Thinking Like An Economist
By Elizabeth Popp Berman
Princeton University Press, 2022
By Paul Sabin
WW Norton, 2021
Explanations for the rise of neoliberal policymaking in the United States commonly take one of two forms: a political history or an intellectual history.
The first focuses on the overlapping crises of the 1970s and the rebalancing political coalitions competing to manage them. The stagflationary oil crisis, rising corporate dominance of Germany and Japan, declining legitimacy after Vietnam, Watergate, and the Iranian hostage crisis confronted an increasingly divided American liberal coalition and a more unified conservative one. The result was a collective political shift to the right, the alienation of many working class people from politics, and the unleashing of a virulent politics of grievance that political elites were unable to manage.
But neoliberalism as it is usually understood, is not just a political coalition, but also a political philosophy. Thus the other narrative: the rise of a self-consciously “neoliberal” intellectual tradition.
The first thinkers to identify themselves as “neoliberal” were a group of right-wing European intellectuals who sought to re-articulate the value of classical liberalism against a corporatist social democratic hegemony.1 Common to most of these thinkers was a vision of markets as spaces of freedom via consumer sovereignty, a form of freedom that is threatened or distorted whenever collectivities outside of the corporate boardroom interfere with the competitive process. According to this view, the goal of governance ought to be to expand the scope of consumer sovereignty and to prevent so-called interest groups from capturing any part of the governance process.
If one conceives of neoliberalism through this way of thinking about governance, then one can follow “neoliberal thought collectives” from the rightward margins of the New Deal order to the center of the Reagan Revolution, tracking the twisted inroads in between. The crises and realignments of the 1970s created ample opportunity for neoliberal ideas and their promoters to make their way into government. And, as neoliberal arguments began to win out in domain after domain, policy makers across the board adopted them.
Such accounts of neoliberalism emphasize rise of the economic right and the left’s triangulating response: conservatives gradually build up strength and strategy until crises create the opportunities to muscle aside New Deal and Great Society liberals (and, in other countries, socialists), who developed their own variations on neoliberalism in response.
But scattered throughout the literature is a different framing, which recognizes the emergence of neoliberalism from within the New Deal and Great Society coalition. There is plenty of analysis out there to help us trace how, for instance, New Deal housing and transportation policies created the car-dependent, single-family-dwelling, racially segregated suburbs that formed the social bases for early conservative revolts in the Republican party (in California and the Southwest, e.g.) and later professional-managerial class splits from the rest of the working class in the Democratic party (in New England, e.g.). Labor histories examine the way union leadership’s compromises with management and commitment to rooting out radicalism undermined its very source of their power in the long term.
At the level of intellectual history, two recent books help us appreciate how theories of governance associated with the neoliberal turn originated in part within the midcentury liberal coalition, becoming part of the Democratic party’s approach to policy analysis well before Reagan’s rise, or even Carter’s turn to the right. One such account is Elizabeth Popp Berman’s Thinking Like an Economist, which tells the story of the growing influence of the “economic style” within the Democratic party starting in the Kennedy Administration. Another is Paul Sabin’s Public Citizens, an account of how the liberal lawyers of the “public interest movement” critiqued the administrative state, market regulation, and “interest group” politics that would become key parts of the Democratic party’s version of neoliberalism.
Popp Berman and Sabin make convincing cases that much of what we now know as the neoliberal style of policy thinking was developed by elite-trained members of the New Deal coalition to rationalize and even sometimes to democratize liberal governance. They fill in an important piece of the narrative on the rise of what we now know as the neoliberal style of governance.
Building the beachheads
Following the “thought collective” approach, Popp Berman traces two different networks of economists as they intermingled and gained influence over the course of the 1960s and 1970s. One network laid the groundwork for monetized cost-benefit analysis; the other built the foundation for the idealized models of markets that guided antitrust reforms and the deregulation of infrastructural industries.
The first arrived through the military. Economists began to build the intellectual apparatus for modern cost-benefit analysis at the RAND Corporation, which was originally founded and funded by the Air Force to continue the weapons and operations research begun during World War II. Economists were part of a team developing ways to rationalize weapons development and deployment.
