In a 1968 presidential campaign speech at the University of Kansas, Robert F. Kennedy warned that an overreliance on economics had led American politicians to misunderstand fundamental facts about their country. While the American economy might appear strong based on the statistics that economists monitored—the unemployment rate was then under 4 percent—there was much that they missed, he said. When economists considered the state of the US, they counted as positive signs the proceeds from cigarette advertising, the running of jails, the sprawl of suburban housing, and the wreckage of forests, which generated riches for some and left many others sick, caged, alienated, or bereft. Millions of Americans were living in households that could not afford even a minimally adequate diet and were suffering from malnutrition.

Economists were influential policymakers and advisers across government, including in the White House. In 1946, Congress had established the Council of Economic Advisers (CEA), a group of economists housed within the president’s executive office, and their power had swelled by the late 1960s. The small size of the CEA—a few dozen economists, statisticians, and support staff—belies its expansive mandate, which is to synthesize information from thousands of other governmental economists into advice on federal policy that its chair can deliver to the president.

The CEA’s recommendations have been remarkably consistent over the years: according to one report, Democratic and Republican CEAs have delivered similar guidance up to three quarters of the time. Beginning in the 1970s, for instance, the CEA was a major supporter of deregulation in energy, transportation, and telecommunications, among other industries. The CEA has been “almost always in favor of competition,” noted Joseph Stiglitz, one of President Clinton’s CEA chairs, in an end-of-tenure address. “We always talked about incentives, and we always promoted markets and quasi-market mechanisms like auctions and options.” How these policies might widen disparities in wealth and power was not a major concern.

In the late 1960s and early 1970s a group of Democratic senators, including Walter Mondale and Eugene McCarthy, raised similar criticisms. Mondale proposed creating a Council of Social Advisers, an assembly of diverse social scientists devoted to environmental, economic, and racial justice—an ideal of “social health.” This was a central piece of Mondale’s Full Opportunity and National Goals and Priorities Act, which would require the president’s office to assess whether Americans of all backgrounds enjoyed equal access to health, education, housing, and the arts and humanities. The Senate passed the act twice, in 1970 and 1972, but it never made it to the House floor.

The need for social health to be measured and included in decision-making has grown all the more clear in the twenty-first century. When Mondale made his proposal, the conditions of life for Americans were improving slowly but steadily, and lifespans were growing longer. But around 2000 there were some signs that progress was stalling, especially among certain groups. Since then, more and more white middle-aged Americans, especially those without a four-year college degree, have been dying from suicide or substance-related causes—more than 150,000 in 2017 alone, as the economists Anne Case and Angus Deaton argue in their 2020 book Deaths of Despair and the Future of Capitalism. They also provide a clear-eyed explanation: the “economy has shifted away from serving ordinary people and toward serving businesses, their managers, and their owners.”

In his new book, Economics in America: An Immigrant Economist Explores the Land of Inequality, Deaton, a Nobel winner and former president of the American Economics Association, criticizes the intellectual underpinnings of this arrangement. He contends that US economists, often inspired by the market veneration of the University of Chicago’s economics department, have rarely focused on the chasms that divide Americans. In this thinking, he writes, the efficiency of policies “is the only thing that counts,” and inequality is “natural.” As he notes, such arguments are frequently made by those economists who have enjoyed significant power in politics, such as Glen Hubbard, a former CEA chair under George W. Bush who believed that health care should function as a consumer market and “give people a way to profit financially” from staying well; if they cannot avoid illness altogether, the sick should be rewarded for choosing inexpensive doctors and cheap tests. In Deaton’s view, Hubbard’s favored policies—and the now-familiar health care savings accounts that Bush signed into law—“penalized” the ill “for their own poor health.”

Still, Deaton would like readers to focus on the counterexamples. His book celebrates data-loving contrarians whose measurements challenge the dominant understanding. Among them are Thomas Piketty and Emmanuel Saez, whose work was essential in documenting the now-taken-for-granted explosion of income and wealth inequality across affluent countries. Piketty explains that such domination requires a class of thinkers who justify the arrangement, an interpretation he arrives at by applying insights from sociology and history. When it comes time for Deaton to assign blame for inequality, however, he points outward rather than at his own discipline, arguing that the advice of economists is often disregarded. He takes America’s notably inefficient and damaging health care system as his prime example. Some economists’ rational solutions, like a single-payer system or public insurance option, would benefit Americans’ health and finances, but economists possess “little power…compared with politicians and lobbyists for the healthcare industry.”

