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Economics at Harvard

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Harvard is probably the best-known of the elite "Ivy League" colleges of the United States.  It certainly is the oldest.  It was founded in 1636 in Cambridge, Massachusetts, as a Congregationalist seminary by the Massachusetts Bay Company. After the dissolution of the company and the transformation of Massachusetts into a royal colony in 1684, Harvard abandoned its puritanical roots and switched to Unitarianism, a considerably more tolerant religion.  Many of the more conservative members of the college were appalled by the apostasy, and angrily decamped to Connecticut to found a new Congregationalist college.  This new college -- Yale -- would eventually become Harvard's great rival.   .    

In the spirit of the times, Harvard gradually evolved out of  its roots as a religious seminary and, by the late 18th Century, had really little more than a "finishing school" for the sons of the upper crust of New England society.  Harvard's curriculum followed very much the "Anglo-Saxon" model of classical education -- Greek, Latin, rhetoric, logic, mathematics, with a dab of moral philosophy in the final year.  It was very much about building "character" and "moral excellence", rather than imparting modern practical knowledge.  

However, by the mid-19th Century, it was understood that some familiarity with economics was essential for every gentleman-student. In 1853, Francis Bowen, a historian and philosopher, was charged with teaching the first courses in political economy for final year students at Harvard. Amasa Walker was appointed examiner in political economy at Harvard that same year.  However, Bowen's predilections for a "loose money" policy -- and his insistence on addressing this in his lectures -- irked the conservative administration. Eventually, in an effort to shield the Harvard undergraduates from Bowen's "dangerous" ideas, the grandees of Massachusetts put together enough money to fund a chair in political economy at Harvard (the first separate chair in United States) and handpicked a "hard money" man for it, Charles F. Dunbar in 1871.  Dunbar's courses relied primarily on classical texts, like Smith, J.S. Mill, Cairnes and Fawcett.

In the mid-19th Century, American universities were under immense pressure to abandon their classical "Anglo-Saxon" curriculum and embrace a more modern curriculum of experimental sciences, modern languages, history and social sciences.  The U.S. government stepped into the game with the Morrill Act of 1862, promising federal funds to set up agricultural and technical colleges.  Harvard availed itself of the opportunity by establishing the "Lawrence Scientific School", offering a modern, scientifically-minded undergraduate curriculum, but they kept it strictly segregated from the classical Harvard College.

But that very same year, a new university was established (also with the help of Morrill money), just down the street -- the Massachusetts Institute of Technology (M.I.T.).  It offered an integrated modern program and seemed to be of much promise.  In 1869, Harvard poached one of M.I.T.'s chemistry professors, Charles W. Eliot, and appointed him president of Harvard.

The ambitious Charles W. Eliot sought to transform Harvard from a gentlemen's college into a serious research university along the "German" line.  The expansion of economics was an integral part of Eliot's plan.   President Eliot gave Dunbar an assistant, the recently German-minted Silas M. MacVane in 1875.   MacVane moved to history in 1878, and was replaced by J. Laurence Laughlin as instructor in economics. President Eliot went on to establish a graduate research program in economics (albeit with the degrees granted through the political science department).  Throughout the early Dunbar period, economics at Harvard was of the Classical School variety, with a heavy "apologist" emphasis. But things were about to change. 

In 1875, Stuart Wood, one of Dunbar's students, became the first person in the United States to receive a Ph.D for an economics thesis.  Frank W. Taussig  received the second degree and was appointed a Harvard instructor in 1883.  That same year, Laughlin was formally made assistant professor. In 1886, Eliot encouraged Dunbar to found the Quarterly Journal of Economics in order to raise the research profile of the Harvard economics department.  The QJE was funded by a substantial gift of $15,000 from one of Dunbar's former students.  Laughlin decamped in 1887, and Taussig rose to assistant professor.

In 1892, the "Department of Economics" was formally established.  That same year, seeing the Dunbar's brand of "classical" economics was a bit behind the times, Eliot promoted the Neoclassical-leaning Taussig to full professor.  To further balance the department, the prominent English Historicist, William J.Ashley was brought in as a full professor that very same year. Other junior appointments followed, so by 1893, Harvard  Taussig was to take over the editorship of the QJE in 1896.

By 1894-95, Harvard had three full professors (Dunbar, Taussig, Ashley), one assistant professor, three instructors, and offered six full-year courses and seven half-courses.  This curiously balanced triumvirate -- "classical" Dunbar, "neoclassical" Taussig, and "historicist" Ashley -- would jointly preside over the department more-or-less as equals for the next few years.   To bless them all, Eliot allowed the economics department to grant its own advanced degrees in 1894.  In 1897, he finally granted the department a fully separate status. . Hitherto confined to upperclassmen, economics courses were finally offered to first year freshmen in 1899.

