TAILIEUCHUNG - A Companion to the History of Economic Thought - Chapter 25

C H A P T E R T W E N T Y - F I V E The Formalist Revolution of the 1950s Something happened to economics in the decade of the 1950s that is little appreciated by most economists and even by professional historians of economic thought: the subject went through an intellectual revolution as profound in its impact | CHAPTER TWENTY-FIVE The Formalist Revolution of the 1950s Mark Blaug Introduction Something happened to economics in the decade of the 1950s that is little appreciated by most economists and even by professional historians of economic thought the subject went through an intellectual revolution as profound in its impact as the so-called Keynesian Revolution of prewar years. I call it the Formalist Revolution after Ward 1972 pp. 40-1 who was the first to recognize the enormous intellectual transformation of economics in the years after World War II. It is common to think of interwar economics in terms of a struggle between institutionalists and neoclassicists but as Morgan and Rutherford 1998 pp. 215 have reminded us pluralism is a more accurate description of the state of play in economics between the two world wars reflecting the considerable variety that actually prevailed in modes of investigation techniques of analysis and types of policy advice. The extraordinary uniformity in the global analytic style of the economics profession that we nowadays characterize as neoclassical economics only dates from the 1950. The term neoclassical economics as a standard label for the mainstream of modern economics over the past century going back as far as the Marginal Revolution of the 1870s is confusing enough because the early pioneers of marginalism saw themselves as post-classicals rejecting the classical economics of Smith Ricardo and Mill and would have decisively rejected the label neoclassical that was invented by Veblen in 1900 Aspromourgos 1986 . But to apply the same label to prewar and postwar orthodox economics is 396 M. Blaug doubly confusing because faced with such leading monographs of the 1940s and 1950s as say Samuelson s Foundations of Economic Analysis 1947 and Arrow s Social Choice and Individual Values 1951 and with Arrow and Debreu s Existence of an equilibrium for a competitive economy 1954 no prewar orthodox economist could have made head or .

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