Abstract
Institutionalists engage in a very active, ongoing dialogue about methodological issues. Their preoccupation with methodology is motivated in part by their critique of mainstream economics. Since institutionalists attempt to steer economic inquiry in a direction quite different from that followed by mainstream economists, the institutionalist critique of neoclassical thought requires that institutionalists be concerned with methodological issues. But there is a more profound reason for the institutionalist emphasis on methodological discourse. It arises out of the influence of the philosophy of pragmatism on institutionalist methodology. A fundamental tenet of pragmatism is that all propositions are subject to revision as theoretical and empirical inquiry moves forward. In order to remain alert to the possibility that such revisions may be required at any given stage of inquiry, methodology must be under constant scrutiny. Consequently, institutionalists are as interested in methodological issues arising in their own work as they are in those arising in their critique of orthodoxy.
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Notes
The term pragmatic instrumentalist is taken from Dewey’s use of the term in The Quest for Certainty in Jo Ann Boydston, ed., The Later Works of John Dewey, 1925–1953, Vol. 4: 1929 (Carbondale: Southern Illinois University Press, 1984, footnote, p. 30. It is hoped that by using “pragmatic” to modify “instrumentalist” one can clearly differentiate between Dewey’s use of “instrumental” and Karl Popper’s use of the term in his philosophy of science. See Karl Popper, The Logic of Scientific Discovery (New York: Basic Books, 1959), footnote, p. 59. Alas, the failure to make this differentiation between the Deweyan and Popperian uses of the term has led to considerable intellectual mischief, a matter that will be taken up later in a comment on Friedman’s “instrumentalism.” One must also differentiate between Dewey’s use of the term from that of Jurgen Habermas. Habermas confines the term instrumental to the technical cognitive interest which he distinguishes from “practical” and “emancipatory” human interests. In contrast, Dewey’s use of instrumentalism spans the three realms of human interests identified by Habermas. See Jurgen Habermas, Knowledge and Human Interests, trans. Jeremy J. Shapiro (Boston: Beacon Press, 1971), pp. 308–311. For a discussion the Habermasian usage, see Jon D. Wisman, “Toward a Humanist Reconstruction of Economic Science,” Journal of Economic Issues 13 (March 1979): 19–48; and “Economic Knowledge, Evolutionary Epistemology, and Human Interests,” Journal of Economic Issues 23 (June 1989): 647–656.
There is no intention here to diminish the importance of Peirce’s philosophical influence on institutionalist methodology. Philip Mirowski, for one, suggests that while Dewey has, indeed, had a greater influence than Peirce on institutionalist methodology, Dewey’ s dominance must be regarded as a basic weakness in the institutionalist literature. He argues that the viability of institutionalism will depend on whether the “hermeneutical” perspective of Peirce can be substituted for the views of Dewey in guiding the methodology of institutional thought in the future. See Philip Mirowski, “The Philosophical Basis of Institutional Economics,” Journal of Economic Issues 21 (September 1987): 1001–1038; and the author’s critical comment on this piece, Paul D. Bush, “Institutionalist Methodology and Hermeneutics: A Comment on Mirowski,” Journal of Economic Issues 23 (December 1989): 1159–1172. For two views of Peirce’s influence on institutionalist methodology that are quite different than Mirowski’s, see Alan W. Dyer, “Veblen on Scientific Creativity: The Influence of Charles S. Peirce,” Journal of Economic Issues 20 (March 1986): 21–41; and H.H. Liebhafsky, “Peirce on the Summum Bonnum and the Unlimited Community,” Journal of Economic Issues 20 (March 1986): 5–20.
John R. Commons, Institutional Economics, Vol. I and II (Madison: University of Wisconsin Press, 1961 [1934]), p. 150.
Both studied at Johns Hopkins as graduate students under Peirce. They both taught at the University of Chicago from the late 1890s until 1904 (Veblen, 1892–1904, and Dewey, 1894–1904) and at the New School for Social Research, where Veblen held his last academic post. See Joseph Dorfman, Thorstein Veblen and His America, 7th ed. (Clifton: Augustus M. Kelly, 1972), p. 449; and H.H. Liebhafsky, “An Institutionalist Evaluation of the Recent Apparently, But Only Apparently Fatal Attack on Institutionalism,” Journal of Economics Issues 22 (September 1988): 837–851. The Liebhafsky article contains a discussion of the relationship of Veblen and Dewey to Peirce and Ayres.
