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Building on Mayhew and Yonay, I offer the following theses: 
 
1. The old institutionalism of Ely and Commons conceived of the economy as 
an institutional construct. The distinctive empirical research methodology 
of old  
institutionalism, comparative institutions and the historical method, were 
both adopted mainly as ways of understanding how institutions worked, and 
consequently how the larger economy worked.   
 
2. The purpose of understanding was evaluation and improvement. What works 
well, and what would work better? In this regard, the old institutionalism 
was the economic wing of progressivism, and had deep roots in American 
pragmatism.  The purpose of economics as a science was to help us solve the 
economic problems we face as a society. 
 
3. The ambitions of institutionalism as an intellectual movement arose out 
of the ambitions of the university and the government as social 
institutions. The subsequent enormous enlargement of both must, therefore, 
be regarded as a huge  
victory for institutionalism. But with victory came the 
institutionalization of institutionalism, as universities set themselves 
the task of producing candidates to meet the demand of the burgeoning 
government and quasi-government bureaucracies (and the expanding higher 
education industry).   
 
4. The division of (intellectual) labor is limited by the extent of the 
market. The widening market for economists fostered specialization, and the 
insecurity that comes with it. Different specializations found economic 
security in different ecological niches-research universities, public 
policy schools, business schools, research organizations, foundations, 
government research staff, liberal arts colleges. Some of these niches 
proved more hospitable than others to research in the style of the old 
institutionalism. 
 
5.  The union card for entering any of these niches has remained the PhD 
degree which has remained under the control of the research universities, 
even though less than half of economics PhDs enter academia (and even fewer 
stay). I gather, from other contributions to this discussion, that there is 
general agreement that the research university has not been terribly 
hospitable to research in the style of the old institutionalism, at least 
insofar as it has not put much energy into training students to continue 
that style. Given the history I have recounted, I think we should ask, Why 
not?     
 
Perry Mehrling 
 
 
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