Elite philanthropy and applied economics: the Rockefeller Foundation’s role in post-war research direction

This essay investigates how, why and with what results the Rockefeller Foundation (RF) influenced the development of UK economics between 1930 and 1950. It shows the extent to which the RF, as the major sponsor of the newly emerging ‘applied economics’ research in the US and Europe, shaped the conversion of newly emerging macroeconomic theory into policy and research, and steered the fast expanding ‘applied’ economics in an econometric direction based on newly available national accounts data. The RF played a decisive role in selecting the economists retained for applied research when World War 2 ended, and with it the type of work funded. We argue that the RF’s preference for financing stand-alone institutes restrained the initial expansion of England’s applied economics research despite a head-start on national income accounting and business-focused research. Drawing on unpublished correspondence between John Maynard Keynes (1883–1946) and senior RF officers, we show how the difficulty in obtaining start-up funding conditioned the turn towards econometrics in the early choice of leadership and research plans at the University of Cambridge’s Department of Applied Economics, narrowing its earlier vision for a ‘realistic approach’ consonant with that of Keynes. Covering the path-dependent nature of applied economics in its formative phase, the essay demonstrates the role of philanthropic elite organisations in knowledge formation that led to the making of microeconomics and macroeconomics.