This is a ground-breaking book about the foundations of institutional economics. K. William Kapp presents the economic role of institutions for economic development, capital formation and technological dynamics in an easily accessible and comprehensive manner. As a front-rank 20th century institutional economist, Kapp pulls together arguments from a variety of sources, including Thorstein Veblen, John Kenneth Galbraith and Gunnar Myrdal, all of which emphasize the crucial role of institutions. The author cements institutional economics as a distinct and coherent framework of analysis to effectively address urgent socio-economic problems, such as environmental disruption and sustainable development.
This book begins with a critique of conventional (neoclassical) economics and an overview of the antecedents of institutional economics. The core of the book is formed by the chapters on institutions, human economic behavior and needs, arguing that institutional change is key to directing economic development towards sustainable and adequate living conditions, rather than merely formal growth formulas. The final chapters provide the reader with the institutional theories of capital and technology, showing how capital formation and technological dynamics are determined by institutions, such as the principle of investment for profit. The appendix complements Kapp’s plea for institutional change with articles on science and technology, social costs, substantive economics, and circular and cumulative causation.
This book is suited for readers at all levels who are interested in institutional economics, the history of economics thought, political economics as well as ecological and heterodox economics. Researchers and students will find it to be an easily accessible and a concise elaboration on the foundations of institutional economics.
Editorial Introduction 1. Introduction: The Lasting and Increasing Relevance of Institutional Economics 2. Institutional Economics and Conventional Economic Theory 3. The Intellectual Antecedents of Institutional Economics 4. The Nature and Meaning of Institutions: Towards a Theory of Institutional Change 5. The Institutional Theory of Human Conduct and Economic Behavior 6. Towards a Theory of Human Needs and Social Minima 7. The Institutional Concept of Capital and the Process of Capital Formation 8. The Interaction between Technology and Business Enterprise 9. Technology II 10. The Multi-Sector Economy and the Theory of Economic Domination. Appendix A: Substantive vs. Formal Rationality: Environmental Indicators as Indicators of Social Use Values. Appendix B: The Central Hypothesis of Institutional Economics: Circular and Cumulative Causation. Appendix C: Institutionalism and the Price System: The Problem of Social Costs. Appendix D: Environment and Technology: New Frontiers for the Social and Natural Sciences. Appendix E: Science and Technology in the Light of Institutional Analysis: Governmental Furtherance of Environmentally Sound Technologies as a Focus of Research and Environmental Policies. Appendix F: Social Economics and Social Welfare Minima. Appendix G: In Defense of Institutional Economics. Appendix H: Alternative Introductions. Appendix I: Project Outline "American Institutionalism: The System of Economic Analysis of Veblen and his Followers"
'[Kapp's] The Foundations of Institutional Economics offers a valuable, readable, and profound introduction to critical institutionalism. This book should be read by all students of economics as it serves as an antidote to the economic mainstream and pushes against conventional indoctrination.' - Helge Peukert, Journal of Economic Issues
'Kapp knew his intellectual enemy well so in this new book he delivered neoclassicism a killing blow, deep and deft...Berger and Steppacher retrieved it from Kapp’s papers, edited it for posthumous publication and added appendix materials that help flesh out the treatment of a number of issues. Geoffrey M. Hodgson wrote a short foreword for the book. Institutionalists owe these scholars our gratitude for saving this valuable work.' - William Dugger, Journal of Economic Issues