Economics as religion.(A Perilous Progress: Economists and Public Purpose in Twentieth-Century America)(Book Review)

A Perilous Progress: Economists and Public Purpose in Twentieth-Century America By Michael Bernstein Princeton University Press, 376 pages, $39.50

Marx famously remarked that the job of a social scientist is not merely to understand the world, but to change it. In A Perilous Progress, Michael Bernstein, a professionally trained economist who teaches history at the University of California at San Diego, laments that modern-day practitioners of the dismal science have largely abandoned this goal "in favor of an increasingly introverted ... discourse."

It isn't just the fact that economists employ increasingly complex theoretical models beyond the comprehension of the layman that bothers Bernstein. He is upset that mainstream economists now look askance at many forms of government activism. This is the ultimate irony, he suggests, for it was statism itself--specifically, the two World Wars--that first propelled economists into positions of national prominence. "[O]ut of the crucible of national mobilization came the beginnings of a professional identity and self-confidence that ... had, up to that point, been elusive and fleeting," he writes.

Economists rode high throughout the Eisenhower, Kennedy, and Johnson administrations, with members of the Council of Economic Advisers enjoying unprecedented influence on public policy. "Having proved its mettle in the extraordinary years of world war, and having continued to do so in the early stages of what would be an even longer cold war, modern economic theory was now deployed in an altogether novel exercise--the pursuit and maintenance of full employment growth in peacetime," argues Bernstein.

Whenever the economy seemed in danger of turning sluggish, the government could just step on the gas with an expansionary fiscal policy. And when things looked like they might overheat, it could hit the brakes. In other words, through Keynesian fine-tuning, economists could manipulate matters at will.

Then came the 1970s. The United States experienced high rates of unemployment and inflation simultaneously. What to do? The traditional answers proved fruitless. What good, after all, could come from the government hitting both the gas and the brakes at the same time? The ...