Home > The Economics Profession > “The American Dream and the Boston Economics Party”

“The American Dream and the Boston Economics Party”

from Edward Fullbrook

An invitation to speak at next year’s ASSA annual conference in Boston has reminded me of attending the same event in Boston twenty years ago and of a short article I wrote about it (“No Reality, Please. We’re Economists”, The Times Higher Education Supplement, March 25, 1994). The observations I made then seem no less pertinent today.  Here is a draft of that article.

The American Dream and the Boston Economics Party

Edward Fullbrook
January 1994

When at this year’s American Economic Association meetings a speaker used the word conscience, embarrassment fluttered through the hall.  “The c-word” is taboo among economists. Its effect on our notion of “rational­ity”, which admits only isolated self-interest, is like a lighted match in a gas tank.

The unfortunate speaker (he was later publicly admonished for his impropri­ety) was one of 7200 economists from over 50 countries gathered in Boston for a three-day bash of reading and listening to learned papers.  Astonishingly, this global event for “the queen of the social sciences”, addressed scarcely a word to the world’s mounting economic ills.

This year’s venue, Boston’s Copley Place, symbolizes economics’ current indifference to the woes and aspirations of the man in the street.  This city-centre complex stands as a postmodernist shrine to the socio-economic after­math of Reaganomics.  A French colleague aptly dubbed it “an American Versailles”.  No expense has been spared or architectural excess foregone in constructing its three thirty-story hotels and their connecting half-mile of arcades.

These warm marbled pleasure walks are home to Neiman-Marcus, Tiffany, Gucci, Louis Vuitton and, for nature-lovers, a sixty-foot waterfall.  With their banks of tropical foliage, the elevated arcades crisscross the icy streets of the other Boston.  When arriving from the airport by subway, that system’s antiqueness and the third-world despondency and shabbiness of its users had shocked me.  But in Copley Place, a city within a city and only a short walk from Boston Common, everyone looks middle class or above.

America’s segregation of old required more than laissez faire.  So too does today’s.  Squads of hard-faced men and women in blazers police Copley Place’s homogeneity, especially at its few ports of entry to the other America.  Even the doe-eyed youths who administer loving care to the delicate plants wear neckties.

Copely Place, like similar developments in other American cities, is a prototype of a new form of civic organization.  It is induced — some say neces­sitated — by the increasing bifurcation of America into haves and have-nots.  That economists should be meeting in such a place, given their lead in creating prosperity for all in the first three post-war decades, seemed poignantly sad.

That proud history desperately needs recalling.  At the end of World War Two western governments feared a return to depression.  So they sub­scribed to the new wonder remedy for economic ills, Keynesian economics.  The cure rate was astonishing.  For three decades the middle class expanded as full employ­ment, low inflation and high growth reigned across America and Western Europe.  It set a record of economic performance completely without historical precedent.  In the wake of its colossal success the economics pro­fession amassed prestige, tenured positions and public funding.

But by the early 1970s, Keynesianism, like an antibiotic that has been over prescribed, began losing its curative powers.  Anxious to preserve its position, the profession scrambled to package and market new remedies.

The earlier success, however, had given rise to the dogma that all of economics’ fundamental problems had been solved.  This doctrine had made primary research a forbidden activity, a career-destroying form of heresy.  For a generation the profession’s patriarchs had permitted only analysis conforming to pre-existing models of how economists of the past believed economies functioned.  So, only old ideas, ones predating Keynes, were available for response to the emerging crisis.

The failure of those reconstituted ideas to stem the decline is now also part of economics’ history.  Today Europe stews in persistent double-digit unemploy­ment as fascism and anti-semitism reappear.  While in the United States, it is public knowledge that for the majority of citizens the American Dream is dead or dying.  Falling expectations of standards of economic man­agement are now an implicit part of the public culture.  The era when a widening middle-class, 3 percent unemployment, 2 percent inflation and 3.8 percent per capita growth was the Western norm now seems like a fairy tale.