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In Deaths of Despair, Case and Deaton express appreciation for the “noneconomists” who improved their work with their studies of the history, culture, and politics that can lead people into despondency. The deaths they document stem not only from economic damage but also from the crises of meaning that follow. Sociologists, anthropologists, and historians have long studied what happens to people when they lose their jobs or other forms of community, although these social scientists are only occasionally invited to advise government. Deaton reminisces about the collaboration among a wide variety of thinkers that was common in his early years in England:

When I first became an economist in Cambridge fifty years ago, philosophers talked to economists, and the economics of inequality, of justice, and of wellbeing was talked about, taught, and taken seriously.

When he came to the United States, he was surprised to find that his interest in equity was considered “unprofessionalism”: how to create a progressive tax system that would “protect the budgets of the least well off,” for example, was thought to be “a totally uninteresting social problem.” He never really asks why in the US today economists are uniquely able to exercise such sway over the state, while philosophers, other scholars, or ordinary citizens who might be able to give Congress a sense of their own experiences and quality of life are not.

Perhaps economics won out not by triumphing intellectually but by serving those who already possessed wealth and authority. This is the thesis of Clara Mattei’s The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism. Mattei is a professor of economics with misgivings about the ways her discipline has enforced owners’ control. Even its detractors, she thinks, have overlooked just how profoundly economists’ views have defended and entrenched elite interests.

Aiding the powerful is not incidental to the dismal science, Mattei argues. The field consolidated its influence early on by strengthening its alliances with politicians and business owners. Mattei focuses on the explosive years around World War I and on two nations—Britain and Italy—because, on the surface, they seem so politically divergent in this period. The first was a market-oriented liberal democracy; the second was careening into fascism. Even so, Mattei finds that they took strikingly similar approaches to suppressing working-class revolt and imposing control over their citizens’ labor.

The decades before the war were marked by extreme income inequality and the expansion of brutal factory work, with only minimal protections for women and children and none for men. World War I, which heaved tens of millions of working men onto battlefields across continents and eventually left more than 20 million dead and maimed, tore apart any remaining faith in the fairness of laissez-faire capitalism. In May 1917 near Glasgow, 200,000 metalworkers struck for more than three weeks, occupying the city’s streets. At the end of that summer employees walked out of factories across Turin, then looted stores and claimed control of entire districts. Others fought with pens and megaphones for social programs that would soften the cruelty of low pay. On both the Continent and in Britain workers formed councils to sustain the strikes and protests. They saw nothing inevitable about exploitation.

Mattei argues that the principles of austerity were invented in large part to quash these upheavals. In order to wage the war, Britain and Italy had each borrowed enormous sums, making these governments highly motivated to stabilize their economies and increase investors’ confidence, which would keep the loans flowing. To do this, the British government bypassed democratic channels, pursuing their policies through the Treasury and the Bank of England. There, they deferred to economic experts, especially the economist Ralph Hawtrey, and fought inflation—which they blamed on the spending of “unruly” consumers (read: workers)—by throttling the buying power of all but the wealthiest. They also placed every social support on the chopping block—even a bread subsidy that helped British citizens keep food on the table—while levying taxes that disproportionately took from those who could least spare it.

In Italy, Parliament slashed pensions, unemployment and disability insurance, and supports for veterans and their families. As in Britain, it enacted a host of economic policies that squeezed wages and forced workers back into factories on owners’ terms. For the finance minister Alberto de’ Stefani, a celebrated economist and prominent fascist, abandoning the vulnerable was essential for recovery. “I need to place on the national agenda the conscious renunciation of the rights gained by the crippled, the invalids, the soldiers,” he instructed lawmakers. “These renunciations constitute for our soul a sacred sacrifice: austerity.” Austerity required victims, just as the war had.

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Mussolini granted De Stefani extraordinary powers. By eliminating even gestures toward democratic deliberation, the fascist government bulldozed a path for imposing unpopular policies. Authoritarian rule also did not pose a problem for international creditors like those at JP Morgan. If “a bloody dictatorship” was the vehicle for restoring “the crumbling pillars of capital accumulation,” the financiers would turn a blind eye, Mattei observes.

The political economist Mark Blyth has argued that, from its inception, austerity hasn’t lived up to its promise to create economic growth after short-term pain.* For Blyth and others, this means that austerity is a failure. Mattei thinks that assessment misses the point. Austerity was designed to discipline workers and defeat their demands by returning control over wages and employment to owners. She shows that under austerity regimes, the “rate of exploitation”—the share of GDP going to corporations and investors over workers—grew by almost a third in Britain and by more than half in Italy.

Mattei’s early-twentieth-century economists argued that this economic order was the only one that could be successful because its social hierarchies resulted not from the decisions of men in conference rooms but from natural selection. “It seems obvious,” said Maffeo Pantaleoni, the main engineer of fascist austerity,

that the classes with lower incomes are significantly deficient in qualities with respect to others. So that this deficiency [deficienza] is the cause of the lower income and not the lower income the cause of the deficiency.

