Agency and mental models in heterodox economics.

Author:Wrenn, Mary V.

Agency is power--the power to act and the power to choose, the power to imagine and the power to understand, engage, and manipulate the surrounding biological and social environment. Mainstream economics adopts the western philosophy of entirely self-determined, autonomous, and efficacious agency in its employment of methodological individualism and optimizing, rational economic man. As such, agency is endowed without discretion to all individuals who independently choose to act based on the weight of objective costs and benefits (Davis 2003, 113). To the heterodox economist, agency cannot be captured or analyzed by this simple rendering of the individual. Rather, agency must be examined by its own internal logic and responses to external forces; how it came to be and how it evolves. The argument set forth is that the conceptualization of agency as a product of the individual's mental models and interaction with the surrounding structural environment unites otherwise seemingly disparate heterodox groups of thought. The procedure is simple: the concept of interactive agency is explored from the perspectives of five different heterodox groups of thought (1) with an eye toward possible common ground.

Original Institutional Economics

Original institutionalist economics (OIE) maintains a long-standing tradition of rebellion against the methodological individualism of conventional economics. Indeed, the clear goal of Thorstein Veblen was to develop a theory of agency to replace the unsatisfactory theory of the optimizing rational economic man--the "hedonistic ... lightening calculator"--of neoclassical economics (1898, 389). In the development of an alternative theory of agency, the OIE places primacy on a more complete ontology of the individual, paying close attention to the cultural mechanisms which shape and channel the individual's mental models. While a few within the OIE, such as Clarence Ayres, adopted a more culturally deterministic concept of agency (Hodgson 2004, 352-3, 358), the persistent theme within the OIE has been on the mutual interdependency, or interactivity, between agency and structure (Hodgson 2002, 174-5).

Instinct, habit, and patterns of behavior form the building blocks of the individual's mental models. The individual is born with certain instincts that have evolved since the emergence of man, such as the capacity for language. Humans must have an innate sense of how to communicate in order to physically manipulate the body to produce sound. Once a human is able to communicate, interaction with the surrounding structural context, including intersubjective relationships with other individuals, builds up the range of language, including dialect and culturally specific rhetoric (Hodgson 2004, 422-3).

Habits and instincts are part of the cognitive framework, in other words, part of an individual's mental models, and are at least partially informed by institutions and structure. Habits, routines, competency base, and skills are not static but evolve with the changing structure and the changing individual (Davis 2003, 118-9). Moreover, patterns in behavior are the combined result, in subjectively determined portions, of genetic composition, habituation, inertia, enculturation, path dependence, and cumulative causation. Habituation is a stabilizing and creative force in terms of institutional formation and evolution, as well as stabilized and channeled by the surrounding structural context (Hodgson 1998, 171, 185). Individuals inform the composition and functioning of institutions and structure directly and through their intersubjective relationships with one another, and institutions inform the composition and functioning of an individual's mental models by reinforcing habits and informing the individual's cognitive process. As such, institutions and individuals maintain their independence while simultaneously are interdependent (180, 184).

In his development of the concept of interactive agency, Veblen recognized the mutual dependence between agent and structure as well as the irreducibility of one into the other. By recognizing that agent and structure are also independent entities, the internal integrity of both is acknowledged as well as the temporally asymmetric evolution of each. Agent and structure evolve, partially due to mutual though nonequivalent influence and partially due to internal, independent inertia (Hodgson 2004, 181-3). The OIE acknowledge the ontological differences in individuals and their mental models as well as the organic evolution of institutions and, moreover, recognize the interdependence and independence of each. Agent and structure are both independent and interdependent, mutually causative but not mutually constitutive--that is, interactive.


Marxist thought addresses agency very specifically in terms of the agent-structure relationship under the capitalist rubric. Marxist thought argues that an individual cannot be studied apart from the totality in which she is situated; it is impossible to understand the totality from the perspective of the individual as the individual is a product of the totality. The individual is not autonomous, but neither is he or she completely structurally determined. Individuals are born with base human instincts for survival which require manipulation of the surrounding environment. This manipulation set within a community becomes organized into productive processes, which...

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