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Understanding Institutional Economics: 1918–1929

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  • Rutherford, Malcolm

Abstract

All attempts to define American institutionalism, whether in terms of a set of key methodological or theoretical principles or in terms of the contributions of the three generally accepted “founding†figures of Thorstein Veblen, Wesley Mitchell, and John R. Commons, have run into a problem with the apparent disparities within the movement. In terms of the three “founders†there are obvious and quite dramatic differences between the methodologies and theoretical directions of the three men. Veblen is associated with an evolutionary approach, a key distinction between pecuniary institutions and technological or industrial requirements, and a biting critique of orthodox theory and business practices; Mitchell with quantitative methods and detailed research on business cycles, an approach he established at the National Bureau of Economic Research (NBER); Commons with documentary histories, work on labor issues and public utility regulation, and an analytical scheme emphasizing the evolution of legal institutions and processes of dispute resolution. The same problem shows up with more explicit types of definition that often seem to capture only some parts or aspects of the movement and not others, or are so broad as to lack much specific content. Institutionalism easily appears as incoherent, as little more than a set of individual research programs with nothing in common other than a questioning of more orthodox theory and method. Thus, Mark Blaug has stated that institutionalism “was never more than a tenuous inclination to dissent from orthodox economics†(Blaug 1978, p. 712), and George Stigler has claimed that institutionalism had “no positive agenda of research,†“no set of problems or new methods,†nothing but “a stance of hostility to the standard theoretical tradition†(quoted in Kitch 1983, p. 170). This view still finds wide currency— for example Oliver Williamson has recently argued that “unable or unwilling to offer a rival research agenda, the older institutional economics was given over to methodological objections to orthodoxy†(Williamson 1998b, p. 24; see also 1998a).

Suggested Citation

  • Rutherford, Malcolm, 2000. "Understanding Institutional Economics: 1918–1929," Journal of the History of Economic Thought, Cambridge University Press, vol. 22(3), pages 277-308, September.
  • Handle: RePEc:cup:jhisec:v:22:y:2000:i:03:p:277-308_00
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    Cited by:

    1. Malcolm Rutherford, 2001. "Institutional Economics: Then and Now," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 173-194, Summer.
    2. Giraud Yann & Charles Loic, 2010. "Economics for the Masses : The Visual Display of Economic Knoledge in the United Staes (1921-1945)," THEMA Working Papers 2010-03, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    3. Ronen Peter Palan, 2020. "An evolutionary approach to international political economy: the case of corporate tax avoidance," Review of Evolutionary Political Economy, Springer, vol. 1(2), pages 161-182, August.
    4. Ioannis A. Katselidis, 2019. "Institutions, Policy and the Labour Market: The Contribution of the Old Institutional Economics," Economic Thought, World Economics Association, vol. 8, pages 13-30, December.
    5. Angela Ambrosino, 2017. "The Role of Agents’ Propensity toward Conformity and Independence in the Process of Institutional Change," STOREPapers 1_2017, Associazione Italiana per la Storia dell'Economia Politica - StorEP.
    6. Christian Cordes, 2019. "The promises of a naturalistic approach: how cultural evolution theory can inform (evolutionary) economics," Journal of Evolutionary Economics, Springer, vol. 29(4), pages 1241-1262, September.
    7. Luca Fiorito, 2009. "The Institutionalists’ Reaction to Chamberlin’s 'Theory of Monopolistic Competition'," Department of Economics University of Siena 560, Department of Economics, University of Siena.
    8. Christian Cordes, 2014. "There are several ways to incorporate evolutionary concepts into economic thinking," Papers on Economics and Evolution 2014-02, Philipps University Marburg, Department of Geography.

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