The lower classes, he claimed, made their scarce self-control clear in excessive spending on alcohol, “sweets, chocolate, and biscuits,” and various other “pleasures.” Mattei observes that across Britain and fascist Italy, economists agreed that business owners were, as Pantaleoni put it, “men of talent and personality whom selection makes into entrepreneurs.”

The opinions of the early twentieth century persist today, Mattei argues, in policy approaches that proceed under a mantle of disinterest and technical impartiality but rely on similar assumptions about the natural origin of social hierarchies and the inherent virtue of the successful. Deaton agrees that these beliefs persist within the discipline, now often disguised as faith in meritocracy. Like Mattei, Deaton warns that the difficulty in seeing beyond accepted hierarchies has political implications: meritocrats “come to believe that they know what is good for the less talented, that their technocratic skills replace the need for democracy.”

Economic power is difficult to perceive because it has become the very language of governance, the sociologist Elizabeth Popp Berman contends. Considering the US in the 1960s through the 1980s, her book Thinking Like an Economist: How Efficiency Replaced Equality in US Public Policy focuses not on economists’ theories but on the much wider spread of an “economic style of reasoning.” This way of thinking assumes that social ills such as failing health systems, environmental hazards, and corporate concentration can be avoided or alleviated by increasing competition among producers, expanding choices for consumers, and nudging both groups with incentives. This rhetoric of market efficiency insulates economic policies from political debate, Berman argues, and avoids messy conversations about decisions that favor the interests of certain races, classes, and geographic areas over others.

How did economic efficiency become an “insider consensus”? During the mid-twentieth century, Berman argues, many policymakers valued goals beyond efficiency—for example, protecting small businesses because they stabilized civic life in small towns. But in the 1960s and 1970s, Democratic reformers such as Presidents John F. Kennedy, Lyndon Johnson, and Jimmy Carter decided to advance a “scientific” approach to governing, particularly around policies related to transportation, health care, poverty alleviation, and environmental protection. They sought experts to supply “neutral, technocratic answers” to questions about whether to break up large companies or to pursue a negative income tax. Objective analysts, they believed, could discover a correct way to govern that was divorced from particular interest groups and instead focused primarily on the costs of policies.

Washington’s demand for policy analysts hastened universities’ ongoing shift toward technical training and drove idealistic young people into schools that would develop their expertise. Policy schools and law schools were hiring economics Ph.D.s and adopting economic approaches where they’d never been applied before. Although professors may have conducted nuanced research themselves, they taught from textbooks that simplified economic ideas. Berman characterizes the basic quantitative analysis courses as “RAND lite,” referring to the defense operations research corporation that first became famous for its cold war military strategy but was soon known for promoting an economic approach to policy decisions. Policy and law school graduates trained in business-friendly economic thinking went on to staff governmental agencies like the Federal Trade Commission, which enforces antitrust law, and think tanks like the Brookings Institution and the American Enterprise Institute, which steer legislators on policy choices and even draft bills.

Berman locates the power of economics in this gradual and widespread institutionalization. Through education and the creation of offices of economic policy analysis in Washington, the field’s foundational concept of efficiency came to be common sense among governing professionals across the political spectrum. “Any objective can be achieved in a more or less efficient manner,” Berman notes. “Who would advocate for inefficiency?”

Historians often place the rightward turn in American politics in the 1970s, when Republicans began to advocate a strict approach to government spending—fighting against the expansion of the national debt, for instance, by squeezing programs for poor and working-class people. That perspective takes Republicans too readily at their word, Berman argues; in fact, they tend to draw on economic knowledge when it suits them and ignore it when it doesn’t. Democrats, who have historically seen themselves as committed to equality, carry a quieter and perhaps more significant responsibility. They expedited the conservative shift by embracing economic reasoning—not instrumentally but as true believers. Take the fate of national health insurance. In 1970 Democratic senator Ted Kennedy proposed a Health Security Act, which would have made insurance available to all citizens with no additional costs, such as the co-pays we take for granted today. The New York Times reported at the time that

subtly but unmistakably, Americans from all strata of society and all economic classes are swinging over to the idea that good health care, like a good education, ought to be a fundamental right of citizenship.

President Nixon turned to the advocates of efficiency to parry Kennedy’s plan. They were, by then, easy to find across all federal agencies, including within the Department of Health, Education, and Welfare. It is hardly a surprise that Nixon resisted a universal health program and instead proposed policies that tied medical care to work. But many in those offices had actually been hired by President Lyndon Johnson to administer antipoverty programs. It is both fascinating and disturbing that the technocrats who assisted Nixon had been chosen by an administration that championed the Great Society. Kennedy’s bill never made it out of committee.

