Alan Gruchy's Views on Institutional Economics

In his 1987 book entitled, "The Reconstruction of Economics", Professor Allan Gruchy had some pointed criticisms especially of the post Veblen economists between the war years.  As these are an important foundation piece to the ILE school, it is useful to consider Gruchy's complaints and criticisms. We can no do better than start with Gruchys, perhaps harsh criticism, that "the late 1920's and the 1930's were not a fruitful period in the development of institutional economic thought" (pg.26). This pretty clear sets the stage for his views on Commons and the Wisconsin school so closely related to the ILE.  He further writes that they (referring to the Wisconsin institutionalisats amongst others), "a survey of their writings does not reveal much advance beyond Veblen" (pg. 26).   and then again, Gruchy writes that "Commons never developed what one of his graduate students described as a theoretical roof" and further that "Commons had a position that would not be acceptable too many institutionalists".  Here he was referring to Commons idea that we needed to reconcile the theories of equilibrium and process approaches to economics which Gruchy felt was not possible and that Commons had failed to do so.

With this background, Gruchy laid out several important issues that he felt defined the field of institutional economics.  One was a focus on different approaches to human behavior other than rational choice. in particular, Gruchy was very interested in a cultural basis for human economic behavior.  His criticism of the post Veblen institutional economists was that had failed to create a cultural basis for human behavior but rather focused on a psychological basis.  Other authors have felt that Commons and his followers did not develop a fully flesh out out theory of human behavior, especially with a cultural basis for understanding economic activity. It should be noted that Gruchy also criticized Veblen for his lack of full theory of cultural basis for human behavior.

A second key piece was a focus on process and open ended systems versus a close ended equilibrium.  We have also referenced that Gruchy specifically targeted his verbal barrage against commons and his attempt to reconcile equilibrium and process theories.

A third key point was that the traditional definition of economics as the "science of efficiency" or the "science of scarcity" was problematic.  These were secondary considerations to Gruchy.  The most important theme that should be explored by economists was that of "social provisioning".  Societieis had to work out how they ensured the right flow of resources to provision the population. This was the primary concern and the secondary issues of efficiency and scarcity were obstacles or constraints only but not the focus of economics.

Gruchy believed that Clarence Ayres (https://www.hetwebsite.net/het/profiles/ayres.htm) was the best post war institutionalist  who did the most to address the issue of integrating cultural anthropology into economics.  Gruchy specifically highlighted the post war economists J. Ron Stanfield, Phillip Klein, Wendell Gordon and Marc Tool as key thinkers moving the Ayres agenda forward.

I don't believe these ideas are in complete contradiction to the ideas of the Great Lakes school of IE, but there was some hostility to some of the approaches first pioneered by Commons.