagine a group of businessmen aggressively lobbying against the physics curriculum at MIT.

Opposing a textbook by writing letters and making a few threats seems quaint compared to contemporary strategies. Why write letters when you can fund the creation of chaired professorships with the understanding that the occupants will spread fundamentalist free-market gospel? Records obtained through a Freedom of Information Act request in 2018 showed that the billionaire Koch brothers influenced economics appointments at Virginia’s George Mason University, to which they contributed millions of dollars.

Between 2005 and 2014, Charles Koch gave $108 million to 366 universities in America. One student at George Mason recalled taking an environmental economics course with a Koch-funded professor who used a textbook called Global Warming and Other Eco-Myths: How the Environmental Movement Uses False Science to Scare Us to Death. The book was published by the Competitive Enterprise Institute, which has also received funding from the Kochs.

In a moment of candor, a director of the conservative John M. Olin Foundation, which spent hundreds of millions of dollars between 1960 and 2005 supporting conservative thinking about market incentives within law schools, explained that while law and economics seemed neutral, they possessed “a philosophical thrust in the direction of free markets and limited government.” Harvard and Columbia Law Schools were among the many recipients of Olin Foundation funding.

A founding document for this type of influence campaign was written in 1971, when future Supreme Court justice Lewis Powell sent a confidential memo to the US Chamber of Commerce claiming that widespread public criticism of the free enterprise system posed an existential threat to American businesses and freedom itself. Citing the product safety campaigns waged by Ralph Nader in the 1960s and surveys of undergraduates that showed support for the nationalization of major industries, Powell argued that conciliation of capitalism’s critics was a losing strategy. Businessmen, guided by the Chamber of Commerce, needed to launch an aggressive counterassault. “The time has come—indeed, it is long overdue—for the wisdom, ingenuity and resources of American business to be marshaled against those who would destroy it.”

A director of the conservative John M. Olin Foundation explained that while law and economics seemed neutral, they possessed “a philosophical thrust in the direction of free markets and limited government.”

Powell envisioned a multipronged campaign that would target secondary schools, campuses, the courts, television, and publishing and media. He also underscored the power of textbooks, calling for a permanent business-friendly staff of overseers at the Chamber of Commerce to “evaluate social science textbooks, especially in economics, political science and sociology. This should be a continuing program” (emphasis added). He wanted the guardians of the purity of textbooks to be “eminent scholars who believe in the American system.” Powell was endorsing precisely the sort of intervention that confronted the administration of MIT in the 1940s, and he wanted it replicated at scale across America.

In many ways, Powell’s vision has been realized. From the Hoover Institution at Stanford to the Mercatus Center at George Mason, the Heritage Foundation, the American Enterprise Institute, and the Center for the Study of American Business, corporate- and plutocrat-backed think tanks now wage the polemical campaign that Powell advocated. Powell would have agreed with Samuelson about the importance of economic textbooks. Unlike Samuelson, he helped galvanize the class interests of America’s wealthy in a coordinated effort to define cultural common sense.

Perceptions of Samuelson’s book shifted as political conditions changed. Though the book was initially criticized for its author’s supposed socialism, following the upheavals of the 1960s, some argued the book was a conventional, pro-growth defense of capitalism: “If one wishes to restructure society in order to achieve other values than maximizing output of material goods and services, Samuelson’s book is no help at all,” one professor wrote in the early 1970s. The book has not changed, but shifts in political conditions had prompted a reevaluation. Economics, in short, was downstream from politics.Disguising political claims about the economy as scientific truth creates vicious, self-fulfilling cycles. Claims of supremacy for markets have motivated disinvestment from public-sector services, worsening public- sector capacity and driving further claims for market supremacy. The same dynamic also occurs in a far more intimate domain. As the philosopher and novelist Iris Murdoch observed, “Man is a creature who makes pictures of himself, and then comes to resemble the picture.” Surrendering the paintbrush to economists has resulted in a grotesque portrait. New research is creating a more complex, empirical, and interesting image, but it is in many ways a rediscovery of what humanists already knew.


Excerpted from The Alternative: How to Build a Just Economy by Nick Romeo. Copyright © 2024. Available from PublicAffairs, an imprint of Hachette Book Group, Inc.

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