1In the first issue of History of Political Economy, Bob Coats presented a new agenda for the research program in history of economic thought. Forty years later, Malcolm Rutherford’s The Institutionalist Movement in American Economics, 1918-1947: Science and Social Control provides a good example of these new « research priorities in the history of economics » (A. W. Coats, 1969).
2The project is clearly defined: “The approach taken in this book is one that leads the historian of economics to think not just about the published literature associated with a particular group, but with a much broader range of issues – the network of individual contacts between members of the group, the university departments that were centers for them, the research organizations and agencies that supported their work, their contacts with government and government agencies, of where they found jobs for their students, their contacts with related disciplines and intellectual developments elsewhere, and, most important of all, the often contested nature of what is to count as good science.” (p. 345)
3 Two milestones mark out the boundaries of Malcolm Rutherford’s book: 1918-1947. 1918 is the year when Walton Hamilton wrote what Rutherford presents as the original institutionalist manifesto, “The institutional approach to economic theory” (Hamilton, 1919), and presented it at the American Economic Association conference, in a session that involved, one way or another, the main protagonists of institutionalism (John Maurice Clark, Walter Stewart, William Ogburn, Harold Moulton, Thorstein Veblen and Wesley Clair Mitchell). 1947 is both the year of the publication of Paul Samuelson’s Foundations of Economic Analysis, and the year of the Koopmans-Vining controversy between the Cowles Commission and the National Bureau of Economic Research. Although these two milestones give a strong structure to the periodization proposed by Rutherford, the book provides a detailed history of the movement since the 1880s and extends its analysis to the 1950s and early 1960s.
4Enhancing the founding role of Walton Hamilton—and thus departing from Joseph Dorfman’s thesis on the “founding triumvirate” (Thorstein Veblen, Wesley Clair Mitchell and John Roger Commons) as sole and unique founders of both the institutionalist movement and the institutionalist doctrine—, Rutherford uses Hamilton’s manifesto as a basis for a wider definition. Institutionalism is thus described as an approach (i) focused on institutions; (ii) concerned with “process”; (iii) connected with contemporary work in related disciplines; (iv) utilizing “scientific” methods; and (v) relevant to the problem of “social control”.
5In order to develop this view, Rutherford endorses a twofold methodological framework. On the one hand, a sociology of science approach, which leads Rutherford to offer a precise and detailed picture of institutionalism as a “movement” rather than as a school of thought: a movement based on university education programs, on research organizations, and drawn on a network of individuals (Hamilton, Veblen, Mitchell, Stewart, Clark, Moulton, and others), who shared values, methodological perspectives, and a common sense of self-identity. On the other hand, the book carries out a strong analytical and methodological thesis, summarized by its subtitle: Science and Social Control – both science and social control being described as analytical and methodological devices as well as political goals.
6Under the influence of Charles Sanders Peirce and John Dewey’s pragmatic philosophy, “science” was defined as an empirical, experimental, and instrumental discipline, whereas “social control” referred to the project of modifying institutional arrangements to supplement market mechanisms.
7Based on an extraordinarily rich recollection of archival material, the book is divided into five parts. It begins with a short introduction to American institutionalism and its sources, where Malcolm Rutherford adopts a “revisionist” approach in order to challenge some of the standard views of the movement: (i) the view according to which American economics was dominated by neoclassicism since the 1890s and institutional economics was mostly a “dissent” of American neoclassical economic theory during the interwar period; (ii) the role of Veblen as a founding character of the movement; (iii) the idea that institutional economics did not make any important contributions to economic theory and/or methodology; (iv) the analysis of the decline of institutionalism in the post World War II period as failing to produce a “viable” alternative to neoclassicism.
8The second part of the book (Institutionalist Careers) is centred on two essential but forgotten characters: Walton Hamilton, “leading promoter” of the early period of institutionalism, and Morris A. Copeland, “perfect candidate for […] a case study owing to his central place within the interwar institutionalist movement” (96). The third part (Centers of Institutional Economics) reviews the major research and educational institutions of the movement during the pre-World War I and the interwar years: the University of Chicago (the “birthplace”, to which Veblen, Hoxie, Mitchell, Hamilton, Moulton, Clark, Dewey and Mead where all associated in the period up to 1918); Amherst and the Brookings Graduate School of Economics and Government; the University of Wisconsin, where Ely, Commons and Ross were the leading figures; Columbia University, where Mitchell, Clark, Mills, Dorfman, Tugwell, Means, Burns and, later, Polanyi held positions; the National Bureau of Economic Research and the Carnegie and Rockefeller Foundations.
9The fourth part of the book (Challenges and Changes) provides an analysis of the theoretical and doctrinal changes of institutional economics after World War II, and examines some of the reasons for its decline: the rise of Keynesian economics and the development of probabilistic econometrics within North American economics; the loss of interdisciplinary connections, together with some failures within some major institutionalist research programs; or the shift in the methodological beliefs at stake within the economic profession, leading to a new standard for economics as an applied science.
10The Conclusion of the book offers an analysis of “institutionalism in retrospect”, and sums up some of the major analytical and methodological positions of the movement: (i) the central analytical importance of institutions; (ii) the role of social psychology as a basis for economic analysis; (iii) a conception of “correct” scientific method as “empirical and investigational” and the rejection of the abstract nature of much orthodox theory; (iv) a critical examination of the functioning of existing institutions and a strong call for new forms of social control involving government regulation; (v) a pragmatic and humanistic approach to social value and a rejection for market efficiency as an adequate tool for policy appraisal.
11The book ends with an analysis of the marginalization of institutionalism in the late 1930s and 1940s, as the result of both absorption and a displacement of institutionalist objects and lines of research into “orthodox” theoretical programs. Among other examples, Malcolm Rutherford insists upon the new positivist “ideas of science”; the shift in the attitude of some of the Foundations towards the standards of economic research; the decline of legal realism within American legal scholarship; the exportation of academic programs in industrial relations and public administration out of economics departments; the boost to operation research and mathematical tools which followed World War II; or the neoliberal reaction against all forms of social control. Other factors include the sociological decline of institutionalist academics at Wisconsin and Columbia, or the replacement of the Mitchell-Burns program at the NBER by more orthodox approaches.
12Yet, Malcolm Rutherford does not end his book with the assessment of a death of the institutionalist program and values. “Institutionalism has continued to exist”, he writes. “Many of the complaints that institutionalists had for orthodox economics in the 1920s still seem to apply, and these concerns continue to feed heterodox traditions.” (354)
13Together with an excellent development of Bob Coats’ program, this might be one of the strongest points made by Malcolm Rutherford in his book: a theoretical and methodological reflection upon the multifaceted subtle and never ended game between heterodoxies and orthodoxies in economics.