Institutional Disaffiliation with the Classicism

Tsvetan Kotsev

Economic Thought journal, 2007, issue 2, 50-69

Abstract: The institutional theory is, to a great extent, filled with criticism of the main classical postulates. Many institutionalists question in their works the hedonistic principle of profit and loss as a main motivating factor for human behavior. The main classical concepts result from relatively old tendencies which dominated the manner of thinking during the period XVII-XVIII century. Due to its strong bond with clerical order, classical economic theory deals with the individual rather than the group. The leading institutionalists argue against this statement and back up the idea that the individual’s behavior is manifested in social environment. These and other characteristics show classical theory in static format, unable to react adequately to the dynamics of the social and economic development. Among the fiercest critics of classicism in this respect are Clarence Ayres and Torstein Veblen. This article aims at showing the unconventional view of some of the competent representatives of institutionalism together with their well-grounded criticism of classical orthodoxy.

JEL-codes: B20 B25 B31 (search for similar items in EconPapers)
Date: 2007
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