Institutionalism as an Approach to Political Economy
The title of this article suggests a duality which captures some of institutionalism's essential properties. One unfamiliar with the development of the institutionalist perspective in twentieth-century American economic thought might be tempted to inquire as to whether the distinguishing property of institutionalism pertains basically to its different methodological or philosophical approach to the discipline of economics or to its focus upon the broader political character of economic life. For institutionalists, of course, the (brief) answer is both. Institutionalism has marched to a different drummer from mainline economics (Keynesian as well as neoclassical) in terms both of the scope and content of its subject matter and its methodologies or modes of approaching its substantive concerns. This article examines "institutionalism as an approach to political economy" from both of these perspectives. First, it gives a comparative review of the institutionalist theory of the evolution of systems of political economy in capitalist development, with focus upon the Veblen-Ayres tradition and contemporary extensions. Here, the emphasis is upon institutionalism's methodological properties, notably, its dynamic and evolutionary approach to analysis of technological and institutional