Dear Prof. Mayhew,

Thank you very much for this wonderfully detailed reply! I look forward to working my way through the literature you suggested, and hopefully coming out of it with at least a slightly better understanding of this field of inquiry.


From: Mayhew, Anne
Sent: ‎Friday‎, ‎April‎ ‎4‎, ‎2014 ‎5‎:‎51‎ ‎PM
To: [log in to unmask]

Hi Karthik:  As an old (in two senses) Institutionalist/Evolutionary Economist, let me offer my perspective on your question.  First off, I recommend that you read Malcolm Rutherford's most recent book, THE INSTITUTIONALIST MOVEMENT IN AMERICAN ECONOMICS, 1918-1947: SCIENCE AND SOCIAL CONTROL.  In this book, Malcolm provides the best explanation of how interwar Institutionalism emerged from the mileu in which Veblen wrote and how the work of a number of Institutionalists was influenced, but not dictated, by Veblen's approach.  Given your interest in money and currency, I would particularly recommend Chapter 4 on Morris Copeland.  It is important to remember that Wesley Mitchell, one of the founders of the National Bureau of Economic Research, had been a student of Veblen's.  Mitchell's emphasis was on the use of statistics to describe the actual instkitutional patterns of the American economy; he saw his approach as in opposition to the process of deduction from a limited set of assumptions, which was the process of "neoclassical" reasoning.  One of the people much influenced by Mitchell, was Morris Copeland.  Copeland, following in both Veblen and Mitchell's footsteps, set out to describe money flows in the U.S. economy.  His approach was incorporated by the Federal Reserve System, with some extensive and rather unfortunate modifications, and is today published in the Quarterly Flow of Funds Reports.  (I will send you separately a brief paper that I have written on this topic.)

After WWII, the ascendency of American-styled Keynesianism (mainly as offered by Samuelson and those who wrote other basic texts in the mold of his earlty introductory texts), crowded out the Institutionalist approach and was, in fact, adopted by some Institutionalists because of shared policy conclusions and as a matter of convenience and survival in Economics Departments that were increasinly unreceptive to the fundamental radicalism of the original or old institutionalist approach.  As "Keynesianism" became increasingly neoclassical, there also developed a relationship of convenience and considerable intellectual compatability betweehn Institutionalism and Post Keynesian Economics.  However, the two are not the same.  Among Institutionalists there was always more emphasis on the economic history of (actual as opposed to hypothsized) monies and curriences and more emphasis on the lack of a clear difference between "money" and "credit" in modern economies.  For an excellent example of what this means for good analysis, I recommend Christopher Brown's 2008 book, INEQUALITY, CONSUMER CREDIT AND THE SAVING PUZZLE.

I would also suggest that  you read Morris Copeland's A STUDY OF MONEY FLOWS IN THE UNITED STATES, for an earlier and classic example of how Veblenian Institutionalists analyzed money/credt in the economy. 

I hope this helps you in sorting out what is a complicated part of the history of modern economic thought.

--Anne MAyhew

From: AFEEMAIL Discussion List [[log in to unmask]] on behalf of Karthik Raghavan R [[log in to unmask]]
Sent: Thursday, February 27, 2014 6:28 AM
To: [log in to unmask]
Subject: [AFEEMAIL] Institutionalist perspective on Money


I am a researcher at Erasmus University in Rotterdam, The Netherlands, working on money, currency and their role in ‘market design’. After looking at various ‘schools’ within Economics, it seems to me that Institutionalism and Evolutionary Economics are critical areas to examine for my research. My interest in economics started with a reading of Veblen, but when I try to get into institutional research today, I find the arena extremely confusing! I am currently reading Malcolm Rutherford’s “Institutions in Economics: The Old and the New Institutionalism” to get my bearings straight before I explore further.

In the meantime, I was wondering if any of you might be kind enough to recommend readings that cover the Institutionalist perspective on money/currency (all flavours of institutionalism welcome)

Also, suggestions on ‘core readings’ or ‘seminal works’ on institutions and evolutionary economics would also be greatly appreciated.