So, last weekend I had the distinct pleasure of reading Yuval Yonay’s (1998) The Struggle Over the Soul of Economics: Institutional and Neoclassical Economists in America between the Wars. Yonay attempts an Actor-Network/Latourian history of the debates within economics in the U.S. around 1920-1940. The book is a fun read, and I think does an excellent job of portraying the positions taken by the neoclassicists and institutionalists respectively. One of Yonay’s central goals is an intervention in the historiography of economics to argue that institutionalism was not a minor dead-end that never had much importance. Yonay shows that institutionalism was a vibrant research program/paradigm/whatnot during this period and that institutionalism eventually lost out not to the neoclassicists but rather to the mathematical economists that arose in the immediate post-War period. While the mathematical economists claimed the neoclassicists more strongly than the institutionalists, Yonay argues fairly convincingly that the post-war mathematical econ/Keynesian consensus represents quite a break from both camps.
As a (budding) economic sociologist, I was struck by the familiarty of the arguments advanced by the institutionalists against the neoclassical orthodoxy. For example, institutionalists advanced three main critiques of homo economicus: 1. People have “nonmaterial and nonselfish interests”, 2. “Irrational behavior” exists as humans are “social creatures” and 3. “Labor is not only a pain which must be endured, but also a source of satisfaction.” (Yonay 1998, 102) All three points resonate with the contemporary economic sociology literature. Here’s an amazing list created by Paul Douglas as the beginning of a classification of “non-commercial incentives”:
1. The desire to benefit humanity.
2. The fascination, or joy, of work itself.
3. The desire to project one’s own personality in the work at hand.
4. The desire to be esteemed by one’s fellows in the same field of activity.
5. The desire for the esteem and approval of the general public.
6. The craving for notoriety.
7. The desire for power over men and over things (Douglas 1924, 188, quoted in Yonay 1998, 102).
And here’s an extended version of point 2 from the instutionalist Edie which goes as far as calling individualism itself a historically specific cultural phenomenon:
“For long, philosophers assumed that individualism meant perfect freedom to set independently of all restraints. However, more recent social thinkers look upon individualism as a form of domination wherein the subjects are commonly ignorant of the taboos, customs, and precepts which dictate their conduct. The so-called freedom of laissez-faire has too often been in reality merely a slavish obedience to traditional standards of choice and outworn institutional arrangement. (1927, 436)” (Yonay 1998, 105)
The third point, that work is potentially a source of satisfaction as well as misery, strikes me as a possibly powerful critique not often examined by economic sociologists (though perhaps that reflects more my unfamiliarity with work in the intersection of econ soc and occupations/work). The normative implications are pretty striking: if work can be a source of utility itself, then maximizing the outputs of labor must be balanced against maximizing the pleasantness of work. Can we imagine an economics that started with the pleasantness of work as one of its principles?
I have written before that economic sociology makes two broad claims: that individuals are not atomistic (Granovetter) and that markets are built and sustained by government intervention and thus cannot be disembedded from the social or political realms (Polanyi). I think both of these claims could find antecedents in the institutionalist critiques of neoclassicism. To what extent can we say that economic sociology is the heir to the institutional economics of the pre-WWII U.S.?