Walter Lippmann

Public Economist

Craufurd D. Goodwin

• Publisher: Harvard University Press
• Year: 2014
• Print ISBN: 9780674368132
• eBook ISBN: 9780674745124
• Topic: Economics
• Subtopic: Journalist Biographies
• Index: Economics

Walter Lippmann was the most distinguished American journalist and public philosopher of the twentieth century. But he was also something more: a public economist who helped millions of ordinary citizens make sense of the most devastating economic depression in history. Craufurd Goodwin offers a new perspective from which to view this celebrated but only partly understood icon of American letters.

From 1931 to 1946 Lippmann pursued a far-ranging correspondence with leading economic thinkers: John Maynard Keynes, Lionel Robbins, Friedrich Hayek, Henry Simons, Adolf Berle, Frank Taussig, and others. Sifting through their divergent views, Lippmann formed his own ideas about economic policy during the Great Depression and shared them with a vast readership in his syndicated column, Today and Tomorrow. Unemployment, monetary and fiscal policy, and the merits and drawbacks of free markets were just a few of the issues he helped explain to the public, at a time when professional economists who were also skilled at translating abstract concepts for a lay audience had yet to come on the scene.

After World War II Lippmann focused on foreign affairs but revisited economic policy when he saw threats to liberal democracy. In addition to pointing out the significance of the Marshall Plan and the World Bank, he addressed the emerging challenge of inflation and what he called "the riddle of the Sphinx": whether price stability and full employment could be achieved in an economy with strong unions.

1

The Making of a Public Economist

WHO CAN SAY with confidence 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 service, and scholarly endeavors are described that seem relevant to his later career.

Education

The only child born to an upper-middle-class German-Jewish family in New York City in 1889, Lippmann led a privileged, even pampered early life. His father worked in the clothing business, and his mother inherited wealth from her family in real estate (Steel 1980, 8). His parents while still quite young decided to devote themselves mainly to pleasure, and he became accustomed to summers in Europe and regular visits to luxurious spas, starting when he was seven. He quickly demonstrated his attraction to celebrities; he met President William McKinley and the war hero Admiral George Dewey (Steel 1980, xiii). He haunted the art galleries of Europe in cities where his parents visited, and one summer Isabella Stewart Gardner, the great Boston patroness of the arts, befriended him in a museum in Paris and became his guide (Steel 1980, 10). He explained in his reminiscences that as a child his inclinations were all toward the arts and literature with no sign yet of interest in public policy: “I was interested in the classics—Latin and Greek—in Italian art, and in architecture—Gothic architecture. While I was in Paris, I spent a lot of time at the Louvre. I used to go when it opened and stay till it closed for three or four weeks at a time—rather ignorantly, I think. I read Ruskin. Ruskin had made a great impression on me” (R 24). It seemed to Lippmann then that he might become an art historian, and in 1928, well into his career as a political journalist, the editor of the magazine Creative Arts could ask him still to write an article on painters of the Middle Ages (Lee Simonson to WL, May 14, 1928, WLPI F1133). He declined.

Lippmann’s early and continuing attachment to the humanities and the arts is relevant to his later work as a public economist. It helps to explain his close and continuing friendships with artists and humanists who often influenced his views on public policy. They included Bernard Berenson and Kenneth Clark the art historians, Laurence Stallings the novelist and screenwriter, Eugene O’Neill and Edna Ferber the playwrights, Lee Simonson the set designer, Deems Taylor the composer, Marsden Hartley the painter, and various members of Mabel Dodge’s salon in Greenwich Village. It was typical that he intervened with the U.S. Immigration Service to facilitate the return of D. H. Lawrence to his New Mexico ranch after the scandalous publication of Lady Chatterley’s Lover (WL to Joseph Cotton, January 16, 1930, WLPI F287). It was ironic that Lippmann had been highly critical of Lawrence’s “Reflections on America” in the New Republic a decade before (NR, December 15, 1920, 70). Through his connections in literature and the arts Lippmann was open to opinions, insights, and values often at odds with those of the politicians, social scientists, and journalists with whom he spent much of his life. His training, especially in the classics and creative literature, led him later to use metaphors, analogies, and short narratives to illustrate his findings and thereby to reach his readers more effectively than many of his journalistic contemporaries. For example, to explain the position of FDR after Pearl Harbor he told the story of Lincoln after the battle of Bull Run. He was accustomed to begin a review of the prospects for the new year in a column with a title that was a quotation from Macbeth: “Watchman. What of the night?” Throughout his career he avoided much of the technical terminology of the social sciences that might put off his audience, and to make his points he told stories with which they were likely to be familiar. He began his scholarly book Public Opinion with a long quotation from Plato about humans living in a cave.

