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The question under discussion - the rise of neoclassicism to dominance in
US universities - seems to me to be an American question. In Britain, for
exmple, neoclassical (Marshallian) economics dominated from before 1900.
In America, institutionalism was a real alternative until WW2, but faded
very fast. An important factor must be that US universities expanded so
fast after 1945. It is not that institutionalists vanished, but that they
had a near-zero share of the new entry in the 1940s and 1950s. Why? Here
are some thoughts.
(1) Incomers from Europe may be a factor. Institutionalism was almost
exclusively American so incomers weren't institutionalists, but numbers
were surely too small to be significant overall.
(2) The mathematization of (neoclassical) economics was a good way for
the new generation to elbow out the old, who were mostly no good at math.
Important when you are young and need to make your mark. This attracted
young economists to neoclassical theory, weakened the institutionalists.
(3) Kenesian economics - we can argue whether Keynesian economics is
neoclassical (in this context I think it is - remember that Samuelson led
the introduction of Keynes into US undergraduate teaching with his
textbook) but it must have attracted many who might otherwise have been
institutionalists, and it was soon absorbed into the neoclassical
mainstream.
(4) Most important - neoclassical economics must have been exciting at
that time (1940-60), with Hicks' Value and Capital, Samuelson's
Foundations, monopolistic competition and so on, all to be absorbed and
developed, as well as Keynes. Institutionalism must have looked
old-fashioned and boring.
(5) (Obviously) the war and Cold War. American capitalism had triumphed
over fascism, but remained under threat from communism. This doesn't
logically entail neoclassical economics, of course, but it surely set a
context in which pro-market, anti-state arguments thrived.
Tony Brewer ([log in to unmask])
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