Veblen's Evolutionary Methodology and Its Implications for Heterodox Economics in the Calculable Future

Jo, Tae-Hee (2019): Veblen's Evolutionary Methodology and Its Implications for Heterodox Economics in the Calculable Future.

Abstract

Critics have repeatedly claimed that heterodox economics has failed in that it has limited acceptance by the mainstream of the economics profession and little influence on other approaches and policies. They blame heterodox economists for their own failure. I subject this claim to critical examination from the perspective of Veblen’s evolutionary methodology. Veblen’s theory of the business enterprise will be used as an example, which exemplifies the case that a ‘blasphemous’ theory is ignored and marginalized even though it provides rich insights into economy and society. Heterodox economics has shown a similar path. It is also argued that social science does not follow the biological principle of natural selection. What survives does not necessarily mean the fittest in the social realm. The history of science is replete with paradoxical incidents that an incoherent, irrelevant, or even wrong theory becomes dominant and widely accepted because it is one that serves the vested interests in academia and society. Economics is no exception.

• Item Type: MPRA Paper
• Language: English
• Keywords: Thorstein Veblen, Evolution, Business Enterprise, Heterodox Economics
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B1 - History of Economic Thought through 1925 > B15 - Historical ; Institutional ; Evolutionary; B - History of Economic Thought, Methodology, and Heterodox Approaches > B2 - History of Economic Thought since 1925 > B25 - Historical ; Institutional ; Evolutionary ; Austrian; B - History of Economic Thought, Methodology, and Heterodox Approaches > B5 - Current Heterodox Approaches > B50 - General; D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory

References

Anderson, Karl L. 1933. “The Unity of Veblen’s Theoretical System.” Quarterly Journal of Economics 47(4):598–626.

Argyrous, George and Rajiv Sethi. 1996. “The Theory of Evolution and the Evolution of Theory: Veblen’s Methodology in Contemporary Perspective.” Cambridge Journal of Economics 20 (4): 475–495.

Becker, Markus C. and Thorbjorn Knudsen. 2012. Nelson and Winter Revisited. In Handbook on the Economics and Theory of the Firm, ed. Michael Dietrich and Jackie Krafft. Cheltenham, UK: Edward Elgar, pp. 243–255.

Boulding, Kenneth E. 1984. “Review of An Evolutionary Theory of Economic Change by Richard R. Nelson and Sidney G. Winter.” American Journal of Agricultural Economics 66 (4): 535–536.

Colander, David, Richard P.F. Holt and J. Barkley Rosser. 2004. “The Changing Face of Mainstream Economics.” Review of Political Economy 16 (4): 485–499.

Colander, David, Richard P.F. Holt and J. Barkley Rosser. 2007-8. “Live and Dead Issues in the Methodology of Economics.” Journal of Post Keynesian Economics 30 (2): 303–312.

Dugger, William M. 1990. “The New Institutionalism: New but not Institutionalist.” Journal of Economic Issues 24 (2): 423–431.

Dugger, William M. 1995. “Douglass C. North’s New Institutionalism.” Journal of Economic Issues 29 (2): 453–458.

Edgell, Stephen and Rick Tilman. 1989. “The Intellectual Antecedents of Thorstein Veblen: A Reappraisal.” Journal of Economic Issues 23 (4): 1003–1026.

Eichner, Alfred S. 1983. Why Economics Is Not Yet a Science. In Why Economics Is Not Yet a Science, ed. Alfred S. Eichner. Armonk, New York: M.E. Sharpe, pp. 205–241.

Endres, Tony. 2004. “One Hundred Years From Today.” History of Economics Review 40 (1): 152–156.

Finch, John H. and Robert McMaster. 2018. “History Matters: On the Mystifying Appeal of Bowles and Gintis.” Cambridge Journal of Economics 42 (2): 285–308.

Fine, Ben. 2019. “Economics and Interdisciplinarity: One Step Forward, N Steps Back?” Revista Crítica de Ciências Socialis 119(Setembro): 131–148.

Fontana, G. and B. Gerrad. 2006. “The Future of Post Keynesian Economics.” Banca Nationale del Lavoro Quarterly Review 59 (236): 49–80.

Foss, Nicolai J. 1998. “The Competence-based Approach: Veblenian Ideas in the Modern Theory of the Firm.” Cambridge Journal of Economics 22 (4): 479–495.

Frigato, Pietro and Francisco Javier Santos-Arteaga. 2012. Planned Obsolescence and the Manufacture of Doubt: On Social Costs and the Evolutionary Theory of the Firm. In Social Costs Today: Institutional Analyses of the Present Crises, ed. Paolo Ramazzotti, Pietro Frigato and Wolfram Elsner. London: Routledge, pp. 73–95.

Groenewegen, John. 2004. “Who Should Control the Firm? Insights from New and Original Institutional Economics.” Journal of Economic Issues 38 (2): 353–361.

Henry, John F. 1990. The Making of Neoclassical Economics. Boston, MA: Unwin Hyman.

