I went to two very interesting talks yesterday on the history of the economics profession. The talk was jointly sponsored by the BGIE (Business, Government and the Int'l Economy) group at Harvard Business School and Harvard's history department. The speakers were Michael Bernstein and Geoffrey Hodgson. Bernstein is a card-carrying economist whose primary appointment is in the history department at UC San Diego. Hodgson is a UK historian (I forget where).
The talk was a historical and critical review of the evolution of 20th century economics motivated by three propositions. Proposition 1: economics as a discipline narrowed its scope considerably in the 20th century. Proposition 2: economics ceased to be the science of the study of the economy. Proposition 3: the evolution of economics was itself a result of historical contingencies.
Hodgson's argument focused mostly on the Methodstreit. The Methodenstreit was a divisive intellectual debate within economics in the late 19th century between institutional economists (often referred to as the German institutional school) and the Austrian economists (theoretical and mathematical economics). Rather than leading to synthesis, the debate led to a sharp division between institutional economists and theoretical economists, with the latter group winning out. Hodgson argues that the "winner" in this case was no so much determined through a contest of ideas but rather a contest of control over institutions and the profession. The theoretical economists were interested in developing a general theory of economics independent of historical contingency and institutional scopes. Institutionalists, in contrast, began with facts and then developed theory, albeit not parsimonious theory. Hodgson later went on to argue that resulted in a center and periphery split within economics. Theoretical economists went on to occupy central positions within the Academy and the dominant positions in the professional institutions, especially the NBER. Institutionalists were relegated to the sub-field of "economic history", a field that was largely marginalized and seen as "soft".
Bernstein picked up from this point and drawing on his latest book, A Periolous Progress: Economists and Public Purpose in Twentieth-Century America described the evolution of American economics. In this interpretative history of the economics profession, he argues that the very tactics which led to economics becoming the queen of the social sciences have begun to undermine the profession, especially its engagement with major societal issues. Using the major wars as the portal through which to examine the inflections of the profession, he finds that WWI and WWII contributed to the status of the profession. Because of price controls, rationing, operationally efficient bombing, and the demobilization effort, economists became front and center not only in academia but also in policy circles. By the time of the Vietnam, however, a gradual disengagement with public problems took hold. Bernstein writes:
The transformation of the nation's political landscape in the wake of the Vienam era had subverted the very foundations of the liberalism that had made sense out of the New Economics. An emphasis on political economic issues that had framed the high tide of activist government since the New Deal had provided a community of professionals with both the means and the ends to deploy their expertise. As soon as social issues concerning opportunity and equlit occupied center stage, most dramatically in the formulation of the War on Poverty, Amnerican liberalism ran headlong into the abiding national puzzle of race and ethnicity. A backlash was the inevitable result, one that shifted a dynamic emphasis on productivity and plenty during the 1950s and 1960s to a static refrain concerning the costs and benefits, the winners and losers in market outcomes during the 1980s and 1990s.
The irony, he argues, is that by the end of the 20th century the state and collective engagement with social policy which led to the prestige of economics is now largely derided by mainstream economists. This is a fascinating hypothesis tested in a rich and detailed analysis of economic journals, the professional institutions of economics, and the role of professional experts in modern society.