Institutionalism and neoclassical economics briefly. institutional approach
Predecessors of the institutionalists (critics of neoclassicism).
German Historical School
1. Friedrich List(1789-1846) as a critic of A. Smith.
Main work: "The National System of Political Economy" (1841).
The country's economy should develop taking into account national characteristics, such as historical features of development, culture, mentality, geographical characteristics and etc.
Protest against the formalism and abstractions of classical political economy.
Increased role awareness human factor in economic development.
Table 1.1 Comparative characteristics of the views of F. List with the classical school.
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2. Gustav Schmoller (1838 - 1917).
Main work: "The New Concept of the National Economy" (1874).
a brief description of and analysis of scientific views.
He described the actual economic behavior, criticizing the formal norms of the classical school.
He emphasized the role of non-economic development factors and, above all, moral norms, ethics and culture in economic activity.
3. Werner Sombart (1863-1946).
Major works: "Modern Capitalism" (1902), "Jews and Economic Life" (1911), "Bourgeois" (1913), "German Socialism" (1934).
.
He analyzed the role of institutions in the formation of the economic system.
The development of capitalism is a peculiar manifestation of the life of the spirit.
Entrepreneurs are a class that was formed by former robbers, feudal lords, speculators, merchants, and statesmen.
Introduces the concept of "conjuncture", highlighting two phases of the economic cycle
- rise and fall.
4. Max Weber (1864-1920).
Major works: The Protestant Ethic and the Spirit of Capitalism (1905), Three Pure Types of Legitimate Government.
Brief description and analysis of scientific views.
He singled out three "ideal" types of state government:
◦ rational-legal - based on legally formalized rational law;
◦ traditional - based on historically established norms;
◦ charismatic - on devotion to the personality of the leader, faith in his unique abilities.
He linked the success of the development of the economy of European civilization with the Protestant mentality.
Table 1.3
Comparative characteristics of traditional and religious people.
Marxism
Karl Marx(1818-1883) as an institutional economist.
He expanded the classical theory by considering a number of social aspects and, on the basis of such a synthesis, proposed his own theory of economic development, those. he endowed his theory with features that are now characterized as institutional.
Table 1.4
The similarity of Marxism with institutionalism through the criteria of difference with
classical school.
Criterion | classical school | Marxism |
Own | Private | Public |
Division of labor | Source of wealth | Positive impact, but: - the worker is not aware of the role played by his labor (alienation of labor); - division of mental and physical labor; - strengthening of material and social inequality => the emergence of classes. |
Classes | Society - a homogeneous set of economic entities | Society is a system of classes that have developed in it, contradicting each other, which serves as a source of social development in a given historical period of time. |
Productive forces | Material and technical factors (production method) | |
Economic development | The quantitative process of increasing the volume of material wealth | The material foundations of production are the productive forces (basis), and the relations of production (superstructure) consist of those elements ( state structure, form of ownership, structure of society, etc.), which are now called institutional. |
Ethical Assessments | Does not contain ethical (value) assessments | Absoluteized the interests of the proletariat; concept of justice |
Review questions
1) What are the common features of the historical school in Germany and American institutionalism?
2) What ideas of K. Marx can be classified as institutional?
2) Korneichuk, B. V. Institutional economics / B. V. Korneichuk. - M.: Gardariki, 2007. - 255 p.
3) Nureev, R.M. Essays on the history of institutionalism / R.M. Nureyev. - Rostov n / a: Publishing house "Assistance - XXI century"; Humanitarian Perspectives, 2010. - 415 p.
4) Rozmainsky, I. V. The history of economic analysis in the West [ Electronic resource] / I. V. Rozmainsky, K. A. Kholodilin. - Electron. text data. - St. Petersburg: B. ed., 2000. - Access mode: http://institutional. boom.ru/Latov_Razmainskiy/Razmainskiy_history.htm, free.
5) Frolov, D. Institutional evolution of post-Soviet institutionalism / D. Frolov // Questions of Economics. - 2008.- No. 4.- P.130-139.
1.3. General signs of institutionalism
Study Plan:
1) Basic provisions of institutional economic theory.
Institutionalism, as the subject of its analysis, puts forward both economic and non-economic problems of socio-economic development. The object of the study is formal and informal institutions that are not divided into primary and secondary.
Institute definition:
Institutes is a system of formal and informal rules that determine the relationship of people in society.
Institutes- "rules of the game" in society (D. North)
Institutes It is a habitual way of thinking, guided by which people live.
Institutes is the result of processes that have taken place in the past.
