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The ‘Economic Style’ as Red Scare Legacy


Landon Storrs (@lstorrs1) is Professor of History at the University of Iowa and author of The Second Red Scare and the Unmaking of the New Deal Left.

This post is part of a symposium on Beth Popp Berman’s Thinking Like an Economist: How Efficiency Replaced Equality in U.S. Public PolicyRead the rests of the posts here.


In Thinking Like an Economist, Elizabeth Popp Berman traces the emergence and diffusion across government agencies and policy domains of an “economic style of reasoning” that prioritized efficiency at the expense of values such as “rights, universalism, equity, and limiting corporate power.” In contrast to studies of neoliberalism’s ascendance that have emphasized the power of the right, Berman’s account focuses on the center-left. “Over and over again,” she writes, “the economic style was introduced to policymaking by technocrats associated with the Democratic Party who wanted to use government to solve social problems.”

Reading this book as a historian, I was struck above all by the extent to which the enduring impact of Red scare politics on U.S. social policy continues to be underestimated. We cannot properly make sense of the embrace of the “economic style of reasoning” by Democrats in the 1960s without attending to the political fallout of earlier decades. In the 1960s, allegations of being “soft on communism” remained a powerful tool for discrediting advocates of liberal policies. And for policy experts in government service, the scars of disloyalty charges still burned. In one field after another—national health insurance, labor and civil rights, consumer protection, public assistance, public power, public housing—disloyalty allegations continued to hinder social democratic policies by constraining government advocates from addressing the tensions between capitalism and democracy, or even acknowledging that such tensions existed. Embracing efficiency-oriented, “rational” and “objective” arguments offered an antidote to right-wing representations of liberalism as un-American.


While Berman locates the rise of a new breed of government economists in the 1960s, she briefly charts the foundation laid by earlier cohorts. The institutional economists, who favored “progressive-to-socialist reforms, with a strong role for the state,” established footholds in government agencies in the 1920s and 1930s and were among FDR’s closest advisers. Then Keynesian macroeconomics took center stage in the discipline and in some policy domains. Early appointees to the Council of Economic Advisors (created in 1946) “tended toward institutionalism” but soon “the CEA became defined by ‘growthmanship’”— raising living standards through economic growth, thereby avoiding the political challenges of redistribution and regulation. In Berman’s telling, macroeconomists’ division over the vexing problem of inflation eventually weakened their influence, creating space for the microeconomic approaches that would become entrenched across government bureaucracy and have constrained policy options ever since.

But the institutional economists and social Keynesians did not just fall out of academic fashion or become irrelevant to the problems at hand. Many were forced out of government or toward the political center by charges of disloyalty to the U.S. government, sometimes in the headlines but more often behind closed doors under the auspices of the federal employee loyalty program. That program had its roots in the late New Deal years, when Congressional conservatives charged that Communists and “crackpot, radical bureaucrats” were running the National Labor Relations Board, the Office of Price Administration, and other agencies that were challenging corporate prerogatives. Investigation by the Civil Service Commission and FBI initially discredited charges of Communist influence, but as conflict with the Soviet Union intensified, similar accusations got more traction.  

After the “Communists in government” issue produced huge Republican gains in the 1946 midterm elections, Truman formalized the loyalty program through Executive Order 9835, which required executive agencies to create loyalty boards to evaluate derogatory information about employees or job applicants. Employees for whom “reasonable grounds for belief in disloyalty” could be established were dismissed. Federal employees were required to fill out forms listing organizations to which they belonged and explaining any association with groups on the newly public Attorney General’s List of Subversive Organizations; meanwhile their loyalty boards requested name checks and sometimes “full field investigation” by the FBI. The definition of “derogatory information” was vague, and much of it came from anonymous informants and the files of the House Un-American Activities Committee.

Beyond association with suspect groups or people, investigators looked for correlation between a defendant’s views and the “Communist Party line”—requiring explanation, for instance, of any past criticism of the capitalist system or white supremacy. They also noted “subversive tendencies,” such as “sympathy for the underdog,” joining many causes, or a woman’s not taking her husband’s surname. Unbeknownst to defendants, the FBI checked voter registration records; those who once had registered for the Socialist Party or American Labor Party but tried to convince loyalty boards they had never held leftist views lost credibility. Between 1947 and 1956 more than five million federal workers underwent loyalty screening, resulting in roughly 2,700 dismissals and 12,000 resignations.

