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Evan Jones wrote:  
 
> There appear to be some stray arguments in the story from Pat 
> Gunning. 
>  
> I would have thought the scholars returning from Europe brought back a 
> mind-set as much conducive to a nascent Institutionalism as to a nascent 
> neoclassicism (vide Joseph Dorfman, The Role of the German Historical 
> SChool in AMerican Economic Thought, AER, May 1955.) As for an 'economics 
> of property rights and freedom' I can't for the life of me see how any 
> version of neoclassicism provides fallow ground for such development. 
> There was a political, ideological and cultural bunfight on these issues 
> at the turn of century. (vide William Forbath, Law and the Shaping of the 
> American Labor Movement, esp. Ch.5) anybody lurching into neoclassicism 
> would be seeking to escape a treatment of property rights and freedom 
> rather than be seeking to analyse them. Wesley Mitchell was certainly a 
> pivotal figure, but not in any dilution of neoclassicism. He was 
> thankfully concerned with bigger issues.  And so on. 
 
Thanks, Evan, for you comment. My views on the "economics of private 
property rights and freedom to exchange," were based on a recognition of 
the rather universal rejection of socialism by various of the early 
writers who I mentioned and who were part of the "new economics" 
referred to around the turn of the century in American journals, 
specifically by Thorstein Veblen. This is pretty easy to document. J. B. 
Clark is perhaps the best example. 
 
In my opinion, the rejection of socialism was based not on political or 
ideological views but on the belief that theoretical developments in 
economics rendered the reasoning used by the advocates of socialism 
simplistic and irrelevant. You can find these arguments, in different 
forms, in the early writings of Menger, Clark, and Walras. (I'm not so 
sure at the moment about Jevons and Marshall, or I would include their 
names also.) Those "early American neoclassicals" who followed these 
leaders, accepted their arguments and embraced the new economics. 
 
I agree that the mindset brought back from Europe by the early American 
"economists" was also conducive to institutionalism, perhaps even more 
so. Clark, for example, did not study Austrian economics. However, the 
same economists who studied German historicism were also, by virtue of 
their language training, prepared to study Menger and other early 
Austrian writers as well as Walras, if they could make sense of the 
math. And many, if not most, eventually did. My claim is that 
institutionalism did not fit so well with the prevailing desire of 
academic economists to communicate about the system of private property 
rights and freedom to exchange in America. Nevertheless, you are correct 
to point out that, if we speak of all the returning "economists," they 
brought back both ideas. And, one might go on to say, the battle lines 
were joined. 
 
(It is worth keeping in mind that prior to the new wave of economics 
toward the end of the 19th century in America, economics was often 
taught as part of moral philosophy by church leaders.) 
 
There were certainly plenty of emerging institutions to study in 
America. But the question is: was the study of these institutions 
"political economy?" 
 
Although I am not an expert on the history of institutionalism, my 
understanding is that the institutionalists were more successful in 
political circles than in academic circles. Historians who are 
interested mainly in politics, ideology, and culture are likely to 
perceive the competition between neoclassicism and institutionalism 
through these lenses (your reference to the American labor movement for 
example). Historians of economic _thought_ (by which I mean theory) have 
a different problem, it seems to me. They want to identify "pure theory" 
and to trace its history. 
 
Well, that's my somewhat singular view. Some on this list (judging from 
our past discussions) are not very interested in tracking pure theory. 
Indeed, many seem to reject the notion that one can identify real 
theoretical advances. As I see it, a good history of thought person must 
be sensitive to politics, ideology, and culture but, more importantly, 
must know how to recognize an advance in theory when she sees it. This is 
a stiff requirement. But this discussion of institutional economics seems 
a bit beside the point of my original comment. The original question was 
not about the "clash" between institutionalism and the new economics but 
about the history of neoclassical economics in America. I do not view 
that history as a history of politics or ideology, although these 
elements were sometimes present. I see it as the emergence of the new 
marginalist and subjectivist (individualist) economics, followed by an 
institutionalization of the teaching of and research in various 
compartmentalized economic subjects. The successive participants in this 
institutionalization and compartmentalization caused it to develop a 
momentum of its own. This made it possible for people to become notable 
"neoclassical economists" in the eyes of modern professional economists 
even though they never learned the theory lessons taught by their fore 
bearers. 
 
Pat Gunning, Sultan Qaboos University, Oman 
 
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