The trials of theory: psychology and institutionalist economics, 1910-1931

The rise of the institutionalist school of economics, in the 1910s and 1920s, has recently been given the historical attention it deserves. However, historical studies of the school have left two questions unanswered. First, to what extent was the institutionalist's interest in academic psychology (frequently declared in their meta-economic writings) realized in their economic writings? Second, what evidence of a fruitful collaboration with institutional economics can be found in the work of psychologists? In this paper I consider the meta-economic statements of three key institutionalists, Wesley C. Mitchell, John M. Clark, and Walton H. Hamilton, and two key economic works by Mitchell and Clark. I contend that these works show little systematic engagement of academic psychology. A study of psychological literature of the period yields the same conclusion; in particular, industrial psychology did not come into fruitful contact with institutional economics, despite the parallel interests of the two fields and their parallel rise after World War I. © 2010 Wiley Periodicals, Inc.