Yngve Ramstad

On the Nature of Economic Evolution: John R. Commons and the Metaphor of Artificial Selection

In his famous 1898 essay, “Why Is Economics Not An Evolutionary Science?” Thorstein Veblen challenged economists to transform their discipline into an evolutionary science. In order to meet that standard, Veblen insisted, economic theory must be recast as “a theory of a cumulative sequence of economic institutions stated in terms of the process itself” (Veblen, 1919, p. 77). Except for the American institutionalists, most of whom self-consciously embraced Veblen’s “research program,” economists for the most part have ignored Veblen’s plea. Trained in a tradition rooted in the “natural law” perspective of Adam Smith, “mainstream” economists1 have generally conceived of market activity in acultural, ahistorical terms. Indeed, among the major figures in mainstream 20th-century economics, only Joseph Schumpeter has seen a need to incorporate an explicitly evolutionary stance into economic analysis.

Free Trade versus Fair Trade: Import Barriers as a Problem of Reasonable Value

The United States has been experiencing for several years now the effects of a sweeping reorganization of the world economy. The most visible manifestation of this rearrangement is the increased level of international competition in American markets.2 From the vantage point of many of the nations inhabitants, increased exposure to foreign competition would appear to be of questionable benefit. Not only have innumerous manufacturing jobs been exported abroad, but, even more important, the real wage associated with those that remain no longer allows for an increase in the workers standard of living.3 Significantly, there are ominous signs that the same trends will soon become evident in the agricultural sector as well.4 It is the principal instrumental function of the economist to point out institutional adjustments that promise to alleviate the nations pressing economic problems without precipitating other problems of equal or greater moment.5 Obviously, this function is predicated, first, upon the possession of a conceptual framework, or theory, within which the effects of a given adjustment can be predicted and, second,

Institutional Economics And The Dual Labor Market Theory

No one has put it better than Wesley Clair Mitchell: “The only reason, the only excuse, for the study of economic theory is to make this world a better place in which to live.”2 What Mitchell was insisting, of course, is that economic theory is most fundamentally an instrument for guiding the process of institutional adjustment in such fashion that “better” flows of real income will be produced. From this standpoint, accordingly, it becomes the task of the practicing economist to develop valid theories which can be used to devise or evaluate specific proposals for altering the institutions patterning specific subsystems of the market economy,3 for example, the “labor market.” For only if a theory, or the model through which it is expressed, is believed to be valid will policymakers be able to use it for institutional impact analysis,4 that is, to anticipate (predict) whether, in the context of a concrete issue, proposed adjustments of existing rules or practices actually are likely to alter the future “economic” attainments (real incomes) of individuals or groups in a “good” way.