Dorfman, Thorstein Veblen and His America, p. 450.
C.E. Ayres, Toward a Reasonable Society (Austin: University of Texas Press, 1961), pp. 29–32. Rick Tilman documents in some detail the strong intellectual ties between Dewey and Ayres as expressed in their correspondence. See Rick Tilman, “New Light on John Dewey, Clarence Ayres, and the Development of Evolutionary Economics,” Journal of Economic Issues 24 (December 1990): 963–979. Dewey made direct reference to Ayres’s Theory of Economic Progress (Chapel Hill: University of North Carolina Press, 1944) as a study that incorporated an approach to values and valuations which Dewey regarded as pertinent to his own inquiries. See John Dewey, “Some Questions about Value,” in Jo Ann Boydston, ed., The Later Works of John Dewey, 1925–53, Vol. 15: 1942–48 (Carbondale: Southern Illinois University Press, 1989), p. 108, footnote 6; and “By Nature and by Art,” ibid., p. 89, footnote 3. Ayres participated in Ray Lepley’s symposium on Dewey’s theory of value in which there is considerable discussion among Dewey, Ayres, and others (e.g., George R. Geiger) concerning the interrelationship between Dewey’s and Ayres’s views on values in culture and on their role in inquiry. See Clarence E. Ayres, “The Value Economy,” in Ray Lepley, ed., Value: A Cooperative Inquiry (New York: Columbia University Press, 1949), pp. 43–63. For the criticisms and rejoinders relevant to Ayres’s contribution, see pages 302–311, 321–333, and 415–423.
An important consequence of reading Veblen from this perspective is that a “normative” Veblen emerges from behind his well-known rhetorical stance of “Olympian detachment.” For a brief characterization of the normative Veblen presented in the context of a commentary on David W. Seckler’s Thorstein Veblen and the Institutionalists (Boulder: Colorado Associated University Press, 1975), see Paul D. Bush, “Radical Individualism vs. Institutionalism, I,” American Journal of Economics and Sociology 40 (April 1981): 139–148; and “Radical Individualism vs. Institutionalism, II,” American Journal of Economics and Sociology 40 (July 1981): 287–298. For Seckler’s rebuttal to this characterization, see Seckler, “Individualism and Institutionalism Revisited: A Response to Professor Bush,” American Journal of Economics and Sociology 40 (October 1981): 415–425. Not all institutionalists who have an affinity for the ideas of Dewey and Ayres acknowledge the existence of a normative Veblen. See, for example, Wendell Gordon, “The Role of Institutional Economics,” Journal of Economic Issues 18 (June 1984): 369–381, specifically, pages 378–379.
K. William Kapp, “In Defense of Institutional Economics,” Swedish Journal of Economics 70 (March 1968): 1–18; reprinted in Warren J. Samuels, ed., Institutional Economics, Vol. I (Aldershot: Edward Elgar, 1988), pp. 92–107.
Professor Ranson made this invitation during his presidential address to the Association for Institutional Thought on April 27, 1984, in San Diego, California, at the 26th Annual Conference of the Western Social Science Association. His address was entitled “Activating AFIT: The Problems and a Possible Solution.”
Some of Richard Rorty’s most important works are: Philosophy and the Mirror of Nature (Princeton: Princeton University Press, 1979); Consequences of Pragmatism (Minneapolis: University of Minnesota Press, 1982); Objectivity. Relativism, and Truth: Philosophical Papers, Volume One (New York: Cambridge University Press, 1991); and Essays on Heidegger and Others: Philosophical Papers, Volume Two (New York: Cambridge University Press, 1991).
Rorty, Consequences of Pragmatism, p. 162.
Ibid.
Ibid., p. 163.
Ibid., p. 165.
Brice R. Wachterhauser, “Introduction: History and Language in Understanding,” in Brice R. Wachterhauser, ed., Hermeneutics and Modern Philosophy (Albany: State University of New York, 1986), pp. 5–61; the quotation is at page 13. The use of the terms foundationalism and foundationalist in this philosophical context should not be confused with the term philosophical foundations of…. When the latter phraeseology is used, it simply refers to the philosohical underpinnings of a given methodological position; the philosophical foundations may or may not be foundationalist in character.
Dewey, The Quest for Certainty.
Ibid., p. 233.
Ibid., p. 19. Italics in the original.
Ibid., p. 157.
Ibid., p. 231.
Ibid.
Ibid., p. 229.
