The Role of Institutions and the Current Crises of Capitalism: A Reply to Howard Sherman and John Henry

Abstract

INTRODUCTION I want to thank Howard Sherman and John Henry for their, by-and-large, sympathetic reviews of my book: Marx, Veblen and Contemporary Institutional Political Economy: Principles and Unstable Dynamics of Capitalism (O'Hara 2000). I also want to thank them for their overt and covert critical analyses of this work. In this right of reply I want to mention briefly some of the positive points made of my book, and then concentrate in some detail on some of the critical points. I will relate the criticisms to the major theme of the book, to examine the socioeconomic foundations of the current global crises of capitalism; scrutinizing the major dimensions of the crises, the likely course of its metamorphosis and evolution; and policy measures that need to be put in place to ameliorate the contradictions and conflicts (to the extent possible). POSITIVE AND CRITICAL POINTS ABOUT CONTEMPORARY INSTITUTIONAL POLITICAL ECONOMY Howard Sherman's review of my book is mostly positive since we share the vision of a unified political economy, drawing on some of the heterodox approaches. We both draw inspiration from Marx, Veblen and Keynes; contemporary neo-Marxian, neo-institutionalist, feminist, post Keynesian and social political economy; but more than anything we want to comprehend the dynamic motion of capitalism, as well as draw up a framework for democratic socialism. We both take a historical-relational view of capitalism; applying a dialectical method to institutional transformation; and especially trying to comprehend the cyclical or wave motion of capitalism. In this we share a holist method with other political economists, and are close intellectually to Bill Dugger, Ron Stanfield, the late David Gordon, Sam Bowles, Michal Aglietta, Rick Wolff and Steven Resnick. It is, therefore, not surprising that Sherman (2002) concludes by saying that O'Hara's s book is clear and reads very easily. It is a useful reference for undergrad uate courses, a good text for graduate courses, and will be an important reference for professionals for decades. John Henry's review is also very positive, although he does make a couple of important criticisms. He is very sympathetic to my formal modeling of institutional dynamics relating to Veblen and the new measure of macroeconomic performance, mainly because O'Hara, however, does not substitute formalization for the more conventional historico-institutional analysis (emphasis added). He is also positive about my attempt to synthesize and link the works of neo-Marxist and neo-institutional economists such as Sherman, Wolff, Resnick, Dale Bush, Gunnar Myrdal and Marc Tool. I was very happy to find that he likes my chapter on the multiple capital paradigm, in which he concludes that it contains a plethora of insights and should be required reading for all economists. John Henry is highly supportive of my proposal for a team of over a hundred political economists to critically evaluate the macro-performance of contemporary capitalism through the Index of Community, Warranted Knowledge, and Participation (CWP) us ing fieldwork and related research. He thinks my best chapter on social structures of accumulation is that on household labor and the family in the United States, an earlier version of which was published in the Review of Social Economy (O'Hara 1995). And he seems to condone my policy recommendations for a global credit bank to provide debt relief; as well as the need to invest more in social and cultural capital; as means to help get the world political economy out of its current mess. John Henry's two criticisms are the subject of the rest of this reply. The first criticism is that he thinks O'Hara ... casts too wide a net when he includes seemingly all non-orthodox economists in the same heterodox camp and attempts to merge all such approaches into one organic whole. He goes on to say that After all, there must be a reason why Schumpeterians, post-Keynesians, feminists, (social economists,) et al. …