But everything quickly broke down in 1900-01. In quick succession, Dunbar died, Ashley returned to England, while Taussig suffered a nervous breakdown and took a leave of absence.  With the department thus decimated, Thomas Nixon Carver -- a Neoclassical economist of Austrian propensities, who had been appointed in 1901 to replace Dunbar - found himself the solitary faculty member in the department.  With Eliot's collaboration, Carver (elevated precipitously to full professor, chair and editor of the QJE) promptly set about plugging in the holes.   Three novices, O.M.W. Sprague (a Dunbar student), A. Piatt Andrew and Edwin F. Gay (economic historian, newly minted under Schmoller in Berlin), were appointed as instructors in 1902.  For senior faculty, they lured William Z. Ripley (from M.I.T) as full professor and Charles J. Bullock (from Williams College) as assistant professor (both had already helped fill in temporarily with lectures in 1901-02).     

Taussig returned from darkness in late 1903 and was quick to assert his authority over the economics department and the QJE.  It is really from this time onwards that Harvard economics became synonymous with Taussig. Carver's Austrian-inspired curriculum was pushed aside in favor of Taussig's Marshallian strand of Neoclassical economics.  Ripley, the other senior faculty member, veered into sociology. Bullock and Gay, representatives of the budding Institutionalist and Historicist traditions respectively, were too junior to challenge or keep Taussig in check (as Ashley had previously done), and so resorted to carving out detached small corners for themselves. These six - seniors Taussig, Carver, Ripley, and juniors Bullock, Gay and Sprague - would constitute the backbone of the department for the next three decades.  But there is little doubt that Taussig was the paramount chief. Taussig's Principles of Economics (1911) became the bible of the department and one of the most widely-used textbooks in America.   

Although things had stabilized a bit after Taussig's return, President Eliot had still not run out of novel schemes.  In 1908, he created the Graduate School of Business Administration, in which the economics department was expected to help out.  Gay was appointed as its head and Sprague joined its faculty.  

In 1909, Eliot was replaced as president of Harvard by A. Lawrence Lowell.  President Lowell was an altogether different character.  He felt that Eliot's attempt to transform Harvard into a research university had left its main responsibility -- the teaching of undergraduates -- in the dust.  Lowell set out to rectify this.  Departments were put on notice that they expected more effective teaching and, in 1914, Lowell went so far as to introduce the English "tutorial" system into Harvard.

America's entry into the First World War in 1917 thinned the department again.  Gay and Taussig departed for appointments in Washington, while Carver went into a slump. In the meantime, C.J. Bullock got distracted - raising money for a empirical research institute.  This became the Committee for Economic Research in 1917.  With the funds, Bullock immediately hired empiricist Warren Persons and the statistician Edward Frickey.  In 1919, Persons introduced a method of measuring and forecasting business cycles that was to become known as the "Harvard Barometer".   That same year, Persons, Bullock and Frickey set up "Harvard Economic Service", a semi-academic, semi-private forecasting service that employed Persons's barometer.   Harvard's second journal, the Review of Economics and Statistics, founded that same year, was the house journal of the HES.  The statistician, William Leonard Crum, joined the barometer project in 1925. 

Teaching, the great priority of President Lowell, suffered in this slow period.  In 1919, a young assistant professor, H.H. Burbank, was given charge of implementing and coordinating the tutorial program (he eventually took over the reigns as chairman of the economics department).  In 1920, Harvard hired a dynamic teacher from Cornell by the name of Allyn Young.  More hires were made in subsequent years, notably the macroeconomist John H. Williams in 1921, the economic historian, A.P. Usher in 1922 and the agricultural economist John D. Black in 1927.

As the most effective member of the faculty, Young's teaching and supervisory load was heavy.   Despite his great influence on students, Young could not hold out for long.  In 1926, Young decided to jump ship and head for the L.S.E.  His prize pupil, Edwin H. Chamberlin, submitted his famous dissertation on "monopolistic competition" in 1927 and stayed on as part of the Harvard faculty.  Another Harvard Ph.D, Seymour E. Harris, also stayed on.

Young's departure was only the beginning of the unraveling of the department that was to follow.  Persons left in 1928, leaving the Harvard Economic Service in the hands of Bullock and Crum.  However, the HES's failure to predict the 1929 downturn for its private customers had soiled its reputation and the Harvard administration was intent on keeping it at arm's length.  The HES was finally dissolved in 1931 and the REStat was folded into the economics department.  Bullock retired soon afterwards.  After three decades, the senior members were also getting on in years -  Ripley and Carver resigned in 1932, while Taussig retired in 1935.  Gay was offered Taussig's chair, but declined and joined the Huntington Library instead, Usher taking over his duties in economic history.  In the meantime, the reigns of the university had passed from President Lowell onto James Bryant Conant in 1933. 

What happened next is well-known in economics lore: the arrival of Joseph Schumpeter.  The Austrian economist and Lausanne enthusiast, Schumpeter, had been a recurrent visiting professor at Harvard since 1927.  In 1932, Schumpeter finally took up a permanent appointment (replacing Carver) and eventually replaced Taussig himself as the dominant figure of the department.  Looking to the European Continent rather than the American hinterlands, Schumpeter was instrumental in the hiring of the brilliant Russian emigré, Wassily Leontief, in 1931 and of his Austrian comrade-in-arms, Gottfried Haberler in 1936.  