From his own experience Lippmann came increasingly to conclude that a liberal education, rather than simply intense specialization in a technical subject, was essential for the development of effective leadership in all walks of life. Especially in the social sciences, he found that too strong a focus on a few simple variables rather than on a larger, more complex context led to absurd conclusions. He became a good friend of Robert Maynard Hutchins, president of the University of Chicago, and he admired the University of Chicago’s “Great Books” approach to undergraduate education. He praised the St. John’s College experiment with great books in his columns (HT 12/27/38), and in July 1942, when he found that poor leadership had set back the American forces in Libya, he told of an American professor of geography (unnamed), lacking a liberal education, who had proposed that Switzerland be carved up into its linguistic components and delivered to the relevant European powers so as to “meet democratic specifications” (HT 7/4/42). This professor “had become so immersed in the abstractions of the science that he had lost all sense of the realities of the world, that Switzerland for him was not actually Switzerland, but a patch of color on a map and some statistics about the languages of the Swiss nation.… This is what happens when specialized sciences which are concerned with human affairs are studied without knowledge of the tradition of wisdom and without the discipline of a moral education. All the great educators, beginning with Plato and Aristotle, have insisted that training in the art of distinguishing good and evil must precede the making of practical judgments in human affairs. Milton himself, a sharp critic of the scholastic education of his day, designed a plan of education in which he took special care to postpone the study of politics until the pupil had learned with some judgment to ‘contemplate upon moral good and evil.’ ” Lippmann remarked that John Milton had noted specifically that a liberal education should precede the study of “economics” as well as of other social sciences. Lippmann wrote during World War II: “If Western civilization is to survive and renew its vitality, we shall have, therefore, to revive and renew our schools. So when the war is over, we have a rendezvous with ourselves to consider as a matter of high priority, the restoration and reconstruction of American education.” Drawing on his own experience Lippmann was convinced that the study of history was the essential foundation of a liberal education. At a memorial service in 1932 for one of his first history teachers, he said: “From him I learned for the first time that the world is round and that the history of man is a long one. By him I was taught to realize the great truth that beyond the mountains there are people also, that the history of the world is not a collection of events, but the chief source book of all wisdom” (WLPIII F79).

Lippmann attended a good private school in Manhattan, the Sachs Collegiate Institute, founded by a partner in the Goldman Sachs firm, and there his academic prowess quickly showed; he became editor of the school paper, a leading debater, a successful athlete, and a class prize winner. He entered Harvard in 1906, described by William Leuchtenburg in 1985 as “by all accounts one of the most gifted undergraduates to attend Harvard in this century” (introduction to WL 1914a). He was determined while in college to explore disciplinary specialties and settle upon an occupation for life. His class included such later luminaries as T. S. Eliot, Stuart Chase, and Heywood Broun (Chase 1930, contained in WLPI F241), and he maintained contact with many of them afterward. At first he was determined to continue with study of the arts and humanities and took mainly courses in literature, history, and philosophy. “I took almost no courses in government or economics.” However, “I very soon converged on the philosophy department and took all of [George] Santayana’s courses at Harvard, I think without exception.” The impact of Santayana was very great. “I felt a good deal of personal inspiration from Santayana. He had a profound influence on my life. I read all his books again and again, particularly The Life of Reason” (R 25 and 26). This five-volume work has been described as the first extended treatment of pragmatism, a subject of continuing interest to Lippmann. Santayana returned the admiration and made Lippmann his teaching assistant. Elsewhere in philosophy Lippmann did not take to Josiah Royce but admired William James, who sought him out after reading a piece Lippmann had contributed to the student newspaper. He turned to psychology where he took courses from Edwin B. Holt (R 28) and developed a lifelong dislike of the work of William McDougall, noted for his theory that social behavior was determined by inherited instincts. Lippmann found that despite a full course load in which he did well enough to win a college scholarship each year, he had time to read “everything that I could lay my hands on. I just read at random” (R 30). He read “very extensively in what was then modern literature—Ibsen, Shaw, Meredith, Wells, Hardy.” He also read Rudyard Kipling, Henry James, and “the Irish—Yeats and Dunsany” (R 31). Throughout his undergraduate years Lippmann showed little desire to focus and specialize.