Everybody at RAND thought that some sort of mathematized cost-effectiveness analysis was needed, but it was economists who pointed out that one could arrive at a general notion of “efficiency” by placing a monetary value on all possible options. Soon, RAND became an epicenter of postwar quantitative social sciences, home to many of the most influential postwar rational choice theorists (Thomas Schelling, Kenneth Arrow, Paul Samuelson, Herbert Simon, Theodore Schultz, etc. etc.). Robert McNamara, who had himself been a cost-effectiveness analyst for the Air Force in World War II and applied similar techniques in the Executive suite at Ford Motor Company, generalized “weapons systems analysis” to “systems analysis” and brought the approach with him to the Department of Defense.
Cost-effectiveness analysis became an important part of several aspects of military strategy, but it was the “Planning-Programming-Budgeting System” (developed to guide the more bureaucratic aspects of the DOD) that had the most lasting institutional and intellectual influence. In 1965, President Johnson ordered its use for cross-executive-branch planning, requiring agencies to devote staff time to defining objectives and developing ways of measuring progress toward them.
Though President Nixon shut PPBS down in 1971 due to widespread resistance to its implementation, Popp Berman argues that the program created a “beachhead” for monetized cost-benefit analysis. It did so by introducing the question of cost-effectiveness and goal definition for the first time at many agencies, and creating specific subdivisions—often called Offices of Policy Planning—dedicated to asking such questions.
PPBS also created a demand for a specific type of policy analysis, which reshaped how many bureaucrats and policy evaluators were trained—a shift from “public administration” to “public policy.” Many of its promoters continued to have profound influence on the framing of policy questions. Charles Schultze—President Johnson’s Budget director who migrated to Brookings and eventually to Chair Jimmy Carter’s Council of Economic Advisors—referred to liberal economists of this sort as “partisan efficiency advocates,” perfectly encapsulating the perceived neutrality of cost-effectiveness as way of cutting through values-talk in a world of connivers and moralists.
In the meantime, another group of liberal economists journeyed to Washington. This looser network of “Harvard School” industrial organization scholars focused not on administration, but on competition. They theorized markets and the way regulation shapes competitive dynamics. Unlike cost-benefit analysts, I/O economists did not introduce economic analysis to a new terrain. Instead, they introduced a new form of economic analysis built on neoclassical rather than institutionalist foundations, and oriented toward “efficiency” rather than the balancing of multiple interests. In doing so, they cleared space for the more recognizably neoliberal Chicago School of I/O, which more strongly emphasized markets’ ability to “self correct.”
The Harvard School approach to antitrust and regulated industries emerged around the same time as weapon systems theory, but it was not until the 1960s that Harvard Schoolers began to have an impact on policy. In 1965, Johnson appointed Donald Turner as the first economist to head the Antitrust Division at the Department of Justice, and many economists followed. Economists gained a stronger foothold at the Federal Trade Commission in 1970 after Ralph Nader’s denunciations led Nixon to reorganize the agency, creating an Office of Policy Planning and strengthening the Bureau of Economics, among other efforts.
Soon, I/O economists—mostly trained at Harvard and Yale—were marching into these institutions. They brought with them the perspective that economic regulation should aim primarily or exclusively at allocative efficiency and give up on ostensibly noneconomic aims such as decentralizing political power or preserving rural communities. Their impact remained limited at first—despite near unanimous support for deregulating transportation industries as early as 1960, for example, they made no headway for years—but they gradually built the conceptual foundations for what we now think of as “economic” approaches to antitrust and regulated industries.
The economic style
By tracing these two distinct inroads for economic analysis, Popp Berman highlights the contingency of a distinctive and unitary “economic style.” Systems analysis was focused on effective decision-making and efficiency in public administration—it did not have anything in particular to say about how to regulate markets or whether social spaces should be set up as markets in the first place. Harvard School I/O economists, on the other hand, were not concerned with the practicalities of the administrative state—let alone the military. The two approaches need not have come together.
But as Popp Berman highlights, there was also a strong complementarity between the two approaches. For one thing, they shared a common intellectual foundation focused on designing “efficient” systems which attempt to maximize the value of a system or choice, and define value in monetary terms. For another, they provided complementary justifications for an approach to policy that seeks to make the real world more like idealized markets. Want to make public administration cost effective? Want to make sure a given area of social life results in allocatively efficient outcomes? Promote market competition and provide the minimum subsidy necessary to ensure that all are included in the market. This way of thinking was broadened throughout the 1970s, often with the support of research funds from government agencies—the Urban Institute, MDRC, and Mathematica developed in this environment.
