The Psychological Contributions of Pragmatism and of Original Institutional Economics and their Implications for Policy Action

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Abstract

The aim of this work is to illustrate the psychological contributions of Pragmatism and of the Original Institutional Economics (also referred to as OIE or institutionalism), and their relevance for improving the process of social valuing and then the effectiveness of policy action.

As a matter of fact, both institutionalist and pragmatist theories were well acquainted with various strands of psychology, and some of them also provided relevant contributions in this respect. Moreover, these theories present significant complementarities both between themselves and with important concepts of social psychology and psychoanalysis. The work will address the following aspects:

(I) The main characteristics of pragmatist psychology, especially in their social implications. We will chiefly analyse the main works of William James and George Herbert Mead, with particular attention to their social implications. We will also underscore the relevance of John Dewey’s seminal article, “The Reflex Arc Concept in Psychology”, which reached out to many domains of social and psychological sciences.

(II) The psychological contributions of institutionalism. We will pay particular attention to Thorstein Veblen’s theory of instincts and John Rogers Commons’s theory of negotiational psychology.

We highlight the circumstance that these theories present, despite a number of differences, relevant complementarities.

For instance, it seems true that, (i) as underscored by Veblen, persons are driven in their action by their instincts (or propensities), which interact in a complex way with the characteristics of the institutional context; and that (ii), at the same time, as highlighted by Commons, persons acquire in their reciprocal interaction an “institutionalized mind” that orients the expression of their propensities according to their role in economy and society.

(III) The interdisciplinary potential of pragmatist and institutionalist psychologies and some difficulty for their unfolding. We then look at the role that psychoanalysis can play in understanding economic and social phenomena and in promoting social change.

(IV) The implications of the previous analysis for improving the process of policy formulation. We will address in particular the intertwined issues of social valuing and democratic planning.

Such interdisciplinary perspective, by rendering “endogenous” many aspects usually treated as “exogenous variables” in orthodox domain, will open the way to a better understanding of many complex and interrelated phenomena. These include consumers’ and workers’ motivations, micro and macroeconomic imbalances, the structural transformations of the system, the issues of social justice and environmental sustainability.

For instance, in devising policies for promoting workers’ motivations, the focus will be not only on the monetary side but also on the adoption of measures aimed at promoting participation in the management of their institutions.

 

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