ANOTHER ATTEMPT TO RECONCILE INSTITUTIONAL ECONOMICS AND ITS CRITICS.

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.