John Dewey, Logic: The Theory of Inquiry, in Jo Ann Boydston, ed., The Later Works of John Dewey, 1925–53, Vol. 12:1938 (Carbondale: Southern Illinois University Press, 1986), p. 111.
Ibid.
Ibid., p. 15.
Ibid., p. 16.
Ibid., p. 143.
Ibid., p. 16.
Dewey, The Quest for Certainty, p. 236.
Thorstein B. Veblen, “Why is Economics Not an Evolutionary Science?” in Thorstein B. Veblen, ed., The Place of Science in Modern Civilisation (New York: Viking Press, 1942 [1919]), pp. 56–81; the quotation is from page 61.
See Wendell Gordon, “The Role of Institutional Economics,” pp. 369–381; and idem, “The Role of Tool’s Social Value Principle,” Journal of Economic Issues 24 (September 1990): 879–886.
A slightly different version of his reply to Wendell Gordon (and also to Anne Mayhew) appears in Marc R. Tool, “Instrumental Value an Eternal Verity? A Reply to Wendell Gordon,” Journal of Economic Issues 24 (December 1990): 1109–1122; and idem, “Culture Versus Social Value? A Response to Mayhew,” Journal of Economic Issues 24 (December 1990): 1122–1133. See Anne Mayhew, “A Critical Analysis of Tool’s Essays in Social Value Theory” a paper read at the Annual Meetings of the Association for Institutional Thought, El Paso, Texas, April 1987; and idem, “Culture: Core Concept Under Attack,” Journal of Economics Issues 21 (June 1987): 587–603.
Dewey, Logic: The Theory of Inquiry, p. 161. Italics in the original.
Ibid., pp. 121–122.
Ibid., p. 161.
Ibid., p. 117.
Ibid., p. 113.
Ibid., p. 136. Italics in the original.
Rorty, Philosophy and the Mirror of Nature, p. 12.
Dewey, “Propositions, Warranted Assertability, and Truth,” in Jo Ann Boydston, ed., The Later Works of John Dewey, 1925–53, Vol. 14: 1941, (Carbondale: Southern Illinois University Press, 1988), pp. 179–180. Italics in the original.
Rorty, Consequences of Pragmatism, p. 86.
Ibid., p. 17.
Dewey, Logic: The Theory of Inquiry, p. 160.
J.E. Tiles, Dewey (New York: Routledge, 1988), p. 25.
Abraham Kaplan, The Conduct of Inquiry (San Francisco: Chandler Publishing Company, 1964), p. 333.
Pierre Duhem, “Physical Theory and Experiment,” in Herbert Feigl and May Brodbeck, eds., Readings in the Philosophy of Science (New York: Appelton-Century-Crofts, Inc., 1953), pp. 235–252.
Willard V.O. Quine, “Two Dogmas of Empiricism,” in Willard V.O. Quine, ed., From a Logical Point of View, 2nd ed., rev. (Cambridge: Harvard University Press, 1980 [1953]), pp. 20–46.
Ibid., p. 79.
Allan G. Gruchy was the first to use the term holism in describing the methodology of institutional economics. See his Modern Economic Thought: The American Contribution (Now York: Prentice-Hall, 1947). An extensive discussion of holistic methodology in institutional economics is found in Charles K. Wilber and Robert S. Harrison, “The Methodological Basis of Institutional Economics: Pattern Model, Storytelling, and Holism,” Journal of Economic Issues 12 (March 1978): 61–89. Discussions of holism and pattern models in the social sciences are undertaken by Kaplan, The Conduct of Inquiry, pp. 327–328; and Paul Diesing, Patterns of Discovery in the Social Sciences (New York: Aldine, 1971), pp. 157–167. For a sophisticated treatment of holism in general, and with respect to John R. Commons’s thought in particular, see Yngve Ramstad, “A Pragmatist’s Quest for Holistic Knowledge: The Scientific Methodology of John R. Commons,” Journal of Economic Issues 20 (December 1986): 1067–1105.
Ramstad, “A Pragmatist’s Quest for Holistic Knowledge …,” p. 1097.
For a discussion of the preoccupation with “induction” in institutional economics and the failure to develop formal models “to guide observation and experience,” see James I. Sturgeon, “Induction and Instrumentalism in Institutional Thought,” Journal of Economic Issues 18 (June 1984): 599–608, especially, page 604.
Kaplan, The Conduct of Inquiry, pp. 335–338.
