economic essays with some blanks quastions ( REVIEW _ MIDTERM)
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451_lecture_1_.pdf
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Institutional Economic Theory
Economics 451
University of Missouri-Kansas City
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Syllabus Institutional Economic Theory
Instructor: James I. Sturgeon
Office: Manheim Hall 202B Email: [email protected]
Graduate Assistant: Alejandro Garay
Email: [email protected]
Introduc)on Nature, Scope and Purpose of Economics Defini)ons of Economics
Standard – The study of the alloca)on of scarce resources among alterna)ve uses
Ins)tu)onal -‐-‐The study of how we make a living-‐the provisioning process
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The Nature and Scope of Institutional Economics
The scope of Ins)tu)onal Economics consists of two broad ranges of analysis. One is a conceptualiza/on of economic ac/vity lodged in an evolu/onary con/nuum of cumula/ve means and ends. The other is a comprehensive cri/cal analysis of the widely accepted standard conceptualiza/on of economic ac/vity, the name of which is usually neo-‐classical.
A significant part of the nature of Ins/tu/onal economics is found in its scope and will emerge as we address this. Scope and Defini)on: Ins)tu)onal economics is the interdisciplinary study of the forces affec)ng the process of economic ac)vity, change and adapta)on. We will discuss each of the opera/ve terms in this statement during the course of the class.
The terms in ques/on are: Interdisciplinary Forces Process Change Adapta/on
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dule Section 1 – Introduction, Scope and Approach
Introduction – What is Institutional Economics
– Evolutionary Economics: Process and Change in Economic Activity Framework and Approach Historical Perspective – Alternative Approaches
Divisions of Economics – Schools, Carl Becker The Heavenly City of the 18th Century Philosophers The Climate of Opinion Paradigms -- Thomas Kuhn The Structure of Scientific Revolutions Nature of Paradigms
Scientific evolution v scientific revolution – but more complicated than this Do practitioners usually ask questions they are confident the paradigm will answer? Analyzed in terms of ability to explain facts
Criticisms of Paradigms– way of thinking – frame of reference E.g., from physical science, Newton v Einstein, or in geology, plate tectonics E.g., from biological science, evolution – spontaneous generation
Frames of Reference
setting for inquiry guide to problem definition-selection guide to research
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Major Perspectives in Economics Smith 18th , Marx 19th, Veblen 19th – 20th, Keynes 20th, ??? 21st
1. Standard Economics
Pre-classical and Classical/Neo-classical Keynes and Keynesian Socialist Reaction, including Marxism
2. Reactions and Criticisms of Classical/Neo-classical/Marxian Theories German Historical School Austrian Thought Institutionalist Thought
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Historical Background Principal Contributors
Veblen --------Commons-----------Mitchell
• Veblen – 1.Theory—2. Critique of standard, classical and Marxian.
Brief Biography Carlton College Johns Hopkins Yale Home – 7 years Cornell Univ. Chicago Stanford Univ Missouri New School Eight Major Books Many Journal Articles Several Popular Magazine Articles Veblen Myths
Major Contributions Criticisms of Classical Theory
pre-Darwinian Taxonomy pre- conceptions of human nature - natural order Analytical Elements
Evolution of Institutions -- Prevalent habits of thought Theory of Behavior -- Habit and Instinct Class Theory -- Leisure Class Theory of Consumption Theory of Production
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Schematic of Veblen – Dewey Theoretical Heritage
Veblen
Mitchell
Kusnets – NBER
Major Theoretical Developments
Ayres
Pecuniary Employments/Industrial Employments And all the rest of the distinctions he made Evolutionary approach to theory and method Class analysis
Dewey
Seek for security, Ceremonial arts, sacrifice, ceremonial rite, magical cult, sacrifice of contrite heart (more pleasing than oxen or bull) Industrial arts, turn powers of nature to account, make
friend instead of enemy. Instrumental theory of value
Veblenian Dichotomy, Combined: Veblen’s Distinctions With Dewey’s value theory
Business cycles, Quantitative Data, GNP
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Wesley C. Mitchell
built on Veblen’s theory to create empirical foundation for economics, especially business cycles, theory of money Business Cycles – Data, Quantification, NBER,
Biography on Mitchell • Born Rushville Illinois 1874 • Decatur Ill High school • University of Chicago 1892 – entered in first class of U of C • Veblen introduced him to economics • Dewey – taught him Philosophy • Dissertation – role of money -- greenbacks • Continued statistics experiments Institute of U of C 1900-1901 • Univ of California 1903 -- head of department • Columbia University 1913 there for next 33 years • Kusnets, National Income and Product accounts
Types of writing Statistical Series – business cycles National income accounts – Kuznets
Aspects of human nature -- institutional factors mass behavior Quantitative statistical approach to human behavior
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John R. Commons
Brief Biography -- Myself • Indiana – discharged for ineffectiveness and dishonesty • Syracuse – discharged due to views on business and religion.
Suggested baseball on Sunday so working people could have a form of recreation on only day off
• University of Wisconsin– rest of career Definition of Institution -- collective action in control and liberation of
individual action
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Schematic of Commons Contributions
Reasonable value Going Concern Transactions
Transactions Bargaining Managerial Rationing
Unemployment Insurance Social Security Public Utility Regulation
Policy & Social Experiments Labor History and Policy
John R. Commons
Theoretical
Several Policy programs in Wisconsin- Later applied at national level
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Outline of the Elements of Institutional Economic Theory
Human Behavior Culture Veblenian Dichotomy Theory of Class Theory of Consumption Theory of Production Theory of Distribution Theory of Value Theory of Progress
