Comments on Papers Presented at the "Institutional Economics at the Millennium: Its Past and Future" Session, January 2000

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Let me begin with Geoff Hodgson's paper, for it is an easy task for me to say that I agree with Geoff that his Item (5) is the crucial and defining characteristic of institutional economics. As I have said this in print on a number of occasions over the past 10 years or so, I have no trouble whatsoever in saying "amen." I also find it easy to second Geoff's proposition that

institutionalists need to emphasize both the "upward and downward causation" involved in the creation, perpetuation, and modification of institutions. To quote myself: "It is obvious that culture is necessarily a creation of people and that this is so even if we also accept that people are creations of their culture" [1987, 590]. As I understand Geoff, he is saying that what is distinctive and attractive about institutional economics is the emphasis on seeing people as cultural animals, or, in his words, as "institutionalized individuals." Absolutely.

I also agree with Geoff that one of the characteristics of institutionalism, though not the defining characteristic, is its willingness to use ideas and data from other disciplines. As institutionalists struggle with how to handle the "reconstitutive downward causation" that learning is, they can take heart and learn from the other social scientists who have, for more than 20 years, been developing ways of treating encultured humans as creative, learning, and conniving creatures as well. In anthropology, for example, the concept of culture has been redefined over the last several decades to incorporate the notion that shared symbols and meanings are used in many ways by active individuals.

Turning now to Malcolm's excellent paper, let me suggest that it is precisely this concept of the active individual that was crucial to the interwar institutionalist tradition. As Malcolm puts it: "What tied this [institutionalist] work...together was its overall 'institutional' perspective, in other words, its insistence on seeing the existing economic 'instituted,' not natural, and subject to scientific examination, critical assessment, and change. What was also distinctive was the use of 'modem psychology' as the basis for understanding the individuals who did the 'instituting'." (See Albert and Ramstad [1997] and many others on this point).

As you listened to these papers, you may have wondered, however, whether the arguments of Hodgson and Rutherford are actually completely consistent. Hodgson stresses that "institutionalism is not defined in terms of any policy proposals," whereas Rutherford says that the main focus of institutionalist research in the interwar years was on 'the pressing problems of the existing economic order'." Even if we agree with Hodgson that institutionalists might take differing views on a particular policy issue, is there not an inconsistency in the emphasis placed on what really constitutes an institutionalist approach? This is an important question, for it affects not only the way in which we understand institutionalist work, but also in what we look for in trying to answer questions about the present and future prospects for the institutionalist approach. For example, Warren Samuel's rather gloomy survey concludes that "too much institutionalist work was primarily a rehearsing, or rehashing ... of the ideas of the g reat institutional economists," and he finds that "the rehashing and the relative paucity of new work continues."

Without, I hope, engaging in the kind of unkindness that Warren finds too common, let me disagree and disagree precisely because it depends on what you are looking for. Now, as in the interwar period, there are a number of economists who identify themselves as institutionalists who study economies and economic problems and issues without beginning their work with explicit statements of what are widely regarded as institutionalist theory. What they do is, nevertheless, good institutionalist work given Geoff's (and my) definition of institutionalism as an analysis that treats encultured individuals in cultural settings (firms, agencies, households, etc. …