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Economic Policy and the Progressive Idea

Paper Session

Friday, Jan. 3, 2020 2:30 PM - 4:30 PM (PDT)

Manchester Grand Hyatt, Cortez Hill A
Hosted By: Association for Evolutionary Economics & Association for Social Economics
  • Chair: Christopher Brown, Arkansas State University

Economic Policy and the Progressive Idea

Paolo Ramazzotti
University of Macerata


The paper argues that a progressive policy does not only require a proper theory of the economy but also a theory of economic policy. To this end, it points out that, in order to think about a policy, one has to identify a divergence between the actual and the desired state of affairs. The main issue is who identifies it. Better said, who decides what is desirable and who decides whether it is also possible.
The conventional view is that political authorities what is desirable according to what economists proved to be possible. This may appear to be a reasonable framework for specific issues. Unless economic laws are deemed eternal, however, policy may determine long-term changes in the very nature of the economy, so that the distinction between possible and impossible goals turns out to be blurred. Furthermore, the economy’s performance may be constrained by non-economic circumstances (e.g. power relations) while, on the other hand, economic policy may affect the non-economic environment, e.g. changing those power relations. Just as above, this interdependence makes it difficult to distinguish technical assessments from value judgments.
The issue underlying these problems is that the conventional distinction between what is and what should be is not only fragile. It neglects a third issue: what can be, that is, what might happen if economic change were to subvert or drastically question present representations of the economy. The issue has less to do with value judgments concerning what is desirable than with a proper understanding of how an economy should be thought out once it is conceived of as an open system, one where it is important not only to understand relevant interactions but also how these may lead to new ones.

Examination of Multiple Criteria in Health Technology Assessment For Application to Instrumental Analysis

F. Gregory Hayden
University of Nebraska-Lincoln


The instrumental-ceremonial dichotomy is the analytical concern emphasized in instrumental analysis by original institutional economists for making welfare decisions. Paul Dale Bush and Wolfram Elsner explained that warranted criteria are required in order to conduct instrumental analysis. The concern for criteria led to an examination of multiple criteria decision analysis in health technology assessment in order to improve instrumental analysis. Health technology assessment (HTA) is one of the most active and extensive areas of analysis for policy making because medical technology changes very rapidly, expenditures on it are high and growing, it can harm as well as help, and there is intense personal concern by citizens who want wellness. Although HTA, especially with regard to the analysis of multiple criteria, has made considerable progress, its appraisal has been a disappointment. Thus, the purpose of this paper is to critique aspects of multiple criteria HTA in order to further develop instrumental analysis.

Welfare Policy and Precarious Lives: “Welfare Reform” Revisited

Janice Peterson
California State University-Fresno


In his Introduction to “Economic Policy for the 1980s and Beyond: An Institutionalist Agenda” (Journal of Economic Issues, March 1984), Marc R. Tool wrote: “Presumably it is always the ‘best of times’ for some, perhaps a few, and ‘the worst of times’ for others, often the many. Economic policy is, and always has been, addressed to the problems characterizing the ‘the worst of times,’ as experienced by those adversely affected and perceived by those with understanding, position, or voice whether of the many or the few.” In the Preface to Institutional Analysis and Economic Policy (Kluwer 2003), Marc R. Tool and Paul Dale Bush argued that institutional economics challenges the myth that “only the market can efficiently allocate a society’s economic resources and equitably distribute its income,” leading to policy analysis that challenges the “conventional wisdom” in the problem areas it addresses. In “Welfare Reform” (a chapter in this volume), Janice Peterson argued that the core values and concerns of institutional economics make it particularly appropriate for the analysis of “welfare reform” policies.

Today, the term “welfare reform” generally refers to the 1996 Personal Responsibility and Work Opportunity Act (PRWORA), which replaced the Aid to Families with Dependent Children (AFDC) program with the Temporary Assistance for Needy Families (TANF) block grant, creating the so-called “work-based safety net.” While supporters of this legislation quickly claimed victory as caseloads fell, research on the impacts of welfare reform over the past two decades paints a stark picture of increasingly precarious lives and fragile economic circumstances among many low income Americans. Despite this evidence, the White House has declared that the “War on Poverty” is “largely over and a success,” arguing that there are few “truly poor” Americans and that those who continue to receive government assistance should be pushed toward private employment. The Council of Economic Advisers has called for more “welfare reform” by expanding work requirements for the Supplemental Nutrition Assistance Program, as well as the Medicaid and housing assistance programs. This paper will briefly describe the institutional economic framework for examining welfare reform, and highlight the key findings of research on the impacts of the 1996 welfare reform over the last two decades. It will then describe and analyze the Trump administration’s welfare reform proposals, and conclude with alternative proposals for addressing the economic challenges facing those for whom it is “the worst of times.”

