The Evolution of Institutional Economics: Agency, Structure and Darwinism in American Institutionalism, by Geoffrey M. Hodgson. Routledge, London and New York: Routledge. 2004. Cloth: ISBN 0 415 32252 9, $180.00. 512 pages. Paper: ISBN 0 415 32253 7, $53.95. 512 pages.
This book is ostensibly an intellectual history of American Institutional Economics, but Geoff Hodgson has given us much more than that. Using the basic framework of Veblenian institutionalism, this work is nothing less than a blueprint for the emerging mainstream economics of this new century. Like biological evolution itself, the evolution of institutionalist thought is full of dead ends, stasis and bursts of breathtaking change. This is an auspicious time for institutional economics because the field of economics has recently entered one of the most exciting periods of intellectual ferment in its history as competing theories scramble to fill the niche left by the demise of the Walrasian general equilibrium system. Many of the "new" ideas current in mainstream economics--the relative income effect, path dependency, the prevalence of endogenous preferences to name a few-have been mainstays of institutionalist thought for over a century. Throughout the book Hodgson skillfully blends discussion of personalities, theories, and the evolution of our understanding of the economic world.
As the author states in the preface, this volume can be considered as a sequel to his previous book How Economics Forgot History. That book was about the problem of historical specificity in economics and a critique of "theories of everything" in the social sciences. In that book Hodgson began to lay the foundations for generalized Darwinism, a theme central to The Evolution of Institutional Economics.
An Outline of the Book
The introductory chapters (1-3) are a stand-alone discussion of institutional economics within the history of economic thought and within changing philosophical currents. Hodgson defends "old" institutional economics as laying the groundwork for a modern science-based approach to agency and structure, that is, the relationship between individual behavior and social structure. Hodgson rejects both methodological individualism and methodological collectivism: "Once we admit that the individual is socially determined then we have an explanatory infinite regress, and neither individuals nor institutions can be the legitimate final term" (p. 19). It is important, however, to recognize that structure precedes agency. All individuals are born into particular existing social structures. How do we analyze a hierarchical system where causality runs from both top-down and bottom-up in a continuous chain of interacting elements? Hodgson's answer is by applying the basic Darwinian principle of analyzing evolutionary change in terms of inheritance, variation and selection.
The second section of the book (chapters 4-5) presents an intellectual history of...