In an effort to bring the Paretian Revival to Harvard, Schumpeter, Leontief and Haberler introduced the first courses in Neoclassical economic theory, mathematical economics and modern statistics (some of them taught by the polymath E.B. Wilson from the School of Public Health).  It probably did not hurt that the Harvard sociologist and Pareto enthusiast, Talcott Parsons, had been on the scene at Harvard since 1927.  Schumpeter participated in the famous "Pareto Seminar" set up by Parsons and his colleagues in 1935.  That same year, Leontief established his "Price Analysis" (i.e. mathematical economics) course.  In 1941, Leontief single-handedly launched his own quantitative revolution with the creation of "input-output" analysis.   

But Harvard had other revolutions going on.  In 1933, Edwin H. Chamberlin, finally published his Theory of Monopolistic Competition, proposing the completely recast the theory of value and causing quite a flurry in the economics world.   Junior faculty members and students, such as Edward S. Mason, Joe S. Bain and Paul Sweezy, kept the monopolistic competition revolution going.  It was during this time that the rivalry between Chicago and Harvard really heated up -- with Frank Knight leading the charge against the Chamberlinians.

There were other new appointments worth noting.  Labor economist Sumner H. Slichter joined the Harvard faculty in 1930.   The Harvard School of Public Administration was created in 1936.  John H. Williams was appointed its first dean and Alvin H. Hansen, soon to become the acknowledged leader of the Keynesian Revolution in America, was hired through it in 1937.  Seymour E. Harris also jumped on the Keynesian bandwagon.

Harvard of the late 1930s was blessed with a "golden generation" of junior faculty and students -- including John Kenneth Galbraith, the brothers Alan and Paul Sweezy, Richard Goodwin, Nicholas Georgescu-Roegen, Lloyd Metzler, Arthur Smithies, Sidney Alexander, John Lintner, David McCord Wright, Abram Bergson, James Tobin, Richard Musgrave, Robert Triffin, James S. Duesenberry, Robert Solow, Robert Heilbroner, Wolfgang Stolper, Shigeto Tsuru, Henry Wallich, and the supreme wunderkind, Paul Samuelson.  Many of them came into Schumpeter's charismatic orbit, absorbed Leontief's mathematics and were charged up by Hansen's Keynesianism.  

However, Depression exigencies required that the department also be slimmed -- and the junior faculty took the chop.  In 1937, the department recommended junior faculty members Raymond Walsh and Alan Sweezy for re-appointment until tenure evaluation down the track, but the administration denied their request.  The "Walsh-Sweezy" case generated much uproar, both within and without Harvard, as many felt that these two quite active, left-wing economists were being targeted by the powers-that-be for political reasons.  After years of wrangling, a resolution was reached which exonerated the administration.  

One result of the Walsh-Sweezy case was the institutionalization of President Conant's "up-or-out" policy:  the stipulation that within eight years, a junior faculty member must earn tenure or else he must leave; there would be no "eternal" junior appointments.   Also, Harvard switched from its old notorious policy of  "only hiring your own" to its new (and equally notorious) policy of "never hiring your own".   The attempt by the overseeing brahmins of Harvard University in the 1940s to "re-balance" what they perceived as a department that had grown too leftist, too theoretical and too Jewish too quickly, took in other casualties. Perhaps the most famous case was that of Paul Samuelson who would, under different circumstances, have been a shoo-in to join the Harvard faculty.  Surprisingly, there was opposition to Samuelson's appointment in 1940, some of it allegedly based on unsavory religious bigotry. (Seymour Harris, then the only Jewish member of the faculty, had to wait eighteen years for tenure.)  Samuelson decamped across the street to M.I.T. and never looked back (well, he looked back once in 1947, when a position opened up again  at Harvard, but was passed over again, in favor of Arthur Smithies).  Promising junior Harvard economists, such as Paul Sweezy and Richard Goodwin, departed for new and better things. Attempts to deny Galbraith tenure failed only because they could not find someone else - John D. Black was approaching retirement and agricultural economics (then a large chunk of Harvard's economics course offerings) would have been left unmanned.

Interestingly, practically no senior Harvard faculty had sat on President Roosevelt's "Brain Trust" in the 1930s.  Some who had been previously involved in government (e.g. Sprague) openly denounced the public policy revolution in Washington.  However,  the junior members of the faculty -- like Currie, Harris, Galbraith and Sweezy -- were heavily involved in the New Deal and wartime administration.   Harvard's "golden generation" students (e.g. Samuelson, Tobin, Solow, etc.) were also prominent theorists and policy analysts in the post-war "Neoclassical-Keynesian Synthesis".   The public policy influence of the golden generation was at its height in the Kennedy administration of the early 1960s.

(to be completed)



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Resources on Harvard Economics


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All rights reserved, Gonçalo L. Fonseca