Formal "written" rules: Constitution, laws, decrees, agreements, etc.
Informal "unwritten" rules: customs, traditions, conventions, habits, etc.
Informal norms play no less a role in society than formal ones, as they have the following features: duration of evolution; many areas are regulated only by informal norms; basis for formal rules.
The problem of harmonizing old and new institutions:
Formal new and formal old;
Formal new and informal old;
Informal new and informal old.
2) Interdisciplinary nature of institutional economics. The economy develops under the influence of other disciplines. Institutional economics is a kind of synthesis of economic processes and phenomena public life described by the humanities.
Neoclassicism and institutionalism: commonality and differences of approaches.
Since institutional economics arose as an alternative to neoclassicism, we highlight the main fundamental differences between them.
Table 1.5
Comparative characteristics of neoclassicism and institutionalism.
Criterion | Neoclassic | institutionalism |
Founding period | XVII - XIX - XX century | 20-30s of the XX century |
Place of development | Western Europe | USA |
Epoch | Industrial | Post-industrial (informational) |
Analysis Methodology | Methodological individualism - explaining institutions through the need of individuals for the existence of a framework, structuring their interactions in various fields. Individuals are primary, institutions are secondary | Holism - explaining the behavior and interests of individuals through the characteristics of institutions, that predetermine their interactions. Institutions are primary, individuals are secondary |
The nature of reasoning | Deduction (from general to particular) | Induction (from particular to general) |
Human Rationality | Complete | Limited |
Information and knowledge | Complete, knowledge unlimited | Partial, specialized knowledge |
Target | Maximization of utility, profit | Cultural education, harmonization |
wishes | Self-defined | Defined by culture, community |
Interaction | Commodity | interpersonal |
Dependence on the impact of social factors | Complete independence | Not strictly independent |
Member Behavior | Opportunistic Behavior* |
* Opportunistic behavior- the pursuit of personal gain using deceit, calculated efforts to lead astray, deceit, concealment of information and other actions.
Review questions
1) Give general definition institute.
2) Consider the origin and functioning of the following institutions: the handshake, private property, marriage, education, the market, the state.
3) Explain the essence of the interdisciplinary approach in institutional economics.
4) Describe the influence of institutions on your life.
5) What shortcomings of the neoclassical direction were reflected in institutional economics?
6) What are the fundamental differences between the neoclassical scenario of the transition from a command economy to a market economy and the neo-institutional one.
1) Moskovsky, A. Institutionalism: theory, decision-making basis, method of criticism / A. Moskovsky // Questions of Economics. - 2009. - No. 3. - S. 110-124.
2) Nureev, R.M. Preface to A. Oleinik's textbook. "Institutional Economics" / R. M. Nureev. - M.: INFRA-M, 2000. - 704 p.
3) Searle, J. What is an institute? [Electronic resource] / J. Searle // Questions of Economics. - 2007. - No. 8. - Access mode: http://www.vopreco.ru/rus/ archive.files/ n8_2007.html, free.
4) Skorobogatov, A. Institutions as a factor of order and as a source of chaos: neo-institutional and post-Keynesian analysis / A. Skorobogatov // Issues of Economics. - 2006. - No. 8. - P.102 - 118.
5) Frolov, D. Methodological institutionalism: a new look at the evolution of economic science / D. Frolov // Questions of Economics. - 2008. - No.
11. - S.90-101.
6) Hodgson, J. Institutions and individuals: interaction and evolution / J. Hodgson // Questions of Economics. - 2008. - No. 8. - S. 45-61.
TOPIC 2. TRADITIONAL "OLD" INSTITUTIONALISM (classical institutional theory)
2.1. The main features of the "old" institutionalism
Study Plan:
1) Characteristics of the "old" institutionalism.
« Old institutionalism” arose at the end of the 19th century and took shape as a trend in the 20-30s of the 20th century. The starting point for the emergence of the institutional direction is considered to be the date of publication of the monograph T. Veblen"The Theory of the Leisure Class" in 1899. However, given the later no less significant publications J. Commons, W. Mitchell, J. M. Clark, marked the emergence of a new trend with well-formed ideas and concepts. It was characterized by the formation of the main provisions of institutionalism and criticism of the concept of a rational economic man, on which classical analysis is based. The works of these American scientists are united by:
- antitrust orientation (“society's control over business” - J. Clark, 1926);
- the need for state regulation of the economy;
- taking into account the impact on economic growth of the totality of social relations;
- taking into account the influence of habits, instincts, customs and traditions;
- use of the methodology of other humanities (law, political science, sociology, etc.);
- inductive method of analysis, movement from law and politics to economics;
- denial of the principle of maximization (utility, profit);
- methodology of holism (institutions are primary, individuals are secondary).
