ECONOMIC IDEAS AND FOUNDERS OF THE INSTITUTIONALISM SCHOOL
Abstract
This article examines the theoretical advantages of the institutional approach over neoclassical economic theory and analyzes the methodological differences among the institutional perspectives of Thorstein Veblen, John R. Commons, and Wesley C. Mitchell. The study demonstrates that neoclassical economics, with its emphasis on rational and abstract economic agents, is limited in explaining real economic processes shaped by social, legal, and cultural factors. In contrast, the institutional approach provides a more comprehensive framework by incorporating the role of economic institutions, norms, and legal arrangements in shaping economic behavior. The paper comparatively analyzes Veblen’s evolutionary and socio-psychological approach, Commons’s legal and transaction-based framework, and Mitchell’s empirical and statistical methodology. The findings indicate that the methodological diversity within institutionalism strengthens its analytical capacity and enhances its relevance for contemporary economic analysis and policy formulation.
Keywords
institutional approach, neoclassical economics, economic institutions, methodological differences, evolutionary economics, transaction theory, empirical analysis, economic behavior.
References
- Veblen, T. (1899). The Theory of the Leisure Class. New York: Macmillan.
- Veblen, T. (1919). The Place of Science in Modern Civilization and Other Essays. New York: Huebsch.
- Commons, J. R. (1934). Institutional Economics: Its Place in Political Economy. New York: Macmillan.
- Mitchell, W. C. (1913). Business Cycles. Berkeley: University of California Press.
- Mitchell, W. C. (1927). Business Cycles: The Problem and Its Setting. New York: National Bureau of Economic Research.
- North, D. C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.
- Hodgson, G. M. (2004). The Evolution of Institutional Economics: Agency, Structure and Darwinism in American Institutionalism. London: Routledge.
- Williamson, O. E. (1985). The Economic Institutions of Capitalism. New York: Free Press.
- Coase, R. H. (1937). The Nature of the Firm. Economica, 4(16), 386–405.