Abstract
In the fall of 1986 I was enrolled in a master's program in public policy, and Steven Rhoads’s (1985) The Economist's View of the World: Government, Markets, and Public Policy was one of the required texts. The “economist’s worldview” seemed strange, even heretical, to my 20‐something self. My margin notes in the book—it is still on my shelf—include the comment that economists appeared to be “a different species.”
Clearly I was out of step with the times. Elizabeth Popp Berman's latest book, Thinking Like an Economist: How Efficiency Replaced Equality in U.S. Public Policy, makes a persuasive case that by the 1980s “the economist's view of the world,” or what she calls “the economic style of reasoning,” had become familiar, even orthodox, in Washington, DC policy circles. The values of “efficiency, incentives, choice, and competition” now were thoroughly embedded in policy arguments from the left as well as the right, crowding out more traditional Democratic appeals to the importance of “rights, universalism, equity, and limiting corporate power” (p. 4) in proposed solutions to various public problems. The origins of the economic style of reasoning, the mechanisms by which it became institutionalized in U.S. policymaking, and its potential implications for American politics are explored in this well‐researched and engaging book.
Like Berman's first book, Creating the Market University: How Academic Science Became an Academic Engine (2012), Thinking like an Economist traces the material and ideological linkages between the academy and the state before and after the watershed decade of the 1970s. Creating the Market University showed how policy decisions reshaped the academy: a diverse set of court cases and legislation changed the legal and material environment that universities operated in and thus fostered a shift in the “institutional logic” of academic science. By the 1980s, the notion that in the academy scientific knowledge properly was pursued for its own sake had been displaced (though not completely replaced) by a “market logic.” Universities now were likely to view academic science as an “economic engine” in which innovation drove economic growth, rather than simply as a passive “economic resource” that firms “would draw upon as needed to solve industrial problems and make technical advances” (2012:3). In contrast, Thinking like an Economist examines how the academy also helped reshape policymaking: post-World War II, the growing prominence of microeconomics in academic departments of economics gave rise to a style of reasoning in which efficiency is the primary criterion for assessing policy alternatives and market mechanisms are the most “efficient allocators of resources” (p. 6). Berman argues that this economic style of reasoning made its way to Washington in the 1960s, was institutionalized in the 1970s, and has reshaped U.S. policymaking and party politics in the decades since.
Berman describes two paths by which the economic style of reasoning gained organizational footholds in Washington in the 1960s; in each case, this process either fostered or was reinforced by the emphasis on economics in professional schools’ curricula. In one pathway, economists (along with mathematicians and engineers) at RAND developed systems analysis, an approach to government decision‐making that emphasized cost effectiveness and was used to create a Planning-Programming-Budgeting System (PPBS) for the Pentagon during the Kennedy administration. To comply with President Johnson's later requirement that nearly all executive branch agencies adopt PPBS, most of these agencies created policy planning offices (PPOs) and then scrambled to staff them with people trained in microeconomics’ core concepts, causal assumptions, and modeling techniques. In response, universities created new graduate programs in public policy and hired economics PhDs as faculty. In the other pathway, by the 1960s law schools had begun to hire economists trained in industrial organization (I/O) to teach in the areas of antitrust law and industry regulation, exposing law students to the view that federal policy should foster market competition and promote allocative efficiency instead of regulating industries with an eye toward their social or political impacts. Law school graduates brought these ideas with them to the Federal Trade Commission (FTC), the Antitrust Division at the Department of Justice, and think tanks like the Brookings Institution and the American Enterprise Institute.
Berman traces how these organizational footholds led to the 1970s institutionalization of the economic style of reasoning in the executive, judicial, and legislative branches of the federal government. In separate chapters, she documents this process and its effects on policymaking in three domains: social policy (welfare and health care), market governance (antitrust and transportation policy), and social regulation (environmental policy). Berman does a deep dive into an array of rich archival sources to show how demand for, and acceptance of, the economic style of reasoning was furthered in each domain by a feedback loop between these organizational changes, the dramatic growth in policy evaluation research organizations (especially in social policy), evolving legal frameworks (especially in market governance), and administrative rules promulgated through executive orders and agencies (especially in social regulation). Taken together, these chapters form a compelling account of how the economic style of reasoning became embedded in the bureaucratic apparatus of federal policymaking, thus privileging efficiency‐based arguments and delegitimating equality‐based arguments for specific policies.
