Contents Preface vii Note on Citations and Abbreviations ix Introduction 1 1 The Making of a Public Economist 5 2 Building Intellectual Community 36 3 “You Can Always Tell a Harvard Man” 56 4 Recovery 74 5 Keynesian Conversion 118 6 Reform I: Redistribution 171 7 Reform II: Monopoly 197 8 “Regenerated Liberalism” 223 9 War 261 10 Peace 298 11 The Economy of the Postwar World 316 12 The Good Economy 351 Draft of Declaration of Principles, 1936 373 Columns by Walter Lippmann 377 References 397 Index 401.
Preface I fi rst became aware of Walter Lippmann’s writings on economic subjects in the 1980s while conducting research on one of the many topics that interested him, and I was struck by the similarity of his approach to that of scholars in the new schools of public policy that had sprouted up at American universities in the 1960s and 1970s either newborn or converted from schools of public administration. They both used what ever disciplines seemed appropriate, and they took their priorities from current public policy debates rather than the dictates of the disciplines. This led to an article in the journal Policy Sciences (Goodwin 1995). More recently I was encouraged to return to Lippmann for a paper to be given at a conference entitled “The Economist as Public Intellectual” (C. Goodwin 2013). There I discovered Lippmann to be even more compelling as a subject for study than I had remembered and that parts of his enormous archive at Yale University Library were now available on microfi lm. This book is the result of three subsequent years of delightful reading in, and thinking about, his many published works and his abundant correspondence, especially the columns entitled Today and Tomorrow, which spanned thirty- six years of his career.
Note on Citations and Abbreviations This study is based substantially on three bodies of material: Walter Lippmann’s books; his Today and Tomorrow columns over the years 1931– 1967; and the Walter Lippmann Papers, MS 326, contained in the Yale Uni- versity Library. The Papers are fi led into several series, designated here by roman numerals, and then into folders with Arabic numerals. Two series are of special interest: Series I, Correspondence up to and including 1930; and Series III, Correspondence 1931 and thereafter. Citations in the text include sender, recipient, date, location in the Walter Lippmann Papers, series, and folder, as in “WL to Joe Smith, December 25, 1935, WLPIII F123.” Abbreviations Used in Text HT New York Herald Tribune NR New Republic R The Reminiscences of Walter Lippmann (1950), Columbia University Center for Oral History WL Walter Lippmann WLP Walter Lippmann Papers, MS 326, Manuscripts and Archives, Yale University Library WP Washington Post.
Introduction From the onset of the Great Depression to the years after World War II Americans were faced with a long and agonizing series of economic policy questions. What had caused the economic collapse and what could be done about it? How should the domestic economy be reformed to make it resis- tant to future crises? How might the distribution of income and wealth be reshaped so as to become more equitable and humane? Should large con- centrations of power in capital and labor be broken up or constrained in some way? How might the dramatic soil erosion in the South and South- west, symbolized by the Dust Bowl, be reduced? Could human liberty be preserved if the economy w ere reconstructed to meet these problems? With the decline of the Eu ro pe an empires after World War II how might the global economic system be reshaped to achieve both effi ciency and justice? As more and more countries during the 1930s abandoned the gold standard and free trade, what new institutions could be envisaged to resist this drive toward autarky? As the war clouds gathered toward the end of the 1930s and Pearl Harbor was attacked in 1941 new and urgent questions were raised about how to mobilize a free market economy for war, and then how to re- turn to peace, a peace in which by default the United States found itself the leader of the free world.
1 The Making of a Public Economist Who can say with confi dence what prepares someone for a career, in this case one as a public economist? We can only speculate. In this chapter those aspects of Walter Lippmann’s family background, education, and early experience in journalism, public ser vice, and scholarly endeavors are described that seem relevant to his later career.
