Institutional economics — first pass

It turns out there’s a whole school of thought dedicated to answering my question from the other day. The question was this:

Has anyone done a comprehensive study on how state policies and regulations form the substrate for the effective operation of markets? (My guess on this one is: yes, probably.)

The answer is yes; in fact, there’s a whole school of thought devoted to it, not just a study or two. The school of thought is called (new) institutional economics. Wikipedia formulates the question this way:

New institutional economics (NIE) is an economic perspective that attempts to extend economics by focusing on the social and legal norms and rules that underly economic activity.

The New School’s intro to institutional economics page gives an even broader (and more tantalizing) definition:

The “New Institutionalist Schools” to refer to the collection of schools of thought that seek to explain political, historical, economic and social institutions such as government, law, markets, firms, social conventions, the family, etc. in terms of Neoclassical economic theory. New Institutionalist schools can be thought of as the outcome of the Chicago School’s “economic imperialism” — i.e. using Neoclassical economics to explain areas of human society normally considered outside them.

“Economic imperialism”? Sounds like that phrase I keep repeating: economics is the dean of the social sciences. I guess BMP and I aren’t the only ones who think so. Major thinkers in institutional economics include Ronald Coase, Oliver Williamson, and Douglas North, from whom I posted a quote the other day.

Note to self: look up and read these materials:

• Bromley, Daniel. Sufficient Reason: Volitional Pragmatism and the Meaning of Economic Institutions, Princeton University Press (2006).
• North, Douglass C. “Institutions, Institutional Change and Economic Performance”, Cambridge University Press (1990).
• Commons, John. “Institutional Economics,” American Economic Review Vol. 21 (1931): pp. 648-657.
• Hodgson, Geoffrey M., “The Approach of Institutional Economics,” Journal of Economic Literature v36, n1 (March 1998): 166-92.
• Chang, Ha-Joon, “Globalization, Economic Development and the Role of the State”, Zed Books (2002)
• Cheung, Steven N. S., “The Structure of a Contract & the Theory of a Non-Exclusive Resource,” J. of Law and Economics 13:49-70 (1970).
• Schmid, A. Allan, Conflict & Cooperation: Institutional & Behavioral Economics, Blackwell (2004).
• Keaney, Michael., “Critical Institutionalism: From American Exceptionalism to International Relevance”, in “Understanding Capitalism: Critical Analysis From Karl Marx to Amartya Sen”, ed. Doug Dowd, Pluto Press, 2002.
• Samuels, Warren J., “The Legal-Economic Nexus,” Routledge (2007).
• _____, “Institutional Economics,” The New Palgrave: A Dictionary of Economics, v. 2 (1987). pp. 866-64.
• John Kenneth Galbraith, “Power & the Useful Economist,” American Economic Review 63:1-11 (1973).
• John B. Davis “Why is economics not yet a pluralistic science?”, Post-autistic Economics Review, issue no. 43, 15 September 2007, pp. 43-51, http://www.paecon.net/PAEReview/issue43/Davis43.htm
• Hodgson, Samuels, & Tool, The Elgar Companion to Institutional & Evolutionary Economics, Edward Elgar 1994.