The economic style became a distinctive approach to governance, contrasted by frameworks that focused on rights, justice, harmony with nature, and the empowerment of marginalized groups. In healthcare, liberal economists were supportive of universal coverage but skeptical that a public system would be the most cost-effective way to provide it: better to promote “cost sharing” and “competition” through an insurance market, set up a limber regulatory agency to ensure basic consumer protection norms are followed, and means test subsidies to the demand side. In environmental policy, liberal economists were supportive of reducing pollution but skeptical of command-and-control regulation that would determine how much would be acceptable where: better to create a cap on total pollution, create a fixed amount of tradable rights to pollute, and then let the market set the efficient level for each facility. In education, liberal economists were supportive of increasing access but skeptical of expanding public schools: better to subsidize students through grants and, in higher education, debt.
She also shows how, despite their emphasis on policy and not politics, liberal economists utilized their “neutral” perspective to manage conflicts between constituencies. An early example is when economists within the Johnson Administration opposed the Economic Opportunity Act’s requirement that public benefit recipients have “maximum feasible participation” in designing the programs. They opposed it for neutral (though not entirely disinterested) reasons: it directly conflicted with centralized evaluation of welfare programs experts through the lens of cost effectiveness. (Berman notes that, to the director of evaluation at the Office of Economic Opportunity, “education was a production function.”) But this opposition became useful to Johnson when several collectives of welfare recipients used federal funding to organize actions that challenged city governments and urban political machines. When mayors in these cities—often Democrats in white-dominated political machines governing large Black populations—began complaining to Johnson, it was convenient to roll back maximum feasible participation using the disinterested economists’ objections.
A later example is more frequently associated with the transition to neoliberalism and will get us closer to understanding it: deregulation of regulated industries. This was an issue on which neoliberal and liberal economists agreed (if not on all the details). And, crucially, it was an issue that was given a populist bent by the Naderite public interest and consumerist movement. As Berman puts it, consumerists “thought that regulation [of the sort that then prevailed] mostly served the interests of incumbents at the expense of consumers, although they approached the topic with a focus on power and equity, rather than market efficiency.”
To get a full sense of this deregulatory shift, we need to bring the public interest community that Sabin chronicles into the story.
The rise of the citizen-consumer
Sabin argues that the overarching concern of the public interest movement was to empower a professional set of “citizen-consumers” to disrupt corporatist forms of governance in which the “public interest” was undermined by the corrupt relationship between big businesses, unions, and regulators. Whether focused on environmental preservation, consumer protection or workplace safety, this vision was grounded in a critique of prevailing regulatory approaches but not of regulation as such. What was needed, from the critics’ perspective, was a reexamination of the substantive goals of regulation—incorporating concerns about environmental degradation and the corrupting influence of business on democratic culture, for example—and ongoing pressure on administrators to do their jobs rather than giving in to industry capture. What was needed was a lobby for the “public interest.”
Although the public interest movement thought of itself as an insurgency from outside “the system,” it was, in many ways, a product of it. It was predominantly populated by white men from the upper middle class trained as elite lawyers. Nader himself was educated at Harvard Law and recruited much of his staff—many of whom would go on to form their own organizations—from Harvard or Yale. At one point in the 1970s, one third of the graduating class of Harvard Law applied to work for Nader.
The preoccupations and methods of the movement were, in many ways, reflective of the legal liberalism that prevailed at elite law schools at midcentury. The idea of a “public interest” to be protected by public-minded experts came out of Progressive and New Deal conceptualizations of the purpose of regulation—the “public interest movement” simply doubted that the public interest would be served if the experts were only in government. This basic critique of regulatory capture and institutional sclerosis was first articulated by former New Dealers like James Landis, Louis Jaffe, and William O. Douglas as well as influential left-leaning law professors like Charles Reich. (Lest we flatten, we should keep in mind that other former New Dealers went in different directions.) The prioritization of working “within the system,” especially through impact litigation, is partially rooted in the liberal lionization of the success of the legal arm of the Civil Rights Movement and the Warren Court’s reimagining of the Constitution.
