Thinking Like an Economist: How Efficiency Replaced Equality in U.S. Public Policy, by Elizabeth Popp Berman (Princeton, 2022).
The book details how what she calls “the economic style of reasoning” has become the dominant way of thinking about public policy in the United States. This is usually (almost universally) seen as a result of the movement led by Hayek and the Mont Pelerin Society that became known as neo-liberalism. Instead, Berman argues, “the most important advocates for the economic style in governance consistently came from the center-left.”
In the 1960s two intellectual communities within economics played the crucial role. One was a systems analysis group from RAND Corp. at the beginning of the Kennedy administration. The other was a network of university economists specializing in industrial organization, first at Harvard University and later at the University of Chicago.
These economists became key advisors and formulators of policy, introducing cost-benefit analysis and other tools for assessing government policies and raising efficiency above other policy goals. As macroeconomics descended into doctrinal disputes about fiscal and monetary policy in the 1970s, US conservatives turned this into a deregulatory agenda. At the same time institutional economists lost their standing in university departments as the mathematical turn after Samuelson marginalised their work.
The book records (in great detail) the development of the economic style, how many of its leading advocates came from the Democratic party and the left, and how the right strategically used these ideas to promote policies that turned social, moral and ethical issues into ones about markets, allocation and tax. It focuses on the 1960s and 70s, and the treatment of later developments is rather short, however the key point is that the earlier turn towards “the economic style of reasoning” laid the groundwork for the regulatory approach taken. Highly recommended.