Human Agency, Cumulative Causation, and the State
Remarks upon Receiving the Veblen-Commons Award
Thank you for this honor, and for the opportunity to share with you some of my thoughts about the theory and practice of institutional economics today. I have been a member of AFEE since its founding, and my training in institutional economics goes back even further, in fact all the way back to 1955 when, as a sophomore, I enrolled in Clarence Ayres' introductory honors course in social science. What I learned in that course still affects me, not least of all in my willingness to trespass across disciplinary lines in the social sciences. I should also thank the many people in this room who have helped me learn--Walter Neale, John Adams, Milton Lower, and, not least of all, Janet Knoedler and Dell Champlin. Thank you all.
Those who know me will know, however, that I am not likely to use this occasion simply to give thanks to friends, as pleasurable as that may be. I am also going to use the opportunity to share some strong opinions. Specifically, I am going to argue that we who honor Thorstein Veblen and John R. Commons have underused and underemphasized parts of the intellectual tradition that we value, and through this underuse have contributed to the decline in prominence of the tradition that was in many ways dominant in the interwar years. In particular, I will argue that we should restore to a prominent place in institutional theory the ideas of human agency and cumulative causation, particularly in their relation to the state. I turn first to human agency.
In a very famous passage in his famous essay "Why Is Economics Not an Evolutionary Science?" Veblen said that humans are not passive recipients of pleasure and pain, they do not "oscillate... under the impulse of stimulii that shift [them] about... but leave [them] intact" (Veblen 1990, 73). With similar understanding, Commons stressed the importance of "volitional psychology." In their emphasis on the active individual, both Veblen and Commons were part of early twentieth century developments in American social thought that, as paradoxical as it may seem to more recent social scientists, simultaneously emphasized the importance of cultural patterning and the importance of individual awareness and action. An emphasis on the nature of individuals was especially important for the pragmatic vision of the American progressives, of whom institutionalists were one subgroup. As Darnell Rucker put it in his explanation of the rise of pragmatic philosophy:
Mind, thought, and consciousness are explained as products of active processes involving a number of agents. There is no isolated individual who must be somehow externally connected with other individuals to form a society. The very process which gives rise to human beings is a social one; hence agents are essentially social beings. The concept of the individual as socially constituted is another side of the concept of mind as receiving its content from the very activity in which it arises, rather than from some external source as in empiricism or from some super-mind as in rationalism. (1969, 28-29) 
If American institutionalism is understood to be an aspect of American pragmatism, as opposed to an offshoot of British or German thought in political economy, the importance given to the role of the active individual in the work of Veblen and Commons makes complete sense. 
The emphasis on individuals as active, learning beings underlay the proposition that society was ours to make and to remake, and so served as foundation for analyses consistent with the pragmatic vision. Thus people were seen as always-changing "institutionalized personalities," sentient and thinking personalities who adapted to their roles in changing societies. This view has assumed a new importance in the social science of the late twentieth and early twenty-first centuries. To explain this importance and to understand how the path taken by twentieth century social science affects the ways in which we today can incorporate the idea of individual action, a review is required. …