Development and Underdevelopment in the History of Economic Thought

The influence of economists on practical policy

Niels Kærgård, University of Copenhagen

When an economist analyses society, the ultimate goal will almost inevitably be to give politicians and decision makers correct and useful advice. The process of transformation from economic theory to political decision is consequently central to applied economics. To illustrate this process, this paper investigates the career and attitudes of all the 43 university educated economists who have been members of the Danish Government in the hundred years from 1920-2019. This is the history of a disciplines rise and fall in political power. There have been economists in all Danish governments from 1897 to 2014. However, this ended in 2014 and, in the recent government, there was none. The number of economists in the government increased until 1972-73 - when there were six - and then gradually decreased until 2014, when there were no economists left in the Government. This means that the apex of their influence came some decades earlier than in the USA (see Appelbaum, who in 2019 wrote of “The Economists’ Hour” as the decades between 1969 and 2008). Another difference is that Appelbaum’s economists were “prophets of free markets” whilst the dominating Danish economists were mainly Keynesians and Social Democrats. These political economists’ qualifications in economic theory was, of course, very mixed, but did included a number of very skilled economists; for instance, five full university professors. A number of them had glorious political carriers. An economist in fact, held the post of Prime Minister for 34 of the 100 years under investigation. The economists seems to have used their knowledge both to form their policy (e.g. Keynesian fiscal policy at a time where balanced budgets were still mainstream) and to choose the right time in the business cycle to take the responsibility of forming a government. No doubt, the economists have had an important role in forming the development of the Danish society.


Keywords: Economists, Political power, Keynesians, Welfare state