- focus on collective action.
2) Identification of the negative and positive postulates of the "old" institutionalism.
Undoubtedly, the emergence at the beginning of the 20th century of a new trend in economic thought - institutionalism significantly enriched economic theory. "Old" institutionalism emphasizes the importance of institutions for economic life and attempts to understand their role and evolution; proves the growing role of man as the main economic resource of the post-industrial society. Representatives of this direction consider the replacement of free competition by monopolization as an objective process of the modern economy, while it is important for large corporations to introduce regularity and consciousness into the spontaneous mechanism of market competition, since. it is large monopolies that are able to ensure the dynamism of the economy, since they bear the brunt of the cost of innovation and scientific and technical progress.
Despite the above advantages, institutional economics is far from flawless. The remark of S.V. Kluzina [I] : “... Institutionalism allows for the absolutization of the role of large corporations, as well as a weak formalization of the analysis". Therefore, in the development of modern economic theory, in general, we can agree with O. Inshakov and D. Frolov: “...Despite the scientific fashion, institutionalism alone can by no means become a methodological panacea for Russia or any other country. It should organically "join" the composition of evolutionary theory along with other approaches that systematically describe transformational and transactional factors.»; “... it becomes obvious that there is an urgent need for interdisciplinary integration within the framework of the humanities with the inclusion of institutional theory, the productive implementation of which should become a vector for the evolution of domestic institutionalism...».
Review questions
1) What principles of "old" institutionalism reflect your behavior? What is their influence on your decision making?
2) Consider the effect of institutions on your life and work in the modern economy.
1) Institutional Economics: Textbook / Ed. A.N. Oleinik. - M.: INFRA - M, 2005. - 704 p.
M, 2007. - 416 p.
3) Skorobogatov, A.S. Institutional Economics [Electronic resource] / A.S. Skorobogatov. - Electron. text data. - St. Petersburg: GU-HSE, 2006. - Access mode: http://ie.boom.ru/skorobogatov/skorobogatov.htm, free.
2.2. Representatives of traditional institutionalism, their theories.
Table 2.1
The first stage - 20-30s of the XX century. Representatives this stage introduced the concept of "institutions" into economics. Human behavior, they believed, is influenced by such institutional formations as the state, corporations, trade unions, law, ethics, the institution of the family, etc.
The basis of the development of society T. Veblen considered the psychology of the team. The behavior of an economic entity is determined not by optimizing calculations, but by instincts that determine the goals of activity, and institutions that determine the means of achieving these goals. Habits are one of the institutions that set the framework for the behavior of individuals in the market, in the political sphere, in the family. He introduced the notion of prestige consumption, known as the Veblen effect. This conspicuous consumption is a confirmation of success and forces the middle class to imitate the behavior of the rich.
W. Mitchell believed that the market economy was unstable. At the same time, business cycles are a manifestation of such instability, and their presence gives rise to the need for state intervention in the economy.
He studied the gap between the dynamics of industrial production and the dynamics of prices. W. Mitchell denied looking at a person as a "rational optimizer".
Analyzed the irrationality of spending money in family budgets. In 1923, he proposed a system of state unemployment insurance.
J. Commons paid great attention to the study of the role of corporations and trade unions and their influence on people's behavior.
"The good reputation of a business or profession is the most perfect form of competition known to the law."
Commons defined value as the result of the legal agreement of "collective institutions". He was engaged in the search for instruments of compromise between organized labor and big capital. John Commons laid the foundations for pensions, which were laid out in the Social Security Act of 1935.
J. M. Clark advocated the implementation of anti-crisis measures by the state, in particular, an increase in government spending aimed at creating "effective stable demand in order to increase the load on enterprises and employment." Clark puts forward a "revolution in the economic functions of the state" as the most important feature of the transformation of capitalism, as a result of which it began to play the role of an organizer of the economy in the interests of the general welfare. This, according to Clarke, is accompanied by "diffusion of benefits", which finds its manifestation in the fact that the results of technical and economic progress are evenly distributed among all classes of society.
The second stage - 50-70s of the XX century. Representative of this stage - John Kenneth Galbraith(1908-2006). Main work: "The New Industrial Society", 1967.
