Jacob Hacker on the American Political Economy

Authored By 
Rick Harrison
June 27, 2023

Jacob Hacker stands by a railing in the atrium outside his office

Even for people who are not political scientists, it might seem intuitive — perhaps obvious — that the political and economic systems in the United States are closely linked.

From battles over the national debt and taxes, to the political implications of unemployment and inflation, to the Election Day influence of campaign donations — even the most casual observer of American democracy can see the prominent influence of money in the competition for power. Who has it, who doesn’t, who needs it, and who gets it.

But even as a body of research has grown in recent years to describe how capitalism affects other wealthy democracies, academics have not focused as much on the precise quality of how these systems interact in the United States.

Now, with grants from The William and Flora Hewlett Foundation, Institution for Social and Policy Studies (ISPS) faculty fellow Jacob Hacker is building a new program within ISPS focused on what he and his colleagues call the American Political Economy (APE).

“This is something Yale will be known for in the way it has become known for introducing experimental methods to the study of political behavior and for developing other now-core aspects of research on American politics,” said Hacker, the Stanley B. Resor Professor of Political Science. “Creating a new framework and agenda for studying the American political economy is the cutting edge of where the discipline is heading. This will be a big part of that.”

The new ISPS APE program at Yale will be the latest Hewlett-supported endeavor related to the Consortium on the American Political Economy (CAPE), led by Hacker; Paul Pierson, the John Gross Professor of Political Science at the University of California at Berkeley; Kathleen Thelen, the Ford Professor of Political Science at the Massachusetts Institute of Technology; and Alexander Hertel-Fernandez, associate professor of political science at Columbia University’s School of International and Public Affairs. In 2021, they edited the book “The American Political Economy: Politics, Markets, and Power” to create a framework for the discipline.

We spoke with Hacker recently to explain the scope and importance of this work, how he and Yale’s partners are changing the field of political science, and what it means for the future of American democracy.

ISPS: Why should we study how political and economic systems are linked?

Jacob Hacker: Economics and politics can’t be separated from each other. Economic factors and power structures influence governance and in turn government policies shape the relative power of actors in the economic sphere. When you study political economy, you are studying the two-way path of influence between the fundamental economic structures of a country and its political dynamics. That means you have to pay attention to what government does and what difference it makes for citizens.

ISPS: Why is this framework useful? What does it provide that other academic disciplines or lines of inquiry do not?

Hacker: One reason has to do with how much of political science has been carved up into different institutions. For example, people study Congress, the presidency, the courts. But organized political actors seek to use all these institutions to advance their interests. A lot of modern American politics involves political actors shopping for the best venue to accomplish a goal, whether that be through passing a law, lobbying for executive action, or filing a lawsuit. That kind of work crosses these institutional boundaries, which from an academic perspective requires a more comprehensive approach to understand the dynamics at play.

ISPS: And not many researchers approach questions this way?

Hacker: Political science can be heavily behavioral. We are focused on elections, public opinion, voter turnout. I’ve done a lot of behavioral work myself. But what my colleagues and I at the Consortium on the American Political Economy argue is that we need to look beyond behavior to understand the political economy.

ISPS: How so?

Hacker: Consider how organized interest groups influence the financial regulatory policies implemented by both Democrats and Republicans, leaving the role of elections somewhat limited. Which is not to say that all politics is determined by the actions of interest groups. But there are aspects of policymaking that are hard to see if you are only looking at voters and elections. One of the things we are trying to do with APE is complement behavioral research with more attention to what the government is actually doing. By studying the distribution of power in the political economy, you can see much more clearly what is driving policy and its effects on citizens’ lives.

ISPS: Can you offer a couple of other examples of how this dynamic plays out?

Hacker: Racial politics would be one. Political science on race has evolved in the last decade or so to reveal what government actually does to shape outcomes in areas such as criminal justice policy. However, a lot of research on race, ethnicity, and politics focuses on behavioral factors, such as the degree to which white voters are racially resentful. What APE research is showing is that we miss a lot about the distribution of power and fundamental economic disparities if we just study public opinion or the extent to which voters support particular policies or candidates.

I think this holds for work on gender too. There has also been a lot of research on how voters view female candidates and whether women have different views on issues than men. But there has been less work on the stark gender inequalities in the workplace and how the disproportionate caregiving role that women often take on can diminish power and influence. We want to push scholars to go beyond the typical questions and get more into what we call “meta-politics.”

ISPS: Meta-politics?

Hacker: By meta-politics, we mean how the political game is shaped by the power and strategic decisions of influential actors. Consider venue shopping — whether groups are working through the courts or states or Congress. Or questions of agenda-setting: Why are some issues on the agenda and others not? The idea is to start to understand more fundamental aspects about how American democratic capitalism works. A lot of political science focuses on the last mile, that final stretch before reaching a destination. We want to complement that work by scrutinizing the long transit that leads up to that last mile.

