ABSTRACT
In methodological terms the American institutionalists raised two challenges to orthodox economic theory. The first, connected more with Veblen, was a psychological critique of hedonism. It was a denial of the entire notion that the objective welfare of individuals corresponds to their subjective wants. The question of how the subjective utility functions of individuals could be maximised was therefore an irrelevance, since these functions did not correspond to the objective well-being of the individual, whose wants were not exogeneous, but were manipulated by the major players in the political economy.
