Revisiting “Institutions”: A Study of the Evolution of Institutional Analysis

Abstract:

Since its founding in 1967, the Journal of Economic Issues (JEI) has been the main publication vehicle for original institutionalist studies. In 1987, twenty years after JEI’s establishment, volumes 3 and 4 of the journal were dedicated to the reintroduction of key concepts and analytical frameworks of original institutionalism. In 1987, JEI’s volume 3, Walter Neale’s “Institutions” was published. It is a seminal study on the meaning and identification of institutions that introduced key issues from the original institutionalism analytical framework. As three decades have passed since the publication of Neale’s article, there is significant motivation to analyze the evolution of the meaning and identification of institutions through original institutionalist studies. The main sources of information for this article are related works published in JEI in the last thirty years.

Keywords::

• cognition
• institutions
• institutional change
• pragmatism
• Walter Neale

JEL Classification Codes::

• B25
• B52

Notes

¹ I chose volume 2 of the 2017 JEI as the cutoff because it was the current issue when I did this bibliometric study.

² Identifying clusters of JEI articles allowed me to search for studies of institutionalists who contribute their theoretical/analytical issues to building an institutional analysis – that relies on the characterization or identification of institutions – in journals beyond JEI.

³ A key issue in Veblen’s approach, to instinct is the unusual perspective he adopted (see Almeida 2014). In a Veblenian perspective, inner impulses to action can be understood as tropisms. Philosophers and psychologists generally use the term “instinct” for what Veblen called tropism. In order to avoid a conceptual misunderstanding, in a previous work (Almeida 2014), I use the term “inner impulse” for the philosophical or psychological perspective and “instinct” for the Veblenian perspective. Thus, in the next paragraph, I follow this terminology (Almeida 2014).

⁴ In Costa and Caldas’s (2011, 671) words, “[g]iven that habit had been captured by behaviorism, Dewey protested against the tendency in (behavioral) psychology to limit its meaning to repetition and to subsume habit in routine.”

⁵ Taking into consideration the concept of habits for contemporary institutionalism, the British institutionalist Geoffrey M. Hodgson offered an explanation. Hodgson differentiates habits from repetition. For Hodgson (2001, 2006), a habit is not a simple repetition, despite the fact that it is built from repetitive situations. A habit does not mean behavior either, despite the fact that some habits may culminate in behavior. For instance, a habit cannot generate a behavior for a long time, but that habit may exist even if it is not manifested in a behavior. A habit is a tendency to behave in a particular manner in specific situations or it is triggered by an appropriate stimulus or context (Hodgson 2002, 2004a, 2006). As Hodgson (2002, 2003, 2006) states, the institutionalist concept of habit characterizes it as a largely non-deliberative and self-actuating propensity to engage in a previously adopted pattern of thought or behavior.

⁶ Considering contemporary institutionalists’ effort to associate institutional economics with modern cognitive approaches, habits and institutions have significantly more analytical elements than instincts. Despite this fact, Cordes (2005, 11) highlights that, in an institutionalist view, instincts can be understood as “present cognitive mechanisms focusing an individual on particular perceptions and generating impulses or actions in response to stimuli.” Cordes (2005) references Hodgson (2004b) in this work, but he continues to highlight that both instincts and habits are psychological mechanisms that have a role in generating and shaping institutions. Thus, institutions are specific from some instincts and such institutions can merely make sense in a society where they exist (Cordes 2005).

⁷ One may argue that this item follows a Veblenian institutionalism and I agree. The reason for this is that institutionalist works with Commonsian bent on decision-making focus on clarifying decision-making issues from Commons’s writings (see Albert and Ramstad 1997, 1998; Atkinson 2009; Atkinson and Oleson 1996; Atkinson and Reed 1992; Ramstad 1995, 2001). Thus, I included these works in my sample of articles.

⁸ The origin of the ceremonial-instrumental dichotomy is in Clarence Ayres’s reading of Veblen’s writings, taking Dewey’s notion of instrumentalism into consideration. A combination of Veblen’s evolutionary approach to institutional chance with Dewey’s instrumentalism was named “neoinstitutionalism” by Marc Tool in his Ph.D. dissertation (in Bush 2009). Later, Allan Gruchy applied the term “neoinstitutionalism” in a more encompassing manner, taking original institutionalist studies into consideration, despite his affinity for the Veblen-Ayres-Dewey tradition (see Gruchy 1972).

⁹ This metric to investigate isolated and systematic contributions was suggested by the young institutionalist Ivan Gambus. In another bibliometric study of JEI articles, which I co-authored with Gambus, taking the same period into consideration, Gambus informed me about the metric. I tested whether this metric would be valid for the present project and I found that it was.

¹⁰ Hodgson does indicate that the reconstitutive downward causation and upward causation occur, but he does not elaborate on how they occur. Essentially, he defines habits as a reconstitute element, but he does not explain how and why individuals acquire such habits. Another concept that Hodgson does not address in detail, although it is absolutely central to other institutionalists (i.e., such as radical institutionalists) is power. For radical institutionalists, power plays a key role in both reconstitutive causation and upward causation. In Hodgson’s (2000, 326) view, “[t]he great merit of the institutionalist idea that institutions shape individual behavior is that it admits an enhanced concept of power into economic analysis. Power is not simply coercion.” While Hodgson does mention power, he does not define the place of power in his institutional change perspective.

Additional information

Notes on contributors

Felipe Almeida

Felipe Almeida is a professor of economics at the Federal University of Paraná (Brazil). This research was supported by the National Council for Scientific Development (CNPq) in Brazil