The Economic Style

For some, neoliberalism is to blame for most, if not all, of our societal problems, as well as for the resistance to progressive changes that characterizes contemporary policymaking. This is for good reason. As has been extensively documented, the neoliberal obsession with fiscal austerity and efficiency has been associated with the increase of inequality, precariousness of job contracts, and dismantling of safety nets throughout the world. 

In her new book Thinking Like an Economist, sociologist Elizabeth Popp Berman suggests that, in the case of the US, neoliberalism may not be the root cause of all social problems. She instead redirects our attention to the role of economics, or more specifically, the institutionalization of an economic style of reasoning that has transformed US public policy since the 1960s. The main consequence of this institutionalization, Popp Berman explains, is that goals that made sense through the lens of economics—growth, efficiency, productivity—came to displace competing visions for policy. Efforts to promote political empowerment of the poor, limit the concentration of power, and protect the environment were harder to understand in economic terms. The result has been a restructuring of the space of political possibility, constraining it to policy options that meet the value of efficiency, but not necessarily equity. 

Thinking Like an Economist convincingly shows that the social sciences can indeed shape politics, but perhaps not how academics intend or anticipate. In Popp Berman’s account, the impact of economics comes not by providing the right answers to politically relevant questions, but by shaping the questions that can be considered in the first place. As the state of the world attests, the book serves as a powerful reminder that the time has come to start asking different questions.

An interview with Elizabeth Popp Berman

Luciana de Souza Leão: In contrast to narratives of a neoliberal turn that explains most societal problems—and in particular the lack of progressive policymaking in the US—you suggest that an economic style of reasoning became institutionalized in the US government. You argue that it was actually so-called liberal economists—liberal in the American sense—that are to blame for many of the problems attributed to neoliberalism. How did you arrive at this conclusion? When did you start thinking that the problem was economics as a form of thinking about the world, and not necessarily just neoliberalism?

Elizabeth Popp Berman: The motivation for writing the book was partly political. I felt that the horizon of possibility was very constrained for people on the left in the US, and especially within the Democratic Party, but it’s not that I set out to write a book about why the Democrats don’t do more ambitious things. 

I had a pretty clear sense that I did not want to tell the right-wing Chicago School economist story—I’d felt for a long time that an important piece of the story of neoliberalism and political change was missing. Not everything turned out the way it did because Milton Friedman and Friedrich Hayek had a project. 

My first book was about the marketization of academic science. I argued that economic ideas shape how policymakers think, and in that particular case, the idea that technological innovation drives growth was paramount. I began studying different cases, and I kept returning to the centrality of technocratic economists, people who wanted to use government to make change and to do better, but had a very particular idea of what that change needed to look like. It wasn’t until fairly late that I decided to commit to taking them to task for that. I knew it would provoke some response: a lot of the people in this space share progressive values and genuinely see themselves as helping through the means of the state and government. 

LSL: In the book, you don’t talk a lot about your methods and historical work, though you base yourself in data and historical analysis. What were the main sites of research, and how did they shape your argument? 

EPB: I went through a lot of different cases in the process of thinking about what the argument was. I started out by trying to identify policy domains where economics had been demonstrated to be deeply influential. Anti-poverty policy was one of my starting points. In some domains, there’s already a rich secondary literature—for example, Marc Eisner’s Antitrust and the Triumph of Economics makes a compelling case about the influence of economics in that area. As I was doing more research, these cases kept intersecting, and people were showing up in policymaking spaces that I had assumed were somewhat independent.

In some instances that wasn’t so surprising, but sometimes anti-poverty policy overlapped with antitrust or regulation, or some other totally different domain. So tracing influence in different policy domains was the original methodological logic, and then as I started to develop an argument, I added cases to test it, some of which were significantly cut in the final book, like housing and education policy.  

I realized that I wasn’t telling a story just about specific policy areas, but rather a broader story about policy change. I did a lot of archival research, but honestly I think the most important work was the synthetic work, drawing on lots of existing information about these different policy domains and figuring out how it all fit together. 

LSL: The institutionalization of economic reasoning meant that arguments based on efficiency were taken for granted, and other policy options based on rights or universalism were considered naive. This resonates with what I found in joint work with Diana Graizbord around anti-poverty policies in Mexico and Brazil. Experts have to do cultural and ideological work to make people buy into the idea of efficiency—essentially winning their hearts and minds. You mention resistance to changes from inside the government. Could you tell us more about both the resistance work at the symbolic level, and how the technocrats you study were able to initially convince people to buy in?

