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Comment on William J. Novak: Institutional Economics and the Progressive Movement for the Social Control of American Business

Published online by Cambridge University Press:  20 January 2020

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William J. Novak's engaging historiography is at once a recovery project and a prolegomenon to a revised history of political economy. His article chronicles the achievements of Progressive Era institutional economists and critiques the way they have been obscured by the shadow of the Chicago School of economics. Why do the Progressives deserve to be recovered and remembered? According to Novak, it is because they “underwrote one of the more fundamental governmental revolutions in modern times” and created the foundations for the “social control of business” (pp. 676, 672).

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Copyright © The President and Fellows of Harvard College 2020

William J. Novak's engaging historiography is at once a recovery project and a prolegomenon to a revised history of political economy. His article chronicles the achievements of Progressive Era institutional economists and critiques the way they have been obscured by the shadow of the Chicago School of economics. Why do the Progressives deserve to be recovered and remembered? According to Novak, it is because they “underwrote one of the more fundamental governmental revolutions in modern times” and created the foundations for the “social control of business” (pp. 676, 672).

At first glance, Novak's essay has much in common with Thomas C. Leonard's recent study of the American economic profession. Like Novak, Leonard argues that “the progressive economists completely remade the nature and practice of their own enterprise.” His text, Illiberal Reformers, starts by telling “the story of the progressive scholars and activists who led the Progressive Era crusade to dismantle laissez-faire, remaking American economic life.”Footnote 1 He also documents the expansion of their ideas into public life, their reform of American government, and the creation of an administrative state. But Novak's and Leonard's stories diverge when Leonard outlines the ways in which Progressive economists like Richard T. Ely, John R. Commons, and Edward A. Ross used their influence and intellectual capital to support theories behind race-based immigration restriction and to advocate for the racist foundations of eugenic beliefs in the inferiority of African Americans. According to Leonard, this is the dark side of the story of Progressive economic achievement.

Not surprisingly, Leonard's work has been the subject of some controversy. He has been lauded for making “a significant contribution” to the literature, and he has also been faulted for writing anachronistic and “motivated history.”Footnote 2 Without getting into the details of the debate, the essential point he makes is that any discussion about the accomplishments of Progressive reformers should address their record on race and inequality.Footnote 3 Progressives were a diverse group, and there were reformers who focused on racial equality and justice (including Ida B. Wells and W. E. B. DuBois), but generally speaking, the Progressive movement did not prioritize racial equality, and American Progressive economists were no exception. Acknowledging this does not contradict Novak's goal of establishing the far-reaching consequences of their work. Far from it.

Novak will find much support for his argument in the history of the expansion and entrenchment of racial inequality in America in the twentieth century. This is not a personal story about the failings of individuals or their intentions. It is a recognition of the consequences of the state power that they helped to create. Elsewhere, this story has been vividly documented in the history of the federal government's promotion of de facto racial discrimination in residential housing. As Richard Rothstein and others have noted, the power of the expanded administrative state can be seen in the policies of the Federal Housing Administration, the Public Works Administration, and “scores of racially explicit laws, regulations, and government practices combined to create a nationwide system of urban ghettos surrounded by white suburbs.”Footnote 4 If the Progressive economists achieved their goals in the expansion of state power, this legacy is a powerful testament to the impact of their work.

This narrative would fit awkwardly into Novak's recovery project, but not because he is unconcerned with or unaware of the history of inequality. As Novak notes, his own revised history is buoyed by what he calls “a new season of discontent” and by a growing literature on inequality, including the new histories of capitalism (p. 695). Like Leonard, the new historians of capitalism have been both lauded and accused of practicing something closer to “social criticism” than history. They have been criticized for not engaging with economists, rehashing debunked theories, and practicing faulty analysis with deficient methods.Footnote 5 Again, the details of the debate are not as important here as the recognition of what they do very well: they speak to the desire to understand and remember the humanity and inhumanity of economic institutions built on racist foundations.Footnote 6 As Eric Hilt has written, “The historians of capitalism rightly remind us . . . that our economic history includes no small measure of cruelty, coercion, and expropriation . . . and that the economic system we have today is not a natural condition, but the outcome of policy choices that could have been made differently.”Footnote 7

Because Novak wants to rescue the Progressive economists from obscurity, he is oriented elsewhere. His point of reference is the Chicago School, whose rise signaled the demise and rejection of the Progressive Era institutionalists. There is more than a hint of nostalgia in this recovery project, and that makes it difficult to engage with the broader consequences of their work. Novak's is a substantial critique, but it could go even further in historicizing the debate. As we have seen, multiple actors are invested in how the story is remembered and told, but they have had differing degrees of influence on the field. That is because the struggle over the boundaries of economics and political economy has both an intellectual history and an institutional one.

References

1 Leonard, Thomas C., Illiberal Reformers: Race, Eugenics, and American Economics in the Progressive Era (Princeton, 2016), ixCrossRefGoogle Scholar.

2 Cavalieri, Marco, review of Illiberal Reformers: Race, Eugenics, and American Economics in the Progressive Era, by Thomas C. Leonard, Journal of the History of Economic Thought 39, no. 4 (2017): 601Google Scholar; Steinbaum, Marshall I. and Weisberger, Bernard A., “Intellectual Legacy of Progressive Economics: A Review Essay of Thomas C. Leonard's Illiberal Reformers,” Journal of Economic Literature 55, no. 3 (2017): 1065CrossRefGoogle Scholar.

3 One example of a Progressive plan to bring regulation and order to social and economic life is the Dawes Act of 1887, which “provided for allotments of land to individual Native Americans as a first step toward granting U.S. citizenship.” These efforts to create and promote property ownership were saturated with values based on white forms of family organization and gender practices. In the end, the Dawes Act created the basis for “a forced transference of a large portion of Indian land from tribal control to the United States government.” Newman, Louise Michele, White Women's Rights: The Racial Origins of Feminism in the United States (New York, 1999), 125Google Scholar.

4 Rothstein, Richard, The Color of Law: A Forgotten History of How Our Government Segregated America (New York, 2017), ixxGoogle Scholar. See also Race: The Power of an Illusion, episode 3, “The House I Live In,” produced by Llewellyn Smith (California Newsreel, 2013).

5 Hilt, Eric, “Economic History, Historical Analysis and the ‘New History of Capitalism,’Journal of Economic History 77, no. 2 (2017): 512CrossRefGoogle Scholar, 514, 515. See also Olmstead, Alan L. and Rhode, Paul W., “Cotton, Slavery, and the New History of Capitalism,” Explorations in Economic History 67 (Jan. 2018): 117CrossRefGoogle Scholar.

6 See Jones-Rogers, Stephanie E., They Were Her Property: White Women as Slave Owners in the American South (New Haven, 2019)CrossRefGoogle Scholar; “The 1619 Project,” New York Times Magazine, 14 Aug. 2019, https://www.nytimes.com/interactive/2019/08/14/magazine/1619-america-slavery.html.

7 Hilt, “Economic History,” 514–15.