THE FORMALIST REVOLUTION OF THE 1950s

Something happened to economics in the decade of the 1950s that is little appreciated by most economists and even by professional historians of economic thought. The subject went through an intellectual revolution as profound in its impact as the so-called Keynesian Revolution of pre-war years. I call it the Formalist Revolution after Ward (1972, pp. 40–41), who was the first to recognize the profound intellectual transformation of economics in the years after World War II. It is common to think of interwar economics in terms of a struggle between institutionalists and neoclassicists but as a number of historians have recently reminded us (Morgan and Rutherford 1998, pp. 21–5; Mehrling 1997; Yonay 1998; Mirowski 2002, pp. 157, 190), ‘‘pluralism’’ is a more accurate description of the state of play in economics between the two World Wars. The extraordinary global uniformity in the analytical style of the economics profession that we nowadays characterise as neoclassical economics only dates from the 1950s. The metamorphosis of economics in the late 1940s and 1950s is aptly called a ‘‘formalist revolution’’ because it was marked, not just by a preference, but by an absolute preference for the form of an economic argument over its content. This frequently, but not necessarily, implied reliance on mathematical modeling because its ultimate objective was to emulate the notorious turn-of-the-century Hilbert program in mathematics by achieving the complete axiomatization of economic theories. Do I exaggerate? Well, consider some of the leading publications of the 1950s.