Memory of the post-war economic miracle greatly embarrasses today’s economists.  It testifies to our radical inferiority to our predecessors in terms of our capacity to treat economic ills and to be of use to society.  Knowing one belongs to a degenerating science does not make one feel good.  Consequently, the post-war miracle is now, by various means, being “pro­gressively” written out of the collective memory.  Already economics’ radical failure to cope with the millennium realities has become one of “the unmentionables of our time” (J. K. Galbraith).  In lieu of a sense of history and of service to humankind, the economics profession increasingly takes refuge in meaningless mathematical puzzles and in the vainglory of its Nobel Prizes.

As a participant in the Boston conference I received a 382 page program listing the 564 sessions and the over 2000 papers.  In vain I studied it for signs that the profession wished to address itself to the economic crises griping the world outside Copley Place.  And, I should add, the paper I gave was no exception.

In any discipline responsibly intent on rectifying its failure to adequate­ly represent and explain its object of inquiry, one would expect to find two things: an empirical focusing on those areas where the system of representa­tion had proven particularly inadequate, and a serious, no holds-barred, critique of theories and concepts.

But, except for sessions organized by women, who recently have gained a toehold in the profession, there was scant sign of such empirical focusing.  And there were no signs at all of mainline interest in rethink­ing the theoretical structure.  Orthodox economic theory is now more sacrosanct than Christian dogma.

I had registered too late to get a room in one of the Copley Place hotels.  So at the beginning and end of each day I had to leave my hot-house world and step out into the real republic.  Walking from my hotel on the morning of “The Presidential Address”, I came upon a parked ambulance.  In the doorway of a boarded-up shop, one of Boston’s homeless had been sleeping.  At first I thought he was elderly; then I realized that the white in his hair was frost.

A few hours later, the president-elect of the American Economic Associ­ation stood under an elephantine crystal chandelier.  He recalled how 43 years ago he had arrived in America as an immigrant.  Fair enough.  But then he claimed that his standing there as the head of “one of the most powerful clubs in the world” epitomized the realization of the American Dream.

Suddenly it appeared to me that the president had crossed over into the subversion of an ideal.  Surely that dream which has given inspiration to most of the world, was not this picture of a man in the exclusive splendour of Copley Place celebrating his hold on the reins of power of a notoriously undemocratic and illiberal institution.  Surely the American Dream, when it had lived, rather than championing the few over the many, had been some­thing like the opposite.

I remember it as the dream that all people, especially those who did not yet have them, would be well provided with the necessities and comforts of life, endowed with the dignity of good education and productive work, and who, after their labors, would feel free, safe and willing to mingle with all comers in truly public places like Boston Common.  The president’s inversion of the American Dream, uttered without malice and in the vacuum of a forgot­ten history, seemed symbolic of the moral decline.

If economic orthodoxy is correct, this article will succeed in arousing not a single economist from their complacency.  If economists are “rational” men and women, seeking to “maximise their utility” as isolated individuals, then they have nothing to gain from abandoning their pro­fessional disregard for the economic perils of our age.  Neither their livelihoods, nor their junkets, nor their prestige, nor even the aura of their Nobel Prizes are at risk.  Indeed, they will find their self-esteem severely dented if they dare venture beyond their Copley Place worlds.

So, in the end, I have no basis for “rational” appeal.  In the end I can only invoke the c-word with intent.  All I can do, all anyone can do, is appeal to their conscience.

  1. William Neil
    March 5, 2014 at 4:03 pm

    Bravo Mr. Fullbrook. I happen to be currently working in the mines of the history of the American Dream, as well as in other veins, the nature of the Western democratic tradition as passed on by Greece and Rome.

    I would refer all interested professional economists to an essay by the late Richard Hofstadter, one of the truly great American historians, about Abraham Lincoln, the actual formulator of “The Dream,” entitled “Abraham Lincoln and The Self-Made Myth.” It appears in his wonderful book, “The American Political Tradition,” 1948 – a year of the last hurrah, some would say, based on Truman’s campaign, of the New Deal, although the institutions set in motion by that New Deal had a powerful carry-over effect with the now lost benefits cited by you in your speech. (And some are still with us, but under siege.)

