Other Major Contributions of the New School
In addition to establishing economic associations and journals, adherents of the New School also contributed to the development of the discipline of economics in the US in various other ways that helped raise the status of economists in society.
For instance, many German-trained economists and their students provided ‘expertise for a variety of federal, state, and local bodies and to private businesses’ (Coats 1993, 348). They also encouraged ‘team work’ between ‘the universities, the governments, and the various societies and institutions devoted to economic research’ (Farnam 1913, 31). An example of this type of collaboration was the American Bureau of Industrial Research, which was founded by Farnam in 1904 and supported by adherents of the New School, including Ely, Clark, and John Rogers Commons (1862—1945). It was essentially a research center that brought together supporters of labor rights and reform-minded academics to collect and organize all available material on the history of the American industrial society, with a focus on understanding the history of the labor movement in the country. With the help of Ely and his students, the American Bureau of Industrial Research 192 GHSE and Establishment of Economic Associations and Journals ended up publishing 11 volumes of a Documentary History of American Industrial Society in 1910 and 1911 (Commons 1918). Then, in 1918, it published the two volumes of the History of Labour in the United States that were prepared by Commons and his graduate students (Commons 1963, 97). These volumes were extremely important, because they were the first systematically organized archived collections on the history of labor in the US.Commons and his students also played instrumental roles in the area of government legislation and policy in the US, including the establishment of labor laws and the development and administration of social security programs and services.
For example, they contributed to ‘drafting the Civil Service Law of 1906, and the Public Utility Act of 1907’ (Yefimov 2009, 39). Edwin E. Witte (1887-1960) and Elizabeth Brandeis Raushenbush (1896-1984) were among Commons’s students who were well known for participating in the drafting of laws pertaining to unemployment insurance, social security, and public health insurance in the US (ibid.). Over the course of his career, Witte was Executive Director of President Franklin D. Roosevelt’s Committee of Economic Security in 1934, the first president of the Industrial Relations Research Association in 1948, and president of the AEA in 1956-1957 (Cohen 1960). Witte, who was strongly inf luenced by Commons, was highly critical of ‘the power of the large impersonal corporation, the political influence of private insurance companies, the control of “Wall Street,” and the influence of professors from eastern universities in government, business, and labor’ (ibid.). Like many theorists of the GHSE, he essentially combined economics, history, ethics, and politics with the realities of life in order to improve the living conditions of all citizens. In fact, he came to be known as ‘the father of the Social Security Act’ in the US, as he played a crucial role in ‘the formulating of the social security program’ (ibid.). Furthermore, he and other Wisconsin institutionalists defended ‘the trade union when such defense was dangerous’ (ibid.). Witte also advocated for ‘social security and public health insurance,’ even though there were strong attacks against any efforts aimed at establishing a ‘welfare-state’ or ‘socialized medicine’ at that time (ibid.).Adherents of the New School also made important contributions to the establishment of the American Association for Labor Legislation (AALL) in 1906.2 Ely was appointed as the first president of the AALL, while Taussig, Seager, Farnam, and Commons were among its well-known members. The membership of the AALL, which was comprised of ‘state and federal officials dealing with labor problems, and of professors and social workers, continually developed plans for labor legislation’ (Lafayette 1962, 72).
The goal of the AALL was ‘to promote uniformity of labor legislation and to encourage the study of labor conditions with a view toward promoting desirable legis- lation.’3 It focused on the elimination of child labor and the improvement of working conditions at factories (Gee 2012, 49). It also pushed for minimum wage legislation, compensation for work-related injuries, and unemployment and health insurance. In fact, ‘the AALL has been remembered primarily for being the first organization to mount a campaign for compulsory healthGHSE and Establishment of Economic Associations and Journals 193 insurance’ (ibid.). Starting in 1911, the AALL published a quarterly journal called the American Labor Legislation Review, which welcomed academic articles that supported social, political, and economic reforms. According to Ely, most adherents of the Old School were opposed to labor legislation on principle because it ‘seemed to them to be a futile interference with economic laws,’ whereas adherents of the New School supported it (Farnam 1913, 82).
In 1920, Ely established the Institute for Research in Land Economics and Public Utilities, which was associated with, but independent from, the University of Wisconsin (Ely and Shine 1924, 315). It was headquartered at the University of Wisconsin until 1925, when it moved to Northwestern University, where it remained until about 1935. The institute also established its own journal entitled the Journal of Land and Public Utility Economics, which published research papers from 1925 to 1947. Ely believed that land economics was a field that was neglected by economists. Accordingly, the institute focused on research in the areas of land valuation, conservation, urbanization, and public utilities. It was supported ‘entirely by contributions of public- spirited citizens and organizations’ that were ‘interested in the securing of the truth for its own sake and of others who have private interests that involve land problems’ (ibid.). As a result, it was ‘entirely free from political influence’ (ibid.). Since ‘no public money’ was ‘paid into its treasury, no political power’ could intervene in its investigations and its publication (ibid.).
Members of the New School also made important contributions to the development of welfare economics. In fact, their ideas played a major role in the creation of the New Deal. To be more precise, the welfare economics of Patten, who is also known as the ‘forerunner of New Dealers,’ highly influenced Rexford Tugwell (1891—1979), who was instrumental in the implementation of Roosevelt’s New Deal. According to Ely (1936, 141), who trained and inf luenced many eminent American economists, ‘neither the New Deal nor the old could be understood’ without the AEA. Moreover, he believed that the New Deal was directly influenced by the social and economic reforms that Bismarck installed in Germany during the 1880s.