The development of American institutional economics

Abstract

Institutional economics is a particularly ill-defined concept, and a great deal of disagreement surrounds its meaning. Both the nature and development of institutional economics have been the subject of dispute for some sixty years; even those who claim to be institutionalists do not always agree on these issues. This thesis is an examination of the development and nature of American institutionalism. It proceeds through a detailed study of the intellectual currents in nineteenth century America which gave rise to the movement, and the work of those writers generally accepted as institutionalists. Most attention is given to T. Veblen, W.H. Hamilton, W.C. Mitchell, J.R. Commons, R.G. Tugwell, and C.E. Ayres. It is argued that institutionalism grew out of the impact of evolutionism and historicism in American thought. These factors resulted in the development of the "new school” of German influenced scholars, the work of Thorstein Ueblen, and the rise of pragmatism. Institutionalism is a combination of Ueblenism, pragmatism, and the ideas of new school writers such as R.T. Ely and H.C. Adams. The examination of the work of the major institutionalists reveals that while they do share a core of very general methodological and economic views, there are a number of points of significant variation. It is also noticeable that the economic theories that institutionalism contains are not rigorously developed and contain many weaknesses. The thesis contends that institutionalism can best be seen as a broad movement containing within itself a number of distinguishable “wings,” “groups,” or traditions.” Its failure to develop a greater degree of coherence and more satisfactory theoretical ideas is attributed to the problems inherent in the epistemological and methodological positions adopted by its members.