Ely was a product of the German historical school with an emphasis on evolution to new forms, and never accepted the marginalist revolution that was transforming economic theory in Britain and the U.S. He was strongly influenced by Herbert Spencer and strongly favored competition over monopoly or state ownership, with regulation to "secure its benefits" and "mitigate its evils". What was needed was "to raise its moral and ethical level." However, whereas Spencer believed that free competition was best served by deregulation and a smaller state, Ely believed that more regulation and a more interventionist state was the policy to follow. Also on social Darwinism, Spencer believed that the state should not get involved in supporting one ethnic group over another — whereas Ely believed that the state should support white "Nordic" people against people of other races (in line with the opinions of his colleagues at the University of Wisconsin, Edward Alsworth Ross and Charles R. Van Hise).