From Veblen to the Economics of Belonging

This paper develops a comparative institutional framework linking classical and modern institutionalist traditions—Veblen, Commons, and North—with the Economics of Belonging. It proposes a demanding criterion of relevance: a valid institutional theory must simultaneously explain core theoretical results of economics (market coordination, multiple equilibria, and normative demands of justice) and major stylized facts of comparative history (Western development, Soviet failure, Asian growth, and Latin American stagnation). The paper argues that existing institutionalisms are partial: Veblen explains cultural evolution but lacks macro-coordination mechanisms; Commons clarifies transactional governance but not macro-historical divergence; North provides a powerful account of incentives and enforcement but faces tensions in explaining non-Western development paths. In contrast, the Economics of Belonging introduces belonging as a primary institutional category and articulates three irreducible subsystems—integration, power, and market—allowing a unified explanation of growth, social order, and institutional change. Empirical evidence from Mexico, China, South Korea, Vietnam, and Russia supports the framework, emphasizing that development depends not only on formal institutions or savings, but on the alignment between integration, power structures, and market dynamics.