Missing Middles, Magical Words, and Leaps of Imagination in the Original Institutionalists' Theory of Behavior

All science makes an attempt to “carve nature at its joints” to study aspects of reality in isolation. Then the insights gained must be reconnected with the whole of nature. This reconnection is difficult and problematic. Additionally, there are gaps in our understanding regarding the nature of the reconnection. This leaves gaps in our understanding. Filling these gaps sometimes requires what Jacob Bronowski called “leaps of imagination.” This is precisely where creativity comes into play in all science. This paper explores the problems of reconnection and the creative ways we employ “leaps of imagination” in Institutional Economic theorizing. These are both epistemological and methodological problems that occur and are unavoidable in all science. These gaps are the missing middles and “leaps of imagination” are the magical thinking. I wish to explore the attempts in institutional economics to fill one of our most persistent gaps; that is the way individual habits and routines become social habits and routines. This is fundament to the institutionalist theory of behavior, the evolution of institutions, and the process of how they change. Thorstein Veblen's attempt to fill the gap is discussed as is Geoffrey Hodgson and Thorbjøn Knudsen's attempt to fill additional gaps in the discussion of institutions.