ISPS: What makes studying American political economy so distinct from other countries?

Hacker: The American system is unusual. A lot of cross-national work tends to lump us in with Canada, the United Kingdom, and Australia. They are similar, but once you look beneath the surface, they are really different. The United States is the leading democratic country in the world economy, and the U.S. dollar is the world’s reserve currency. That’s hugely influential, and that shapes how we go about our business and politics. Our political institutions are also quite distinctive. Instead of a parliamentary system, the United States has a presidential system with single-member district elections for the House of Representatives. The Electoral College and the U.S. Senate skew power disproportionately toward less populated, more Republican states. The U.S. Supreme Court is the most powerful high court among wealthy democracies. And American-style federalism creates a uniquely decentralized structure, placing more authority in local governments than many other countries do. Together, American the system has many veto points and junctures where policies can be made and influenced.

ISPS: OK. That’s the political system. But what’s unique about the interaction between markets and governance?

Hacker: For one thing, organized labor here is really weak. In addition, the United States has no organized producer groups that coordinate within politics and the economy of the sort we see Europe. As a result, individual companies and wealthy activists seeking advantage have a lot of room to ply their influence. You see this in how technology and financial companies resist regulation. You can see now how behind the curve our government seems when it comes to regulating something moving as fast as artificial intelligence.

ISPS: How does the legacy of slavery factor in?

Hacker: The American history of race is very distinctive. The United States had chattel slavery on its own soil, and even after the Civil War, patterns of racial hierarchy were stark and enforced through violence. Cleavages over race are deeply hardwired into structures of local government. And a lot of what has happened with patterns of racial segregation became patterns of inequality — from health care to public goods to education and more. After the Civil War, Black Americans became full citizens in the North, but because of Jim Crow laws and racist policies like redlining communities to exclude Black people from home ownership, Black people did not become fully integrated into the American economy. Racism is common in other countries, but our racial conflicts reflect this deeper divide. Our politics are more fraught. You can’t understand how our political economy works without looking at race.

ISPS: How has CAPE encouraged broader efforts to define and explore the American Political Economy?

Hacker: CAPE is doing a lot to facilitate this project. We have helped create an American Political Economy section of the American Political Science Association, which I co-chair. That came about because we had a petition that gathered hundreds of signatures virtually overnight, including those of several past presidents of APSA. We held our first set of panels last year. We have also created a working group of junior faculty to present their papers, part of CAPE’s effort to offer leadership to the next generation of scholars. And we offer CAPE as a resource, with a website, small grants, and a postdoctoral fellow to help coordinate everything. This summer, we are holding our fourth summer academy, hosting 20 junior faculty members, postdocs, and advanced graduate students working in and around APE topics.

ISPS: What is the goal of the summer institute?

Hacker: It’s a way of reaching a critical audience. We spend three or four days learning about work in different areas, sharing work in progress, receiving feedback, and conducting professional career-building and field-building exercises. We want the top people who are getting hired at the top departments to be interested in APE and published in the top journals.

ISPS: What does a fully developed research field of APE look like?

Hacker: We are tremendously grateful to the support of the Hewlett Foundation, and one of the reasons they have made these long-term investments is that they understand political science must be a part of the conversation about the economy in a way it is not today. It is the best discipline to influence how we think about power — how policy reshapes politics, how we build coalitions, how we build institutions that can affect government operation in the future. Any discussion of American capitalism should include not just economists but political scientists fluent in a mature discipline with a proven capacity for investigating and shaping policy.

ISPS: I know that we need to know things before we do something about them, but what could we do to eventually operationalize this knowledge? Particularly considering how so much of it speaks to the intrenched interests and polarization of our power structures?

Hacker: It’s easy to get pessimistic, but I’m actually optimistic. We have made enormous steps forward. For example, we know much more about inequality in the United States now than we did 10 or 20 years ago. We have some fact-based diagnoses and prescriptions for what we can do to address it. The big challenge is getting the political system to act on them.

ISPS: Easier said than done, right?

Hacker: When suggesting ways to improve the economy, political scientists need to help guide policymakers and leaders of movements with good evidence and facts. APE is set up to do this, but a lot of the discipline isn’t. The key is that we can’t improve our economy without improving our democracy, and political science should be the leading disciplinary voice helping to figure out how we do that.

ISPS: What might success look like?

Hacker: I imagine there will not be one solution in any domain but a bunch of different, overlapping efforts that reflect the depth of the challenges. Bold ideas that gain support across the political spectrum and not just through academic papers. I’m hopeful we can participate in a groundswell of political leadership and broad movements that push for change. APE can and should be an influential part of the conversation.