Old and New Institutional Economics

This long course (2-hour lecture, 2-hour seminar and 1 office hour a week) will explore the nature of institutions in the economy. Institutional economics has important connections with jurisprudence, politics, sociology, history, management and moral philosophy. The central tenet of institutional economics is that a modern economy is a complex, evolving system whose effectiveness in meeting and changing human purposes depends on rules, which constrain possibly opportunistic behaviour (Kasper and Streit 1998; Eggertsson 1990). The course will discuss:

how institutions matter, and the ways they affect human behaviour and values, contrasting with the neoclassical orthodox ideas concerning human action and agency (Kasper and Streit 1998; Hodgson 1988);
the two major traditions of institutionalist thinking (the 'old' and 'new' institutionalism) exploring issues of analytical methods, rules, evolution and normative appraisal of institutions (Rutherford 1994; Hodgson 1988);
how economic phenomena are in large measure the result of learning over time, and how coordination of economic activity is supported by social and economic institutions (Langlois 1986; Eggertsson 1990; Thompson et al. 1991).

Readings

* Wolfgang Kasper and Manfred Streit, 1998, Institutional Economics, Edward Elgar, Cheltenham.

* Malcolm Rutherford, 1994, Institutions in Economics, Cambridge University Press, New York.

* Geoff Hodgson, 1988, Economics and Institutions, Polity Press, Cambridge.

* Richard Langlois (ed), 1986, Economics as a Process, Cambridge University Press, Cambridge.

Thrainn Eggertsson, 1990, Economics Behaviour and Institutions, Cambridge University Press, Cambridge.

Geoff Hodgson, 1996, Economics and Evolution, University of Michigan Press, Michigan.

Grahame Thompson et al. (eds.), 1991, Markets, Hierarchies and Networks, Sage Publications and Open University, London.

Tony Lawson, a collection of articles on realist perspective on economic theory.

Geoff Hodgson (ed), 1993, Economics of Institutions, Edward Elgar, Aldershot.

Roberto Simonetti, Maureen Mackintosh, et al. (eds.) 1998, Understanding Economic Behaviour: Firms, Sage Publications, London.

Andrew Trigg, Susan Himmelweit, et al., 1998, Understanding Economic Behaviour: Markets, Sage Publications, London.

Susan Himmelweit et al. (eds.), 1997, Understanding Economic Behaviour: Households, Sage Publications, London.

Andrew Sayer, 1995, Radical Political Economy, Blackwell, Oxford.

WEEK (2-hour lecture and 2-hour seminar)

Introduction: aims of the course, and definitions (Kasper and Streit Chs1-2; Hodgson Ch1; Rutherford Ch1).

No seminar

Human Behaviour and Values: rationality, opportunism, information and habits (Kasper and Streit Chs3-4; Hodgson Chs4-5; Langlois Ch1).

Seminar: Walton Hamilton, 1932, ‘Institution’, in Geoff Hodgson (ed), 1993, Economics of Institutions.

Institutions - Individual rules: internal and external rules, and formal and informal sanctions (Kasper and Streit Ch5; Hodgson Ch6; Eggertsson Ch3).

Seminar: Geoff Hodgson, 1993, ‘Institutional Economics: Surveying the ‘’Old’’ and the ‘’New’’’, in Geoff Hodgson (ed), 1993, Economics of Institutions.

Institutional systems and social order: markets, state, community and associations, and design/spontaneous order (Kasper and Streit Ch6; Thompson et al. Chs20-24; Rutherford Ch5).

Seminar: Viktor Vanberg, 1989, ‘Carl Manger’s Evolutionary and John R. Commons’ Collective Action Approach to Institutions: A Comparison’, in Geoff Hodgson (ed), 1993, Economics of Institutions.

Institutional Foundations of Capitalism: nature of property rights (Kasper and Streit Ch7; Hodgson Ch7; Eggertsson Chs4-5; Langlois Ch9; Trigg et al. Ch1).

Seminar: Ugo Pagano, 1991, ‘Property Rights, Asset Specificity, and the Division of Labour under Alternative Capitalist Relations’, in Geoff Hodgson (ed), 1993, Economics of Institutions.

Dynamics of Competition: the nature and types of market process (Kasper and Streit Ch8; Langlois Ch2; Hodgson Ch8; Thompson et al. Chs1-7).

Seminar: Giovanni Dosi, 1988, ‘Institutions and Markets in a Dynamic World’, in Geoff Hodgson (ed), 1993, Economics of Institutions.

Test
Economics Organisations: the nature and types of firms (Kasper and Streit Ch9; Thompson et al. Chs8-13; Eggertsson Chs6-7; Hodgson Ch9; Simonetti et al. Ch2).

Seminar: Hans Nutzinger, 1976, ‘The Firm as a Social Institution: the failure of the contractarian viewpoint’, in Geoff Hodgson (ed), 1993, Economics of Institutions.

Collective Action and Government: liberal order and theory of human needs (Kasper and Streit Ch10; Hodgson Ch11).

Seminar: Rosalind Levacic, 1991, ‘Markets and government: an overview’, in Thompson et al. (eds.), 1991, Markets, Hierarchies and Networks.

Economic Metaphors and Evolution of Institutions: types of metaphors and a classification of economic evolution (Kasper and Streit Ch12; Hodgson (1996) Ch2; Langlois Ch5; Rutherford Ch4; Eggertsson Chs8-9; Simonetti et al. Ch10).

Seminar: David Ellerman, 1991, ‘Myth and Metaphor in Orthodox Economics’, in Geoff Hodgson (ed), 1993, Economics of Institutions.

Economic Methodology: empirical realism and critical realism (Lawson various articles; Hodgson Chs2-3).

Seminar: Tony Lawson, ‘A Realist Theory For Economics’, in a collection of articles on methodology.

Alternative Economic Systems: (Kasper and Streit Ch13; Sayer Chs6-7; HodgsonCh11; Trigg et al. Chs8-9; Thompson et al. Chs1-7).

Seminar: A reading from Geoff Hodgson (ed), 1993, Economics of Institutions

Examination

Assignments

One essay of 2-3000 words

End of semester examination and mid-semester tests (written papers)

Weekly seminar presentations