The "New Generation" is used to refer to generation of "progressive" American economists in the final decades of the 19th Century.
The New Generation economists had many things in common. Almost all "New Generation" economists were too young to have served in the Civil War, and grew up in its aftermath. The "New Generation" came into adulthood in the 1870s and 1880s, just as the industrial revolution was taking off in the United States. Many originated from New England, especially Massachusetts, and could trace their lineage to old English Puritan stock. Almost all were Protestants, often raised in religious households, and educated in the elite colleges of the Northeast. Indeed, many were sons of Protestant ministers, and groomed for careers in the ministry, but set aside the collar of religious mission for the secular gospel of social reform.
The "New Generation" got their first taste of economics as undergraduates, from the apologetic lessons of the antebellum clerical school. There, they heard the routine recitation of praises of the Divine hand of the market system, unbridled individualism and laissez faire. But they were unconvinced. The new post-bellum industrial age, with its social disruptions, disorders and sharpening inequalities seemed nothing like the economic harmonies extolled by their teachers.
The common factor, de rigeur among the "New Generation" economists, was to spend a period of graduate education abroad in Europe, notably in German universities. Young Americans going for graduate study in Germany started as a trickle in the early 1870s, accelerated in the late 1870s and turned into a flood by the 1880s.
The academic tour in Germany was formative. German universities, with their modern subjects, research-orientation and earned degrees, were an entirely different educational environment. The young Americans came under the influence the German Historical School, sitting at the feet of the likes of Adolph Wagner in Berlin, Johannes Conrad in Halle, Karl Knies in Heidelberg, Gustav Cohn in Göttingen, etc. They embraced the historicist, empirical approach of their German professors, and eschewed the abstract theoretical constructions of the British classical school of economics they had been fed back home. The Germans derided the "Manchesterthum" laissez faire policy conclusions of the British school and emphasized the vital role of the State in the economy, as a harmonizer and arbitrator of interests, and corrector of the social ills of industrial capitalism. It seemed like music to the ears of young Americans, hungry for a progressive social gospel.
The "New Generation" imbibed these lessons and carried them back to the United States, and as such can be called the school of "American Historicism".
The German experience also showed the young Americans how economists could be more than amateur dabblers, and become professionals - with prestigious careers as university professors, government advisors and public intellectuals, at or near the top of the social heap. As a result, the "New Generation" were instrumental in the professionalization of economics in the United States. Their greatest success was in the transformation of the American university system. Economics and other social sciences, indeed modern subjects as a whole, were largely non-existent in American colleges in the early 1870s. But the push for reform was on. By the late 1870s, there were three economics professors in American universities and a slew of new elective courses on economic subjects that needed lecturers. These opportunities expanded greatly through the 1880s. Economics initially shared space with history and political science in academia. But dedicated economics departments were in place in most American universities by the end of the 1890s.. The New Generation of American historicists, with their minted German degrees, filled most of these positions.
The New Generation staffed the new modern universities established by gilded age fortunes in the United States, such as Johns Hopkins (f.1876), Stanford (f.1885), Chicago (f.1892) and others. They also supplied faculty for older established universities (e.g. . Harvard, Yale, Columbia, Pennsylvania, Wisconsin), helping shift them decisively away from their old Anglo-Saxon roots, in a more research-oriented direction of the German model. The American Economic Association (AEA), founded in 1885, was established by the New Generation economists on the model of the German Verein für Socialpolitik.
With their Historicist background, the New Generation did not shy away from direct confrontation with Classical and then Neoclassical economics, although their real targets were the plethora of apologists that dominated the American academic scene. Deploring the the universalist pretensions of much of economic theory, they stressed the importance of historical, social and institutional factors which make so-called economic "laws", contingent on these factors. Much of everything in the economic world, they argued, was not immutable but rather conditioned by the influence of an always changing history - whether acting on the individual directly, or indirectly through the institutions and society which surround him. This confrontation resulted in some famous methodological battles, e.g. publicly in the pages of Science magazine in 1885-86, and internally between Richard T. Ely and Simon Newcomb at Hopkins.
The "New Generation" also impelled the creation of new journals for the dissemination of research. Early American economists had published in a variety of literary reviews, most notably the North American Review (f. 1824), the New Englander & Yale Review (f.1843) and the International Review (1874-83), and also occasionally in magazines like Science, Bankers' Magazine, Harper's, Lippincott's and the Atlantic Monthly. In 1882, Johns Hopkins began putting out monographs and articles in the series The Johns Hopkins University Studies in Historical and Political Science. In 1886, three American economics journals came out - the Quarterly Journal of Economics (QJE) from Harvard, the Political Science Quarterly (PSQ) of Columbia and the Publications of the American Economic Association (proto-AER). They were joined by the Annals of the American Academy of Political and Social Science (Pennsylvania) in 1890, and the Journal of Political Economy (JPE) of the University of Chicago, in 1892.
The New Generation eventually evolved into the American Institutionalist School.
Early American Historicists
The American "New Generation" (with German tours)
Resources on American Historicism
All rights reserved, Gonçalo L. Fonseca