Institutional Economics after One Century

Institutional economics, by any reckoning, has had its centenary. Alas, institutional economics is not what it once was. It has gone from being a more or less recognized part of the discipline and practice of economics to a marginalized heterodox status, and from being part of the mindset and work of many, if not most, economists to being the specialized school for some economists and latent in the work of some specialists in specialized fields. But for those content to actually do institutional economics, rather than use it as a vehicle for career enhancement, i.e., as a means of status emulation, it is alive and reasonably well, if not prosperous. Yet it has serious problems. Part of institutionalism's predicament derives from its treatment by non-institutionalist economists, treatment including being curtly dismissed, being misrepresented, being ignored, and being read out of the discipline. But some, if not much, of institutionalism's predicament derives from within, and it is this aspect of the situation that I address in this article. I approach the task from a position based on at least three foundations: as a committed and practicing institutionalist, as a historian of economic thought, and as an eclectic (and relativist) economist. Part 1 of this article summarizes my critique of neoclassical economics and my approach to the history of economic thought. I would urge application of both to the problem of the present predicament of institutional economics. Part 2, therefore, considers the internal sources of the predicament on such basis. Part 3 notes a hopeful sign. Part 4 recapitulates and extends my argument.