Comparison of Thorstein Veblen and Clarence Ayres Ideas on Economic Development (Research Paper Sample)

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Comparison of Thorstein Veblen and Clarence Ayres' Ideas on Economic Development
Introduction
Institutional Economics
Institutional economics is a category of economics that mostly deals with understanding the role of institutions when it comes to economic development. This research paper will deal with two very well-known institutional economists (Thorstein Veblen and Clarence Ayres) and will compare their views on institutional economics and economic development in a systematic manner. It will also talk about how they analyzed economic development from a technological, ceremonial, and human nature standpoint.
Thorstein Veblen and Clarence Ayres' View on Technology in Economic Development.
Veblen and Ayres had some similar ideas to a significant level. For example, while Veblen only talked about technology and accepted its role in the institutions and economic growth, Ayres talked about it in detail. Although Veblen talked about social institutions as being the core of economic activity rather than business men, Ayres talked more of the role of technology in the society. For example, he usually identified social institutions with regret and sentiment because his main economical aspect was based on technology.
Ayres always treated technology in a careful and extensive manner and was certainly very important to him (Ayres 39). He states that development of technology is not an attribute of the skill faculty of an individual but is implicit in the character of goods. In his theory of tools, knowledge and technology, he states that tools are assumed to change and grow independent of any essential contribution on part of humans. He also says that technology is an external force on which civilization has been shaped. However, Veblen contradicts with the latter statement. He instead argues that technology evolved from socialism and it is the latter that caused civilization in the society.
While Ayres considered technology as a very important factor in economic development, Veblen says that technology stands in the system of interdependence in which they exert determining actions on the side of individuals (Ayres 45). Moreover, he stated that if technological progress is capable of having institutional changes in the society, it will be conditioned by the instincts that prevail in the society. With this, it is safe to say that Ayres stood on the side of technology in institutions, while Veblen firmly stood on his idea on socialism being the most important factor even though he still acknowledged technology.
Veblen said that technological developments are emancipated in a ceremonial power system and those in authority of the same only want to control its direction and usage. In effect, they try to manipulate the boundaries and limits upon technology through the special collaborating efforts of the legal framework, the information system, and the property system. To him, there is a whole channel of networks that control technology and its consequences. Moreover, they are set such that they only benefit the institutions and the controllers of such technology. Subsequently, the effect is that the dominating authorities expand hegemony over the society and its inhabitants.
Moreover, although Ayres mainly developed his ideas from studying other people's work (including Veblen's) carefully, his ideas usually differed from the original ideas in some way. Veblen often talked about the problems of capitalism and Ayres took the same path but in a different manner. (Ayres 62). Veblen saw the problem in the capitalist economy and how it hinders development differently. While Veblen proposed an analytical dichotomy between the ceremonial and instrumental aspects of culture, Ayres saw the institutional aspect and the ceremonial one as the same (perhaps why he always ignored the institutional framework in the economy).
Ayres strove to identify the universal moral values that are derived from a sort of technological continuum. It was defined as the sum of human skills and tools. He always denounced the statistical analyses, full employment theories, and savings accumulation as moral measures and instead vouched for government policy and full production with technology advances (Ayres 81). This is very similar to Veblen's idea that man is just a calculating agent concerned with his own self-interest that are driven by instincts and habits. However, while Ayres argued that full production would occur in the economy if the government encompasses technology or human skills and knowledge in its strategies, Veblen talks about how technology influences the individuals to form the instincts and habits he is talking about. Therefore, according to Veblen, technology brings about a hindrance to the institutions in an indirect manner.
Ayres view of Institutionalism Dualism lies on technological and social behavior. As said before, the two coexist according to Ayres, but Veblen separated them. Ayres proposed a theory of 'institutional lag' where technological changes kept the economy one step ahead of the socio-cultural institutions. According to Veblen (as Ayres noted), technological changes were caused by instinctive inventive activity. But then, Veblen also stated that the socio-cultural structures could at one time be maladapted by the changes. Ayres' theory stated that institutions would start responding to technology and by the time they adjusted, the next innovative activity would have already skipped along further ahead and maintained a permanent lag and this would lead to incongruity between the economy technology and social structures.
Ceremonialism
Veblen and Ayres used the words 'institutions' and 'ceremonial' respectively to talk about the same ideas. However, according to Ayres, he avoided the word 'institutions' since he was trying to define the aspect of culture that he and his counterpart were trying to distinguish. This aspect, according to Ayres, was the 'institutional aspect' when it came to Veblen, hence they used the terms interchangeably but with almost the same meaning to them (Cypher 233). Regardless, both Ayres and Veblen were trying to analyze and distinguish an aspect of culture that is both habit oriented and non-dynamic.
They also put much emphasis on the ceremonial behavior patterns rather than social structures patterns. Veblen termed institutions as both structural and functional but for his counterpart, the term institution should not be included in the structural category. According to Ayres, unlike Veblen, the institutional aspect does not divide the total substance of society into its subsequent parts fully. Therefore, Ayres dictated that the institutions played only a functional part while Veblen stated that they played ...