But, like liberal economists at the same time, the public interest movement sought to distance itself from the coalition politics of midcentury liberalism. Drawing from the New Left, they sought to create space for “participatory democracy” that could undermine “structured power.” Doing so required “people who knew how to play the Washington game” to lead, rather than “black tenant farmers in Mississippi.” Consequently, they built issue-specific organizations with small staffs of elite-trained lawyers. Sabin argues that the Ford Foundation, at that time led by former national security advisor McGeorge Bundy, played a crucial role in developing the model by having his elite network advise the young upstarts, among other efforts. Less influential than the funders were the members, whose participation was mostly restricted to mailing in money and serving as a list of potential named plaintiffs in strategically placed jurisdictions. And since participation was limited to funding lobbying and litigation, member bases tended to be upper middle class and white. They were more likely to donate when they worried about the capacity of government to protect the public interest (in Republican administrations) than when they trusted those in power (in Democratic ones). The more public interest organizations that were created, the more they competed over this narrow base of funders.
In its heyday, the public interest movement was often at loggerheads with the liberal economists Popp Berman chronicles. It was perhaps the most important promoter of the “command-and-control” vision of the administrative state that economists have so often decried. The wave of environmental laws in the early 1970s is a prime example. These laws explicitly—and notoriously—prevented the new Environmental Protection Agency from balancing environmental benefits against monetary costs to business.2 They mandated pollution level setting which provided “an ample margin of safety to protect the public health” rather than one which used marginal reasoning to calculate an “optimal” level. They created “technology-forcing” rules that required the adoption of anti-pollution measures, rather than leaving it to the market. Alongside the emphasis on strict regulation deadlines and citizens’ right to sue agencies and prevent stalling, public interest movement standards were designed to prevent capture and to rebalance societal priorities, not to internalize the externalities of pollution given current preference functions and technological capacities. Indeed, economists loudly objected to these rules. At the time, they were roundly ignored.
The public interest movement’s position on market competition was more ambivalent. Many arms of the movement were critical of the corrupting influence of the profit motive, and the impacts of unchecked development on local communities and the environment. Their belief in citizen activism and (in some circumstances) union democracy caused panic among many businessmen—Ralph Nader was notoriously spied on by agents of Ford, and he was the central antagonist in Lewis Powell’s notorious memo to business leaders on the need to create a more unified political strategy.
However, “the public interest” was often conflated with the interests of the consumer, often without attention to the inequalities between consumers. Though the consumers who populate consumerists’ imaginative world are different than those of the neoclassical economist—they are so-called citizen-consumers, capable of protecting their interests through collective action and government intervention rather than market choice—this distinction made little difference when some consumer interests (in something like low prices, say) were pitted against others (like higher revenues and wages). Additionally, market competition presented an attractive remedy to capture and corruption, promising to break up the perceived cartel of big business and big government. Because they were not tied to any particular economic theory, these notions remained open to interpretation through a neoclassical lens.
The convergence of Popp Berman’s economic style and Sabin’s citizen-consumer opened the path to deregulation. The importance of this union is clearly demonstrated in the history of the transportation industry. Starting with the Interstate Commerce Commission in 1887, the prevailing approach to transport regulation involved a specialized federal agency responsible for restricting entry and price competition, and fostering stability and geographical equity through rate regulation. Although the agencies involved were nominally independent, in practice they closely communicated and coordinated with the companies under their purview. This approach to regulation tended to keep prices well above marginal or even average total cost—indeed, in the airline industry, carriers often competed on luxury, driving costs and prices up rather than down.
For the consumerist wing of the public interest movement, the problem with this model was that the collusion between big business and complacent regulators hurt consumers: high prices, limited service, and a disinterest in consumer satisfaction. For I/O economists, the problem was that regulated industries were inefficient because they did not harness the power of market competition to lower prices and improve service. Firms were using the regulatory process to rent seek at the expense of consumers.
These justifications could have led to differing policy orientations. It is not too hard to imagine consumerists favoring a more command-and-control approach that mandated lower pricing margins and looser standards for entry. They might have favored giving consumer representatives formal representation in the agency (as with the Consumer Advisory Board in the National Recovery Administration of the 1930s and the Consumer Protection Agency they were contemporaneously advocating for) or a private right of action to challenge decisions about prices or new entrants.
But by the 1970s the economists had spent over a decade elaborating a solution. Brookings alone had published dozens of reports from its designated research project on deregulation. What Berman calls the “economic style” was growing in influence more generally, such that consumer power and freedom were increasingly conflated with neoclassical notions of consumer sovereignty. (The emergence of commercial speech doctrine from public interest impact litigation strategies to break up professional cartels is another resounding example of this convergence.) In this context, the two interpretations merged into one: corporatist forms of regulation were said to result in rent-seeking through regulatory capture, representing a conspiracy against consumers that inefficiently reduced consumer surplus and increased deadweight loss.
