Institutional economics

Institutional economics was once described by the late Ed win E. Witte as "a method of studying economic phenom ena rather than a connected body of thought expressing the timeless and placeless laws' which govern what Frank Knight referred to as 'the economic calculus of individual preference." It represents a distinctly American contribu tion to economic theory, and in this respect is closely re lated to the movements of pragmatism in philosophy and, to a somewhat lesser degree, sociological jurisprudence in law.

Institutional economists have never confined themselves to the classical economic theory of value and distribution. They have freely disregarded the arbitrary lines of demar cation between the academic disciplines and have stressed so-called non-economic factors in their analysis of eco nomic problems, especially those having to do with labor. They have also insisted that the first condition of sound theory is that it be based on thorough knowledge of rele vant facts, and they have developed a methodology which stresses the systematic gathering and rigorous analysis of these data.