From the point of view of the most prominent representative of institutionalism, the American economist J.C. Galbraith, the place of the self-regulating market was taken by a new economic organization, represented by monopolized industries, supported by the state and controlled not by capital, but by the so-called technostructure(social stratum, including scientists, designers, managers, financiers) - knowledge organized in a certain way. Galbraith consistently tried to prove that the new economic system represented, in fact, a planned economy. That is why Galbraith's ideas were so popular in the Soviet Union. Galbraith's main point is in today's market, no one has all the information, everyone's knowledge is specialized and partial. Power has shifted from individuals to organizations with group identities.
Table 2.2
Comparative characteristics of the market system and the new industrial
J. Galbraith Society
Review questions
1) Why does T. Veblen criticize the “leisure class” and what role does he assign to him in society?
2) What role, according to T. Veblen, should be assigned to the state in the economic sphere?
3) What is common in the works of American institutionalists (T. Veblen, J. Commons, W. Mitchell, J. M. Clark.) and their modern followers?
1) Veblen, T. The Theory of the Leisure Class / T. Veblen. - M.: Progress, 1984. - S.202.
2) Commons, J. (translated by Kurysheva A.A.) Institutional Economics / J. Commons // Economic Bulletin of the Rostov State University. - 2007. - No. 4 (vol. 5). - S. 78-85.
3) Galbraith, J.K. The New Industrial Society / J.K. Galbraith. - M.: Progress, 1999. - 297 p.
4) Veblen, T. Limitedness of the theory of marginal utility / T. Veblen // Questions of Economics. - 2007. - No. 7. - S. 86-98.
5) Nureyev, R. Thorstein Veblen: a view from the 21st century / R. Nureyev // Questions of Economics. - 2007. - No. 7. - S. 73-85.
6) Samuels, W. Thorstein Veblen as a theoretical economist / W. Samuels // Questions of Economics. - 2007. - No. 7. - S. 99-117.
2.3. The human model in institutional economics.
Study Plan:
1) Models of human behavior and their role in economic development.
Table 2.3 Comparative characteristics of theoretical ideas about the individual 1 .
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2) Institutional man today.
For institutionalists, the factors that determine human behavior in economic life originate in the distant past, not only of the individual himself, but of all mankind. Institutionalists view man as a biosocial being, under the cross influence of all biological nature and social institutions. In society, the attitude of scientists-economists to socio-economic assessments related to the satisfaction of people's needs has changed significantly. Today, it is becoming more and more obvious that it is illegal and socially dangerous to underestimate the importance of a thorough study of the relationship between economic growth and the satisfaction of the population's vital needs. The gradual development of market relations,
democratization of society, new socio-economic conditions for the life of society, the emergence of opportunities for rethinking and scientific justification many specific theoretical problems the development of society and the assessment of real living standards achieved in countries with developed market economies, required increased attention of scientists to a comprehensive and more detailed study, primarily of such interrelated categories and concepts as vital activity, quality of life, standard of living, cost of living, standard of living, image lifestyle, lifestyle, way of life, living conditions, life expectancy. Radical transformations in Russia have fundamentally changed the forms of human attitude to the outside world, and, consequently, the forms of people's life.
Review questions
1) What is the essence of a rational person? What are its main shortcomings in modern economic theory?
2) Consider O. Williamson's analysis of the individual.
3) What is the role of introducing the concept of “institutional man” into economic analysis?
4) Describe the "institutional man" model.
1) Avtonomov, V.S. Human model in economic science [Electronic resource] / V.S. Autonomous. - Electron. text data. - St. Petersburg: School of Economics, 1998. - Access mode: http://ek-lit.narod.ru/avtosod.htm, free.
2) Malkina, M.Yu. Economic theory. Part I. Microeconomics / M. Yu. Malkina. - Nizhny Novgorod: Publishing house of UNN, 2009. - 436 p.
3) Storchevoy, M. A new model of man for economic science / M. Storchevoy // Questions of Economics. - 2011. - No. 4. - S. 78-98.
TOPIC 3. NEO-INSTITUTIONALISM
3.1. The structure of scientific theory. general characteristics and directions of neo-institutionalism.
The third stage - from the 70s of the twentieth century. Further institutionalism develops in two directions: neo-institutionalism and new institutional economics. Despite the apparent identity in the names, we are talking about fundamentally different approaches to the analysis of institutions. For the subsequent detailed analysis, we need to know structure of scientific theory. Any theory has two components: hard core and cabbage soup tnu shell. The statements that make up the rigid core of the theory must remain unchanged in the course of any modifications and refinements that accompany the development of the theory. They form those principles from which any researcher who consistently applies the theory is not entitled to refuse, no matter how sharp the criticism of opponents is. Containment theories, on the other hand, are subject to constant adjustments as the theory develops.
