Richard T. Ely - Expensivity

Ely’s Early Life and Education

Richard T. Ely (1854–1943) was born in Ripley, New York, a town on the southernmost section of the state’s Lake Erie shore, about halfway between Fredonia, New York, and Erie, Pennsylvania.

When Ely was still a toddler, his father moved the family to a 90-acre farm near Fredonia, where the boy spent his formative years doing farm chores like milking cows, churning butter, gathering and carrying firewood, and picking rocks out of the fields.

Ely’s family belonged to the Presbyterian faith, but as an undergraduate in college he joined the Episcopal Church. Eli was fervently religious, and his religious beliefs would have a profound impact upon his economic views.

In 1872, Ely entered Columbia University in New York City. He received his bachelor’s degree in 1876 and his master’s degree in 1879, both from Columbia.

In 1878, Ely had traveled to Germany, where he enrolled at Heidelberg University to work on a doctorate in economics. While at Heidelberg, he studied with well-known economists of the German historicist school.

In the spring of 1879, Ely received his PhD in economics from Heidelberg, at the same time that Columbia conferred the master’s degree on him.

Some years later, in 1892, Ely also received a Doctor of Laws degree from Hobart College in Geneva, New York.

Ely’s Career

In 1881, Ely obtained his first academic position at Johns Hopkins University in Baltimore, Maryland, where he taught for 11 years before moving to the University of Wisconsin at Madison in 1892.

In 1885, Ely was one of the founders of the American Economic Association (AEA), the main professional organization for the economics profession to this day. He served as the AEA’s secretary from 1885 until 1892 and as the organization’s president from 1899 until 1901.

In 1925, Ely moved again, this time to Northwestern University in Evanston, Illinois, just north of Chicago, where he remained until his retirement in 1933.

Ely’s Ideas

Ely was an important intellectual contributor to the Progressive Movement in American politics at the end of the nineteenth and beginning of the twentieth centuries.

Ely was a harsh critic of capitalism, but from the point of view of the Social Gospel movement, not atheist Marxism. He believed that the moral message of the Christian gospels ought to apply to society considered as a whole, not just to the conduct of individuals.

However, Ely was clear that the drawbacks of capitalism in his day did not justify the move to full-blown socialism. In this sense, he was a reformer, not a radical, advocating such things as labor unions, improved factory conditions, child labor laws, and public-funded, compulsory education.

As a critic of capitalism, Ely was heavily criticized by the mainstream and politically conservative economists of his day; as a reformer, he was bitterly condemned by the revolutionary socialists.

Ely was even attacked by politicians in the Wisconsin state government who applied pressure on the University of Wisconsin’s administration during Ely’s tenure there to fire him for his allegedly socialist views. However, the university’s Board of Regents refused to take any action against Ely, issuing instead a ringing endorsement of academic freedom.

Ely explained the position he occupied in between unfettered capitalism and socialism in the following terms:

I condemn alike that individualism that would allow the state no room for industrial activity, and that socialism which would absorb in the state the functions of the individual.

Ely also warned that the proper combination of private enterprise and public regulation which should be the object of the reforms to capitalism was:

. . . menaced by socialism, on the one hand, and by plutocracy, on the other.

Ely was also a fervent evolutionist and, unfortunately, a prominent advocate of eugenics—along with many other distinguished scientists, lawmakers, and public intellectuals of his day.