By the Ford administration, the two constituencies had converged on this issue. And they were joined by neoliberals—more specifically Chicago School I/O economists, who had their own, more radical, theories of agency capture and inefficacy. Their joint cause gained momentum when a group of liberal and neoliberal economists advised President Ford that transportation deregulation would help reduce inflation (even though they privately admitted it would not). Ford was on board, and he was joined by staunch consumer advocate Ted Kennedy. Carter, who actively courted Nader’s approval throughout his term, prioritized deregulation across transportation industries and beyond. By the time Reagan took office, airlines, trucking, cargo shipping, and railroads were either deregulated or very nearly so.
In his own account of this period, the journalist Binyamin Appelbaum reports that, as predicted, prices dropped across the board, especially in highly trafficked areas. Without mandated cross-subsidy, companies disinvested in rural and other low-population regions. In some industries, reliability and safety increased. Meanwhile wages and conditions for workers deteriorated. And increased competition for profit led to greater concentration of control, often combined with an offloading of responsibility through creative use of corporate forms—outsourcing, contracting, franchising, and so on. Executive compensation and stock prices soared.
Soon enough deregulation spread to telecommunications, finance, and utilities. A similar pattern followed: lower overall prices with increased inequality. In some industries, volatility and fraud increased dramatically, as eventually demonstrated by the California blackouts and the escalating series of financial crises that culminated in the 2007 meltdown.
Meanwhile, the economic style more generally had begun to get an easier and easier hearing in the Democratic party. Competing discourses of rights and justice gradually lost relevance; the interests they expressed came to be seen as so many preferences of interest groups—to be efficiently balanced through technocratic application of optimization functions. The public interest movement, with diminishing returns to fundraising and diminishing standing among policy elites, would have to get in line with all the other “special interests.”
Indeed, according to Popp Berman, the economic style became the Weltanschauung of Democratic party elites from the Carter Administration on. And Republicans took advantage as they took power. Berman points out that Reagan used economic analysis when it served his political agenda of “regulatory relief”—to require cost-benefit analysis for Executive Agencies, to promote the consumer welfare standard in antitrust, to rein in consumer protection at the FTC—but ignored it (and even cut off funding to policy research) where it went against his political agenda in domains like healthcare funding, environmental regulation, and social welfare policy. Thus began a rightward ratchet effect through which liberals internalized the economic style as a neutral limit to their own political ambitions, while conservatives opportunistically used the economic style as a neutral justification for their agenda where it served them, and ignored it where it did not.
Rethinking the economic style
There is no question that something that we might call the “economic style” is characteristic of contemporary policy discourse, and Popp Berman makes a convincing case that this style gained sway through the Democratic party well before the more radical form that arrived with the Reagan Revolution (or the Carter Administration). She vividly illustrates how even the translation of avowedly social democratic goals into the argot of social welfare functions and self-equilibrating markets can create blindspots while clearing conceptual space for the rightward ratchet that has been called neoliberalism.
But Popp Berman’s account has an important flaw: it risks overlooking the political and methodological struggles within economics that made this style and its purported neutrality possible. Attending to these struggles highlights that the influence of liberal economists cannot be entirely separated from the influence of neoliberals—the battle simply took place earlier.
Economic advisors to the Roosevelt and Wilson administrations were trained in a discipline which was pluralistic and predominantly concerned with how public institutions should ensure that increasingly consolidated corporate power was held responsible to the public interest.3 Its economic style (usually just referred to as “political economy”) was much more heavily historicist, institutionalist and, eventually, Keynesian. Many influential economists in this era were skeptical of overly mathematized and deductive models—and, indeed, some of them used “neoclassical” as a term of derision for those who fetishized perfectly competitive markets rather than theorizing conflicting interests and the role of collectivities in shaping outcomes. These were the economists who staffed the early Federal Trade Commission, the Office of Price Administration, the Agricultural Adjustment Administration, the National Recovery Agency, and so on.
