Elizabeth Popp Berman’s Thinking Like an Economist: How Efficiency Replaced Equality in U.S. Public Policy is a very smart book that deserves a wide audience. The book explores the rise to prominence of an economic “style of reasoning” in U.S. policymaking in the post-World War II decades. Between 1950 and 1980, Popp Berman shows, this style pervaded realm after realm of policymaking, from social welfare programs to the regulation of markets to the management of the environment.
The chief institutionalizers of the economic style of reasoning were not neoliberals or libertarians (these would become truly prominent in government only after the election of Ronald Reagan in 1980). Instead, they were Democrat-appointed economists and the bureaucrats they worked with and influenced. Albeit not ideologically opposed either to social programs or to market intervention, these economists and bureaucrats insisted that social goals be met as efficiently as possible and that market solutions were generally preferable to interventionist ones. Wherever possible, they pushed cost-benefit analyses and reviews within administrative agencies, urged the dismantling of early-twentieth-century market controls, and sought to achieve ends by creating markets for entitlements rather than by imposing standards by fiat. In all this, they shared much with those further to their right.
By the time Ronald Reagan was elected president, the economic style introduced during the Kennedy and Johnson years had become thoroughly entrenched. Indeed, it had become the hegemonic approach to solving all manner of public problems, its ubiquity and self-evidence continually reinforcing each other. Reagan Republicans would employ the economic style, but the ground had been laid for them decades earlier by Democrats. Indeed, Popp Berman argues, Democrats proved far less strategic in using the economic style than Reaganites. Democrats privileged it as a method in context after context and allowed it to subsume their substantive ends. By contrast, Reaganites were more selective and often successfully subordinated it to their substantive ends.
In Popp Berman’s rendering, the economic style in the 1950s, 1960s, and 1970s was resolutely microeconomic. As she puts it: “It starts with basic microeconomic concepts, like incentives, various forms of efficiency, and externalities. It takes a distinctive approach to policy problems that includes using models to simplify, quantifying, weighing costs and benefits, and thinking at the margin.” (P. 5.) By focusing on the microeconomic at a time when Keynesian macroeconomics was at the height of its prestige, Popp Berman is doing something highly original: directing the reader’s attention away from the well-worn secondary literature on postwar macroeconomic debates toward a vital and burgeoning realm of activity, one where microeconomic styles of reasoning were actively being instantiated within administrative agencies. She is also doing something extremely valuable in showing her readers that left-of-center thinkers, rather than those to their right, were the progenitors of the economic style in American government. Thanks to Popp Berman, we get not only a sense of the complex roots of our current market-oriented approaches, but also a sense that market approaches were not—and hence need not be—the exclusive preserve of the Right. To my mind, however, Thinking Like an Economist’s real strength lies in its detailed examination of the instantiation of the economic style. This is not an account of high economic theory, but a delving into the tangled politics of regulation, agency by agency, sector by sector.
It is precisely the richness of Popp Berman’s account that enables my interrogation of the “from”/“to” account she provides. The subtitle of the book is: “How Efficiency Replaced Equality in U.S. Public Policy.” At least to me, this suggests that “equality” was temporally prior to “efficiency,” that equality oriented the U.S. public policy (at least in the areas Popp Berman focuses on) before it was displaced by efficiency.
For a book that claims to take us from equality to efficiency, however, Thinking Like an Economist devotes rather little space to exploring what equality looked like in U.S. public policy and bureaucratic practice before efficiency dislodged it. Indeed, Popp Berman herself provides evidence that a commitment to equality might not have been especially robust before the economists took over.
It is certainly true that Johnson’s Great Society programs, as Popp Berman characterizes them, were committed to some kind of equality insofar as they were premised on logics of social insurance, political participation, racial equality, and rights. (P. 126.) But this is not true of many areas Popp Berman explores, where the economic style eventually came to predominate.
Consider Popp Berman’s description of the orienting logics of American market regulation during the first half of the twentieth century that the economic style later took apart. She writes:
“Between the late nineteenth century and the New Deal era, the United States established a legal and organizational framework for governing both market competition in general (antitrust policy), and a range of specific markets that showed tendencies towards monopoly or where stability or broad access were concerns (or example, transportation, energy, and banking)…Although the exact motivations for regulating varied, none focused on the promotion of efficiency.” (P. 152.)