For example, Medicare and Medicaid were created in 1965, “driven in part by the logic of social insurance . . . and rights” (pp. 120–21). In response to the subsequent rapid increase in medical care costs, in 1970 Senator Ted Kennedy introduced a Health Security bill that would have folded Medicare and Medicaid into a fully national health insurance system, again based on the argument that good health care was a right of citizenship. In search of counterproposals, Nixon turned to ASPE, the PPO in the Department of Health, Education, and Welfare, which previously had published a report analyzing “healthcare as a market . . . centered heavily on finding ways to promote efficiency” (p. 120). Nixon's approach to health care policy moved in the direction of cost sharing, means testing, and cost effectiveness and led to the establishment of HMOs. “By 1979, even Ted Kennedy had compromised on his earlier proposals, introducing elements of competition into his latest attempt to secure universal coverage even as he retained the language of rights” (pp. 186–87).
In the remaining chapters, Berman turns to the political implications of the institutionalization of the economic style of reasoning, arguing that this “was not as constraining for conservatives as it was for liberals” (p. 17). In partial support of this claim, she asserts that Republicans simply were “more willing” than Democrats to “ignore economic reasoning when it conflicted with” their policy agenda (p. 18). Certainly there is evidence that the Reagan administration used the economic style of reasoning strategically rather than adhering to it across the board. Staff in the PPOs of Health and Human Services and in Housing and Urban Development were drastically cut, and funding for policy evaluation research on welfare and housing assistance shrank, thereby decreasing the influence of the economic style of reasoning in the social policy domain (pp. 203–205). Conversely, Reagan's staffing cuts at the Antitrust Division and the FTC amplified the influence of the economic style of reasoning in market governance by greatly increasing the ratio of economists to lawyers among the staff who remained (pp. 208–209). And because Reagan viewed cost‐benefit analysis as a way to curtail environmental and safety regulations, he expanded the influence of the economic style of reasoning in social regulation by placing oversight of all regulations in the newly created Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget (pp. 211–12).
But since Berman presents no evidence about the how the economic style of reasoning was used during any of the Bush administrations, it is difficult to accept her claim that the pattern during the Reagan years is a Republican pattern. Moreover, Democrats seem as likely as Republicans to selectively invoke the economic style of reasoning when debating whether to continue, terminate, or reform ineffective (let alone inefficient) social programs. Berman's description of how the economic style of reasoning fostered (and then was reinforced by) a thriving “ecosystem” of policy evaluation research organizations focuses mainly on how prospective evaluation research shaped the formulation of new policy alternatives, but a good deal of policy evaluation research assesses existing programs. Program assessments typically find few or no demonstrable impacts, and even successful programs “often fail when replicated”; yet policymakers across the political spectrum commonly disregard this evidence in their decision‐making (Gamoran 2018:183, 185).
When Berman argues that the fundamental principles embedded in the economic style of reasoning in and of themselves constrain Democrats’ policy agendas, she is on firmer ground. She points out that the economic style of reasoning can be used to critique any particular (liberal or conservative) policy proposal as inefficient but cannot be used to counter a (typically conservative) stance that government should not be used to address a public problem, such as poverty (p. 17). And the institutionalization of this style of reasoning in legal frameworks and administrative procedures makes it difficult to circumvent. If the economic style of reasoning cannot be disregarded, can Democrats work within its parameters to advance (some) left‐of‐center policy positions? Berman's answer is “Yes, but . . .” For example, on the first day of his administration Biden directed the OMB to “look for ways the regulatory review process [as overseen by OIRA] can promote . . . equity . . . ‘racial justice,’ and ‘the interests of future generations’” (pp. 231–33). A May 2023 New York Times article reported that Richard Revesz, Biden's pick to head OIRA and the coauthor of Reviving Rationality: Saving Cost-Benefit Analysis for the Sake of the Environment and Our Health (2020), proposed changes in how federal agencies conduct cost‐benefit analyses of proposed regulations. Revesz favored including costs to future generations (not just the current population) and considering how costs and benefits of a proposed regulation might affect various subgroups differently (rather than just the population as a whole). Modifying cost‐benefit analyses in these ways almost certainly would be used to justify more aggressive regulation of greenhouse gases and tailpipe emissions, but would “not fundamentally challenge the economic style” (p. 232)—indeed, it can be argued that this would further reinforce the centrality of the economic style of reasoning to U.S. policymaking. Moreover, Berman cautions that “there are limits to the range of policy positions that can be made consistent with the economic style of reasoning” (p. 232). It's as if liberal Democrat policymakers are trapped in an ideational version of the Dupont Circle traffic roundabout, where the constant rush of policymaking inhibits attempts to exit, and all the exits are to the right in any case.
