On pragmatist institutional economics

The movement of New Institutional Economics (NIE), born in the seventies, followed the Institutional Economics of John R. Commons by putting the notion of ‘transaction’ in the centre of its study. The seventies were a period of appearance of an absolute authority of neoclassical economics with its hypothetic-deductive (Cartesian and positivist) methodology and the NIE followed this methodology. The NIE was assimilated by many of the members of its community with ‘transaction costs economics’. In this way they have distorted totally the initial design of Commons’ institutional economics who saw the transaction as a unit of activity common to law, economics and ethics. Instead of Cartesian analytic philosophy, which is the philosophical foundation of neoclassical economic theory, he based his institutional economics on pragmatist philosophy of Charles S. Peirce and John Dewey. As Philip Mirowski has noted “these two traditions have a profound conflict over their respective images of a ‘science’, and therefore profoundly incompatible images of ‘economic man’ and ‘rationality’” (Mirowski, 1987). Commons used the pragmatism as a model of human behaviour and as a method of research. The paper discusses the pragmatist methodology and techniques from an institutional economist point of view. It is based on a personal experience of the author in application of these methodology and techniques for economic institutional investigations. This paper is an appeal to economists to adopt the pragmatist method. This method, in its modern form related to social sciences, is Qualitative Research. It is called ‘qualitative research’ because it deals with primarily qualitative data but its most important characteristic is its affiliation to the pragmatist paradigm.