Harold Groves, Wisconsin Institutionalism and Postwar Public Finance

Abstract

Institutionalism was the dominant approach to public finance prior to World War II, after which it was eclipsed by Pigouvianism and Keynesianism. This transition defined the career of Wisconsin’s Harold M. Groves (1897-1969). Groves was a notable public finance economist, leading textbook author, and drafter of significant tax and labor legislation. He represented the culmination of multigenerational institutionalist tradition. In this paper, I examine Groves and postwar public finance as a test case for the legacy of Wisconsin Institutionalism. Considered are Groves contributions to postwar tax policy, his interactions with Henry C. Simons and Richard M. Musgrave, and his view on Keynesian public finance. Wisconsin Institutionalist contributions to modern public finance are identified and explanations for the postwar decline in institutional public finance are considered.

Keywords: Harold Groves, Public Finance, Wisconsin Institutionalism

JEL Classification: B25, B31