The Economists' Hour

Introduction: How Economists Gained Political Power

In the mid-twentieth century, economists were largely excluded from American political power. Figures like Paul Volcker started as mere human calculators in the lower levels of the Federal Reserve. Leaders like William McChesney Martin openly mocked the profession as a group of theorists who did not understand their own limitations. Presidents from Roosevelt to Eisenhower viewed economists as impractical mathematicians, and the Supreme Court frequently dismissed economic evidence as irrelevant to matters of law.

By the 1970s, a profound revolution shifted the seat of authority from traditional bureaucrats to advocates of the free market. As the post-war economic boom faltered, a new generation of thinkers argued that economics held the ability to eliminate scarcity through better policy. This era saw these specialists move from the basement to the highest levels of government. They successfully advocated for the end of military conscription, the deregulation of massive industries, and the assignment of dollar values to human life to justify policy decisions.

This movement was fueled by a fundamental shift in political faith. Previous leaders like John Maynard Keynes believed the economy required the steady hand of government intervention to remain stable. The new guard preached that markets were entirely self-correcting and that policymakers should simply get out of the way. This deep trust in markets found a powerful ally in the corporate elite and the rising political right, who provided the funding to turn academic theories into global reality.

The results of this economic revolution were a study in contradictions. The global embrace of free markets successfully lifted billions of people out of poverty and created a world of unprecedented consumer choice. However, the single-minded pursuit of economic efficiency came at a staggering social cost. By focusing on the overall size of the economy rather than how wealth was distributed, leaders presided over a period where the middle class stagnated and life expectancy for the poor began to decline.

Ultimately, the triumph of market logic transformed the very nature of modern society. Citizens were no longer viewed as members of a shared community, but as individual rational actors engaging in transactions. This shift replaced the messy moral debates of democracy with the cold calculations of a spreadsheet. While the market-driven approach generated immense national wealth, the decision to remove government guidance left nations increasingly fractured in spirit.