Those numbers understate the program’s impact. For one, they exclude the thousands of civil servants who were cleared only after excruciating investigations—interrogatories, hearings, appeals, and sometimes months of waiting without pay for a decision. Also, clearance often represented only a temporary reprieve: even without new allegations, thousands of cases were reopened as loyalty criteria became more restrictive over time. Further, even after the loyalty program was curbed in the late 1950s, the FBI continued to keep tabs on former loyalty defendants, who often got wind of those inquiries. “You can never get cleared,” one economist lamented. Through the Kennedy and Johnson administrations, the career anticommunists watched for opportunities to revive old charges, blocking some appointments and putting even successful candidates on notice (among others, HEW’s Wilbur Cohen, consumer affairs advisor Esther Peterson, and U.S. Women’s Bureau director Mary Dublin Keyserling, all players in the Great Society debates Berman explores).

Policy experts who wanted to be in government service became very, very cautious. Not only did they eschew association with any cause or person who might be under suspicion, but, crucially, they adjusted the language (and sometimes the substance) of their recommendations. Berman’s government economists were no exception, but they were not alone.

A prime example is Leon Keyserling, the New Deal lawyer and economist who later chaired Truman’s Council of Economic Advisors. I have written at length about the protracted loyalty investigations faced by Leon and his wife Mary Dublin Keyserling, a Commerce Department economist. His first claim to fame involved drafting the National Labor Relations Act of 1935, which abetted the rise of industrial unionism, while she began as a consumer activist. As a couple, they aptly represent the social movements whose advances mobilized the anticommunist right in the late 1930s. Under pressure of investigation, both Keyserlings moderated their political rhetoric and policy proposals. Previously, they had denounced inequality, declared private enterprise incapable of meeting social needs with government intervention, and advocated broad rather than targeted social programs. But after Mary’s loyalty case went to a hearing in 1948, they became vocal anticommunists and began referring respectfully to “free enterprise.” From his position on the CEA, Leon began calling for growth rather than redistribution—which he now derided as an “economics of scarcity” that lacked faith in the American economy—and urged increasing the military budget to defeat communism. Out of government during the Eisenhower presidency, the Keyserlings became Democratic Party loyalists; during the Johnson years, Leon advised Hubert Humphrey, and Mary, as Women’s Bureau director, made the War on Poverty more responsive to women. Both urged the labor movement to support Johnson’s policy in Vietnam. Throughout their careers, the Keyserlings fought to raise living standards for all Americans, but to retain policy influence during the long Red scare, they abandoned positions that might be interpreted as critical of capitalism.

Examples from other policy domains abound. Catherine Bauer, who had helped draft the 1937 U.S. Housing Act, abandoned her commitment to universal public housing in the 1950s after her husband, an architect, lost his security clearance—and thus his government building contracts—based on allegations about her. The economist Wilbur Cohen, who held key positions in the Social Security Administration and headed its successor, the Department of Health, Education and Welfare under Johnson, adopted more conservative approaches to public assistance—treating unemployment and poverty as the failing of individuals rather than of the labor market—after a series of accusations in the 1950s against him and, less publicly, his wife. In the words of welfare expert Elizabeth Wickenden, charges of Communist sympathies “became a kind of miasma that hung over all of government and particularly the New Deal agencies where there were more liberals.” That miasma lingered, and so did its effects on public policy. 

This was the historical context underlying the economic style’s appeal to liberal Democrats, as well as its longevity in government agencies. Arguing from values such as universalism, rights, and equality had gotten a lot of FDR’s and Truman’s policy experts in serious trouble—harming their careers but also the causes to which they were dedicated. No wonder they embraced a seemingly “neutral, technocratic framework for decisionmaking,” whose goals of efficiency seemed “inherently unobjectionable, and its methods . . . objective and apolitical.”


Another piece of historical context missing from Berman’s account relates to the role of gender in the development of the social sciences and U.S. public policy. Historians have produced an enormous literature on those topics, to which I cannot do justice here. In brief, since the late nineteenth century, social scientists often disagreed along gender lines over “advocacy” versus “objectivity” as professional goals, with women more likely than men to embrace social reform as fundamental to their mission. In turn, across the twentieth century, the prominence of women as advocates of state-building reforms allowed the right to mobilize popular opinion against progressive policies by casting them as subversive of the all-American family.

Further, because the federal civil service opened to women (of all races) earlier than the private sector or academia, not only government policies but their administrators were readily characterized as gender deviant and morally suspect. From the 1930s through the 1950s, right-wing congressmen complained of federal bureaucracies run by “short-haired women and long-haired men” who undermined American individualism by promoting “womb-to-tomb” security policies and coddling those who could not compete in the free market at the expense of hard-working taxpayers.

That is the context in which the Kennedy administration took pains to project toughness and virility abroad and at home; his advisers wanted to neutralize decades of representations of liberals as sob-sisters and do-gooders who were quite possibly homosexual. By positioning government policy experts as “hard-headed, rational decisionmakers,” the “economic style of reasoning” may have helped Cold War liberals distance themselves from the feminized qualities of emotionalism and idealism that Red scare politics had associated with un-Americanism.