In 1933, as the Nazi regime dismantled German universities and purged Jewish and dissident scholars from public life, the New School for Social Research in New York established the University in Exile. The project offered sanctuary to displaced intellectuals fleeing authoritarianism in Europe. Yet the institution did more than rescue endangered scholars. It transformed modern economics.
Mark Knell, professor emeritus, NIFU
Top photo: Eduard Heimann was a Jewish social scientist and economist. He emigrated to the USA in 1933. Photo akg images NTB.
The economists who arrived at the New School carried intellectual traditions shaped by Weimar Germany, democratic socialism, institutional economics, and ethical political economy.
Figures such as Emil Lederer, Eduard Heimann, Frieda Wunderlich, Gerhard Colm, Adolf Lowe, Jacob Marschak, and Franco Modigliani did not view economics as a narrow technical discipline. They understood it as inseparable from questions of democracy, social order, labour relations, and political stability.
American universities transformed
Their exile coincided with a major transformation inside American universities. During the 1930s and 1940s, economics increasingly defined itself as a scientific and technical field. Mathematical models, econometrics, policy expertise, and claims to neutrality became central to professional authority. Economists gained influence not as public moralists, but as technical experts capable of managing complex economic systems.
Trygve Haavelmo illustrates the wartime convergence of exile, expertise, and state administration, and the broader shift toward technical economic knowledge.
During the Nazi occupation of Norway, he received an offer from the New School’s Graduate Faculty but instead led the American office of Nortraship in New York, where he applied statistical analysis to problems of planning and coordination. The Norwegian Shipping and Trade Mission (Nortraship) was an organization that, during the Second World War, administered the large Norwegian merchant fleet outside German-controlled areas. His later work in econometrics reflected the growing authority of technical and policy-oriented economic expertise during and after the war.
Different constraints
Within this environment, refugee economists faced a changing set of constraints. In Weimar Germany, economists often spoke openly about capitalism’s moral contradictions, democratic crisis, and social reform.
In the United States, however, overtly political or normative language increasingly appeared unscientific or ideological. Refugee economists therefore adapted their arguments to fit new institutional expectations.
The result was not silence, but reconfiguration. Ethical and political arguments were reformulated to meet institutional norms that rewarded technical expertise, methodological neutrality, and scientific legitimacy.
Eduard Heimann and Adolph Lowe
Eduard Heimann offers a revealing example. Before 1933, Heimann developed a critique of capitalism rooted in Christian socialism and labour ethics. He argued that economists should judge economic systems not only by efficiency and productivity, but also by their ability to sustain democracy, human dignity, and social solidarity.
After emigrating to New York, Heimann retained these commitments, but increasingly expressed them through the language of institutions, coordination, and social adjustment rather than explicit ethical critique.
A similar pattern appeared in the work of Adolph Lowe. Deeply influenced by German historical economics and Marxian social theory, Lowe remained committed to democratic planning and social stability. Yet he reformulated these concerns through what he called “instrumental analysis,” a methodological framework focused on policy coordination and institutional design. Political economy became systems analysis.
Econometrics
Jacob Marschak and Franco Modigliani moved even further toward the formal methods that would dominate postwar economics. Marschak became a leading figure in econometrics and decision theory, while Modigliani helped integrate Keynesian economics into mathematically structured macroeconomic analysis.
Yet even these highly technical approaches retained traces of older European concerns with instability, planning, and democratic order.
Different kinds of censorship
The history of the University in Exile therefore reveals something larger about modern intellectual life. Censorship does not operate only through bans, repression, or direct political control.
Liberal societies also shape knowledge through institutional incentives and professional norms. In mid-century America, economists did not need to be told explicitly what they could or could not say. The standards governing scientific legitimacy already rewarded abstraction, technical expertise, and methodological neutrality.
This process produced a form of productive self-censorship. Refugee economists did not abandon political and ethical concerns. Instead, they recoded them into technical vocabularies capable of surviving within American academic institutions. Critiques of capitalism became stabilization policy. Democratic planning became coordination theory. Ethical commitments became methodological assumptions embedded within models and policy frameworks.
Transformation of economics
The transformation changed economics itself. Histories of economics often describe the rise of formalism as an internal methodological evolution driven by mathematics and econometrics. But the story of the University in Exile shows that politics, migration, and institutional adaptation also played a decisive role. Modern economics emerged not only through scientific innovation, but through struggles over legitimacy, authority, and permissible discourse.
The émigré economists who arrived in New York escaped authoritarian repression, but exile forced them to renegotiate how economic knowledge could circulate and acquire credibility inside liberal democratic institutions. In doing so, they helped construct the technocratic language that continues to shape economic expertise today.
The history of the University in Exile reminds us that threats to academic freedom do not emerge only through authoritarian censorship or direct political repression. Universities and research institutions also shape knowledge through funding structures, professional incentives, and standards of legitimacy that influence which forms of expertise gain authority.
At a moment when democratic institutions again face political polarization, distrust of expertise, and growing pressure on universities across both Europe and the United States, the experience of the émigré economists at the New School offers an important historical lesson.
Intellectual freedom depends not only on protecting scholars from repression, but also on preserving institutional environments in which critical and politically uncomfortable forms of knowledge can remain legitimate.