Institutional Adjustment, Instrumental Efficiency, and Reasonable Value

In a recent article Yngve Ramstad concluded that institutional economics operates under two competing and incompatible paradigms. Furthermore, he argued that the search for principles to unite these paradigms into a unified theory of institutionalism "is foredoomed to failure" [Ramstad 1989, p. 772]. Ramstad compared the Veblen-Ayres instrumental value paradigm with the reasonable value paradigm of John R. Commons. Although each paradigm employs instrumentalism, according to Ramstad "instrumentalism is not an economic paradigm, it is a posture toward the development of warranted knowledge, and hence science [Ramstad 1989, p. 769]. He views the major differences between the competing paradigms as the rejection by those working in the Veblen-Ayres paradigm of the subjective mindset of individuals as valid criteria of social value and the rejection of the Veblen-Ayres dichotomy by Commons. We will argue that although there are differences in these two ap