VEBLEN: PIONEER OF OPEN ECONOMIC REALITY

Abstract

In this study, it is argued that the main failure of mainstream economics is its inability to establish a social ontology and Thorstein Veblen, the founder of the Institutional Economics school, has an important role in establishing this social ontology. Considering the social and economic reality as a closed system, which mainstream economics presupposes in the analysis, is the main reason behind its failure to produce solutions to real world problems. The necessity of an open system ontology is a common issue for heterodox schools of economics that opposes the mainstream. It will be argued that Veblen’s analysis has the ideas that form the basis of this concept. First, the basic elements of the open system approach will be discussed. Then, it will be argued that the elements of the evolutionist approach, the relationship between structure-agent, the rejection of positivism and the cumulative causality in Veblen’s analysis are consistent with the open system approach.