But if former radicals are horrified by such blatant supping with the devil, the present-day staff see the service as just one more step in the inevitable convergence between academia and business.
Ten years ago, more than 80 per cent of the LSE's funding came from government; now 26 per cent does, with the rest generated by fees and income from research and consultancy. Research contracts, which provided negligible income a decade ago, now account for 14 per cent of the school's funds.
The academics have become more entrepreneurial on their own account, too. Many do consultancy work, although they are supposed to hand over a chunk of their earnings to the school. With full professorial salaries starting at pounds 32,000, it is not surprising that they feel the need to fatten their wallets.
The latest venture almost fell foul of this freelance work. John Ashworth, the vice-chancellor, set up Enterprise LSE (Else) when he arrived from Salford, where there was a similar organisation. He wanted it to exploit the skills of the academics in a way that would not damage their prime research and teaching role. But the staff were worried that it would merely siphon a bigger portion of their consultancy earnings into the school's coffers.
That changed last year when Keith Mackrell, an LSE old boy and former director of Shell International, took charge of Else. He told the staff the organisation was there to help them market their skills and - says Crispin Lyden-Cowan, projects manager - 'waited for them to come to us'.
There was no stampede, but gradually the academics got the message that Else was not out to strip them of their freelance earnings. One, Larry Phillips, had developed a software package called Hiview to help companies make rational decisions. Else took over its marketing and developed a Windows version of the package to make it more attractive.
Then another old boy, Shandi Modi, came up with a new scheme. Mr Modi had built up Idea to become an important supplier of analysis to financial institutions, and had already embarked on a new product to cover emerging markets. Developing countries are a source of intense interest to fund managers, but also of considerable mystery. 'Investing is very attractive, but very risky,' Mr Modi says.
Much of the real expertise on such countries as Venezuela and Malaysia lay in the universities, and the LSE, one of the world's leading social science institutions, had more than its fair share. Mr Modi decided it would make sense to ask academics to provide political analysis, which could then be interpreted for the markets by Idea's own specialists.
The plan was to produce a daily fax on Latin America, and one on Asia-Pacific. Academics would be paid to produce material, which would then be edited into what Mr Modi calls 'an easily digestible form'. There was an inevitable mismatch between the natural style of an academic and that of a snappy market report, but the two sides gradually came together. 'It was difficult at first, but now we are very pleased with the quality of the output,' he says.
The service was launched a month ago and, Mr Modi says, has been Idea's most successful start-up yet. He has already signed up 25 institutional clients at pounds 1,000 a month.
The LSE's latest venture into capitalism seems to be paying off. 'I think it will be pleasantly surprised when it looks at the revenues in a year's time,' Mr Modi says.