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Power, Harm, and the Modern Corporation

Paper Session

Friday, Jan. 5, 2018 10:15 AM - 12:15 PM

Loews Philadelphia, Congress C
Hosted By: Association for Evolutionary Economics
  • Chair: Eric R. Hake, Catawba College

Dillard and Klein: The Exercise of Power in a Monetary Production Economy

Joe Ballegeer
University of Missouri-Kansas City


The 1987 papers by Dillard and Klein describe two foundational elements of modern economic theory that separate institutional and heterodox theory from more conventional approaches: monetary production and market power. This theory allows us to emphasize the non-neutrality of money and the potential for less than competitive markets. Dillard’s “Money as an Institution of Capitalism” describes the central role money plays in the decisions to produce goods and services. Dillard argues that money is the motivator for economic activity and dictates production. In a modern financial economy, money is created at the point of loan origination and importantly, money extends to systems of credit. Consolidation of the financial sector consolidates power over money creation. Klein’s “Power and Economic Performance” details a framework for the incorporation of power into economic theory. The shrinking number of financial institutions are enjoying an ability to dictate what industries get funding and who receives the surplus of that activity. This reality is precisely what Klein is referring to when he states that “power is one’s ability to influence the way the economy operates to carry out the tasks assigned to it.” In the modern financial economy, hegemonic financial institutions have subsumed the foundational economic institution. In combining Dillard and Klein, this paper addresses the role of power over the institution of money, and constructs a framework for understanding the modern financial economy. This framework is foundational for theory of prices, employment, monetary policy, and stability in contemporary Institutional theory and Post-Keynesian economics.

Harm: Its Importance in History and Economics

Lane Vanderslice
Hunger Notes


This paper examines the approaches to harm in conflict theory and rent-seeking behavior present in standard economics, as well as the Marxist idea of exploitation, to show an underlying important reality, indicate its importance in understanding economics empirically and theoretically, and show how institutionalists have and can continue to facilitate this understanding. Harm obtains income by “taking away,” not production; it uses scarce resources; and it is opposed by those who are subject to the “taking away.” Various possible names for this taking away, including conflict, rent-seeking, and exploitation are explored. The second section indicates the importance of harm in understanding economics both empirically and theoretically, making note of institutionalist contributions to this understanding. Contributions from authors writing in the various approaches to harm are used to show the substantial differences in economic theory that result from the inclusion of harm. The role of harm in economic history is discussed, drawing on the work of such authors as Tilly, Acemoglu and Robinson, and Findlay and O’Rourke. A short final section discusses the way forward.

Corporate Power in Two Gilded Ages: The Late 19th and Early 21st Centuries

Janet T. Knoedler
Bucknell University


The rise of the modern corporation and, thus, the emergence of corporate power in the economy and the larger culture during the late nineteenth century was accompanied by a great outcry against these large behemoth corporations, whether in the form of the populist movement, or the Grange protests, or the muckraker journalists. In the view of at least some scholars, these protests were instrumental in bringing about an impetus for reform through the antitrust movement, even if many of the actual instruments of reform required the courts and economists to work through the details. In these first two decades of the 21st century, arguably, we have seen an even more pronounced growth of large firms, with power that seems to extend to all aspects of the economy, politics, and culture. But to the extent that a populist or muckraker tradition can be identified in our current age, it seems to be aimed at the institutions that should be keeping corporate power in check. As argued in Munkirs and Knoedler in 1987, a “basic tenet of institutional economics is the existence and exercise of power and coercion in the community's economic decision making processes” (Journal of Economic Issues, December 1987). This paper will examine some of the reasons for different outcomes and popular conceptions in the two eras.

Global Production Networks and the Private Organization of World Trade

Ann E. Davis
Marist College


As John R. Commons understood, the role of the firm in providing employment and income distribution is a form of public power (JEI Munkirs and Knoedler 1987). This public power of firms is supported by the laws of the state, which protect private property and enforce market transactions.
The Global Production Network (GPN) is a new form of the firm, influenced by information technology to lower “transaction costs” (Coase), as well as international trade regimes, such as the “Washington Consensus” to influence the ease of world trade. The GPN is globe-scanning yet private, able to shape the economies and policies of countries. The only international organizations with jurisdiction are ones which enforce trade rules, such as the World Trade Organization (WTO), to facilitate the expansion of their reach. Under the banner of branded products, the lead firm in a supply chain exercises considerable power over subsidiaries, contractors, workers, communities, and countries.
Drawing upon interdisciplinary research, this topic benefits from an alliance of sociology, business, history, law, and international, as well as institutional economics, in the AFEE tradition. This paper will consider the work of leading scholars in the field (Wilkins; Hymer; Chandler; Milberg; Gereffi; Sturgeon; Baldwin; Antras), and will draw implications for the world trade system as well as ongoing political resistance.

The Institutionalist Theory of the Business Enterprise: Past, Present, and Future

Tae-Hee Jo
State University of New York-Buffalo State


An essential contribution of institutional economics to heterodox economic thinking is the theory of the business enterprise starting with Thorstein Veblen and, later developed by, just to name a few, Gardiner Means, John Kenneth Galbraith, Alfred Eichner, and William Dugger. Such a contribution is unique in that it offers an evolutionary and social analysis of the business enterprise in the evolving capitalist society. However, its original and distinctive insights are often missing in the present institutionalist research. This has led some scholars to posit that institutional economics does not have a well-developed theory of the business enterprise. The paper argues otherwise. This paper shall deal with the essential and distinct characteristics of the institutionalist theory of the business enterprise vis-à-vis other heterodox economics in order to move beyond the past development.
F. Gregory Hayden
University of Nebraska-Lincoln
JEL Classifications
  • L0 - General
  • B5 - Current Heterodox Approaches