Postwar mainstream economists skeptical of free markets pioneered finance theory

Evidence

No simple mechanical link can be drawn between the way economics as a whole was changing and the way financial markets were theorized. The unity of orthodox, neoclassical economics in the postwar United States is easy to overstate, as Mirowski and Hands (1998) have pointed out, and, as was noted above, even in the 1960s and the 1970s the financial markets did not seem to many economists to be a central topic for their discipline. The mainstream economists who did take finance seriously notably Franco Modigliani, Paul Samuelson, and James Tobin often had Keynesian sympathies, while Milton Friedman was among the economists who doubted that some of finance theory counted as proper economics (see chapter 2). Nevertheless, the mathematicization of scholarship on finance paralleled developments in the wider discipline of economics, and finance theorists largely shared their colleagues’ renewed faith in free markets and in the reasoning capacities of economic agents. There is, for example, an affinity between rationalexpectations economics and the “efficient-market” theory to be discussed in chapter 2. — Donald MacKenzie, An Engine, Not a Camera, 49

Categorization

• XREF: Connects to wider financialization literature where finance theory is often assumed to be born of free-market orthodoxy; this shows the intellectual genealogy is messier, with Keynesians like Modigliani and Samuelson central. — connects to: Mainstream economists who pioneered finance theory often held Keynesian sympathies — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 49; Mainstream economists once dismissed finance theory as marginal and trivial — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 34; By 1945 mainstream economists dismissed market-equilibration theory as obsolete — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 417 (+4 more)

Broader Connections

• Mainstream economists who pioneered finance theory often held Keynesian sympathies #corroborates (0.95) — Donald MacKenzie, An Engine, Not a Camera, 49
• Mainstream economists once dismissed finance theory as marginal and trivial #expands (0.80) — Donald MacKenzie, An Engine, Not a Camera, 34
• By 1945 mainstream economists dismissed market-equilibration theory as obsolete #corroborates (0.80) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 417
• Early free-market economists deliberately adopted progressive-sounding positions to shield their deeper agenda #corroborates (0.80) — Angus Burgin, The Great Persuasion, 137
• Mainstream economists defended theory by scapegoating Greenspan-style market fundamentalism #complicates (0.75) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 700
• Monetarism mainstreamed Austrian and ordoliberal economic ideas #contradicts (0.70) — Mark Blyth, Austerity, 412
• Early free-market economists legitimized some government intervention; later ones did not #complicates (0.70) — Angus Burgin, The Great Persuasion, 375