MODERN ECONOMIC THOUGHT

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The movement to reconstruct economics was well established in the United States before 1929. By 1914, Thorstein Veblen had articulated his evolutionary or cultural version of economics. In the years leading up to World War I, Veblen's followers, including Wesley C. Mitchell and Robert F. Hoxie, actively defended this emerging institutional economics. By 1918, interest in this new economic theory had grown significantly, prompting discussions at the American Economic Association's annual meeting. By 1921, institutional economics had reached a peak in popularity. Following the 1920-21 depression, the movement continued to attract advocates, though it began to diverge from Veblen's earlier frameworks. Younger economists like John M. Clark and Rexford G. Tugwell introduced fresh perspectives, focusing more on immediate social and economic issues and envisioning reforms within the existing private-enterprise system. While they found some aspects of Veblen's work outdated, their approach remained fundamentally aligned with his tradition. This evolution in thought marked a significant shift in the quest to modernize economic science while retaining foundational principles.