A critical transformation occurred in Lippmann’s attitude to scholarly endeavor as a result of a fire in 1908 in the working-class community of Chelsea near Boston that made him for the first time intensely aware of poverty and destitution. For guidance on how to help change these distressing conditions he found the humanities lacking. He could not find answers in the works he was reading, “Goethe, Dante, Lucretius, and fine arts.” So he turned to “political writers such as Veblen, Ward, and Beard” and then on to the social sciences (R 31). He took sufficient courses that in his fourth year he qualified for a master’s degree in philosophy. In economics he seems to have taken three courses but was not impressed by them, especially because of their abstract behavioral assumptions and perhaps too because of the rare “B” he received in one. He took Econ. 1, the introductory class taught by Frank W. Taussig. The texts were John Stuart Mill’s Principles of Political Economy and Henry R. Seager’s Introduction to Economics (1904) (syllabus and notes in WLPI F1335). The latter remained an object of ridicule with him for years to come. In his first book, A Preface to Politics, he wrote: “I have in my hands a text-book of six hundred pages which is used by the largest universities as a groundwork of political economy. This remarkable sentence strikes the eye. ‘The motives to business activity are too familiar to require analysis.’ … I myself was supposed to read that book pretty nearly every week for a year. With hundreds of others I was supposed to found my economic understanding upon it. We were actually punished for not reading that book. It was given to us as wisdom, as modern political economy” (WL 1913, 60–61). From the lecture notes made by Lippmann it appears that Taussig’s course was substantially descriptive and definitional and not likely to intrigue a brilliant mind. All the same he made a strong impression on Taussig, who wrote a formal letter of appreciation at the end of the course of a kind received by few students in introductory economics from a leader of the discipline. It said: “I congratulate you upon your work in Economics 1, which has been of the first order and not less so because your point of view is in some ways different from mine. I judge that, from your being a candidate for a degree, you are to leave the university this year. I should have been glad to have the opportunity to see you in a course like Economics 2” (Taussig to WL, June 23, 1909, WLPI F1192). The low point in Lippmann’s career in economics at Harvard was a course given by Thomas Nixon Carver, one of the most doctrinaire American economists of the time. Lippmann took it, he said, so as to see how the other side thought. “I regarded him as the opponent of all I believed in. I took his course to understand what I regarded as the opposition” (R 34). One suggestion from Carver’s class, which Lippmann confirmed later through a letter to the professor (WL to Carver, December 4, 1914, WLPI F227), was that poverty could be reduced by denying the poor marriage licenses. Carver replied to the letter as follows: “Dear Sir … I have often suggested some restriction on marriage as one item in a comprehensive program for the elimination of poverty. When it comes to a real issue of this kind, however, the socialists are always laissez faire stand-patters, as they are on every real issue.” Carver reported that as a trustee of the Massachusetts State School for the Feeble-Minded he favored some restriction to prevent students at the school from “reproducing themselves.” The situation with the poor was quite similar: “Economically incompetent people tend to multiply almost at the same rate. That tends to increase the supply of the unemployable as well as those with a low grade of skill. The presence of large numbers of such people, however, is a constant menace to the laborers who are just above that level.” Carver attached to this letter his full “Programme of Reform,” which included, in addition to the expected constraints on monopoly and advocacy of land value taxation, “The discouraging of vicious and demoralizing developments of public opinion, such as: 1. The cult of incompetence and self pity. 2. The gospel of covetousness, or the jealousy of success. 3. The emphasizing of rights rather than obligations. 4. The worship of the almighty ballot and the almighty dollar.” Then, perhaps with an eye to his former student’s tastes and current journalistic career with the New Republic, Carver added two items, handwritten and with italics: “5. The idea that a college education should give one a ‘gentlemanly appreciation’ of the ornamental things of life. 6. The idea that capitalizing verbosity is productive business” (Carver to WL, December 5, 1914, WLPI F227).

Lippmann was one of the founders at Harvard of a socialist club (the Harvard chapter of the Intercollegiate Socialist Society), and thereby was confronted with the other extreme from Carver’s positions. The club members were very earnest and called each other “comrade.” Yet this was socialism of the heart rather than of the head. It was neither “scientific” nor “revolutionary” and it dealt hardly at all with socialist economic theory. The doctrine was eclectic and today might be called “communitarianism.” One member even called for sympathetic study of Henry George, though George was highly critical of socialism (Rene W. E. Hoguet to WL, September 16, 1908, WLPI F552). The approach of the British Fabians to socialism appealed a good deal to Lippmann, but Marx figured not at all. “I had been reading people like Shaw and Wells, and therefore I began to pick up that side of them. Then I went on to the Webbs. The book which made me at that time a socialist was a book of Fabian essays. I never read Karl Marx. In fact, I took it for granted from reading essays which despised Karl Marx as an obsolete economic thinker. I never read Karl Marx until twenty years later” (R 32). There was a practical quality about the Fabians that appealed to Lippmann; he found some of the American reformers too utopian. “I thought Bellamy’s Looking Backward was a fascinating book, but I wouldn’t say it had any great influence, because I was too non-Utopian in my own feeling about things to believe that that was to be taken seriously as a project of society” (R 33). He joined the British Fabian Society in 1909, and he attended the Fabian Summer School in 1914, where he met G. D. H. Cole, John R. Hobson, and other luminaries.

