Walton Hale Hamilton
Walton H. Hamilton (October 30, 1881 – October 27, 1958]]) was an American law professor who taught at the Yale Law School (1928–1948), although he was an economist, not a lawyer. In 1919 Hamilton coined the term "Institutional economics".
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- INSTITUTION is a verbal symbol which for want of a better describes a cluster of social usages. It connotes a way of thought or action of some prevalence and permanence, which is embedded in the habits of a group or the customs of a people.
- Hamilton, Walton H. (1932), "Institution," in Edwin R. A. Seligman and Alvin Johnson (eds), Encyclopaedia of the Social Sciences, Vol. VIII, New York: Macmillan, pp. 84–89.
- In some form or other the rivalry of men will continue to be employed as an instrument of the general welfare. It is not important that the arrangements which currently are set down as the competitive system will endure. It is important that the spirit of competition shall be enhanced and not impaired. There must be an outlet for the creative urge, free play for the dynamic drive. In a society, as in the physical world, motion is inseparable from life.
- Walton H. Hamilton (1957), The politics of industry, p. 168-69; as cited in: Arnold, Thurman. "Walton Hale Hamilton." The Yale Law Journal 68.3 (1959): 399-400.
The Institutional Approach to Economic Theory, 1919
Hamilton, Walton H. "The Institutional Approach to Economic Theory." The American Economic Review 9.1 (1919): 309-18. Web.
- An explanation of the "institutional approach" to economic theory is a plea for a particular kind of theory. It is possible to come upon the same object from different angles; but more often those who take different routes chance upon different things. The "institutional approach" doubtless has some importance because it is a happy way to acceptable truth, but its significance lies in its being the only way to the right sort of theory. An appeal for "institutional economics" implies no attack upon the truth or value of other bodies of economic thought, but it is a denial of the claims of other systems of thought to be "economic theory." This, however, is no pointless struggle in method to be carried on by breaking syllogisms over concepts and by engaging in polemics over niceties in statement. On the contrary, it involves the very nature of the problems which the theorist should set himself; its real issue is over what economic theory is all about.
- p. 309: Introduction
- "Institutional economics" alone meets the demand for a generalized description of the economic order. Its claim is to explain the nature and extent of order amid economic phenomena, or those concerned with industry in relation to human well-being. In the words of Edwin Cannan, it attempts to tell "why all of us are as well off as we are" and "why some of us are better off than others." Such an explanation cannot properly be answered in formulas explaining the processes through which prices emerge in a market. Its quest must go beyond sale and purchase to the peculiarities of the economic system which allow these things to take place upon particular terms and not upon others.
- p. 311
- There [is]... a list of five tests which any body of doctrine which aspires to the name of economic theory must be able to meet:
- 1. Economic theory should unify economic science. - The task of a general body of theory in any subject is to give unity to its investigations...
- 2. Economic theory should be relevant to the modern problem of control. - Students of economics should spend their efforts upon subjects worth investigation...
- 3. The proper subject-matter of economic theory is institutions. - The demand that economic theory relate to institutions is implicit in the plea for its relevancy...
- 4. Economic theory is concerned with matters of process. - If economic theory is to treat of institutions it must know both the kinds of things institutions are and the kinds of things they are not...
- 5. Economic theory must be based upon an acceptable theory of human behavior. - After all control and institutions and processes are immediate things. They can all be translated into terms of human conduct...
- p. 311-6