The Evolution of Institutional Economics
The Evolution of Institutional Economics
Agency, Structure and Darwinism in American Institutionalism
Agency, Structure and Darwinism in American Institutionalism
Published 2004 by Routledge.
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This is the sequel to How Economics Forgot History
Mark Blaug (University of Rotterdam):
“Geoffrey Hodgson has done more than anyone else to rehabilitate, indeed to reconstruct, the history-friendly evolutionary economics of the old American Institutionalists and the German Historical School. But he has not just recovered the intellectual paternity of institutional and evolutionary economics. He has also explored and improved its philosophical foundations. In a little more than ten years, he has written five books. They are all very good but
The Evolution of Institutional Economics is his crowning achievement.”
The story of American Institutional Economics – from its emergence, through its interwar supremacy and to its postwar decline – is rich and interesting but hitherto neglected. Understanding this history, including the achievements and failures, is a vital task for those involved in the recent revival of institutionalist ideas. Today, with the resurrection of pragmatist philosophy, key developments in psychology and the return of a non-reductionist Darwinism to the social sciences, the intellectual conditions for a revival and reconstruction of American Institutionalism are in place.
Reviews of The Evolution of Institutional Economics
Marc R. Tool (California State University at Sacramento, USA), New Political Economy, March 2005.
“a most extensive, perceptive and significant analysis of and commentary on historic developments in institutional economics. … Hodgson provides us with an original, exceptional and extensive review and appraisal of developments in institutional economics in the first half of the twentieth century. His characterisations and assessments are instructive, inclusive and persuasive. … Hodgson provides an exceptionally perceptive, substantive and intellectually satisfying history of the mainly American development of institutional economics … His reconsideration of the contributions of Veblen, Commons, Ayres et al. ought to rekindle more comprehensive and philosophical assessments of this tradition and its contemporary status and potential.”
C. S. Poirot Jr. (Shawnee State University, USA) Amazon.com, March 2005.
“I thoroughly enjoyed the book. I recommend it to any economist willing to look beyond constrained optimization problems. It will also interest (or should interest) anthropologists, sociologists, political scientists, or anyone interested in philosophical foundations of the social sciences and the relationship of the social sciences to Darwin and Darwinism.”
William Waller (Hobart and William Smith Colleges, USA), Research in the History of Thought and Methodology, 2005
“Geoffrey Hodgson’s book is a crucial contribution to the future of both evolutionary and institutional economics. Hodgson demonstrates conclusively that institutional economics has not always remained evolutionary and has declined, at least partially, as a consequence. But the real contribution of the book is the recapturing of the evolutionary philosophy underlying Veblen’s evolutionary economics and updating it for the purpose of reinvigorating institutional economics. Hodgson presents a complex argument built on a foundation of extraordinary scholarship and careful exegesis. He builds his case for reconsidering evolutionary theorizing in institutional economics so carefully and thoroughly … Hodgson presents a compelling case for original institutional economists to reconsider the current status of their evolutionary theorizing.”
John Gowdy (Rensselaer Polytechnic Institute, USA), Journal of Economic Issues, December 2006.
“This book is ostensibly an intellectual history of American Institutional Economics, but Geoff Hodgson has given us much more than that. Using the basic framework of Veblenian institutionalism, this work is nothing less than a blueprint for the emerging mainstream economics of this new century. … Throughout the book Hodgson skillfully blends discussion of personalities, theories, and the evolution of our understanding of the economic world. … The ideas so eloquently expressed in this book are critically important at this stage in the development of economic thought. The mechanistic worldview has collapsed, biology has replaced physics as the field of inspiration for the philosophy of science, and the unification of the social sciences is well underway. This is the best book yet by one of the most insightful and prolific economists. This is economic writing at its best. Hodgson’s book is a must read for institutional economists.”
Graham Brownlow (Queen’s University Belfast, UK), Review of Radical Political Economics, Spring 2007.
“In this companion volume to his 2001 book How Economics Forgot History, Geoffrey Hodgson further cenents his reputation as one of the world’s most significant institutional economists. … Hodgson has crafted both a powerful thematic interpretation of episodes in the history of economic thought as well as a thought-provoking manifesto for the reconstruction of economics. … The ambition of the books’s vision and the erudition contained in The Evolution of Institutional Economics are the sources of its significance and strength. … Hodgson’s journey has provided an important service to current and future generations of evolutionary economists.”
Jan-Willem Stoelhorst (University of Amsterdam), Academy of Management Review, October 2007.
