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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. 
 
The ascendnacy of neoclassicism after WWII was probably multi-pronged: 
 
-the attraction to formalism per se (vide Machlup's interventions in the 
marginalism dispute) 
 
- the attraction to formalism as an escape from the hard issues (perhaps 
important to many economists who had migrated from Europe and had seen the 
barbarous consequences of conflict over the big issues) 
 
- the attraction to formalism as vehicle for mechanical instruction (the 
textbook phenomenon as mentioned by Gunning etc) 
 
- an ideological component, as reflected in the rise of labour economics 
as a vehicle for pushing the economic criminality of unions, belatedly 
legitimised in the US (the Chicago school here: David McCord Wright, 
Albert Rees) 
 
The list of motives could go on. 
 
However, the essential element of institutionalisation, which has had to 
be constantly replenished, is not the substance of the varieties of 
neoclassicism but the fiercely anti-intellectual process by which 
intellectual pluralism has been inhibited in the 'discipline's domain - 
core syllabus control, hirings, promotions, publishing, etc. The answer 
to the institutionalization process has to be found in the sociological 
and psychological realm. 
 
But the person who does a decent job on this process (which would 
transcend Coats' useful but sugar-coated treatments) is not going to get 
a Nobel Prize in Economics for their efforts. The doctorate in economics 
in the US is a masterpiece of thought control. That anybody gets through 
it with their sanity and integrity intact is a miracle, due no doubt to 
the handful of 'soft' people on the margin who shield their charges from 
the worst excesses of the thought police. 
 
Evan Jones 
 
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