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The article presents response of the author on comments made by Lewis E. Hill on the papers "Toward a Reconciliation of Institutional Economics and Its Critics" and "Beyond the Market Economy Building Institutions That Work," by Clarence E. Ayres that were published in the March 1970 issue of the periodical "Social Science Quarterly." Under appropriate arrangements for doing things, that is, under an appropriate institutional structure, the propensity to truck and barter naturally entails the creation of markets, which are themselves arrangements for effecting exchange. In the U.S., the institutional structure is such that markets permeate most of the economy. For example, in August 1970, nearly 84 per cent of total civilian employment was in the private sector, all of which consists of regulated and more or less unregulated markets. Thus, employing scholar Robert L. Heilbroner's system of classification, the economy of the U.S. would be appropriately designated as essentially a market system, as the author did in his introduction to Ayres' classic. "Institutionalism and Economic Development." But Ayres objects to him, that the U.S. economy is an industrial economy. Unfortunately, his is not intended to be a cross-classification, which, if correct, would be a suitable complement rather than a substitute for the one that the author employed, since Ayres says prefatorily, and the author flatly denies that the U.S. economy is a market economy.

The article presents comments of the author on the papers "Toward a Reconciliation of Institutional Economics and Its Critics," by Coldwell Daniel and "Beyond the Market Economy Building Institutions That Work," by Clarence E. Ayres that were published in the March 1970 issue of the periodical "Social Science Quarterly." The author's purpose in writing this comment is to attempt again the reconciliation of institutional and conventional economics. The first step in reconciliation is to differentiate the two theories. Ayres' great contribution to economic theory is his application of scholar John Dewey's instrumental theory of normative value to economics. Ayres' methodology is pragmatic and inductive, and his theory is clearly in the category of normative economics--the theory of what ought to be. It is equally clear that conventional theory uses a deductive methodology and that the resulting theory is positive economics-the theory of what is. It is obviously true that there are positive implications of Ayres' institutional theory and normative implications of conventional theory; but these implications are not essential to the respective theories. If these non-essential implications are eliminated, then Ayres' institutionalism and conventional theory become completely compatible. There are, also, deductive normative economic theories.

The article presents a discussion on the paper titled "Institutionalism and Economic Development," written by Clarence E. Ayres. It is a clear and more or less complete statement of the position taken and emphasis given by a distinguished and influential scholar. The author does not attempt here a detailed appraisal of this article. Once a critic of institutional economics, Benjamin Higgins notes in his introduction that Professor Ayres and his fellows, it is now clear, have long been doing the sort of thing all development economists now find it necessary to do. Perhaps equally important is the observation that Ayres has, in the article which follows, provided the basis for a "reconciliation" of his position with that of his "hostile" critics. Specifically, the author agrees that Professor Ayres' position or approach is economic, a theory of what the economy is and how it works. That is, technically, the job of an economist is to explain, describe, and predict the workings of economic systems and, therefore, Ayres is a practicing economist.