ECONOMIC IDEAS AND FOUNDERS OF THE INSTITUTIONALISM SCHOOL

This article examines the theoretical advantages of the institutional approach over neoclassical economic theory and analyzes the methodological differences among the institutional perspectives of Thorstein Veblen, John R. Commons, and Wesley C. Mitchell. The study demonstrates that neoclassical economics, with its emphasis on rational and abstract economic agents, is limited in explaining real economic processes shaped by social, legal, and cultural factors. In contrast, the institutional approach provides a more comprehensive framework by incorporating the role of economic institutions, norms, and legal arrangements in shaping economic behavior. The paper comparatively analyzes Veblen’s evolutionary and socio-psychological approach, Commons’s legal and transaction-based framework, and Mitchell’s empirical and statistical methodology. The findings indicate that the methodological diversity within institutionalism strengthens its analytical capacity and enhances its relevance for contemporary economic analysis and policy formulation.