Defining and Defending a Progressive Market Square: Bringing Institutionalist Development Discourse in Line with the Reality of Post-Soviet Transition Experiences

Anna Klimina
St. Thomas More College and University of Saskatchewan


My paper is a response to two crucial ideas about progressive institutional change: the first derives from Foster’s principle of “minimal dislocation,” which asserts that socio-economic changes should be implemented gradually, to avoid unraveling the social fabric of the community; the second is Polanyi’s conceptions of double movement and reciprocity, likewise concerned with protective communal responses to the way impersonal and self-regulating market separates individuals from their traditional social context.
Using lessons learned in the thirty-year transition to market in post-Soviet countries, this paper seeks to refine these two generally accepted ideas.
Foster’s principle of “minimal dislocation” seems to have been conceived with only Western democratic countries in mind, countries in which openness, honesty and the rule of law are not only long established but highly valued. However, in other countries, transition countries included, socio-economic development has been more uneven, and the degree of hospitality in their culture to the promotion of human rights and democratic principles varies greatly. Therefore, constructing a democratic market in these countries requires a radical, not minimal change of existing institutions, and such an expeditious change should be based not on culture-specific but on universal values inherent in progressive development.
Polanyi’s emphasis on community and cultural embeddedness has likewise been enthusiastically adopted into institutionalist discourse, as a necessary plank of resistance to the anti-social stance of liberal market. The pendulum of reaction, however, has swung too far. I am particularly troubled by risks inherent in too great an emphasis on the role of reciprocal exchange - a symmetrical and highly personalized social system of mutual obligations - which is viewed positively as a countermovement to the inequality and anonymity of unregulated market. However, in transition, given the plutocratic nature of the Soviet system, relying on informal safeguards of social security actually meant that reciprocal exchange functioned (and still functions) in the place of the rule of law, resulting in widespread corruption and rent-seeking.
Thus I argue that to commence progressive institutional change in the honesty- and transparency-resistant cultures of former Soviet states, impersonal exchange and impartial rule of law must be given far greater weight than personalization of contacts and continuation of cultural traditions. Efforts to reduce informality must further be accompanied by state regulation that promotes social justice and guarantees important human rights, such as a limited right to property, a right to economic democracy, a right to employment, and a right to welfare.

Recontextualizing Clarence Ayers’s “The Theory of Economic Progress”

Felipe Almeida
Federal University of Paraná
Gustavo Goulart
Federal University of Paraná


Contemporary notions of institutional change are, in no small part, directly associated with Clarence Ayres’s writings. Ayres was a central figure in the field of institutional economics in the 20th century. The charismatic leader of the “Cactus” or “Texas” branch and one of Association for Evolutionary Economics’ founding fathers, he played a key role in organizing institutional economics. Ayres focused on the theoretical development of the institutional approach following a Deweyan–Veblenian tradition, wherein he introduced his perspective of institutional change. During the first half of the 20th century, Ayres witnessed the rise of a new mainstream in economics, and strongly criticized its core, its price system, and the dynamics of capital. Indeed, Ayres went beyond criticism and proposed an alternative approach—naturally relying on Deweyan–Veblenian institutionalism. The most famous systematization of Ayres’s approach is “The Theory of Economic Progress” published in 1944. The goal of our paper is to recontextualize this classic in the evolution of ideas in economics. We believe the negative reception that “The Theory of Economic Progress” received conveys the mainstream perspective of Ayres’s book. Our paper will challenge this perspective with archival sources from the Clarence Ayres Papers Collection. The aim is to understand the “The Theory of Economic Progress” from Ayres’s viewpoint and confront his critics with his standpoint confront his standpoint with his critics.
Christopher Brown
Arkansas State University
William Waller
Hobart and William Smith Colleges
JEL Classifications
  • B5 - Current Heterodox Approaches
  • B0 - General