Harold Groves, Wisconsin Institutionalism, and Postwar Public Finance

Institutionalism was the dominant approach to public finance prior to WWII, 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 a multigenerational institutionalist tradition. In this paper, I examine Groves and postwar public finance as a test case for the legacy of Wisconsin institutionalism. To that end, I consider Groves's contributions to postwar tax policy, his interactions with Henry C. Simons and Richard M. Musgrave, and his view on Keynesian public finance. I identify some Wisconsin institutionalist contributions to modern public finance and offer an explanation for the postwar decline in institutional public finance.