Institutional Economists - Institutional Economics

Institutional Economics

Institutional economics focuses on learning, bounded rationality, and evolution (rather than assume stable preferences, rationality and equilibrium). It was a central part of American economics in the first part of the 20th century, including such famous but diverse economists as Thorstein Veblen, Wesley Mitchell, and John R. Commons. Some institutionalists see Karl Marx as belonging to the institutionalist tradition, because he described capitalism as a historically-bounded social system; other institutionalist economists disagree with Marx's definition of capitalism, instead seeing defining features such as markets, money and the private ownership of production as indeed evolving over time, but as a result of the purposive actions of individuals.

"Traditional" institutionalism rejects the reduction of institutions to simply tastes, technology, and nature (see naturalistic fallacy). Tastes, along with expectations of the future, habits, and motivations, not only determine the nature of institutions but are limited and shaped by them. If people live and work in institutions on a regular basis, it shapes their world-views. Fundamentally, this traditional institutionalism (and its modern counterpart institutionalist political economy) emphasizes the legal foundations of an economy (see John R. Commons) and the evolutionary, habituated, and volitional processes by which institutions are erected and then changed (see John Dewey, Thorstein Veblen, and Daniel Bromley.) The vacillations of institutions are necessarily a result of the very incentives created by such institutions, and are thus endogenous. Emphatically, traditional institutionalism is in many ways a response to the current economic orthodoxy; its reintroduction in the form of institutionalist political economy is thus an explicit challenge to neoclassical economics, since it is based on the fundamental premise that neoclassicists oppose: that economics cannot be separated from the political and social system within which it is embedded. Some of the authors associated with this school include Robert H. Frank, Warren Samuels, Mark Tool, Geoffrey Hodgson, Daniel Bromley, Jonathan Nitzan, Shimshon Bichler, Elinor Ostrom, Anne Mayhew, John Kenneth Galbraith and Gunnar Myrdal, but even the sociologist C. Wright Mills was highly influenced by the institutionalist approach in his major studies.

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Other articles related to "institutional economics, institutional, economics, economic":

Institutional Economics - Criticism
... In other words, institutional economics have become so popular because it means all things to all people, which in the end of the day is the meaning of nothing ... Rather than being "institutional," Veblen, Hamilton and Ayres position is anti-institutional ...
Mesoeconomics - Areas Claimed To Be Mesoeconomic - Institutional Economics
... Galbraith began writing on the effects of institutional inertia and behavior on economics, drawing from work in management and studies in business ... Recently it has been argued that such institutional effects cause economic actors to behave in ways differently from rational expectation maximalizing and profit maximalizing ...
Carsten Herrmann-Pillath - Important Works
... Economy, (forthcoming, European Journal of Law and Economics, 2008) ... Identity Economics and the Creative Economy, Old and New, Cultural Science Vol. 1(1), SSRN-link Deducing Principles of Economics From Ontological Constraints on Information, Invited paper presented at the 2008 Annual Meeting of the ...
Geoffrey Hodgson
... the editor-in-chief of the Journal of Institutional Economics ... spirit and intellectual tradition of the founders of institutional economics, particularly that of Thorstein Veblen ... His broad research interests span from evolutionary economics and history of economic thought to Marxism and theoretical biology ...

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