Hodgson, Geoffrey M. 2004. “Social Darwinism in Anglophone Academic Journals: A Contribution to the History of the Term.” Journal of Historical Sociology 17 (4): 428–463.

Hodgson, Geoffrey M. 2007. “The 2007 Veblen-Commons Award Recipient: Richard R. Nelson.” Journal of Economics Issues 41(2):311.

Hodgson, Geoffrey M. 2013. “Understanding Organizational Evolution: Toward a Research Agenda Using Generalized Darwinism.” Organization Studies 34(7):973–992.

Hodgson, Geoffrey M. 2019. Is there a Future for Heterodox Economics? Institutions, Ideology and a Scientific Community. Cheltenham, UK: Edward Elgar.

Hodgson, Geoffrey M. and Thorbjorn Knudsen. 2004. “The Firm as an Interactor: Firms as Vehicles for Habits and Routines.” Journal of Evolutionary Economics 14:281–307.

Holt, Richard P.F., J. Barkley Rosser and David Colander. 2011. “The Complexity Era in Economics.” Review of Political Economy 23(3):357–369.

Jennings, Ann and William Waller. 1998. “The Place of Biological Science in Veblen’s Economics.” History of Political Economy 30(2):189–216.

Jo, Tae-Hee. 2018. A Heterodox Theory of the Business Enterprise. In The Routledge Handbook of Heterodox Economics, ed. Tae-Hee Jo, Lynne Chester and Carlo D’Ippoliti. London and New York: Routledge, pp. 199–212.

Jo, Tae-Hee. 2019a. “The Institutionalist Theory of the Business Enterprise: Past, Present, and Future.” Journal of Economic Issues 53 (3): 597–611.

Jo, Tae-Hee. 2019b. A Veblenian Critique of Nelson and Winter’s Evolutionary Theory. AFEE-ASSA Annual Conference, Atlanta, GA.

Jo, Tae-Hee and John F. Henry. 2015. “The Business Enterprise in the Age of Money Manager Capitalism.” Journal of Economic Issues 49(1):23–46.

Jo, Tae-Hee, Lynne Chester and Carlo D’Ippoliti. 2018a. The State of the Art and Challenges for Heterodox Economics. In The Routledge Handbook of Heterodox Economics, ed. Tae-Hee Jo, Lynne Chester and Carlo D’Ippoliti. London: Routledge, pp. 3–26.

Jo, Tae-Hee, Lynne Chester and Carlo D’Ippoliti, eds. 2018b. The Routledge Handbook of Heterodox Economics. London and New York: Routledge.

Jo, Tae-Hee and Zdravka Todorova. 2018. Social Provisioning Process: A Heterodox View of the Economy. In The Routledge Handbook of Heterodox Economics, ed. Tae-Hee Jo, Lynne Chester and Carlo D’Ippoliti. London: Routledge, pp. 29–40.

Kay, Neil M. 1994. Theory of the Firms. In The Elgar Companion to Institutional and Evolutionary Economics, ed. Geoffrey M. Hodgson, Warren J. Samuels and Marc R. Tools. Vol. I Aldershot, UK: Edward Elgar, pp. 237–241.

Knoedler, Janet T. 1995. “Transaction Cost Theories of Business Enterprise from Williamson and Veblen: Convergence, Divergence, and Some Evidence.” Journal of Economic Issues 29 (2):385–395.

Laurent, John. 2000. “Alfred Marshall’s Annotations on Herbert Spencer’s Principles of Biology.” Marshall Studies Bulletin 7. URL: https://www.disei.unifi.it/upload/sub/pubblicazioni/msb/2000/laurent7.pdf

Lavoie, Marc. 2014. Post-Keynesian Economics: New Foundations. Cheltenham, UK: Edward Elgar.

Lawson, Tony. 2003. Reorienting Economics. London: Routledge.

Lawson, Tony. 2013/2016. What is This ‘School’ Called Neoclassical Economics? In What is Neoclassical Economics? Debating the Origins, Meaning and Significance, ed. Jamie Morgan. London: Routledge pp. 30–80. Originally published in the Cambridge Journal of Economics, Vol. 37, No. 5, pp. 947-983.

Lee, Frederic S. 2009. A History of Heterodox Economics: Challenging the Mainstream in the Twentieth Century. London: Routledge.

Lee, Frederic S. 2013. Heterodox Economics and its Critics. In In Defense of Post-Keynesian and Heterodox Economics, ed. Frederic S. Lee and Marc Lavoie. London: Routledge, pp. 104–132.

Lee, Frederic S. 2018. Microeconomic Theory: A Heterodox Approach. London: Routledge.

Marshall, Alfred. 1890/1920. Principles of Economics. Eighth ed. London: Macmillan.

Marx, Karl. 1852. The Eighteenth Brumaire of Louis Bonaparte. Marx/Engels Online Archive. URL: https://www.marxists.org/archive/marx/works/1852/18th-brumaire/index.htm

Mayhew, Anne. 2000. Veblen and Theories of the ‘Firm’. In Is Economics an Evolutionary Science? The Legacy of Thorstein Veblen, ed. Francisco Louça and Mark Perlman. Cheltenham, UK: Edward Elgar, pp. 54–63.

