Volume 43, Number 170,
July-September 2012
Emerging Countries:
The Marxism-Institutionalism Controversy
Sergio Ordóñez

Institutionalist Critique

Thorstein Veblen, one of the founders of the so-called old institutionalism7, centers his criticism of Marxism on the following aspects, which directly concern the relationship between structure and agent: (1) the mere position of individuals in the social production process says little about their specific concepts or thought habits and corresponding actions, to the extent that individual interests do not inevitably lead to corresponding individual actions; (2) individuals are not exclusively social beings that act in the social process as a means to transmit and express social laws and changes; (3) historical materialism lacks an explanation of operating forces acting in the (historical) process; and (4) history lacks an “objective” or predetermined goal, which for Marxism would be a society without classes, an approach that implies a teleological concept of history (Hodgson, 2001).

Later, Hodgson would expand this critique, identifying Marxism as the most solid and consistent way of thinking about “methodological collectivism,” which says that social structures completely determine the agent and his practices,8 in contrast with “methodological individualism,” where structures are the result of the sum of individual wills, a way of thinking that identifies neoclassicism and its maximizing rational subject as the agent that explains society and the economy.9

The Marxist critique depends on a concept of society and history (historical change) centered on the individual and institutions, understood as “the system of established and prevailing social rules that structure social interactions” (Hodgson, 2006: 2), whose durability arises from the fact that they create stable expectations for behavior of the rest, which, simultaneously, constrict and enable individual action (Hodgson, 2006).

The historical movement is explained by way of social Darwinism, that is, by “an evolutionary process of individuals adapting to changing conditions, due to the surrounding nature of society. This is a process in which the fundamental reactions are two-fold: technology is consolidated as the means to take advantage of and efficiently transform nature, and institutions structure higher social interactions. While technology is more linked to instincts, and particularly to the innate “idle curiosity” of the individual, institutions are based on habits, understood as the acquired inclination or capacity (non-innate) to think and act in a certain way (shared thought and action habits). This is based on repetitive behavior that feeds back on itself, which supposes the existence of rules inherent to action. Persistent and shared habits are the basis for customs, and for the habit to become a (formal) rule, it must attain a normative characteristic, be potentially codified and prevail among a group (Hodgson, 2006).

In the context of this foundation, historical development is seen as an open process, with multiple potential orientations. It tends towards complexity, insofar as reactions to changing conditions and their combinations are ever more complicated, which implies a process of accumulative causation (the causes that originated an initial change accumulate and combine to produce successively more varied changes). This translates into a process of evolution. However, the process depends on the past trajectory (path dependent). In other words, it carries over past baggage. As such, solutions and reactions that prevail before a new situation may not be the most efficient, but they will likely be those that best correspond to a previous trajectory for a determined society.

7 The term institutional economy was originally used to refer to the American School of Economic Thought, founded by Th. Veblen, W. Mitchell and J. Commons in the years following the First World War. This school of thought peaked in the inter-war period, and began to decline in the wake of the Second World War. In the mid 1970s, we see the rise of “new institutionalism,” led by O. Williamson (who received the Nobel Prize in the 1990s), which is much closer to the neoclassic tradition. Finally, towards the end of the 1980s, we see a resurgence of literature inspired by old institutionalism (Hodgson, 1994). Based on what would later develop, we can note a relationship between what in Gramscian terms constitutes a crisis and the process of the dissolution of an organic unit of capitalism with the rise of literature inspired by institutionalism.

8 However, the same author recognizes that Marx and Engels may reject methodological collectivism when they write that “history is nothing more than the activity of man pursuing his desires” (Hodgson, 2004).

9 For this school of thought, the surge of a structure is explained by the (innate) propensity of the individual towards structure, in the same way that a new institution conceives a natural state of man free of institutions, an idea that goes against the old institutionalism, where man and institutions are inseparable (Hodgson, 2004).

10 For Giddens, structure and agent are two sides of the same coin, insofar as structure does not really exist, but is rather the result of a mental construction, which is why structure is assimilated in the subject (Hodgson, 2004). In reality, Giddens confuses the cognitive process of reality according to the subject with actual reality, because before acting (on the structure), the subject internalizes the structure. That is, a mental image of the structure is created, which is what Giddens says is the structure itself.

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 195 October-December 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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