“This is a book to be read by anyone with an interest in the history of ideas in the social sciences in general, let alone those with an interest in problems of agency and structure or the application of evolutionary arguments to socio-economic change. … The book inspires because of its breadth and depth of scholarship, and it convinces in its arguments for a Darwinian approach to the social sciences. It offers an important contribution by outlining the philosophical foundations of an evolutionary social science …”
Other comments on The Evolution of Institutional Economics
Robert Aunger (University College London):
“A work of impressive interdisciplinary scholarship, The Evolution of Institutional Economics is simultaneously a well-written historical narrative and a sophisticated, astute contribution to the philosophy of the social sciences. Hodgson’s latest book reviews the limitations of human psychology and the constraints on behaviour arising from institutional structures, which together make Homo economicus an inappropriate foundation for economic theorizing. Hodgson successfully sets the groundwork for the future development of economics as an evolutionary, truly social science.”
Kurt Dopfer (University of St. Gallen):
“Thought provoking and lucidly written, this book is a monument to Hodgson’s outstanding efforts to reconstruct economics from a penetrating vision of the past. It offers an ingenious integrative analysis which clears the ground for a new approach to institutional economics that can contribute to a deeper understanding of the world in which we live, and will provide an enduring stimulus for theoretical discussions in the future.”
Stephen Dunn (UK Department of Health):
“Occasionally, though rarely, an author offers more striking insight than that which might be gained from even the most diligent personal study. With The Evolution of Institutional Economics and How Economics Forgot History Professor Hodgson has forcefully articulated the need to resurrect a research agenda for the social sciences which integrates the salient scientific categories of agency, structure and history in a meaningful and analytical manner. With great erudition Professor Hodgson shows how the early American Institutionalists grappled with the salience of such scientific categories and offers several meaningful lessons that must be learnt by all those seeking to properly integrate these important issues into analysis and, in the process, reinvigorate our tired and stale subject. A compelling work.”
Phillip Anthony O’Hara (Curtin University):
“This is a brilliant book about the rise, fall and potential renewal of the original institutional economics. The critiques of methodological collectivism and methodological individualism are particularly persuasive, and the book suggests a way forward for eschewing these dichotomous positions. Overall, this is an engaging, exciting and very well written work.”
Ugo Pagano (University of Siena):
“a very imaginative ‘real utopia’ advocating a development of economics rooted the Veblenian tradition of creative consilience of Economics with Psychology, Anthropology and Darwinian Evolutionary Biology. In this very stimulating and scholarly book, Hodgson shows how Economics can end its painful isolation from the most creative findings of the other disciplines only by rejecting its own inconsistency between the traditional emphasis on scarcity and the implicit assumption of free rationality and free institutions. As Veblen and others have shown many years ago, rationality and institutions cannot be treated as a free lunch available to all economic systems. They are a costly product of human history. Economics that forgets history is necessarily silent on their emergence and cannot explain their qualities and their limitations.”
Warren J. Samuels (Michigan State University):
Ulrich Witt (Max Planck Institute, Jena):
“This is a marvellous book! Hodgson’s account of the rise and decline of American Institutionalism reads like a crime novel. And yet, in its breadth and deepness of ideas, explanations, and philosophical underpinnings it goes far beyond any history of economic thought. It provides a plea for returning to the Darwinian inspiration of Thorstein Veblen’s research program for economics and the other social sciences. As Hodgson shows this program is more up-to-date than much of the present-day mainstream paradigm in economics. This book is presumably the most serious attempt to reinstate the evolutionary gist of American institutionalism since Veblen himself.”
Contents of The Evolution of Institutional Economics
Part I: Introduction
1 Nature and scope
2 Agency and structure
3 Objections and explanations
Part II: Darwinism and the Victorian social sciences
4 Charles Darwin, Herbert Spencer and the human species
5 Precursors of emergence and multiple-level evolution
Part III: Veblenian institutionalism
6 The beginnings of Veblenian institutionalism
7 The Darwinian mind of Thorstein Veblen
8 Veblen’s evolutionary institutionalism
9 The instinct of workmanship and the pecuniary culture
10 A wrong turning: science and the machine process
11 Missed connections: creative synthesis and emergent evolution
12 The launch of institutional economics and the loss of its Veblenian ballast
Part IV: Institutionalism into the wilderness
13 John R. Commons and the tangled jungle
14 Wesley Mitchell and the triumph of macroeconomics
15 The maverick institutionalism of Frank Knight
16 The evolution of Clarence Ayres
17 The Ayresian dichotomies: Ayres versus Veblen
18 The decline of institutional economics
Part V: Beginning the reconstruction of institutional economics
19 The potential revival of Veblenian institutionalism
20 On individuals and institutions
21 Conclusion and beginning
Reviews of The Evolution of Institutional Economics
Marc R. Tool (California State University at Sacramento, USA), New Political Economy, March 2005.