An exmple of the use of a hypothetico-deductively formulated model in institutional economics is found in Paul D. Bush, “An Exploration of the Structural Characteristics of a Veblen-Ayres-Foster Defined Institutional Domain,” Journal of Economic Issues 17 (March 1983): 35–66. Ramstad has criticized the approach taken in that article as being incompatible with a holistic methodology. See Ramstad, “A Pragmatist’s Quest for Holistic Knowledge …,” p. 1097 and footnotes 12 and 51. “It is my suspicion,” he says, “that Bush’s ingenious effort to formalize such qualitative and evolving concepts as’ social values,’ and then to combine them into concepts such as ‘ceremonial encapsulation’ or into quantitative indexes such as the ‘index of ceremonial dominance,’ will ultimately prove sterile” [footnote 15]. While the author is sympathetic to Ramstad’s concerns with respect to the perils of both “formalism” and “quantification,” he does not believe that the model he set forth in the 1983 article is incompatible with holistic methodology. Indeed, every effort was made to indicate that the “hypothetical” portion of the model was derived from the rich theoretical and empirical insights found in the pattern models of Veblen, Dewey, Ayres, and Foster. In regard to the question of sterility, that is a matter that can only be settled through further inquiry.
Diesing, Patterns of Discovery …, pp. 156–67.
Wilbur and Harrison, “The Methodological Basis of Institutional Economics,” p. 85.
Mirowski, “The Philosophical Basis of Institutional Economics.”
Ibid., p. 1016.
Joseph Ratner, ed., Intelligence in the Modern World: John Dewey’s Philosophy (New York: The Modern Library, 1939), p. 308.
Dewey, The Quest for Certainty, p. 235.
Ibid., p. 236.
Ibid.
George R. Geiger, John Dewey in Perspective (New York: Oxford University Press, 1958), p. 84.
Tiles, Dewey, p. 142.
Ibid.
Dewey, Logic: The Theory of Inquiry, pp. 30–47.
Ibid., p. 109. Italics in the original.
Ibid., p. 161.
Mirowski, “The Philosophical Basis of Institutional Economics,” p. 1163.
Ibid., p. 1034, footnote 7. See John Dewey, “Theory of Valuation,” in Jo Ann Boydston, ed., The Later Works of John Dewey, 1925–53, Vol. 13:1938–39 (Carbondale: Southern Illinois University Press, 1988), pp. 191–251. The author has commented on Mirowski’s use of Thayer’s observation about Dewey’s “alliance with the logical positivists” in Bush, “Institutionalist Methodology and Hermeneutics: A Comment on Mirowski,” p. 1163.
James A. Swaney and Robert Premus, “Modern Empiricism and Quantum-Leap Theorizing in Economics,” Journal of Economic Issues 16 (June 1982): 713–730; reprinted in Alfred S. Eichner, ed., Why Economics is Not Yet a Science (Armonk, NY: M.E. Sharpe, 1983), pp. 41–60; the words quoted are on pp. 47–48. See Crossland’s and Weinel’s critique of Swaney and Premus [Philip P. Crossland and Ivan Weinel, “Modern Empiricism and Quantum Leap in Economics: A Comment,” Journal of Economic Issues 17 (December 1983): 1129–1138] and Swaney’s and Premus’s reply [James A. Swaney and Robert Premus, “Practice, Logic and Problem Solving: A Reply to Crossland and Weinel,” Journal of Economic Issues 17 (December 1983): 1138–1142.]. Although this is an interesting exchange of views, the alleged association of Dewey with logical positivism is not mentioned.
Dewey, Logic: The Theory of Inquiry, pp. 512. Italics in the original.
Gladys Parker Foster offers a very clear discussion of the role of prediction in pragmatic instrumentalist thought in “Cultural Relativism and the Theory of Value: The Educational Implications,” American Journal of Economics and Sociology 50 (July 1991): 257–267; see especially pages 262–265.
James A. Swaney, “A Coevolutionary Model of Structural Change,” Journal of Economic Issues 20 (June 1986): 393–401; idem, “Building Instrumental Environmental Control Institutions,” Journal of Economic Issues 21 (March 1987): 295–308; and James A. Swaney and Paulett I. Olson, “The Economics of Biodiversity: Lives and Lifestyles,” Journal of Economic Issues 26 (March 1992): 1–25.
Marc R. Tool, The Discretionary Economy (Santa Monica: Goodyear Publishing Company, 1979) and idem, Essays in Social Value Theory (Armonk, NY: M.E. Sharpe, 1986).
