In September 1954, I arrived at the University of Wisconsin to commence graduate studies in economics. I had taken a course on institutional economics at the University of Miami and went to Wisconsin because of its John R. Commons institutionalist tradition, especially its work, under Edwin Witte and Harold Groves, on the economic role of government. At that time, the only book written by an institutionalist that I had wholly read was Thorstein Veblen's The Theory of the Leisure Class. I have never regretted the decision to attend Wisconsin, then at the tail end of the reign of Commons's students. And I have never ceased to look at the world primarily, albeit not entirely, through an institutionalist prism, hopefully always appreciating that it was indeed a prism or, to change the metaphor, a particular design for a story of what the legal-economic system, and other things, is all about.
In the period since I started my graduate education, I have learned of differences within institutionalism: differences among the disciples of Commons, differences among the disciples of Veblen, and differences between the two groups. I also have learned what they have in common, the differences notwithstanding. One of the principal similarities is an attitude toward the world, an attitude that constitutes the context in which institutionalism has meaning. I have also learned about the work of other writers, not conventionally listed among the institutionalists, who have much to say on topics of interest to institutionalists.
In this essay, my principal objective is to consider the intellectual context--the framework of issues--in which Veblen and his work--and institutionalism as a whole--can be understood. Certain aspects of this are well known and need not be rehearsed here: the conflicts between methodological individualism and methodological collectivism, between a priori deduction and empiricism, between deliberative and nondeliberative decision making, between static optimal equilibrium and evolution, and so on.
A subordinate objective of this essay is to explain, or at least place in focus, Veblen's cynicism, skepticism, sarcasm, and satire-practices of his so often used by others to denigrate, trivialize, and marginalize his ideas. I have a text around which to target my principal themes. The text is a statement from a 1992 Supreme Court decision, specifically from the dissent written by Justice John Paul Stevens. It reads as follows:
The Court's holding today effectively freezes the State's common
law, denying the legislature much of its traditional power to revise
the law governing the rights and uses of property. Until today, I
had thought that we had long abandoned this approach to constitutional
law [Lucas v. South Carolina Coastal Council, 112 S.Ct.
2886, 2921 (1992)]
I will return to this soon.
My themes are these: Veblenian institutionalism, indeed institutionalism as a whole, was part of the process of the defense and critique of status quo arrangements, modes of action, and mindsets. It represented a challenge of empiricism and reason to metaphysical obfuscation and to morality defined in terms of status quo practice. It opposed the ceremonial reification and absolutist legitimation of selected aspects of the status quo. It did these things and more through demystification, in part by affirming the artifactual and belief-system nature of institutions including language; in part by emphasizing an open-ended Darwinian approach to social change; in part by taking an existentialist and pragmatic approach to social, political, and economic arrangements and affairs; and in part by affirming the process of working things out through human choice and action. I cannot deal with each of these points in their entirety, but hopefully I can say enough for them to make sense.
In thinking about constructing this essay, at one point I thought …