“a most extensive, perceptive and significant analysis of and commentary on historic developments in institutional economics. … Hodgson provides us with an original, exceptional and extensive review and appraisal of developments in institutional economics in the first half of the twentieth century. His characterisations and assessments are instructive, inclusive and persuasive. … Hodgson provides an exceptionally perceptive, substantive and intellectually satisfying history of the mainly American development of institutional economics … His reconsideration of the contributions of Veblen, Commons, Ayres et al. ought to rekindle more comprehensive and philosophical assessments of this tradition and its contemporary status and potential.”
C. S. Poirot Jr. (Shawnee State University, USA) Amazon.com, March 2005.
“I thoroughly enjoyed the book. I recommend it to any economist willing to look beyond constrained optimization problems. It will also interest (or should interest) anthropologists, sociologists, political scientists, or anyone interested in philosophical foundations of the social sciences and the relationship of the social sciences to Darwin and Darwinism.”
William Waller (Hobart and William Smith Colleges, USA), Research in the History of Thought and Methodology, 2005
“Geoffrey Hodgson’s book is a crucial contribution to the future of both evolutionary and institutional economics. Hodgson demonstrates conclusively that institutional economics has not always remained evolutionary and has declined, at least partially, as a consequence. But the real contribution of the book is the recapturing of the evolutionary philosophy underlying Veblen’s evolutionary economics and updating it for the purpose of reinvigorating institutional economics. Hodgson presents a complex argument built on a foundation of extraordinary scholarship and careful exegesis. He builds his case for reconsidering evolutionary theorizing in institutional economics so carefully and thoroughly … Hodgson presents a compelling case for original institutional economists to reconsider the current status of their evolutionary theorizing.”
John Gowdy (Rensselaer Polytechnic Institute, USA), Journal of Economic Issues, December 2006.
“This book is ostensibly an intellectual history of American Institutional Economics, but Geoff Hodgson has given us much more than that. Using the basic framework of Veblenian institutionalism, this work is nothing less than a blueprint for the emerging mainstream economics of this new century. … Throughout the book Hodgson skillfully blends discussion of personalities, theories, and the evolution of our understanding of the economic world. … The ideas so eloquently expressed in this book are critically important at this stage in the development of economic thought. The mechanistic worldview has collapsed, biology has replaced physics as the field of inspiration for the philosophy of science, and the unification of the social sciences is well underway. This is the best book yet by one of the most insightful and prolific economists. This is economic writing at its best. Hodgson’s book is a must read for institutional economists.”
Graham Brownlow (Queen’s University Belfast, UK), Review of Radical Political Economics, Spring 2007.
“In this companion volume to his 2001 book How Economics Forgot History, Geoffrey Hodgson further cenents his reputation as one of the world’s most significant institutional economists. … Hodgson has crafted both a powerful thematic interpretation of episodes in the history of economic thought as well as a thought-provoking manifesto for the reconstruction of economics. … The ambition of the books’s vision and the erudition contained in The Evolution of Institutional Economics are the sources of its significance and strength. … Hodgson’s journey has provided an important service to current and future generations of evolutionary economists.”
Jan-Willem Stoelhorst (University of Amsterdam), Academy of Management Review, October 2007.
“This is a book to be read by anyone with an interest in the history of ideas in the social sciences in general, let alone those with an interest in problems of agency and structure or the application of evolutionary arguments to socio-economic change. … The book inspires because of its breadth and depth of scholarship, and it convinces in its arguments for a Darwinian approach to the social sciences. It offers an important contribution by outlining the philosophical foundations of an evolutionary social science …”
Other comments on The Evolution of Institutional Economics
Robert Aunger (University College London):
“A work of impressive interdisciplinary scholarship, The Evolution of Institutional Economics is simultaneously a well-written historical narrative and a sophisticated, astute contribution to the philosophy of the social sciences. Hodgson’s latest book reviews the limitations of human psychology and the constraints on behaviour arising from institutional structures, which together make Homo economicus an inappropriate foundation for economic theorizing. Hodgson successfully sets the groundwork for the future development of economics as an evolutionary, truly social science.”
Kurt Dopfer (University of St. Gallen):
“Thought provoking and lucidly written, this book is a monument to Hodgson’s outstanding efforts to reconstruct economics from a penetrating vision of the past. It offers an ingenious integrative analysis which clears the ground for a new approach to institutional economics that can contribute to a deeper understanding of the world in which we live, and will provide an enduring stimulus for theoretical discussions in the future.”