Berman argues that President Jimmy Carter cemented this transformation. In the late 1970s plummeting American fortunes were a shock, but Carter’s response was patterned by entrenched experts. The president appointed Charles Schultze, LBJ’s former budget director, as chairman of his CEA, and Carter’s health care plans centered on Schultze’s directive to, in Berman’s words, “move beyond command-and-control regulation through the use of market-like incentives.” Schultze demanded federal agencies supply the CEA’s new arm, the Regulatory Analysis Review Group (RARG), with cost-effectiveness assessments of all policies expected to have an impact of $100 million or more. Agency leaders hated this process—which they called being “rarged”—for overriding their own expertise.

By the end of the 1970s the Washington policy establishment agreed that national health insurance would be a waste of money. The alternative was a reform of health care that turned to competition and co-pays to keep costs down. By the 1990s, Clinton’s Health Security Act—which shared only a title with Ted Kennedy’s previous efforts—“sought to make healthcare more cost-effective and promoted choice and competition so that it would function more effectively as a market.” Universal health care disappeared from political discussions, without acknowledgment.

Berman, like Mattei and Deaton, wants readers to question the unstated alliance between “those who benefit from the status quo and those whose way of thinking about the world tends to defend it.” Take climate change. Why has the United States taken so long to act? Since the 1980s independent natural scientists have argued for urgent and focused action to address global warming. Economists, in league with the fossil fuel industry, have often stood in the way. In a critical 1983 National Academy of Sciences report, Changing Climate: Report of the Carbon Dioxide Assessment Committee, a group of prominent economists undermined their colleagues in the natural sciences by emphasizing the difficulty of making predictions about a world decades in the future. “Anticipating climate change is a new art,” wrote the Nobel Prize–winning economist Thomas Schelling. “In our calm assessment we may be overlooking things that should alarm us. But it is difficult to know what will still look alarming 75 years from now.”

Policies for addressing climate change were uncertain, too; carbon taxes were a promising way to stop polluters, but they would be expensive and hard to enforce. Anyway, the Yale economics professor William Nordhaus wrote in the same report:

Whether the imponderable side effects on society—on coastlines and agriculture, on life in high latitudes, on human health, and simply the unforeseen—will in the end prove more costly than a stringent abatement of greenhouse gases, we do not now know.

Based on these doubts, they advocated for politicians to “wait and see.” Which is precisely what happened.

When citizens and their representatives oppose received economic wisdom, they can count on being dismissed as ignorant, irrational, or silly. This can also happen to economists who do not conform. Deaton recalls the pitchforks hoisted against the economists David Card and Alan Krueger when they disproved a basic economic assumption about the minimum wage that benefited the fast-food industry. For decades economists and business people had promoted the idea that raising it would cost low-wage workers jobs, an argument that justified keeping compensation down. (The current federal minimum wage, set fifteen years ago, is $7.25 per hour, a rate followed by twenty states.) In the late 1980s, Card and Krueger compared numbers of fast-food jobs in Pennsylvania and New Jersey after the latter raised the minimum wage. They found that, in fact, the increase had little or no effect on the number of jobs available to low-wage workers. Rather than accept that evidence, other economists heaped abuse on Card and Krueger. Finis Welch, a professor at Texas A&M, mocked them for concluding that “the laws of gravity had been repealed.” Writing in Business Week, Paul Craig Roberts, a conservative economist and commentator, denounced the American Economic Review—a top publication in the field—for genuflecting to “political correctness” by publishing their article. Even association with the authors attracted attacks. Deaton reports (one assumes based on personal experience) that colleagues of Card and Krueger could expect to be treated as if they were “the friends and defenders of child molesters.” “What was at stake,” Deaton concludes, was “the theoretical incorrectness of the evidence.”

How, then, can governments move beyond what Mattei calls the “repressive nature of today’s economic science”? This might be already happening, as many of President Biden’s economic advisers mix inherited ideas about efficiency with a renewed focus on inequality. The administration’s pandemic response showed a commitment to move beyond austerity: according to the Center for Budget and Policy Priorities, the family financial assistance in Biden’s 2021 American Rescue Plan (ARP) built on earlier pandemic crisis funding to raise more people out of poverty “than any other piece of legislation enacted in more than 50 years.” By increasing the amount of aid available and the number of families eligible for it, the ARP enabled people to pay their bills, buy groceries, and cover their housing costs. But this advance didn’t last. Congress allowed the measure to lapse, plunging 3.7 million children back into poverty a year later. The ARP may have advanced a vision of government as an agent of widespread well-being, but it did not represent a permanent political shift.

As Mattei writes, today’s economy is not “inevitable” or “the only and best possible world.” Recognizing the unstated foundations of policy agendas, like the natural dominion of owners over workers, or the seemingly unassailable reign of efficiency, can bring economic thinking back into its proper place among intellectuals and citizen experts who should, together, guide government.