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Chapter 5: The Pragmatist View of Knowledge and Beliefs in Institutional Economics: The Significance of Habits of Thought, Transactions and Institutions in the Conception of Economic Behavior
Véronique Dutraive 5.1 INTRODUCTION A major trend of modern economics is to emphasize the role of institutions in economic phenomena, long after the work of old institutionalist economists. The revival of the theory of institutions owes much to North’s contribution to economic history and growth macroeconomics based on property rights and transaction costs. Subsequently, stemming from the influential works of Coase and Williamson, the interest in institutions has spread to the theory of the firm and of economic organization, and more widely to microeconomics. One of the important questions now discussed is the relation between institutions and cognition, and North himself has drawn attention to this point (Denzau and North, 1994, p. 5). The competences and capabilities theories of the firm and more widely evolutionary economics are now connecting evolutionary processes and cognition (Egidi and Rizzello, 2004). In this context, old American institutionalism, in particular the contributions of Veblen and Commons, have been rediscovered and recognized as having anticipated some of the trends of contemporary economic analysis (Hodgson, 2004; Rutherford, 2001; Samuels, 1995). Indeed, Veblen and Commons, dissatisfied with the conception of human agency in the exclusive terms of the theory of rational choice, pioneered the focus on the importance of institutions for our understanding of the dynamics of economic phenomena in modern societies and made early claims that economics must have some interaction with other sciences and particularly with the psychological sciences. There is a common agreement that Veblen’s and Commons’s conceptions of knowledge rely on American pragmatist...
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