Institutionalism in the Early 20th Century

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Questions and Answers

What is one significant limitation of environmental economics identified by ecological economics?

One limitation is that environmental economics often fails to account for the ecological limits of natural resources.

How do feminist economists justify the need for a different approach to economic theory?

Feminist economists argue it is necessary to address assumptions that neglect women's unpaid labor and the realities of gender inequality.

What are the two laws of thermodynamics and their implications for ecological economics?

The two laws are: 1) Energy cannot be created or destroyed, only transformed, and 2) Entropy in an isolated system will increase over time. They imply that economic growth must stay within ecological limits.

What is the critique of ecological economics from the mainstream economic paradigm?

The mainstream paradigm critiques ecological economics for lacking a cohesive model and for being too focused on sustainability over growth. Signup and view all the answers

What does 'degrowth' describe in the context of ecological economics?

'Degrowth' describes a planned reduction of production and consumption aimed at achieving environmental sustainability and social equity. Signup and view all the answers

What were some key reasons for the prestige of Institutionalism in the early 20th century?

Institutionalism was seen as a necessary response to the limitations of classical economics, emphasizing social norms and historical context in economic behavior. Signup and view all the answers

What are the two values that Institutionalism divides cultural phenomena into?

The two values are ceremonial values and instrumental values. Signup and view all the answers

Why is it important to distinguish between ceremonial and instrumental values in Institutionalism?

Distinguishing these values helps to understand the motivations behind behaviors and the role of culture in economic systems. Signup and view all the answers

Name the three intellectual developments that influenced Institutionalism.

The three developments are Darwinism, historical materialism, and the critique of neoclassical economics. Signup and view all the answers

What does Veblen's concept of 'conspicuous consumption' refer to?

Veblen's 'conspicuous consumption' refers to the practice of using extravagant spending to showcase wealth and status. Signup and view all the answers

What innovation in neoclassical economics contributed to its dominance over Institutionalism?

The introduction of utility maximization as a central concept in neoclassical economics helped it gain dominance. Signup and view all the answers

What is considered the building block of behavior in the institutionalist paradigm?

The building block of behavior in the institutionalist paradigm is the habits and customs shaped by social institutions. Signup and view all the answers

Give an example of a ceremonial value and an instrumental value.

A ceremonial value could be cultural rituals, while an instrumental value could be the efficiency in resource allocation. Signup and view all the answers

Study Notes

Institutionalism's Prestige in the Early 20th Century

Analysis rooted in understanding the world in context, making it relevant for policymakers
Provided credibility for positions in government, contrasting with more abstract theories
Extensive empirical work on business cycles, contributing significantly to the National Bureau of Economic Research
Key figures like John R. Commons and Thorstein Veblen developed influential concepts impacting our daily lives

Institutional Values

Ceremonial Values: Focus on past traditions, defining social status and acceptable behavior, often rooted in authority
- Example: Racial segregation policies (Jim Crow South)
Instrumental Values: Goal-oriented, open to experimentation and evidence-based solutions
- Example: Implementing evidence-based laws to improve education
Purpose of the distinction: To determine whether an economy is primarily driven by ceremonial or instrumental values

Intellectual Influences on Institutionalism

Anthropology: Emphasized the learned nature of human behavior over instinctive reactions, highlighting cultural influence on economic activity
Evolution: Questioned whether economic systems change over time and in response to pressures, recognizing the adaptable nature of economic structures
Pragmatism: Believes that truth is evaluated through the outcomes of actions and emphasizes goal-oriented policymaking.

Veblen's Conspicuous Consumption

Term coined to describe lavish spending used to display social status, not for practical needs
Reflects ceremonial values, highlighting the importance of social hierarchy in economic behavior.

Neoclassical Economics' Rise

Institutionalism's prestige declined due to its struggles in predicting and addressing the Great Depression
Increased focus on mathematical models, general equilibrium theory, and microfoundations in neoclassical economics (NCE) resulted in a shift away from institutionalism

Institutionalist Paradigm's Building Block

Focus on cultural context, incorporating social norms, historical influences, and learned behaviors in understanding economic behavior
Challenges the idea that economic actions are solely rational and individualistic

Ceremonial and Instrumental Values Examples

Ceremonial: Segregation laws in the Jim Crow era reinforced racial hierarchies through tradition
Instrumental: Anti-discrimination policies which use research to show effectiveness in promoting equality and economic growth

Feminist Economics Critique of Gary Becker

Becker's theory regarding gender wage differences is criticized for circular logic, assuming house work's specialization is related to its superiority, and underestimating its market values.

Genuine Progress Indicator (GPI)

Combines economic, social, and environmental factors to measure a nation's well-being, providing a more comprehensive view than GDP
GPI adjusts GDP by incorporating factors such as the value of unpaid labor, volunteer work, and ecosystem services, but also taking into account social and environmental costs

Feminist Economics' Inspirations

Marxism: Analysis of class conflict and exploitation, extended to include gender as a critical factor
Institutionalism: Recognition of sexism as a ceremonial value influenced by existing norms
Neoclassical Economics: Recognizing shortcomings in ignoring gender differences and biased assumptions about economic behavior

Key Element of Feminist Economic Methods

Focus on recognizing inherent values throughout research methods instead of trying to be neutral; acknowledging the potential for values to affect research results

Feminist Economics' Purpose

Aims to improve quality of life through policy recommendations, in contrast to theories focused on understanding behavior.

Questioning Fundamental Economic Assumptions

Feminist economists emphasize the need to question traditional economic assumptions to better understand the economic realities of gender inequality
Traditional models often ignore gendered roles in work and home life

Ecological Economics' Critique of Environmental Economics

Environmental economics often relies on market-based solutions, which ecological economists view with skepticism.
Traditional models are deemed inadequate for addressing complex ecological problems

Ecological Economic Models

Mainstream Model: Represents goods, services, and factors between firms and households.
Ecological Model: Adds natural inputs / outputs to the model, emphasizing the finite nature of ecosystems, the need for recycling, and recognizing the importance of environmental impact.

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Description

This quiz explores the significance of institutionalism during the early 20th century, focusing on key figures like John R. Commons and Thorstein Veblen. It highlights the contrast between ceremonial and instrumental values in policymaking and their impact on society. Understand the empirical work that shaped economic thought and its implications for modern governance.