Institutionalism in Action: Balancing the Substantive Imbalances of “the Economy” through the Veil of Money

Scholars working on the history of economics and economic governance assume national income accounting emerged naturally out of Keynesian concerns with economic growth and wartime needs. This paper provides an alternative and more complex genealogy, arguing instead that income accounting was born out of a governmental project, implemented by institutionalist economists at the National Bureau of Economic Research (NBER) during the interwar period, to manage “the business cycle.” Bridging the literatures on the history of economic policymaking of the interwar period and the postwar triumph of “American Keynesianism,” it shows that institutionalists developed income accounting as a knowledge infrastructure to monitor inter-sectoral imbalances that generated cyclical fluctuations. Called the National Income and Product Accounts (NIPA) System, this infrastructure constructed “the economy” as a composite statistical object, composed of many disparate, nonfungible substantive elements that could not have been otherwise patched into a coherent whole. Wrapping these elements into the veil of money, the NIPA System became the interface through which policymakers intervened in intersectoral imbalances at the level of monetary flows with fiscal tools.