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Early institutional economics Institutional economics focuses on learning, bounded rationality, and evolution (rather than assume stable preferences, rationality and equilibrium). It was once the main school of economics in the United States, including such famous but diverse economists as Thorstein Veblen , Wesley Mitchell , and John R. Commons . Some institutionalists see Karl Marx as belonging to the institutionalist tradition because he described Capitalism as a historically bounded social system; other institutionalist economists disagree with Marx's definition of capitalism, instead seeing defining features such as markets, money and the private ownership of production as evolving over time, as a result of the purposive actions of individuals. "Traditional" institutionalism {Link without Title} rejects the ''reduction'' of institutions to simply tastes, Technology , and nature (see Naturalistic Fallacy ). Tastes, along with expectations of the future, habits, and motivations, not only determine the nature of institutions but are limited and shaped by them. If people live and work in institutions on a regular basis, it shapes their world-views. Fundamentally, this traditional institutionalism (and its modern counter-part Institutionalist Political Economy ) emphasizes the legal foundations of an economy (see John R. Commons ) and the evolutionary, habituated, and volitional processes by which institutions are erected and then changed (see John Dewey , Thorstein Veblen , and Daniel Bromley .) The vacillations of institutions are necessarily a result of the very incentives created by such institutions, and are thus Endogenous . Emphatically, traditional institutionalism is in many ways a response to the current economic orthodoxy; its reintroduction in the form of Institutionalist Political Economy is thus an explicit challenge to Neoclassical Economics , since it is based on the fundamental premiss that neoclassicists oppose: that economics cannot be separated from the political and social system within which it is embedded. Some of the authors associated with this school include Robert Frank, Warren J. Samuels, Mark R. Tool, Geoffrey Hodgson , Daniel Bromley, Jonathan Nitzan , Shimshon Bichler , Elinor Ostrom, and Anne Mayhew. New institutional economics See also Main Article . With the development of theories of for effectively ignoring institutions, and at New Institutional Economics for attempting to reduce institutions to 'rational' and 'efficient' resolutions to the problem of Transaction Costs . Institutionalism today Modern institutionalism is thus sharply divided between New Institutional Economics represented by people like Nobel Prizewinner Douglass North and Institutional Political Economy and "old" or "critical" institutionalism (an approach radicaly opposed to mainstream Neoclassical Economics ) associated with the Cambridge economist Ha-Joon Chang , Warren Samuels, Michigan State University, and Geoffrey Hodgson from University of Hertfordshire. Some Sources
Journals include ''Journal of Economic Issues'' and ''Journal of Institutional Economics''. EXTERNAL LINKS |
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