    Hofstadter’s essay is profound for its fairness and lack of illusions: Lincoln’s life truly embodied the best of the dream, just as his youthful years in Jacksonian America saw perhaps the world’s purest example of a capitalism of many small competing firms, and I certainly include the most dominant category of them – the farmers. Lincoln spent his share of time at the bottom, near the “mud-sill” level, but as he noted, with any display of the traits the Dream requires – that are part of its definitions – hard work and self-denial, money could be set aside to rise by procuring one’s own land or starting a small business – or towards the professions: law, medicine, ministry. The 1820-1840’s were perhaps the greatest time of correlation between the dream and economic reality. Yet Hofstadter qualifies the myth, in Lincoln’s own life and the economic life of the nation. He married well and early won the support of the upper middle class, if not higher of his day. That helped his climb, no doubt. He had to turn his back upon his father, and move to the physcial frontier of his day, early indications of the unspoken costs and price of mobility: opportunity yes, certainly, but a fracturing of family and community as certain costs. He said in later political life that if there was a conflict between the man and dollar, the man must come first, but left out of that simple equation were these unspoken human costs of those “in the race” to self-improve and climb.

    And Hofstadter’s clear eye said that already by the 1850’s. this dynamic commercial society contained the seeds, foreshadowed the evolutionary path that would end in the Gilded Age of the Robber Barons. Here, in some of the most powerful and impassioned historical writing in our annals is how he described the drama:

    “If there was a flaw in all this, it was one that Lincoln was never forced to meet. Had he lived to seventy, he would have seen the generation brought up on self-help come into its own, build oppressive business corporations, and begin to close off those treasured opportunities for the little man. Further, he would have seen his own party become the jackal of the vested interests, placing the dollar far, far ahead of the man. He himself presided over the social revolution that destroyed the simple equalitarian order of the 1840’s, corrupted what remained of its values, and caricatured its ideals.”

    To this I can only add a couple of observations of my own about what the best of the Lincoln formulation of the American dream got right, and what it missed. Lincoln referred to the frantic pace of self-improvement and upward mobility as “the race of life,” and crucial to the fairness of the view was that if one worked hard and saved a bit, most could advance, was the belief that very few – black Americans to be sure – would be stuck in that “mudsill” layer of the worst of the world of work – and the implied dependency that went along with it. This notion is still overwhelmingly with us today, heard again and again in President Obama, and I hear it in the difficulty even union leaders have in addressing the idea of the working class – I’m thinking of the SEIU president talking about her campaign for a $15.00 per hour wage for fast food workers. Will that make them middle class, be mobility itself…or just serve as the first rung in a ladder out of…out of well, what, the working class? Or is this the first of the campaign to accept the fact that we have created a structure in the economy where as the EPI in DC has said, 28 million Americans work for $9.89 per hour or less. There are not enough ladders of mobility and opportunity in all the firehouses and Home Depots of America to get 28 million into the middle class…and if you listen closely to those on the left, and office holders, they really fumble and blur the descriptions of where these 28 million stand (and I am one of them at $8.75 per hour after 18 months at a Fortune 100 company…yes, Fortune 100). This then resembles in some ways, the great “social question” of the late 19th century when the millions of unorganized industrial workers gave an entirely different cast to Lincoln’s “mudsill layer,” which most white workers wouldn’t have to spend much time in.

    Enough. Thanks once again, Mr. Fullbrook.

  2. William Neil
    March 6, 2014 at 1:04 am

    Professor Fullbrook, after having left nearly a day long pause and seeing no other comments I don’t feel as though I’m crowding anyone out, so I would like to proceed with a further comment, a complex one, starting with your important observation that “Orthodox economic theory is now more sacrosanct than Christian dogma.” I think that’s true and it has important implications for public policy, the state of democracy in capitalist societies, and the assignment of “status” in society, and I hope to be able to tie these factors together with the nature of the American Dream.