Are there any policy contexts in the United States where the economic style of reasoning is less pervasive and/or is successfully contested? Future research might leverage state‐level variation in education and welfare policies to explore whether policymaking processes in red and blue states exhibit variation in the use of arguments that appeal to values of efficiency and competition versus equality and universalism. In what sorts of state contexts have policy rationales other than the economic style of reasoning been effective? Policy also is made at the local level, where “street-level bureaucrats”—teachers, social workers, police officers—exercise discretion as they implement policy‐as‐written and deliver services on the ground (Lipsky 2010). The 1970s saw widespread calls for efficiency and accountability in public education, casework, and policing; these calls have only intensified in the last two decades as state budgets have continued to tighten. But seeking efficiencies in street‐level bureaucracies is likely to result in the debasement, not improvement, of social services due to the structural conditions of this work, and street‐level bureaucrats have strong incentives to retain discretion in their practices (Lipsky 2010). What sorts of arguments have teachers’ unions, police unions, and other stakeholders used to resist local‐level calls for efficiency in teaching and police work?
As an alternative to working within the economic style of reasoning, Berman endorses a longer‐term strategy for creating new ways of reasoning: investing in think tanks, such as Demos and the Economic Policy Institute, “in which alternative frameworks can be incubated and spread” and a policy language of moral imperatives, rights, equality, and universalism can reemerge (pp. 22, 226). She also holds out hope that as the U.S. discipline of economics continues to evolve, new approaches to formulating policy solutions to public problems will arise (p. 232).
“Thinking different” is no small task if the economic style of reasoning is as entrenched as Berman's research suggests. A useful first step might be to look outside the United States. Fourcade (2010) argued that the U.S. discipline of economics differs from Continental economics in several ways, including greater intellectual homogeneity on the principles of “free trade, the economic benefits of technology, and the efficiency of the price system” (pp. 63–64), the particular “intellectual and institutional trajectories leading to the mathematization of economics” (p. 90), and the extent to which the discipline is marked by “imperialist expansion” “into new and increasingly remote fields” (p. 92). Thus the “economic style of reasoning” Berman describes may be distinctive to U.S. policymaking. Is cross‐national variation in the intellectual orientations and configurations of academic departments of economics associated with variation in the styles of reasoning used in other nation-states’ policymaking? If “thinking like an economist” is differently instantiated in French or Swedish policymaking, this can be a starting point for new ways of thinking here.
Berman’s framing of her research offers no more than a nod toward some of the ongoing theoretical conversations within the subfields of political sociology and the sociology of organizations—for example, the determinants of state capacity, or when and how the state may be a target or a source of social change (p. 223)—and this is a significant shortcoming of the book. Instead, Berman uses the wealth of evidence she has amassed to contribute to debates about how to explain the 1970s shift toward policies affirming the desirability and necessity of “transferring economic power and control from governments to private markets” and valuing economic growth and efficiency over the equal distribution of resources and environmental sustainability (Centeno and Cohen 2012:318, 328).
Berman argues that standard neoliberal accounts characterize the ideological underpinnings of this policy shift too narrowly, as centered on the right's concerted efforts to advance the free‐market ideology of the Chicago School via conservative think tanks and other institutions. Instead, the evidence suggests that “we should turn our attention toward [a different ideological shift:] an economic style of reasoning that is not associated with the right, that is not explicitly political (and indeed gets part of its power from its appearance of neutrality), and that has been advanced by Democrats even more than Republicans” (p. 18). The economic style of reasoning came to Washington policymaking under Democratic, not Republican administrations: Kennedy commissioned PPBS to bring the exploding defense budget under control in the Cold War era (p. 52); Johnson's 1965 expansion of PPBS to nearly all executive agencies was motivated by public concern about increased federal spending on social programs and the Vietnam War (p. 56) and “set the stage . . . for reining in the Great Society” (p. 101). The economic style of reasoning was not unilaterally advanced by Republican administrations: as detailed above, Reagan used this reasoning selectively, and Nixon discontinued the required use of PPBS in the executive branch—albeit too late to dislodge the organizational footholds for the economic style of reasoning in PPOs and public policy graduate programs (p. 58). Finally, the center‐left technocrats who pioneered the application of the economic style of reasoning to social policy, market governance, and social regulation believed government had a role to play in solutions to public problems and wanted to improve government, not shrink it (pp. 222–23).
One of the through lines in Berman's work is a focus on economization, which she defines as the historical “shift toward thinking in terms of the economy,” and especially a shift toward thinking in terms of using government to improve the economy (2014:399). “Economization”—a process that constitutes the state as well as individuals as economic actors—rests in turn on quantification, the set of practices that make it possible to organize and assess performance “in accordance with principles of efficiency” (Mennicken and Espeland 2019:233). For Berman, both the turn to a market logic in academic science and the entrenchment of the economic style of reasoning in policymaking are examples of this process, and both are broader phenomena than the concept of neoliberalism can capture. While the economic style of reasoning, market logic, and economization might appear on the surface to be value‐neutral, Berman is deeply concerned about the power of these ideas to encumber everyone's thinking—on the left and the right—about what sorts of ends are possible or desirable to pursue.