Abstract

All economic analyses require the application of philosophical assumptions. The validity of economic analyses depends upon the validity of such assumptions. American institutional economics and American instrumental philosophy provide warranted philosophical bases for scientific economic analyses. Drawing on the writings of Thorstein Veblen, John Dewey, and Clarence Ayres in particular, this thesis develops an inclusive mode of inquiry in political economy captioned "neo-institutionalism." It is addressed to problem solving through structural change. ;The philosophy of neo-institutionalism is comprised of four major elements: theories of knowledge, human nature, social change and social value. ;The theory of knowledge incorporates Dewey's instrumental logic---the logic inherent in the cumulative development of science and the technological process. Knowledge is a process of generating warranted assertibility. Intuitive, authoritative and metaphysical theories, et cetera, are abandoned. ;The theory of human nature affirms the distinguishing attribute of perceiving means-consequence relations. People are capable of rational reflection and communication. They are both products and producers of culture. Utility maximization is inconsequential. ;The theory of social change explains the process of institutional adjustment. Correlated patterns of conduct that enhance the capacity to generate and distribute real income are characterized as instrumental. Correlated patterns based on power, prestige, tradition, rank etc., that preclude or impair needed change are characterized as ceremonial or invidious. ;The theory of social value explains the inherent need for criteria of judgment in directing social change. Choices among institutional options compel recourse to criteria of judgment. Neoinstitutionalism offers a warranted criterion drawn from the scientific inquiry process itself. The applicable criterion is the instrumental efficiency of the social process. Utility value and price valuation are inapplicable. ;The implications of the philosophy of neo-institutionalism are explored briefly in reference to: Indeterminateness in orthodox analysis of oligopoly. Keynes' abandonment of utility theory in analysis of determinants of real income. The Machlup-Lester controversy over the applicability of marginal productivity theory of wages. The bargaining theory of wages and the relevance of the theory of compromise. Groves' principle of maximum advantage in public expenditure theory. ;The thesis closes with suggestions for further research