Thursday, December 26, 2019

2019 Nobel Prize Celebrating The Triumph Of Institutionalism?

Elizabeth Warren Echoing A View Institutionalists Understand

This year, the "Nobel prize" in economics went to Abhijit Banerjee, Esther Duflo, and Michael Kremer. They champion empirical economics over theory. Previously, institutionalist economics was described as 'measurement without theory' (Koopmans 1947). Does institutionalist economics parallel the supposed mainstream empirical turn?

Although institutionalists, as far as I know, did not have the resources to create randomized control trials (RCTs), they did collect and analyze statistical data. I think especially of Wesley Clair Mitchell and the National Bureau of Economic Research (NBER).

Institutionalists was not atheoretical, I think. They developed qualitative analytical concepts. I think of C. E. Ayres extension, for example, of the Veblenian dichotomy. Sometime, I intend to read John R. Commons' 1924 book to see how he breaks up a transaction. John Kenneth Galbraith's concept of the technostructure and Alfred Eichner's idea of the megacorp are other examples here. Institutionalists contributed to the development of Industrial Organization. John Maurice Clark had, at least, a verbal description of the business cycle that combined the multiplier and the accelerator.

Institutionalist economics is not a strictly American school of thought. I include Geoffrey M. Hodgson and Gunnar Myrdal as institutionalists. I suppose I should read the Journal of Economic Issues or the Journal of Institutional Economics more frequently. The Association for Evolutionary Economics (AFEE) puts out the JEI.

  • John R. Commons. 1924. Legal Foundations of Capitalism Macmillan.
  • John S. Gambs. 1946. Beyond Supply and Demand: A Reappraisal of Institutional Economics. Columbia University Press.
  • Tjalling C. Koopmans. 1947. Measurement without theory. Review of Economics and Statistics 29(3): 161-172.

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