But if efficiency might not have been a key motivation, it is hardly clear that equality was. Stability, the orienting principle behind the regulation of financial markets since the New Deal, is not equality (and might even have entrenched inequality). The same might be said of regulation in sectors like energy and transportation.
Within administrative agencies as well, it is not clear that equality-oriented decision making was the norm before the economists assumed control. Of the culture of the Antitrust Division of the Justice Department, Popp Berman writes: “Antitrust lawyers were not generally interested in evaluating whether existing law was bad, or whether a particular merger would increase productive efficiency or reduce allocative efficiency. They were interested in winning cases: prosecuting as many violations as the law would allow in order to gain litigation experience.” (P. 85.) The same is true of lawyers at the Environmental Protection Agency (EPA), who shared a “‘culture of enforcement’ that interpreted success through the lens of winnable cases.” (P. 163.) However one might characterize this lawyerly orientation, it does not seem to be particularly oriented towards equality.
When it comes to scientists employed within agencies like the EPA, one might tell a similar story. Scientists enshrined the protection of ecosystems as a supreme value in ways that resisted logics of efficiency and equality. The first generation of environmental legislation treated environmental concerns as absolutes. Popp Berman tells us that it “built ambitious and relatively rigid rules—like simply banning water pollution unless the ‘best available technology’ for pollution control was used—because they saw inflexibility as a tool for preventing [legislative] capture.” (P. 155.)
From the foregoing, one might conclude that, when postwar economists and economistic bureaucrats implemented the economic style of reasoning within administrative agencies and pushed for deregulation of markets, it was by no means clear that they were, as a general matter, replacing equality with efficiency. Quite apart from the role that mid-twentieth-century bureaucracy played in exacerbating race-based inequalities, one might conclude from Popp Berman’s own complex account that the prior animating logics and the actual practices of American regulators were extremely varied, directed towards ensuring stability, minimizing market fluctuations, winning cases, protecting the environment seemingly regardless of cost, as well as what we might more conventionally call promoting equality.
I wish to conclude this review by drawing attention to something else that Popp Berman’s account makes visible. In my view, her rendering of the contest between environmental scientists, who placed the protection of the environment as an absolute beyond calculation in terms of costs and benefits, and economists, who insisted on viewing the protection of the environment in terms of the logic of matching limited means to multiple ends, reveals something important about economics and, indeed, about our own modern condition.
Like many realms of intellectual endeavor that underwent the modernist turn, in the late nineteenth century, economics shed its concern with given truths, ends, and foundations and became, albeit slowly, a science of matching limited means to multiple ends (to paraphrase the economist Lionel Robbins’ famous definition). What Popp Berman calls the economic style is a style for a world without ultimate truths. As economists describe their own endeavors, all they offer is a way of maximizing multiple ends given limited resources; they take ends as they come, without enshrining any one above others. God, in modern economics, really is dead. Popp Berman recognizes as much toward the end of Thinking Like an Economist where, in a section entitled “Lessons for the Practically Minded,” she tells her readers: “[T]he economic style does not allow for commitment to absolute principles—for moral values that are ends in themselves, rather than objectives to be evaluated in terms of costs, benefits, and trade-offs.” (P. 225.)
In a gesture of opposition to the economic style, Popp Berman urges those who would resist it to continue to make absolute claims. But going back to a pre-modernist world of ultimate truths, ends, and foundations might not be that easy. The way Popp Berman urges her readers to challenge the economic style suggests as much: “But even if one recognizes that rights are rarely absolute in practice, starting out with absolute claims is both morally powerful and politically useful.” (P. 225; emphasis added.) Those who invoke absolutes must recognize that there are no real absolutes, Popp Berman informs us, but they must nonetheless persist because absolute claims are “useful.” They must act “as if” their truth claims were true, just as (I would argue) economists have long modeled the world “as if” economic actors are rational. In this sense, moral claims, like the economic style Popp Berman would have them oppose, are techniques. How these different techniques will battle for hegemony in the future is, of course, another story. But it does suggest that vanquishing the economic style will be no easy task.
Thinking Like an Economist is a protean book. It draws attention to a vitally important (and hitherto understudied) feature of postwar American governance. At the same time, its open-ended account enables not only an interrogation of its own narrative, but also a meditation on the nature of knowledge. Legal historians will profit from reading it.