Lippmann demonstrated early on his willingness to tweak the conservative establishment. In 1911 he nominated W. E. B. Du Bois, the great American sociologist and civil rights pioneer, for membership in the Liberal Club of New York. The nomination was rejected (Caroline M. [indecipherable] to WL, October 19, 1911, WLPI F715). But he crossed swords as well with the more radical members of the Harvard socialist club who wanted more action, notably with his classmate John Reed, future friend of Lenin who chronicled the Russian Revolution in Ten Days That Shook the World (1919) and was buried in the Kremlin wall. While working in New York, Lippmann presented a paper to a socialist club on Staten Island and a member told him of her “awful shock” at his doctrinal apostasy when he “disclosed the fact that you believed that under socialism there would be both rent and interest. I am not aware of any other socialist holding the same view, no matter how reformist or ‘opportunist’ he might be, and I am at a loss to know how you ever determined in your own mind—as I suppose you have done—that you are a Socialist at all” (Bertha W. Howe to WL, April 15, 1913, WLPI F569).

Lippmann offered his own definition of socialism at that time, which was more closely allied with feminism and egalitarianism than with the public ownership of property.

In short, the making of a better society is the training ground for feminism. I call that better society socialism. I don’t identify it with the Socialist Party. I don’t identify it with government ownership, or the general strike. I think of it as a society in which social opportunity has been equalized, in which property has lost its political power, a society in which everyone has a genuine vote, not only a ballot, but a real share in economic development, and free access to the resources of civilization. Such a society cannot be realized without feminism. It will, I believe, in large measure be made by feminism. (WL to Marie Howe, February 16, 1915, WLPI F570)

Lippmann’s departure from Harvard in 1910, in his fourth year, without even waiting for his master’s degree, signaled his rejection both of the mainstream social sciences as disciplines to which he could devote his life and of the academic world as a place in which to dwell. Over the next two decades he went through what amounted to a series of internships in other fields and other places from which he could make his career choices: he spent time in socialist endeavors, investigative journalism, government service at several levels, and the editorship of a magazine and a newspaper.

Searching for a Career

For a short time after graduation Lippmann worked at a socialist paper, the Boston Common, but his first real job gave him deeper insight into one career choice that lay before him, investigative journalism. The prominent “muckraker” Lincoln Steffens was planning an exposé of Wall Street similar to those he had conducted of municipal governments, and he came to Harvard looking for an assistant. He asked who had “the ablest mind that could express itself in writing” (Hartshorn 2011, 184) and was told Walter Lippmann. The investigation for Steffens in which Lippmann did most of the legwork yielded an eight-part series called “It” in the popular periodical Everybody’s Magazine in 1910–1911 (the first part is Steffens 1910); this documented monopoly in the banking industry and the overwhelming power of J. P. Morgan (Steffens 1910). The furor it created was fuel for a congressional inquiry (the Pujo Committee) that led to the Federal Reserve Act of 1913. Lippmann appreciated that muckrakers drew attention to issues of public concern that otherwise might be neglected by government and the scholarly community. But he worried that their methods were not sufficiently thorough and careful to provide a basis for sound policy formation. Throughout his life he looked for the right balance between rigor and relevance, and here he thought the weight was much too heavily on relevance. There was no real research by Steffens. His approach was the antithesis of science. “I was also rather startled to find that he never read anything. He was only interested in seeing people. He never wanted to read anything. He never read any books on the subject he was writing about, and that rather put me off. He was a journalist, and he liked a sensation for its own sake” (R 43). Lippmann retained an affectionate regard for his old boss but did not follow in his footsteps.

After the Chelsea fire Lippmann did volunteer work in the community. He gave lectures to a working-class audience on the fine arts, including one on embroidery. An opportunity to really experience socialism in action, however, opened with the election of the first socialist mayor in America, George Lunn, in Schenectady, New York, in 1912. After the brief interlude with Steffens and Everybody’s Magazine he gladly took a position as Lunn’s executive secretary. He reflected very candidly on the frustrations of this experience in a long letter to the National Office of the Socialist Party in 1913 (reproduced in Stave 1975). The essential problem for socialists in power, he wrote, was that their doctrine was mainly about the simple redistribution of income and wealth. Take from the rich and give to the poor. That was all very well, but it implied man...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• Preface
• Note on Citations and Abbreviations
• Introduction
• 1. The Making of a Public Economist
• 2. Building Intellectual Community
• 3. “You Can Always Tell a Harvard Man”
• 4. Recovery
• 5. Keynesian Conversion
• 6. Reform I: Redistribution
• 7. Reform II: Monopoly
• 8. “Regenerated Liberalism”
• 9. War
• 10. Peace
• 11. The Economy of the Postwar World
• 12. The Good Economy
• Draft of Declaration of Principles, 1936
• Columns by Walter Lippmann
• References
• Index