Milton Friedman, “The Methodology of Positive Economics,” in Milton Friedman, ed., Essays in Positive Economics (Chicago: University of Chicago Press, 1953), pp. 3–43.
See Lawrence A. Boland, “A Critique of Friedman’s Critics,” Journal of Economic Literature 17 (June 1979): 503–522; and Lawrence A. Boland and William J. Frazer, Jr., “An Essay on the Foundations of Friedman’s Methodology,” American Economic Review 74 (September 1983): 782–788.
Popper, The Logic of Scientific Discovery, p. 59.
Ken Dennis, “Boland on Friedman: A Rebuttal,” Journal of Economic Issues 20 (September 1986): 633–660; and idem, “Boland on Boland: A Further Rebuttal,” Journal of Economic Issues 21 (March 1987): 388–393.
Lawrence A. Boland, “Boland on Friedman’s Methodology: A Summation,” Journal of Economic Issues 21 (March 1987): 380–388.
Lawrence A. Boland, The Foundations of Economic Methodology (London: George Allen & Unwin, 1982), p. 145.
Ibid., p. 143.
John Dewey, Reconstruction in Philosophy, in Jo Ann Boydston, ed., The Middle Works of John Dewey, 1899–1924, Vol. 12: 1920 (Carbondale: Southern Illinois University Press, 1982), pp. 169–170. Italics in the original.
Boland, “A Critique of Friedman’s Critics,” and Boland and Frazer, Jr., “An Essay on the Foundations of Friedman’s Methodology.”
Abraham Hirsch and Neil di Marchi, Milton Friedman: Economics in Theory and Practice (Ann Arbor: The University of Michigan Press, 1990), p. 6.
Ibid.
James R. Wible, “The Instrumentalisms of Dewey and Friedman,” Journal of Economic Issues 18 (December 1984): 1049–1070; the words quoted are on page 1065.
Ibid., p. 1060.
Ibid.
See H.H. Liebhafsky and E.E. Liebhafsky, “Comment on ‘The Instrumentalisms of Dewey and Friedman,” Journal of Economic Issues 19 (December 1985): 974–983; and James Webb, “Is Friedman’s Methodological Instrumentalism A Special Case of Dewey’s Instrumental Philosophy? A Comment on Wible,” Journal of Economic Issues 21 (March 1987): 393–329.
Abraham Hirsch and Neil de Marchi, “Methodology: A Comment on Frazer and Boland, I,” American Economic Review 74 (September 1984): 782–788; and idem, Milton Friedman: Economics in Theory and Practice, pp. 92–93.
Friedman, “The Methodology of Positive Economics,” pp. 14–15.
Dewey, Logic: The Theory of Inquiry, p. 144.
Friedman, “The Methodology of Positive Economics,” p. 14.
See Dewey, Logic: The Theory of Inquiry, pp. 113, 314, 485, and elsewhere.
Dewey, “The Theory of Valuation,” p. 248.
Dewey, Logic: The Theory of Inquiry, pp. 16, 105–122.
The author originally offered this criticism in his “The Normative Implications of Positive Analysis,” A paper presented to the Western Economics Association, Corvallis, Oregon, August 23, 1968; abstracted in the Western Economic Journal 6 (September 1968): 309.
Hirsch and de Marchi, Milton Friedman, p. 273.
Ibid.
Bruce Caldwell’s critique of Friedman’s methodology, while not focused on the specific issues raised here, lends general support to the arguments set forth in this section. See Bruce Caldwell, Beyond Positivism (London: George Allen & Unwin, 1982), pp. 173–188. See also the Geoffrey M. Hodgson’s discussion of the inadequacies of Friedman’s methodology in Geoffrey M. Hodgson, Economics and Institutions: A Manifesto for a Modern Institutional Economics (Philadelphia: University of Pennsylvania Press, 1988), pp. 28–35.
Rorty, Consequences of Pragmatism, p. 164. However, K. Kolenda warns that Rorty may be giving too much credit to Dewey on this point. See K. Kolenda, “Rorty’s Dewey,” Journal of Value Inquiry 20 (1986): 57–62, especially page 61.
Dewey, “Valuation Judgments and Immediate Quality,” in Jo Ann Boydston, ed., The Later Works of John Dewey, 1925–1953, Vol. 15:1942–48 (Carbondale: Southern Illinois University Press, 1989), pp. 70–71. Italics in the original.
