The Business Cycle Theory of Wesley Mitchell

Abstract

Most neoclassical economists believe that Wesley Clair had no theory of the business cycle; according to Milton Friedman, Mitchell is generally considered primarily an empirical scientist rather than a theorist (Burns 1952, 237). The reason is that Mitchell's theory was not a neoclassical theory, so in their view, it was not a theory. Whereas all neoclassical theory is stated in terms of eternally true laws, stated an evolutionary theory. Whereas all neoclassical business cycle theories are exogenous, relying on external shocks to the economy, stated an endogenous theory, based on the internal dynamics of capitalism. Whereas neoclassical theories are deduced from unproven psychological axioms, builds his theory from inductive generalities gained from empirical research. Before examining these points in detail, it is worth noting the importance of in the institutionalist movement at a time in the 1920s and 1930s when it appeared that institutionalism might become the dominant paradigm in US economics. was the leading figure of the large number of institutionalist faculty and students at Columbia in that period. He was the leader of the National Bureau of Economic Research, which was seen as the main home of scientific empirical research in economics and was clearly institutionalist. His books were among the major examples of the institutionalist paradigm. (All of these points on are documented in an