THE INFLUENCE OF INSTITUTIONALISTS ON THE NEW DEAL: AND WHY THE MAINSTREAM LITERATURE OF THE HISTORY OF ECONOMIC THOUGHT IGNORES THIS PERIOD IN HISTORY

Abstract

This article holds that institutional economics constituted the economic foundation for Roosevelt's New Deal. Institutional economics created the ideal environment for the implementation of the state intervention measures of the New Deal though the "institutionalist movement" of 1920s. The notions of planning of Wesley C. Mitchell, John M. Clark, and Walton Hamilton, the most influential institutionalists then, were embodied in a good many measures of the New Deal. Many institutionalists participated in the making and the implementation of New Deal policies. The ideas of planning held by Rexford G. Tugwell and Mordecai Ezekiel were directly adopted in the New Deal measures, proving that the New Deal measures came from institutional economics. Adopting the SSK approach, this article believes that the literature of orthodox economics ignores this period of history on purpose, since it is part of the social construction process for orthodox economics to ignore this period of history.