Many institutionalist thinkers were marginalized or forced to disguise their views in the politically repressive environment of the 1950s and others found themselves isolated as policy shifted more to stimulating demand rather than reforming institutions. Meanwhile, the highly mathematized neoclassical methods that neglected questions of power were much more likely to attract Cold War research funding (at RAND, for example). At the same time, the more radical implications—both political and methodological—of these frameworks were smoothed over to fit within an overall “neoclassical synthesis.” As neoclassical thinkers gained control over departments, they often prevented Institutionalists, Keynesians, and Marxists from gaining a hearing in the mainstream of the discipline in the United States (though it took decades for pluralism to truly disappear). These alternative methods became “heterodox,” and developed their research programs at less prestigious and less well-funded departments.
In developing the neoclassical framework and pushing against these alternative approaches, liberals and neoliberals acted as friendly rivals. The sense of a shared “economic style” was created by suppressing forms of economic analysis built on foundations other than efficiency, rationality-as-preference-maximization, markets as variations on a perfectly competitive theme, and the like (“human capital” for labor markets,4 “information economics” for consumer markets,5 “public choice theory” for political institutions).
Thus, even though this economic style may have first been successfully applied to policy by liberal economists operating within the Democratic Party, we should not treat their influence as independent of the neoliberals. Added to the dominance of economics within the Democratic Party is a struggle over the meaning of economics itself.
Reflecting on self defeat
Armed with Sabin and Popp Berman’s accounts, we can begin to piece together a more detailed picture of how New Deal and Great Society liberalism set up the conditions for its own defeat. The economic style and the public interest movement were both manifestations of postwar optimism about human reason, expertise, and the possibility of finding neutral ways to serve the public interest. They built on Progressive and New Deal efforts to rationalize governance, which themselves were premised on a notion of a public interest that balanced the collective needs of different constituencies.
Very few of those involved in making these internal critiques of the liberalism that came before predicted that they were clearing the way for a defeat of the liberal coalition. Most operated on the presumption that conservatism (not to mention socialism or communism) had been resoundingly defeated—that the New Deal regime would perpetuate itself. Yet, through their disdain for coalition and confrontational politics, they failed to appreciate how their own positions depended on the mobilizations, interest groups, and deal cutting that made the midcentury liberal coalition possible. In the case of the public interest movement, their antagonistic strategy to push sympathetic liberals in their direction was increasingly undermined as liberals left Congress. In the case of economists, they became more influential just as the coalition was hollowing out. When the coalitions shifted, so did the impact of their work.
What lessons do these historical reinterpretations hold? Popp Berman provides a good starting point in identifying the specificity of the economic style and encouraging progressives and leftists to recover and develop other registers for policy analysis. Since economists tend to present their style as universal, parochializing it forces open the conversation about how to think about economic institutions and the values that shape them.
Still, to identify the limits of an “economic style” risks treating the methodological questions within economics as settled, leaving only the question of how humble those who use those methodologies should be. And we do not just need to better situate economic analysis within an overall policy analysis; we need to rethink what economic analysis consists of. Doing so involves learning from the heterodox traditions that have not had sufficient attention or support to develop detailed policy programs.
What would this look like? Popp Berman notes that “in making efficiency (in various forms) its core value, the economic style often treats efficiency as self-evidently good, rather than itself a choice that sometimes competes with other values, like equality or democracy.” But rather than balancing efficiency against other values, scholars of law and economy have argued we should abandon it altogether.
The basic economic concept (and the one that applies most frequently in I/O) is Pareto optimality—a state of the world in which nobody could be made better off without at least one other person objecting. But, aside from being regressive and based on absurd assumptions about human decision-making, this concept rarely has purchase in the real world. Kaldor-Hicks welfare maximization, which seeks to avoid the limitations of Pareto efficiency through adopting the policy mix with highest total willingness to pay, ultimately experiences the same problem: it is biased in favor of the desires of the wealthy, requires unrealistic assumptions, and frequently leads to parodic results in practice (as when, say, bureaucrats need to measure the commercial value of biosphere collapse).
In antitrust in particular, the analysis becomes even more tangled. “Allocative efficiency” is supposed to be traded off against “productive efficiency,” but, ex hypothesi, an allocatively efficient outcome is one in which all resources are already being used optimally—that is to say, productive efficiency is an element of allocative efficiency in the standard model. As Sanjukta Paul has made clear, in order to square the circle, the concepts must be modified, such that allocative efficiency means, in essence, low consumer prices and productive efficiency means consolidation that facilitates low prices. So the purported trade off is actually between something like the low prices that supposedly come with concentrated control and the reduction in competition that results from consolidation—“efficiency” does not enter into it.