2 Building Intellectual Community Most intellectuals are embedded in some kind of supportive group from which they draw creative nourishment. Sometimes this group is clearly defi ned within a profession, such as college and university teach- ing and research. In such cases there are regularized meetings, lectures, publications, close colleagues where the intellectuals are employed, and networks of relationships that grow up and sustain intellectual activity over a lifetime. In other instances a single major institution is large enough in it- self to create the supportive group. Sometimes the intellectual community is very informal and made up of people from similar occupations like business or farming or government, or professions like law or medicine, or ideological communities of socialists or libertarians. Lippmann was involved closely with none of these; he read and wrote alone in his study on the Upper East Side of Manhattan, later in his home on Woodley Road in Washington, D.C., or at Wading River on Long Island, Sanibel Island, Florida, or Mount Desert Island, Maine. Sometimes he used assistants and secretaries but al- ways in a clerical capacity and never as joint authors. His acquaintance with a very wide literature puzzled his friends, who wondered how one person could read so much. Lewis Gannett suggested that newspapers publish Lippmann’s reading list, and Lippmann replied with embarrassment that .
3 “You Can Always Tell a Harvard Man” It remains a puzzle how Lippmann, with all his responsibilities as author, editor, and pol itic al journalist, kept up so well with the fast-m oving social sciences and academic aff airs in general during the turbulent de- pression years. Part of the explanation lies undoubtedly in his voracious reading, his extended friendships, and his development of a complex set of intellectual relationships discussed in Chapter 2. But unlike conventional academics he did not have daily exchanges with colleagues, the stimulus of classroom teaching, time specifi cally designated for serious research, or participation in professional societies to sustain his intellectual engagement and keep him on the frontier. He made up for a good deal of this lack through his remarkably close association with Harvard University from his days as an undergraduate to the end of his life.
4 Recovery Where then did Walter Lippmann stand when he began his extraordi- narily successful newspaper column in 1931? He had sampled many of the main intellectual disciplines in the humanities, the arts, and the social sci- ences, with emphasis on philosophy, po liti cal science, law, economics, and psychology. He had concluded that he would never be comfortable special- izing in just one, but he was excited at the challenge of making combina- tions among them. Within economics he had been exposed to classical eco- nomics, socialist doctrine, evolving Institutionalist ideas, and the new Keynesian macroeconomics. He felt most comfortable with the last two. His contacts and friendships were remarkably wide and rich. In addition to prominent economists he could call for advice from partners in J. P. Mor- gan, distinguished scientists, labor leaders, or even an occasional president or prime minister. His main concentration on economics began at the start of the 1930s and ended after the Second World War. When he tried to un- derstand the prospects for postwar infl ation in 1946 he wrote to Seymour Harris: “I feel like a man who learned to speak a little French, but hasn’t spoken it for so long is afraid he can’t say what he means” (WL to Harris, October 4, 1946, WLPIII F998).
5 Keynesian Conversion The final macroeconomic sacred cow to appear before Lippmann in his search for the cause of the depression, after free trade and the gold standard, was the balanced fi scal budg et. He began his columns in 1931 devoutly orthodox on this matter. On fi scal policy, he wrote that “maintain- ing an absolute confi dence throughout the world in the credit of the United States” was of paramount importance and therefore “the balancing of the Federal budg et by reducing expenditures and by increasing revenues is the fundamental and indispensable problem before Congress” (HT 1/5/32). He admitted that maintaining a balanced bud get during a depression by reduc- ing expenditures and increasing taxation was one of the most painful obli- gations facing modern democracies. But it had to be done. Sadly, “in no great country has an ordinary pol itic al assembly had the courage or the dis- cipline to tax and to economize eff ectively” (HT 3/29/32). The United States must show the way. The issue of bud get balancing was presented by Lippmann mainly as a test of moral courage among politicians who were understandably uncomfortable delivering bad news to their constituents. “For the task of balancing the bud get is an inherently painful one: it consists in distributing not favors and privileges but burdens and sacrifi ces” (HT .
6 Reform I: Redistribution Walter Lippmann was a kind and generous man in his relations with family, friends, and even relative strangers. He volunteered to help the less privileged as a student, and he made a substantial (and anonymous) contribu- tion to a private committee set up at the beginning of the depression to help the unemployed (WL to Emergency Unemployment Relief Committee, No- vember 9, 1931, WLPIII F708). He even paid the tuition of neighbors’ chil- dren when the neighbors ran out of money. So there is no reason to expect that he would be opposed to all redistribution of income and wealth. In- deed, he did believe that some acts by government were required to make income distribution more equitable. He wrote to Felix Frankfurter in April 1932: “I regard the present distribution of income in the United States as wholly undesirable and I greatly desire to see it leveled down. But so far as I know the only tax which can do it is the inheritance tax” (WL to Frank- furter, April 5, 1922, WLPI F816).