Poverty and Charity: Early Analytical Conflicts between Institutional Economics and Neoclassicism

One of the defining characteristics of the difference between institutional economics and neoclassicism is the treatment of the lower income classes and charitable institutions. The modern neoclassical paradigm provides a very narrow economic analysis of poverty. Institutional economics has a more comprehensive and coherent analysis of poverty within capitalism. Both of these theoretical views can be traced to their intellectual origins. Early conceptualization of poverty and charity in neoclassical and institutional literature is reviewed. A historical analysis of how the early differences in approach led to the divergent treatment of poverty and charity in current institutionalism and neoclassical economics is provided.