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  • Print publication year: 2010
  • Online publication date: June 2012

3 - Economics

Summary

The Second World War

The Second World War and the events surrounding it – the rise of the Nazi regime and the economic trauma of the 1930s – were crucial for economics. In the 1920s, though American economics had grown rapidly since the turn of the century, European economics remained dominant. The generation that had shaped economics as it entered the twentieth century, many of whose members died in the 1920s, was overwhelmingly European. In the 1920s and 1930s, a high proportion of the most innovative work was still done in Europe – Alfred Marshall's Cambridge, the London School of Economics (LSE), Karl Menger's seminar in Vienna, Stockholm, and Lausanne.

By the end of the Second World War, the situation was completely different. Hundreds of European economists, many Jewish, had been forced to emigrate and, though some stopped in Britain, most ended up in the United States (Hagemann 2000), joining those who had left Russia and Eastern Europe after the 1917 revolution. Many rapidly achieved influential positions: Harvard had Joseph Schumpeter (from Austria) and Wassily Leontief (from Russia via Germany); Jacob Marschak (Ukrainian, via Germany and Britain) was at the Cowles Commission in Chicago, along with many other émigrés; Fritz Machlup (Austrian) was at Johns Hopkins. The extent of this migration is shown by the fact that in 1945, half the articles in the American Economic Review (AER), the journal of the American Economic Association (AEA), were written by economists born outside the United States, but holding positions in U.S. universities.

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