    I am going to refer all the good economists here at the site to an important essay which just surfaced about a week ago at Naked Capitalism, by Yanis varoufakis (http://www.nakedcapitalism.com/2014/02/yanis-varoufakis-can-internet-democratize-capitalism.html) of the University of Athens. Set the internet connection aside, this is really an essay about how in the West, there has been a long evolution away from the classical definition of what it means to be fully human, from public man in the Agora and the Assembly, especially the Athenian ideal, to the contemporary version of economic man who has eclipsed political man. Varoufakis says the troubled state of democracy, its apathy of the masses and the domination of public policy especially by financial elites and their supporters in the economics profession who drive public policy, is by design, intentionally veering toward oligopoly and distance between the voter and his representative…which was not the case in face-to-face Athens, setting aside for the moment the question of slavery which I did above, as well, in my first comment on Jacksonian democracy and its purest form of capitalism.

    Yanis sees the great maldistribution of wealth and income as reflecting these outcomes in democracy’s processes, indeed the two are interwoven, with one additional factor: there is a Protestant twist to this in the West, connected to the process (remember the American Dream formula from Lincoln’s time): success is connected to hard work and thrift and character: in Lincoln’s time, this was obvious because success and mobility had its hey day in terms of opportunity and probability; its very, very different today, in the US, but also Western Europe, but economic failure is still taken by many, silently and individually, as a outcome of bad character, and it’s impossible not to hear this in the Republican Right’s assignment of blame for the crisis (compassionate do-gooderism in housing) and bad characters applying for the govt’s generosity foisted upon the virtuous, hard-working private sector (after all, they were in a form of financial “manufacturing” of mbs instruments, were they not?) When Paul Krugman complains that the Right, and much of orthodox economic policy has turned public debt and deficits into a “grand morality play,” he fails to realize this legacy: he is exactly right, economic orthodoxy it is still a grand morality play, as it was in the 19th century, with the ideal being a gold standard for international trade and balanced domestic budgets…

    Karl Polanyi would agree with this, and he wrote eloquently of the religious intensity with which the classical economists pursued their project of the world’s first fully dominant labor market in England, that when they realized what a grand project it was, and how much additional social engineering had to accompany it, they had to be driven by a near religious frenzy to enact the full project, including the overturning of the Corn Laws, imposing a model of free trade in agriculture which was probably counter to England’s best national interest, given its propensity for war, perhaps made more understandable by the long relative peace from 1815-1914.

    But at the heart, at the bottom of deep differences between the left and right in America today, and I believe this also is true between the left and right in economics, is the crucial question of causality, heard very clearly in the discussion of the causes of the economic crisis. The left has the inclination to assign some if not most of the moral blame to the nature of economic institutions – the lenders and the debt issuing private sector, in financializataion turning every existing flow of income into a speculative debt instrument, from student loans, to auto loans to mortgage loans to time shares on vacation condos. And the nature of the economy shifts over time; very different in the Jacksonian era, from the Guilded Age, from the 1920’s to the 1930’s…and today…The Right now puts the burden on the bad character traits, family life and habits of the poor – their failure to constantly update their skills (Tom Friedman would have them learning until they had one foot in the grave), and their traits seem to spill over to the government itself, which always does things worse than the private sector. What did you expect from an institution full of weak characters; that’s why we need the revolving door, to recruit, to start of interveinous drip of good goldman sachs characters at the highest level.

    Interestingly enough, Professor Varoufakis lists one of my most recommended books, “Hellfire Nation: The Politics of Sin in American History,” 2004 by James A. Morone of Brown University. Morone says a central tension in American life is the question of whom we blame when things go wrong, not only, but often, during periods of economic stress: do we blame the individual or the system. He answers that predominantly we blame the individual, not the system, except when the system nearly collapses, as in the Great Depression, and then the Right says it was human error, policy mistakes made by the federal reserve, not more important systemic troubles like under-consumption and farm deprivation and speculation.

    Let me finish these very complex matters which I can only suggestively sketch out here, with some further thoughts on economics and the American Dream. It is precisely the moral intensity of the Dream, the burden of good character, hard work as the determining factors in upward mobility and success in Lincoln’s “race of life” that give it such a painful poignancy and potentially dangerous psychological dimension at a time when it is really a much deeper crisis in capitalism itself that is causing so much pain.