Dewey, Logic: The Theory of Inquiry, p. 163.
Ibid., p. 176.
Ibid.
John Dewey, Essays in Experimental Logic, in Jo Ann Boydston, ed., The Middle Works of John Dewey, 1899–1924, Vol. 8:1915 (Carbondale: Southern Illinois University Press, 1979), p. 29.
Ibid., pp. 26–28. See also Dewey, “Theory of Valuation,” pp. 194–195.
Dewey, Essays in Experimental Logic, p. 26.
Dewey, “Theory of Valuation,” p. 249.
James Gouinlock, John Dewey’s Philosophy of Value (New York: Humanities Press, 1972), pp. 10–11.
John Dewey, Democracy and Education, in Jo Ann Boydston, ed., The Middle Works of John Dewey, 1899–1924, Vol. 9:1916 (Carbondale: Southern Illinois University Press, 1980), p. 132.
Dewey, “Theory of Valuation,” pp. 248–249.
Dewey, Democracy and Education, p. 306.
John Dewey, “Existence, Value, and Criticism,” in Jo Ann Boydston, ed., The Later Works of John Dewey, 1925–1953, Vol. 11: 1925 (Carbondale: Southern Illinois University Press, 1986), p. 321.
Dewey, The Quest for Certainty, pp. 211–212. Italics in the original.
Dewey, Logic: The Theory of Inquiry, pp. 489–490. Italics in the original.
Ibid., pp. 496–497. Italics as indicated in quotation.
Ibid., p. 491. Italics in the original.
Ibid., p. 484, footnote 3.
Ibid., p. 484.
The notion that values function as standards by which behavior is correlated has been widely discussed in the institutionalist literature by J. Fagg Foster and his students. For a summary of this discussion, see Paul D. Bush, “The Theory of Institutional Change,” Journal of Economic Issues 21 (September 1987): 1075–1116, reprinted in Marc R. Tool, ed., Evolutionary Economics: Foundation of Institutional Thought, Vol. I (Armonk, NY: M.E. Sharpe, 1988), pp. 125–166.
Charles S. Peirce, “The Scientific Attitude and Fallibalism,” in Justus Buchler, ed., Philosophical Writings of Peirce (New York: Dover Publications, 1955), p. 54.
Jacob Bronowski, Science and Human Values, rev. ed. (New York: Harper & Row, 1965), p. 58.
Ibid., p. 60.
Dewey, Logic: The Theory of Inquiry, p. 496.
See, for example, George R. Geiger, John Dewey in Perspective, pp. 124–135; and Michael F. Sheehan and Rick Tilman, “A Clarification of the Concept of ‘Instrumental Valuation’ in Institutional Economics,” Journal of Economic Issues 26 (March 1992): 197–208.
The meaning of the term neoinstitutional, like the term instrumental, has been obscured by usages that are incompatible with the meaning assigned to the term in the American institutionalist literature. The term neoinstitutional has been coopted by the so-called new institutionalists whose neoclassical methodology is fundamentally incompatible with what they call the old institutionalists (i.e., contributors to the standard American institutionalist literature). For a well-known specimen of the new institutional economics, see Richard N. Langlois, ed., Economics as Process: Essays in the New Institutional Economics (Cambridge: Cambridge University Press, 1986). The use of the term neoinstitutional as a synonym for the new institutional economics apparently enjoys wide currency in Europe. For example, one European neoclassical economist working in the new institutional economics mode who refers to his research program as neoinstitutional economics is Thrainn Eggertsson; see his Economic Behavior and Institutions (Cambridge: Cambridge University Press, 1990). Neoinstitutionalists of the old institutional economics variety, and those sympathetic to their exclusive claim on the neoinstitutionalist rubric, are highly critical of the new institutional economics and its cooption of the term institutional, neo, or otherwise. For a sample of this critical literature, see John Adams, “Reinventing the Mos: Neoclassical Ignorance of Institutionalism as a Source of Fame and Employment,” a paper presented to the Fourth Colloquium of the Charles Gide Association, Marseilles, France, September 19 and 20, 1991; Geoffrey M. Hodgson, “Institutional Economic Theory: The Old versus the New,” Review of Political Economy 1 (November 1989): 249–269, reprinted in Geoffrey M. Hodgson, After Marx and Sraffra (London: MacMillan, 1991), pp. 194–213; and Anne Mayhew and Walter Neale, “The Implicit Theory and Method of the Old (and Real) American Institutionalists,” a paper presented to the Fourth Colloquium of the Charles Gide Association, Marseilles, France, September 19 and 20, 1991.
