Comments on Papers Presented at the "Institutional Economics at the Millennium: Its Past and Future" Session, January 2000
Mayhew, Anne, Journal of Economic Issues
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 order...as '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  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.) as they seek culturally patterned goals and change. It is self-serving for me to say so, but I do think that if you will read issues of the JEI over the past few years, you will find a lot of fine work that proceeds in this way. (In an expanded version of these comments, I plan to elaborate on the similarities between recently published work and that of the in terwar years.)
What Malcolm and his co-editor Mary Morgan , along with others, have done is to look beyond self-applied labels and to see the essential institutionalism of a lot of very good work that was done in interwar America. There is more to be done: we need more comparisons of the work of the interwar institutionalists to determine common assumptions, and much more work to better understand how and why the impoverished view of humans, upon which neoclassical theory is based, came to dominate the much richer view of the institutionalists. Still, a good start has been made, and it is an effort that should be carried forward.
It has often been observed that a lot of the work in development economics that has been done from the 1950s to the present, non-cliometric economic history, a substantial portion of labor economics, and comparative economics is institutionalist. I agree, alas, with Warren that in all of these areas of study neoclassical approaches have encroached on old institutionalist territory, but in trying to understand that encroachment we need to be careful about how we define the boundaries. Warren warns against narrow definition, but in some ways he seems to succumb to that which he warns against. No, I do not see a John Kenneth Galbraith among us, but I do see a lot of people working in the same vineyard that was fruitfully worked in Malcolm's interwar years.
Let me not, however, end on an optimistic note. It is easy to begin to see any work that is not explicitly neoclassical (or classical) as institutionalist, and that generous drawing of boundaries does not serve us well either. We should ask for more. Picking up once again on Geoff s defining characteristic, we need to promote (and do) work that consciously and explicitly explores the ways in which encultured but learning and conniving individuals create and resolve economic problems. (Parenthetically, I would add that when we do this we do the work of evolutionary economics, even though we may not talk of evolution on a grand scale.) However, it is difficult for students and practitioners of institutional economics to practice this work in supportive yet critical environments. This is so for all of the reasons that we know. The methods of institutionalism are squeezed out by the time spent on math and the status of alternative approaches. If institutionalism has a future (and I think it does, though it may n ot be in departments of economics), then it is incumbent upon present practitioners to draw on the rich past that Malcolm has revealed for us, upon our sister social sciences, upon Geoff s good description of the defining characteristics of the tradition, and upon Warren's spirit of eclecticism in applied institutionalist work. In a curious way we have emulated our neoclassical colleagues by awarding highest status to those who do "high theory." We need also to show how to continue the interwar tradition and how to apply the theory that has emerged and been improved. If we can summon the energy and will to do that, then I will ask Warren's forgiveness for an optimism founded on the strength of the tradition that this panel has so ably discussed.
The author is Professor of History, the University of Tennessee, Knoxville.
Albert, Alexa, and Yngve Ramstad. "The Social Psychological Underpinnings of Commons's Institutional Economics I: The Signifiance of Dewey's Human Nature and Conduct." Journal of Economic Issues 31, no. 4 (December 1997): 881-916.
_____. "The Social Psychological Underpinnings of Commons's Institutional Economics II: The Concordance of George Herbert Mead's Social Self and John R. Commons's Will." Journal of Economic Issues 32, no. 1 (March 1998): 1-46.
Mayhew, Anne. 'Culture: Core Concept Under Attack." Journal of Economic Issues 21, no. 2 (June 1987): 587-603.
Morgan, Mary S., and Malcolm Rutherford, eds. From Interwar Pluralism to Postwar Neoclassicism. Durham and London: Duke University Press, 1998.…
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Publication information: Article title: Comments on Papers Presented at the "Institutional Economics at the Millennium: Its Past and Future" Session, January 2000. Contributors: Mayhew, Anne - Author. Journal title: Journal of Economic Issues. Volume: 34. Issue: 2 Publication date: June 2000. Page number: 331. © 1999 Association for Evolutionary Economics. COPYRIGHT 2000 Gale Group.