Stephen Dunn (UK Department of Health):
“Occasionally, though rarely, an author offers more striking insight than that which might be gained from even the most diligent personal study. With The Evolution of Institutional Economics and How Economics Forgot History Professor Hodgson has forcefully articulated the need to resurrect a research agenda for the social sciences which integrates the salient scientific categories of agency, structure and history in a meaningful and analytical manner. With great erudition Professor Hodgson shows how the early American Institutionalists grappled with the salience of such scientific categories and offers several meaningful lessons that must be learnt by all those seeking to properly integrate these important issues into analysis and, in the process, reinvigorate our tired and stale subject. A compelling work.”
Phillip Anthony O’Hara (Curtin University):
“This is a brilliant book about the rise, fall and potential renewal of the original institutional economics. The critiques of methodological collectivism and methodological individualism are particularly persuasive, and the book suggests a way forward for eschewing these dichotomous positions. Overall, this is an engaging, exciting and very well written work.”
Ugo Pagano (University of Siena):
“a very imaginative ‘real utopia’ advocating a development of economics rooted the Veblenian tradition of creative consilience of Economics with Psychology, Anthropology and Darwinian Evolutionary Biology. In this very stimulating and scholarly book, Hodgson shows how Economics can end its painful isolation from the most creative findings of the other disciplines only by rejecting its own inconsistency between the traditional emphasis on scarcity and the implicit assumption of free rationality and free institutions. As Veblen and others have shown many years ago, rationality and institutions cannot be treated as a free lunch available to all economic systems. They are a costly product of human history. Economics that forgets history is necessarily silent on their emergence and cannot explain their qualities and their limitations.”
Warren J. Samuels (Michigan State University):
“Geoff Hodgson’s new book continues his search for a viable institutional economics. This work is both a history and a critique of American institutionalism. Both history and critique are constructed from Hodgson’s own perspective, which is well informed, albeit controversial. More than in any of his earlier works, he has put the problem of reconstruction on the table; it is up to other institutionalists to put up or shut up. Hopefully, this book will engender a dialogue that will produce a revised and viable institutionalism – hopefully, too, an open and pluralist one.”
Rick Tilman
(University of Nevada, Las Vegas):
“The Evolution of Institutional Economics may be the best book ever written on the subject. It is a considerable intellectual achievement, not only in terms of analysis and synthesis, but also in terms of breadth and depth of learning. It focuses on the main unresolved issues and problems in institutional economics and offers a way to resolve them.”
“The Evolution of Institutional Economics may be the best book ever written on the subject. It is a considerable intellectual achievement, not only in terms of analysis and synthesis, but also in terms of breadth and depth of learning. It focuses on the main unresolved issues and problems in institutional economics and offers a way to resolve them.”
Ulrich Witt (Max Planck Institute, Jena):
“This is a marvellous book! Hodgson’s account of the rise and decline of American Institutionalism reads like a crime novel. And yet, in its breadth and deepness of ideas, explanations, and philosophical underpinnings it goes far beyond any history of economic thought. It provides a plea for returning to the Darwinian inspiration of Thorstein Veblen’s research program for economics and the other social sciences. As Hodgson shows this program is more up-to-date than much of the present-day mainstream paradigm in economics. This book is presumably the most serious attempt to reinstate the evolutionary gist of American institutionalism since Veblen himself.”
Contents of The Evolution of Institutional Economics
Part I: Introduction
1 Nature and scope
2 Agency and structure
3 Objections and explanations
Part II: Darwinism and the Victorian social sciences
4 Charles Darwin, Herbert Spencer and the human species
5 Precursors of emergence and multiple-level evolution
Part III: Veblenian institutionalism
6 The beginnings of Veblenian institutionalism
7 The Darwinian mind of Thorstein Veblen
8 Veblen’s evolutionary institutionalism
9 The instinct of workmanship and the pecuniary culture
10 A wrong turning: science and the machine process
11 Missed connections: creative synthesis and emergent evolution
12 The launch of institutional economics and the loss of its Veblenian ballast
Part IV: Institutionalism into the wilderness
13 John R. Commons and the tangled jungle
14 Wesley Mitchell and the triumph of macroeconomics
15 The maverick institutionalism of Frank Knight
16 The evolution of Clarence Ayres
17 The Ayresian dichotomies: Ayres versus Veblen
18 The decline of institutional economics
Part V: Beginning the reconstruction of institutional economics
19 The potential revival of Veblenian institutionalism
20 On individuals and institutions
21 Conclusion and beginning