Liberal Technocrats and the Economic Ideology of Efficiency

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• Liberal Technocrats and the Economic Ideology of Efficiency
• Laura Phillips-Sawyer (bio)

Elizabeth Popp Berman, Thinking like an Economist: How Efficiency Replaced Equality in U.S. Public Policy. Princeton University Press, 2022. x + 334 pp. Notes, bibliography, index. $37.00

Thinking like an Economist opens with a familiar lament: that liberal Democratic presidents have lost their progressive edge. Democratic policies, Elizabeth Popp Berman explains, no longer embody the core values and aspirations of New Deal and Great Society programs—”political claims grounded in values of rights, universalism, equity, and limiting corporate power” (p. 4). Those noneconomic values once motivated and sustained progressive policies in social policy, antitrust law, and social regulation of health, safety, and the environment. Today, however, Democratic policymaking embraces a traditionally Republican focus on “leveraging choice, competition, incentives, and the power of markets in the pursuit of outcomes that would be not just effective, but efficient” (p. 2). This embrace, she argues, has redefined what constitutes “good policy (p. 6)” and constricted the “very horizons of possibility (p. 3)” for contemporary American progressives.

Berman argues that “liberal technocrats”—professionally trained public servants who identified with a centrist Democratic Party—brought postwar neoclassical economics’ obsession with efficiency into government. Beginning in the 1960s, systems analysts and industrial organization (IO) economists deployed an economic style of reasoning as a politically-neutral tool to “rationalize” bureaucratic decision-making processes and economic regulation. Elite economics departments initially developed the core tenets and basic presumptions of neoclassical economics, but this way of thinking through real-world problems quickly spread to law schools, public administration programs, and especially think-tanks. A feedback loop formed that reinforced the trend. Eventually, those liberal technocrats—not right-wing conservative or libertarian pundits—elevated efficiency (broadly defined) as the core principle of policy analysis. Through the ubiquity of cost-benefit analysis, efficiency displaced other values, such as universal access, democratic participation, or decentralized economic power. By the 1980s, where many stories of “neoliberalism” [End Page 262] and deregulation begin, Democratic policymaking had already been captured by economists’ understanding of efficiency.

So, what does it mean to think like an economist? Do all economists think alike? Here, Berman sets her book apart by focusing on postwar neoclassical microeconomics, rather than macroeconomics. Macroeconomics is concerned with national-level fiscal, monetary, and trade policies. Microeconomics, on the other hand, is about the decisions of individuals, households, and firms participating in market exchanges. In the late 1940s, the economist Paul Samuelson established a “newly consolidated microeconomic story” (p. 37). with his seminal undergraduate and graduate textbooks. For Samuelson, decision-making must always be made under some constraints, such as scarce resources, and the goal of the economist is to quantify and analyze how those choices affect an efficient allocation of resources. That analysis is based on a series of presumptions: that individuals are rational and profit-maximizing, that resources are scarce, and that market competition produces the most efficient allocation of those scarce resources. Using those presumptions, microeconomic models simplify and quantify costs and benefits to produce reliable estimates of price and cost curves and thus, efficiency gains or losses. The problem is that because those models are always and by design simplifications of a more complex reality, their continual study and repeated use can ingrain a restrictive approach to analyzing problems, an approach Berman characterizes as “unrepentantly utilitarian and consequentialist” (p. 39).

Berman organizes Thinking like an Economist around two groups of “liberal technocrats” who came to Washington armed with this new economic thinking and ready to rationalize government (not tear it down). First, systems analysts from the RAND Corporation reoriented the internal, administrative processes at the Department of Defense. They were concerned with improving “How to Make Government Decisions” (Chapter 3). They prescribed new systems to measure cost-effectiveness, and their interventions would ultimately reorient how social policies would be assessed and executed. Second, industrial organization economists reframed “How to Govern Markets” (Chapter 4). They focused mainly on antitrust law and policy, but their efforts spilled over into other areas of economic regulation, such as the deregulation of airline and trucking industries. Those two groups of academics-cum-policymakers, and the reforms they pursued, frame the remaining...