EPB: There was a very broad cultural resistance to the kinds of arguments that economists made in the 1950s and 1960s. For example, in 1959 Ronald Coase published a paper arguing that the Federal Communications Commission (FCC) should auction off the electromagnetic spectrum. But at the time, the FCC assigned these rights through administrative means. The dominant idea was that the public owns the airwaves, so they should be run in the interest of the public. 

When Coase initially made this suggestion as a consultant at the RAND Corporation, it was so controversial that RAND suppressed the report. When he testified in Congress, members of Congress voiced their complete rejection, saying, “How can you say that we should just sell off this public resource to the highest bidder? What a terrible idea.” 

People in positions of authority found the basic framework of economics to be problematic because it competed with their existing moral vision in some way, and they voiced their opposition verbally. But a lot of the advance of economics really took place in the federal bureaucracy, and in those places the resistance looked different. A big piece of the story is the spread of the Planning-Programming-Budgeting System (PPBS). This budgeting system grew out of the RAND Corporation, and it was implemented across different executive agencies. With PPBS, you would decide your agency’s goals, and then systematically compare the different programs imagined that could get you there. You would try to quantify everything to the greatest extent possible, and then choose the most cost-effective program as the best policy decision. Your budgeting decisions would follow from that initial analysis.

There was a lot of resistance to PPBS, for different reasons. Some people were morally opposed: Alice Rivlin once spoke about how teachers and doctors don’t like to think of their work in terms of its economic value. But a lot of times, the resistance was due to bureaucratic interests as well. Agencies didn’t have the actual staff prepared to use these methods, to think about their goals and define them in a quantitative way. Many bureaucrats found the system stupid, thinking that it was for show and the real decisions were going to be political anyway—which is kind of what ended up happening. I would distinguish between these kinds of resistance, which were about the practical implications of ideas, and a broader moral opposition to the framework of economics.

LSL: Once these methods and frameworks become institutionalized, were bureaucrats persuaded? Were these methods imposed on them, or did symbolic work eventually make them believe in efficiency as a value? 

EPB: It was less about the work of persuasion and more about the work of creating new believers. The PPBS rollout was initially top down. It started at the Defense Department with Robert McNamara’s directive, and Lyndon B. Johnson rolled it out on the basis of its success there. He had been convinced by a couple of economists at the Budget Bureau, and he signed an executive order. 

At the time, there were some interesting studies done that looked at which agencies really used the methods and which just filled out the paperwork. They found that in the few agencies that really used the methods, the leader had some kind of belief in the system, even if they weren’t an economist. But the PPBSers didn’t convince most agency leaders. The process of rolling out the methods led to the creation of new believers. The origins of policy schools trace back to this moment. The government needed people who could use these methods, and universities saw an opportunity to meet a market demand for people who could do these analyses. Thousands of people were trained to think in this way, and then they moved into policy spaces. People were convinced at age twenty-three when they were getting their master’s degree.

Implementing the methods created new resource streams, in particular around social policy. Those advocating for PPBS generally believed that we should measure the cost-effectiveness of policy in general, so they supported policy evaluation. They started to ensure that evaluation money would be included in social policy bills—this created resources that could go to think tanks, which could then hire people to conduct these analyses, who are in turn those who have already bought into the framework. All of a sudden, there was a much larger space of people, think tanks, and research institutes invested in this vision. 

LSL: You mention Alice O’Connor and the poverty research industry. As you show very convincingly, technocrats avoid talking about race when they’re talking about efficiency. Using the example of social policy, why do you think economic reasoning was so successful with anti-poverty policies? Can you pinpoint some of the racial, cultural, and class premises that favored one type of anti-poverty option, say the Child Tax Credit or the Negative Income Tax, over policies based on community participation, for example?

EPB: Anti-poverty policy in particular was a project that succeeded because it solved certain racial problems for the state. The initial phase of the War on Poverty was organized around the idea of community action. This phase reflected an underlying theory that if poor people were politically empowered, they would be able to make their own claims, and get their needs met through the state—political empowerment could solve poverty in the long run. But the project was very quickly bogged down in racism. Poor communities, mostly communities of color in cities, organized and placed demands on mayors, who were typically white Democrats. The collective organizing of Black and Latino organizations—which often produced conflict and drew attention to achieve political goals—created problems for the Democratic Party.

Community action became a problem to solve rather than a model to emulate, specifically for Johnson. All of a sudden, Democratic mayors were showing up at his door saying, “What the hell, we are your support base, why are you doing this to us?” The shift to an economic framework—the idea that what poor people need isn’t political agency, but income—was instrumental. If we can just figure out how to get money to people who don’t have it, we can solve the problem efficiently. The shift worked in part because of racism. There are moments where proponents of the economic style speak with a subtext which points to race—or perhaps an opposition to the world view of those supporting community action efforts. But what was fundamental was that the new anti-poverty methods sidestepped questions of race, and made it irrelevant in policy. You don’t have to talk about race if all you care about is people’s incomes. And I think that’s a big reason why economic reasoning around anti-poverty was so successful—it sidestepped race.

