Clarence Ayres Memorial Lecture: Does Pragmatism Imply Institutionalism?

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The Affinity between Pragmatism and institutionalism: Of Political Nature Only?

It is old, established knowledge that there are close political and ideological affinities between pragmatistic philosophy and the institutional position in economics. As Rick Tilman has recently expressed the matter, "the political counterpart of institutional economics is the instrumental political theory of John Dewey" (2001, 117). There is all the reason to think so, but I intend to develop the theme further and to show that the affinity between pragmatism and institutionalism is not just of political nature. I wish to make a somewhat stronger case to the effect that there are theoretical and conceptual commonalities between the two positions. In the title of this paper, I use the logical term "to imply"; I do this on purpose and entertain in serious terms the possibility that the affinity between pragmatism and institutionalism comes close to being of downright logical nature.

It is, of course, the professionals' job to decide what ultimately implies what in their discipline, and economics is not my profession. What I venture to do, nevertheless, is to say the first word, not so much the last word, about the theoretical kinship between pragmatism and institutionalism; final conclusions may belong to the expertise of professionals. The impression that I get from my reading in institutional economics is that a theoretical zero-sum game seems to be going on between this approach and the neoclassical one. This impression may be a bit too simple-my economic colleagues are welcome to correct it, if need be-but the least I can show is that pragmatism is seriously at odds with many of the methodological assumptions that neoclassical economics consistently takes for granted.

What Is Wrong with Methodological Individualism?

Pragmatism opens a new perspective from which to assess critically a central tenet in neoclassical methodology, that of methodological individualism. The first thing to be noted about it is that pragmatism has no quarrel with this position as long as it remains a methodological position. The problem is that it too seldom remains so. In fact, what is innocuously proffered as methodological individualism is too often taken as a position in social ontology. As Hans Joas, the social theorist, has put the matter, "the unreflected assertion that the self-interested, autonomous individual is the natural starting point in all social theory is deeply rooted in the possessive individualism of western culture" (1996, 184). This unreflected assumption, whose theoretical consequences are not always for the best, permeates contemporary social thinking in general and neoclassical economics in particular. (1)

From the viewpoint of pragmatism, the real fault with misunderstood, that is, ontologically interpreted, individualism is not that it treats human beings as separate individuals, although that already is a fault. Even graver is its fault in thinking about human actions as separate individuals, It is here where the ultimate source of even the former error lies. Instead of depicting human activity as a sequence of separate instantaneous "actions," pragmatism understands it as a unified ongoing process, even so that the acting subject's intentionality and rationality are to be found inside rather than outside that process. (2) The first thing to be said about this idea, in comparison with the traditional one, is that it is not only a different but a much more embracive conception. This means that nothing that is of value in the traditional interpretation needs to be sacrificed--its accomplishments do remain at our disposal--but at the same time we are now able to see further on the pragmatistic basis.

An adherent of methodological individualism might have an answer ready. He or she might say that its postulates are not to be taken as accurate empirical descriptions of behavior, economic or otherwise. …