Institutional Currents and Methodological Individualism: Reflections on an analytical rupture

Abstract

The central objective of this article is to highlight the rupture between Veblenian institutionalism and New Institutional Economics. Although both are classified as institutional approaches, this paper argues that convergence between them is fundamentally impossible. Veblenian institutionalism is defined by its rejection of methodological individualism and therefore stands in opposition to economic orthodoxy, whereas New Institutional  Economics explicitly adopts this method, which lies at the core of the traditional approach. While the two schools share a broadly similar definition of institutions, the neoclassical commitment to methodological individualism constitutes a decisive point of divergence. For new institutionalists, institutions emerge from interactions among individuals, given 
their interests and preferences. By contrast, original institutionalists conceive institutions as shaped by specific interests, whether those of dominant social classes or of the state acting as a mediator of conflict.