LSL: What were the paths not taken that would allow us to rethink the relationship between economic reasoning and public policy? 

EPB: I find it hard not to feel like the whole thing was overdetermined. Even if the people I write about in the book hadn’t existed, I do think that the broad political and economic changes at the global level—and the changing position of the US within that—make it seem that this turn away from government and its ability to deliver on universal ideals and claims about rights, would have happened anyways.

LSL: You have a great line in the book, almost playing on Weber’s switchman: “The economic style of reasoning was not the main reason, but the main channel.”

EPB:  It matters that once you have a certain set of people with certain ideas occupying positions of influence, more and more people are trained in certain ways, take new things for granted, and this becomes very sticky and very difficult to dislodge. I believe completely that a large-scale material change could disrupt the whole enterprise and usher in a new era. But in the meantime, as we go through periods of smaller change, the institutionalization of the style of reasoning makes it difficult to do much outside of it. 

The Biden administration has several appointees that come from a different place. But I think you can also see that many of the progressive policies they’ve advocated for have been marginalized by the more dominant voices who adhere to the economic style of reasoning, and consider these other approaches naive. 

LSL:  How can we approach the question of policy values in terms of economic reasoning? I come from a so-called poor country that has universal health care, and the health-care story you tell is striking in terms of paths not taken; I take for granted that everybody should have access to free healthcare. How can we discuss those values with economists without sounding naive?

EPB:  In policy spaces, it’s almost a necessity to translate any action into economic terms. Someone may be motivated to pursue a policy because of justice, equity, or some underlying deep core value that doesn’t have anything to do with efficiency, but in many cases it just absolutely has to be translated into that language in order to be heard. I think part of the problem is that we often limit ourselves to that language even when we are not talking to narrow technocratic audiences. Whole political campaigns are focused on narrow technocratic fixes. I think of Obama and the health care exchanges. It is politically difficult to sell some complicated market-like mechanism and convince someone it’ll make their life better. I think it’s really important to aggressively make the other kinds of value-based arguments to broader audiences.

LSL:  To what extent is this an American story? As we know from the work of Marion Fourcade and others, economics is an international field, regardless of where you’re trained. Can we expect this style of economic reasoning to have similar political effects in other parts of the world as well? 

EPB:  The answer is both yes and no. The book is fundamentally about the US case, and many of the dynamics and actors are specific to the US. Economists & Societies is a great illustration of how different configurations of knowledge formation of states work together to produce nationally distinct outcomes. At the same time, like you say, economics is an international field, and there is a lot of commonality. Many people trained in the US go elsewhere to work in policy positions. The US is still the hegemonic figure within the discipline, at least for now. In that respect, I think you can see the US as a bellwether case; these changes were happening here before they happened anywhere else.

A lot of what I refer to as the economic style of reasoning is part of this broader space of rationalization processes. New public management, scientific management, all these processes of thinking quantitatively and rationally about how to effectively reach organizational or political goals—these are global societal trends. There are places which it is channeled through economics and tends to look similar to the US, and there are also places where it’s happening through other national disciplinary configurations, making it look quite different. 

LSL:  I’m always struck by how the US public policy debate is not comparative—both the differences in the dominant policy-relevant disciplines, and the policy outcomes that flow from them, are obscured. In some cases, compared to the US, countries in the global South have accomplished more progressive measures with much less money. 

Brazil provides one way to think outside the grammar of efficiency. When it implemented its conditional cash transfer, Bolsa Familia, it was a very specific moment when ending poverty was the political project. The Lula administration said, efficiency is not our priority, we are worried more about excluding poor families than including families who are not poor into our CCT. Those good years of political focus on inclusion are long gone, but it proves that there were political moments where bureaucracies could legitimately say that efficiency was not their goal. 

Yet, you show very well how this language of efficiency connects to strict budgeting and austerity, which seems to be the most common political context. PPBS is always more useful when you need to cut costs. This language of fiscal austerity and efficiency fits together really well. 

EPB:  It’s a good reminder that the right political configuration can produce more significant structural change. Does that seem likely to happen in the US soon? I would say no. On the other hand, I do think that social movements and the resurgent left in the US can put real pressure on that system. While it is easy to be pessimistic about what’s coming, it is also possible to imagine enough of a base organized that you have politicians brought into power championing the idea that inclusion and not efficiency is the priority. If you’ve got enough political power, then everything else will follow along. Maybe economists don’t matter that much in the end.