    The odds and nature of our economy are very different than in the Jacksonian era and Lincoln’s formulation, but the Right and Economic Orthodoxy, with religious fervor, put all the burden on the individual, leading to some of Mr. Friedman’s “roadkill analogies,” disdain for organized labor, and his preachment of cradle to grave learning – the burden falling on individuals not economic institutions.

    And please note the ahistorical nature assigned to the turning points of causality on the Right and in orthodox economic land: they take a dynamic system which shaped not only economic but cultural life (the pill, the credit card and the auto…the internet….)and pretend that it is all based on timeless formulations from the late 18th and early 19th century, with a burst of updating in the late 19th. But economic life looks to me to have been very different in 5th century Athens, second Century Rome, the Middle Ages, the Renaissance (which poses a lot of challenges) the early and late 19th century…and coming round back to Professor Fullbrook.s speech, the 1945-1971 period compared to today. I would add one final thought, relating to his use of the word conscience; I will say it a little differently but I think we are driving at the same idea: institutions – democracy, the economy, civic life have their “morality dimension” as well as individuals, and they are not constants as time goes on and history records different epochs…why there is not equal emphasis on personal morality and institutional morality is a mystery to me, but if you listen carefully to the depths of left-right debates, you’ll here the huge differences… and I believe that the social democracy which Karl Polanyi stood for and expressed in his great book achieves a balance between the public and the private…I think it is called social democracy, a term much in eclipse…but I fully agree with Professor Varoufakis that democracy needs much tending and revision as well…they (the economic) go hand in hand and it makes sense that both are under great strain today.

  3. March 7, 2014 at 10:30 am

    Bravo indeed Edward. I especially appreciate you recounting the post-war economic miracle, which puts the neoliberal era in the shade even without including the neoliberal-generated great recession.

    I would just add that the subsequent ascendancy of older, pre-Keynesian ideas was very much to do with a campaign initiated by Hayek and his Mont Pelerin Society to promote libertarian ideas, which the wealthy were very happy to sponsor, as libertarianism allows them to do whatever they like.

    Perhaps the libertarian takeover was aided by the academic profession having neglected its job of critically examining ideas, but there was a big push as well.

  4. PZ
    March 10, 2014 at 8:50 pm

    Economics as a profession is thorougly politicized subject, especially in the united states. Ideas of the old were resurrected because they pointed to politically convenient outcomes. Amongst all people those who have far-right leanings have the most motivation to participate in economic policy discussions. And their policies are based on hate.

  5. March 13, 2014 at 1:56 am

    “It set a record of economic performance completely without historical precedent.”


    Economic growth from 1933-1945 was 10% a year. Economic growth 1945-1970 was closer to 5% a year. Can we cut out the “Post WWII growth was unprecedented” nonsense already?

    “But by the early 1970s, Keynesianism, like an antibiotic that has been over prescribed, began losing its curative powers.”

    Again, the 1970s myth. The 1970’s were slow compared to earlier periods, but had almost the same growth as the 1980s. Killing unions plus a major war and two massive energy shocks does not sound like a failure of “Keynesianisms curative powers” to me.

    “The earlier success, however, had given rise to the dogma that all of economics’ fundamental problems had been solved.”

    Sorry, I think you mean “Slow but steady pressure by college donors to push economics to the right had given rise to the dogma that all of economics’ problems had been solved.”

    “Memory of the post-war economic miracle greatly embarrasses today’s economists.”

    You mean “should greatly embarrass today’s economists”. I have seen no sign of embarrassment.

    “I remember it as the dream that all people, especially those who did not yet have them, would be well provided with the necessities and comforts of life, endowed with the dignity of good education and productive work, and who, after their labors, would feel free, safe and willing to mingle with all comers in truly public places like Boston Common.”

    This part I agree with whole-heartedly.

    “So, in the end, I have no basis for “rational” appeal. In the end I can only invoke the c-word with intent. All I can do, all anyone can do, is appeal to their conscience.”

    Ditto. This is a good line.

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