Mearman, Andrew, Sebastian Berger and Danielle Guizzo. 2019. What is Heterodox Economics: Conversations with Leading Economists. London: Routledge.

Mirowski, Philip. 1983/1998. Nelson and Winter’s Evolutionary Theory of Economic Change. In Against Mechanism: Protecting Economics from Science. Totowa, NJ: Rowman & Littlefield pp. 161–170. Originally published as “An Evolutionary Theory of Economics [sic] Change: A Review Article,” in Journal of Economic Issues 1983, 17 (2): 757-768.

Mumford, Lewis. 1931. “Thorstein Veblen.” The New Republic August 5:314–316.

Nelson, Richard R. and Sidney G. Winter. 1982. An Evolutionary Theory of Economic Change. Cambridge, MA: Harvard University Press.

Nightingale, John and Jason Potts. 2003. An Alternative Framework for Economics. In The Crisis in Economics, ed. Edward Fullbrook. London: Routledge, pp. 180–182.

Ramstad, Yngve. 1994. On the Nature of Economic Evolution: John R. Commons and the Metaphor of Artificial Selection. In Evolutionary and Neo-Schumpeterian Approaches to Economics, ed. Lars Magnusson. Boston: Kluwer Academic Publishers, pp. 65–121.

Rosser, J. Barkely, David Colander and Richard P. F. Holt. 2013. “How Can Something So Right as Heterodox Economics Have so Little Influence?”. URL: http://cob.jmu.edu/rosserjb/Friendly%209%2012%2012%20final.docx

Spencer, Herbert. 1851. Social Statics. London: Chapman.

Tilman, Rick. 1996. The Intellectual Legacy of Thorstein Veblen: Unsolved Issues. London, UK: Greenwood Press.

Tilman, Rick. 2007. Thorstein Veblen and Enrichment of Evolutionary Naturalism. Columbia, MO: University of Missouri Press.

Veblen, Thorstein B. 1898/1961e. Why is Economics Not an Evolutionary Science? In The Place of Science in Modern Civilisation and Other Essays. New York: Russell & Russell pp. 56–81. Originally published in The Quarterly Journal of Economics, 12 (4): 379-397.

Veblen, Thorstein B. 1900/1961c. The Preconceptions of Economic Science III. In The Place of Science in Modern Civilisation and Other Essays. New York: Russell & Russell pp. 148–179. Originally published in The Quarterly Journal of Economics, 14 (2): 240-269.

Veblen, Thorstein B. 1904. The Theory of Business Enterprise. New York: Charles Scribner’s Sons.

Veblen, Thorstein B. 1906/1961b. The Place of Science in Modern Civilisation. In The Place of Science in Modern Civilisation and Other Essays. New York: Russell & Russell pp. 2–31. Originally published in American Journal of Sociology, XI (March).

Veblen, Thorstein B. 1908/1961a. The Evolution of the Scientific Point of View. In The Place of Science in Modern Civilisation and Other Essays. New York: Russell & Russell pp. 32–55. Originally published in University of California Chronicle 10(4).

Veblen, Thorstein B. 1908/1961d. Professor Clark’s Economics. In The Place of Science in Modern Civilisation and Other Essays. New York: Russell & Russell pp. 180–230. Originally published in The Quarterly Journal of Economics, 14 (2): 240-269.

Veblen, Thorstein B. 1914/1964b. The Instinct of Workmanship and the State of the Industrial Arts. New York: Augustus M. Kelley.

Veblen, Thorstein B. 1918/1957. The Higher Learning in America: A Memorandum of the Conduct of Universities by Business Men. New York: Hill and Wang. Originally published in 1918.

Veblen, Thorstein B. 1919. The Vested Interests and the Common Man. New York: B.W. Huebsch.

Veblen, Thorstein B. 1923/1964a. Absentee Ownership and Business Enterprise in Recent Times: The Case of America. New York: Augustus M. Kelley.

Vromen, Jack J. 1995. Economic Evolution: An Enquiry into the Foundations of New Institutional Economics. London: Routledge.

Vromen, Jack J. 2001. Ontological Commitments of Evolutionary Economics. In The Economic World View, ed. Uskali Mäki. Cambridge: Cambridge University Press, pp. 189–224.

Wais, Erin. 2005. “Trained incapacity: Thorstein Veblen and Kenneth Burke.” The Journal of the Kenneth Burke Society 2(1). URL: http://kbjournal.org/wais

Watkins, John P. 2010. “Mainstream Efforts to Tell a Better Story – Natural Selection as a Misplaced Metaphor: The Problem of Corporate Power.” Journal of Economic Issues 44(4):991–1008.

Wible, James R. 1998. The Economics of Science: Methodology and Epistemology as if Economics Really Mattered. London: Routledge.

Yalcintas, Althug. 2016. Intellectual Path Dependence in Economics. London: Routledge.

Zimmermann, Erich W. 1933/1951. World Resources and Industries. New York: Harper & Brothers Publishers.