H.P. Rickman states that according to Wilhelm Dilthey, “the use of understanding [verstehen] provides the human studies with a method distinct from those of the physical sciences and thus frees them from subservience to the latter.” See Wilhelm Dilthey, Pattern and Meaning in History, edited and introduced by H.R. Rickman (New York: Harper Torchbook, 1962), pp. 17–18.
Examples of the use of this distinction between “value judgment” and “valuation” are to be found in Paul D. Bush, “The Theory of Institutional Change,” Edythe S. Miller, “Review of Wendell Gordon and John Adams, Economics as a Social Science: An Evolutionary Approach,” Journal of Economics Issues 24 (March 1990): 275–278; and Baldwin Ranson, “Review of Laurence H. Tribe, Corrine S. Schelling, and John Voss, editors, When Values Conflict,” Journal of Economic Issues 12 (March 1978): 195–196.
It appears that Liebhafsky first used the term self-correcting value judgments in The Nature of Price Theory, rev. ed. (Homewood: Dorsey Press, 1968), p. 523. His elaboration on this idea is discussed by Warren Samuels in “Technology vis-a-vis Institutions in the JEI: A Suggested Interpretation,” Journal of Economic Issues 11 (December 1977): 867–895; the discussion is found on pages 887–891. See also Anne Mayhew’s use of Liebhafsky’s notion in “Ayresian Technology, Technological Reasoning, and Doomsday,” Journal of Economic Issues 15 (June 1981); 513–520.
C.E. Ayres, The Industrial Economy (Boston: Houghton Mifflin Company, 1952), p. 310.
A number of important issues arise in connection with the pragmatic instrumentalist view of the role of values in inquiry. Space does not permit their discussion here, but the author has attempted to address some of them in previous publications, two of which are: Paul D. Bush, “The Normative Implications of Positive Analysis”; and idem, “Reflections on the 25th Anniversary of AFEE: Current Philosophical and Methodological Issues in Institutional Economics,” Journal of Economic Issues 25 (June 1991): 321–346. For a highly competent review of the pragmatic instrumentalist approach to the theory of valuation and its application in the institutionalist literature, see Steven R. Hickerson, “Instrumental Valuation: The Normative Compass of Institutional Economics,” Journal of Economic Issues 21 (September 1987): 1117–1143; reprinted in Marc R. Tool, ed., Evolutionary Economics: Foundation of Institutional Thought, Vol. I (Armonk, NY: M.E. Sharpe, 1988), pp. 167–193. The most extensive development and application of the pragmatic instrumentalist value theory to institutional economics is to be found in the works of Marc R. Tool. See Tool, The Discretionary Economy, and idem, Essays in Social Value Theory. The pragmatic instrumentalist position acknowledges the possibility of an infinite regress in the means-ends relationship that exits between “value judgments” and “valuations.” Contrary to the view held by many philosophers, pragmatic instrumentalists do not regard the possibility of an infinite regress as a deficiency of the theory. It is their view that, properly understood, all empirical and normative propositions are embedded in infinite regresses. On this issue, see Sidney S. Alexander, “Human Values and Economists’ Values,” in Sidney Hook, ed., Human Values and Economic Policy (New York: New York University Press. 1967), pp. 101–116; Paul D. Bush, “Reflections on the 25th Anniversary of AFEE: Current Philosophical and Methodological Issues in Institutional Economics,” especially pp. 329–340; and Larry Dwyer, “The Alleged Value Neutrality of Economics,” Journal of Economics Issues 16 (March 1982): 75–106.
For a discussion of the methodological significance of this definition of the term “institution,” see Paul D. Bush, “On the Concept of Ceremonial Encapsulation,” Review of Institutional Thought 3 (December 1986): 25–45. See also J. Fagg Foster’s use of this conception of institutions in “The Effect of Technology on Institutions,” Journal of Economic Issues 15 (December 1981): 907–913.
Gunnar Myrdal, Objectivity in Social Research (New York: Pantheon Books, 1969), p. 9. Myrdal’s use of the term “a priori” should not be read to mean in some metaphysical sense “beyond inquiry.” His use of the term is consistent with the pragmatic instrumentalist view that valuations are logically prior to the determination of the “facts.”
