Designing US Economic Policy: An Analytical Biography of Leon H. Keyserling

Published by EH.NET (November 2001)

W. Robert Brazelton, Designing US Economic Policy: An Analytical Biography

of Leon H. Keyserling. New York: Palgrave, 2001. ix + 181 pp. $65

(hardback), ISBN: 0-333-77575-9.

Reviewed for EH.NET by Craufurd Goodwin, Department of Economics, Duke

University.

Leon Keyserling is a fine subject for an analytical biography. He was a

notorious intellectual anachronism, an unreconstructed remnant of New Deal

radicalism set down in the post-war Keynesian world, a low-tech economist in

high places just when high-tech economics was beginning to hold sway. He was a

product of Columbia University Institutionalism and a devoted disciple of

Rexford Tugwell. His relations with the other major figures at Columbia in his

time have not been explored. He went to Capitol Hill in the 1930s as an aide

to Senator Robert Wagner and after the war was made a member of President

Harry Truman’s first Council of Economic Advisers, then not the prestigious

body it later became. It is hard to get a measure of Keyserling’s influence on

policy and events during his years in office partly because of his own

reluctance to cooperate with scholars of the period. He was certainly very

vocal and energetic and he claimed credit for most policies with which he was

associated, from the Wagner Act to the Employment Act. Most of the senior

figures in government viewed him with affectionate amusement, and

occasionally mild annoyance because of his volubility. He repeated often many

of Tugwell’s familiar ideas about the importance of balance in the economy,

the danger in monopoly, and the benefits to be gained from planning. But he is

best known for a single idea that he proclaimed day-in, day-out, that all

problems can be solved with growth. If you are in a recession you can grow

your way out of it; if you suffer from inflation try the same cure. It is

ironic, considering his stance on the left of the Democratic Party, that

Keyserling may be seen as a pioneer of supply-side economics. Like the

ideologues of the Reagan Revolution, Keyserling insisted that demand

management made sense only if it were seen as stimulating supply.

But Keyserling’s economic analysis was extremely unsophisticated and he was

never able to engage the macro economists of his time or to develop an

intellectual following. During Truman’s first term he was vice chairman of the

Council and he chafed under the leadership of the far more conventional chair

Edwin Nourse. Keyserling’s brief period of real influence was in the first two

years of Truman’s second term when he succeeded to the chairmanship and before

the outbreak of the Korean War. During this short window intellectuals

throughout the government became convinced that monopolies in both product and

factor markets were throttling American productivity and they argued that some

fundamental systemic reforms might be in order. In this environment

Keyserling’s ideas were congenial. When the North Korean army marched south,

however, such philosophizing ended and Keyserling and the Council became

nearly irrelevant as the economy was put once more on a war footing. When

Eisenhower came to office in 1953 some conservatives among the Republicans

argued that Keyserling had so politicized and discredited the Council that it

should be eliminated. But Eisenhower’s choice for the new chair, Arthur Burns,

another product of Columbia Institutionalism, argued successfully that it

should be reformed and retained.

After he left office Keyserling continued to write profusely on his old

subjects, mainly under the auspices of something called the “Conference on

Economic Progress,” but his influence on policy seems to have been slight. He

was a rather bitter man. He had an exaggerated view of his own importance and

believed that others, notably John Maynard Keynes, had been given undue credit

for ideas that were really his. During the 1970s when much research was

undertaken on economic policy in the Truman administration Keyserling declined

to cooperate and he did not, at that time, follow other Truman aides and

deposit his papers in the Presidential Library. On four different occasions

during that period this reviewer presented papers on Truman’s economic

policies at the Truman, Johnson, and Kennedy libraries, and the Woodrow Wilson

International Center for Scholars, where Keyserling was present. Unlike most

of the other veterans in attendance (for example John Snyder, Averill

Harriman, Charles Murphy, David Bell, Charles Brannan) Keyserling declined to

cooperate in enriching or correcting the record. He seemed to dislike

“professors,” perhaps because he failed to complete his dissertation at

Columbia.

But Keyserling did ultimately deposit materials in the Truman Library and so

it seemed that this book, by a professor of economics at the University of

Missouri at Kansas City, might finally answer the questions about Keyserling

that have for long remained unanswered. Unfortunately it does not. This volume

is strange indeed. To begin, the author seems to be completely unfamiliar with

the voluminous scholarship on economics in the Truman presidency, and even

with the literature on the Truman presidency in general. How can we take

seriously a book on the Truman period that does not have in its bibliography

even the great biographies of Truman by David McCullough and Robert Donovan,

the latter a shrewd reporter who covered the whole Truman period and had much

to say about Keyserling? Nor is there mention of Michael Lacey’s excellent

collection of essays about the Truman presidency or Francis Heller’s volume on

economics in the Truman administration (that actually contains a paper by

Keyserling), the foundational work of Barton Bernstein and William Barber, or

even the autobiographical account of his experiences as CEA chair by

Keyserling’s nemesis Edwin Nourse. Instead of this abundant secondary

literature, Professor Brazelton turns most often to an unpublished master’s

thesis!

Professor Brazelton tells of his own warm personal relationship with

Keyserling, and a problem may be that he was not able to gain sufficient

distance from his subject. But it seems inexplicable that he used so few

primary as well as secondary materials. He does not appear to have used any of

Keyserling’s personal papers or the revealing White House files that are just

down the road in Independence. Keyserling’s story is told here largely from

his various published documents and the published reports of the CEA – surely

very limited sources for an “analytical biography.” The book reads rather like

one of the authorized biographies of famous people in the nineteenth century

about whom “never is heard a discouraging word.” At the same time the book is

riddled with errors big and small. To give just some flavor, CEA member Neil

Jacoby becomes Jacob, Agriculture Secretary Charles Brannan becomes Brannon,

the Austrian economist B?hm-Bawerk becomes Bahm-Bawerk, the Brookings

Institution becomes an Institute, and even the Council of Economic Advisers is

sometimes misspelled as Advisors. On top of all this, the little book of 181

pages is priced at $65.

It is to be hoped that this work does not stand in the way of a serious

biography of Leon Keyserling, perhaps focusing on his role as standard bearer

of Institutionalism in an increasingly Keynesian world.

Craufurd Goodwin is editor of the journal History of Political Economy

(Duke University Press) and the book series Historical Perspectives on

Modern Economics (Cambridge University Press). He is working currently on

aspects of the history of cultural economics. A recent book is Art and the

Market, University of Michigan Press, 1999.