We can agree with Popp Berman that antitrust policy should not just focus on consumer prices (or on output restrictions that are supposed to mechanically cause increases therein), but we can disagree that this means “trading off” against allocative efficiency. Within the set of values we consider, we might include a more modest and intuitively appealing notion of efficiency, meaning economizing on some dimension (time, energy, money), a version that would make sense to trade off against other values—e.g. economizing on production time vs. creating humane working conditions. This line of analysis leaves open the question of how to balance those values–but if we think that balancing values is part of the task of politics rather than purely a matter of calculation, that is a feature rather and not a bug.
Indeed, any post-neoliberal style of policy analysis worthy of a broadly social democratic coalition must also reexamine the relationship between experts and the messier side of politics. The attempts at disinterest and neutrality—of rising above “interest groups”—from economic stylists was far from neutral: it helped ratchet policy discourse to the right. Its real valence was to focus power in the hands of technocrats, who then pressed a form of policy analysis with regressive tendencies.
The public interest movement had a better sense of politics. It highlighted the insufficiency of creating agencies or programs designed to serve the public interest and the need for insurgent expertise to prevent agency sclerosis and capture and to workshop new ideas for reforms. It also provides a model of policy analysis that does not present itself as disinterested or value-neutral and that takes seriously the need to create programs that reproduce political conditions of accountability and deliberation rather than just targeting static distributional/allocative outcomes.
Yet, as Sabin tells it, the public interest movement is also its own cautionary tale of attempting to rise above coalitions. It institutionalized insurgent expertise not in base-building organizations working together with similar organizations as part of a broader power-building project, but in specialized nonprofits hemmed in by funders. This is a model of change that works best when confronting officials and politicians who are sympathetic, when it can mobilize unorganized people by scandalizing them, and when it is not going up against a better funded and similarly organized opposition—conditions that obtained in the 1960s and early 1970s, but not the present. The foundation-funded insider-advocacy model is even less effective in front of a reactionary judiciary or competing for the attention of the small fraction of Democratic congresspeople who do not just take their agenda from lobbyists and consultants. Nevertheless, it remains the main way that left-leaning legal and subject-matter experts advocate for their causes. These are, accordingly, mostly rearguard actions. Meanwhile conservative organizations that built themselves on the public interest model are thriving.
A form of expertise worthy of a left-liberal coalition that could move us past neoliberalism must be one that does not hold itself apart from base-building organizations or from political calculation. It must be one that breaks down subject-area silos that press for narrow specialized reforms and instead aims to find ways to build power and agendas that combine multiple issues into a mutually agreeable vision. Of course, there is always a risk that incorporating strategic and political considerations will degrade expertise into hackery. But part of the lesson of these books is that even purportedly disinterested policy advice can function as hackery in a given context. Being able to critically assess the complicated political valences of one’s analysis—and acknowledge one’s epistemic limits—is a superior way to manage this tension than pretending at disinterestedness.
The Road from Mont Le Perin: The Making of the Neoliberal Thought Collective, eds. Philip Mirowski & Dieter Plehwe (Cambridge: Harvard University Press, 2015); Philip Mirowski, Never Let a Serious Crisis Go To Waste (London/New York: Verso, 2013); Angus Bergin, The Great Persuasion: Reinventing Free Markets Since the Great Depression (Cambridge: Harvard University Press, 2015); Kim Phillips-Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (New York: W.W. Norton, 2009); Quinn Slobodian, The Globalists: The End of Empire and the Birth of Neoliberalism (Cambridge: Harvard University Press, 2018); Nancy MacLean, Democracy in Chains: The Deep History of the Radical Right’s Stealth Plan for America (New York: Viking, 2017).↩
Amy Sinden, “In Defense of Absolutes: Combating the Politics of Power in Environmental Law,” Iowa Law Review 90 (April 2005): 1405; Douglas Kysar, Regulating from Nowhere: Environmental Law and the Search for Objectivity (New Haven: Yale University Press, 2010).↩
Malcolm Rutherford, The Institutionalist Movement in American Economics, 1918–1947: Science and Social Control (Cambridge: Cambridge University Press, 2013).↩
Laura Holden and Jeff Biddle, “The Introduction of Human Capital Theory into Education Policy in the United States,” History of Political Economy 49, no. 4 (December 2017): 537–574.↩
Philip Mirowski and Edward Nik-Khah, The Knowledge We Have Lost in Information: The History of Information in Modern Economics (Oxford: Oxford University Press, 2017).↩