Jerry L. Petr, “Fundamentals of an Institutionalist Perspective on Economic Policy,” Journal of Economic Issues 18 (March 1984): 1–17; reprinted in Marc R. Tool, ed., An Institutionalist Guide to Economics and Public Policy (Armonk, NY: M.E. Sharpe, 1984), pp. 1–17.
See, for example, Mark Blaug, The Methodology of Economics (Cambridge: Cambridge University Press, 1980), pp. 1–51; Bruce Caldwell, Beyond Positivism, pp. 221–230; Paul Feyerabend, Against Method, rev. ed. (London: Verso, 1988); Thomas S. Kuhn, The Structure of Scientific Revolutions, 2d ed. enl. (Chicago: University of Chicago Press, 1970), and idem “Reflections on My Critics,” in Imre Lakatos and Alan Musgrave, eds., Criticism and the Growth of Knowledge (London: Cambridge University Press, 1970), pp. 231–278; Imre Lakatos, “Falsification and the Methodology of Scientific Research Programmes,” in Imre Lakatos, The Methodology of Scientific Research Programmes: Philosophical Papers, Volume I, ed. John Worrall and Gregory Currie (Cambridge: Cambridge University Press, 1978), pp. 8–101; and Popper, The Logic of Scientific Discovery.
Kuhn, The Structure of Scientific Revolutions.
Kuhn, “Reflections on My Critics,” pp. 266–277.
See, for example, John M. Connolly and Thomas Keutner, “Introduction: Interpretation, Decidability, and Meaning,” in John M. Connolly and Thomas Keutner, trans, and eds., Hermeneutics Versus Science? Three German Views: Essays by H.-G. Gadamer, E.K. Specht. W. Stegmuller (Notre Dame: University of Notre Dame Press, 1988), pp. 1–67; Kurt Mueller-Vollmer, “Introduction: Language, Mind, and Artifact: An Outline of Hermeneutic Theory Since the Enlightenment,” in Kurt Mueller-Vollmer, ed., The Hermeneutics Reader (New York: Continuum Publishing Company, 1985), pp. 1–53; and Wachterhauser, “Introduction: History and Language in Understanding,” pp. 5–61.
Mirowski, “The Philosophical Basis of Institutional Economics,” p. 1010.
Wachterhauser, “Introduction: History and Language in Understanding,” pp. 7–10.
Ibid., p. 6.
Ibid., p. 7.
Ibid.
Ibid., p. 10.
Rorty, Philosophy and the Mirror of Nature, pp. 12–13.
William Waller explores some related problems in William Waller, “Avoiding the Cartesian Vice in Radical Institutionalism: A Reply to Mayhew,” Journal of Economic Issues 24 (September 1990): 897–901.
Fritz Machlup, “The Problem of Verification in Economics,” Southern Economic Journal 22 (July 1955): 1–21; see especially pages 7–11.
Lionel Robbins, An Essay on the Nature and Significance of Economic Science, 2nd ed. (London: MacMillan and Co., Ltd., 1952 [1935]), p. 79.
See Ludwig von Mises, Human Action (New Haven: Yale University Press 1949); and idem, The Ultimate Foundations of Economic Science (New York: D. Van Norstrand, 1962).
For an excellent sample of critical commentaries of Rorty’s work, see Alan Malachowski, ed., Reading Rorty (Oxford: Basil Blackwell, 1990). See also K. Kolenda, “Rorty’s Dewey”; and idem, Rorty’s Humanistic Pragmatism (Tampa: University of Southern Florida Press, 1990).
Unfortunately, the limits of space have not permitted a review of and response to the substantial body of literature critical of pragmatic philosophy. That task must remain for a later undertaking. Such an undertaking should include a discussion of some of the more interesting and relevant commentaries, such as: Roy Bhaskar, “Rorty, Realism and the Idea of Freedom,” in Alan Malachowski, ed., Reading Rorty (Oxford: Basil Blackwell, 1990), pp. 198–232; Martin Hollis and Edward J. Nell, Rational Economic Man (London: Cambridge University Press, 1975), pp. 152–169; and Max Horkheimer, Critical Theory, trans. Matthew J. O’Connell et al. (New York: Herder and Herder 1972).
Hodgson, Economics and Institutions.
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Bush, P.D. (1993). The Methodology of Institutional Economics: A Pragmatic Instrumentalist Perspective. In: Tool, M.R. (eds) Institutional Economics: Theory, Method, Policy. Recent Economic Thought, vol 31. Springer, Dordrecht. https://doi.org/10.1007/978-0-585-29604-3_3
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