Reclaiming Mitchell’s Institutionalist Approach to Business Cycles

Abstract

Wesley C. Mitchell, despite his seminal contributions to the understanding of macroeconomic fluctuations, with a few exceptions, has not received the deserved attention from scholars. This article argues that his business cycles research must be updated and developed into a macro-theory emphasizing the endogenous co-evolution of the institutional influence on behavior and the typical features of a monetary economy. This development suggests that Mitchell’s approach ought to be, after updated and cross-fertilized with other theories, reclaimed. In order to bring his formulations up to date, complement it, and put it back to the forefront of an institutionalist macroeconomics, it seems necessary to: (i) address some important changes underwent by capitalism since Mitchell’s time; (ii) intensify dialogue with heterodox currents, mainly post-Keynesians; (iii) emphasize the evolutionary aspect of Mitchell’s thought, making explicit the role of institutions in this approach.