1) General characteristics of neo-institutionalism, its structure.
The main representatives of neo-institutional economics: R. Coase, R. Posner, J. Stiglitz, O. Williamson, D. North, J. Buchanan, G. Tulloch.
This trend was initiated in 1937 by Ronald Coase's The Nature of the Firm, but until the 1970s, neo-institutionalism remained on the fringes of economics. Initially, it developed only in the USA, but in the 1980s, Western European economists joined this process, and in the 1990s, Eastern European economists as well.
Neo-institutionalism leaves the rigid core of neoclassicism unchanged, only the protective shell is corrected. Without abandoning the traditional microeconomic tools, neo-institutionalists seek to explain factors that were external to neoclassicism - ideology, norms of behavior, laws of the family, etc.
Protective Shell Changes:
1. Considered more a wide range of forms of ownership: along with private property, collective and state property are analyzed, their comparative effectiveness in securing transactions on the market is compared.
2. The concept is introduced information costs- costs associated with searching for and obtaining information about the transaction and the situation on the market.
3. Along with production costs, allow the existence transaction costs arising from transactions.
The founder of neo-institutionalism R. Coase in a lecture dedicated to the awarding of the Nobel Prize in Economics to him, he casts a reproach to traditional theory for being isolated from life. " What is being studied, he notes, is a system that lives in the minds of economists, not in reality. I called this result chalkboard economics.". Coase sees his merit in "proving the importance for the operation of the economic system of what may be called the institutional structure of production." The study of the institutional structure of production became possible due to the development of such concepts as transaction costs, property rights, contractual relations by economic science.
Recognition of the merits of neo-institutionalists was expressed in the award of the Nobel Prize in Economics James Buchanan (1986), Ronald Coase (1991), Douglas North (1993), Joseph Stiglitz (2001), Oliver Williamson (2009).
The development of neo-institutionalism in Russia.
In Russia, representatives of neo-institutionalism: R. Kapelyushnikov, R. Nureev, A. Oleinik, V. Polterovich, A. Shastitko, E. Brendeleva.
Review questions
1) What are the main provisions of neo-institutional theory? How do they differ from the basic foundations of neoclassical theory?
2) Describe the concept of "opportunism", and what impact such behavior has on uncertainty external environment?
3) What is the basic unit of analysis in neo-institutional theory?
4) List the main directions of neo-institutionalism.
1) Kusurgasheva, L. Critical analysis of the foundations of neo-institutionalism / L. Kusurgasheva // The Economist. - 2004. - No. 6. - P. 44-48.
2) Oleinik, A.N. Institutional economics / A. N. Oleinik. - M.: INFRA
M, 2011. - 416 p.
3.2. Property Rights Theory
Study Plan:
1) Basic provisions of the theory of property rights. Property category, a bundle of property rights. Honore's list.
Under the system of property rights in neo-institutional theory is understood the whole set of rules governing access to scarce resources. Such norms can be established and protected not only by the state, but also by other social mechanisms - customs, moral principles, religious precepts. According to existing definitions, property rights cover both physical objects and incorporeal objects (say, the results of intellectual activity).
From the point of view of society, property rights act as "rules of the game" that streamline relations between individual agents. From the point of view of individual agents, they appear as "bundles of powers" to make decisions about a particular resource. Each such “bundle” can be split, so that one part of the powers begins to belong to one person, the other to another, and so on.
In 1961, British lawyer Arthur Honoré proposed a bundle of indecomposable and non-overlapping property rights. Institutionalists view any exchange of goods as an exchange of property rights to them.
Property rights according to A. Honoré
Ownership | Explanation |
1. Ownership | Right to exclusive physical control over goods |
2. Right of use | Right of application useful properties good for yourself |
3. Right of management | The right to decide who and under what conditions will have access to the use of the good |
4. Right to income | The right to enjoy the results of the use of the good |
5. The right of the sovereign | The right to alienate, consume, change or destroy a good |
6. Right to security | The right to be protected from expropriation of goods and from harm from the external environment |
7. Right of succession | The right to transfer wealth by inheritance or testament |
8. Right to perpetuity | The right to unlimited possession of the good |
9.Prohibition of harmful use | Obligation to use the benefit in a way that does not harm the property and personal rights of others |
10. Right to liability in the form of recovery | The possibility of recovering a good in payment of a debt |
11. Right to residual character | The right to “natural return” of powers transferred to someone after the expiration of the transfer period, the right to use institutions and mechanisms for protecting violated rights |
Property rights have a behavioral meaning: they encourage some ways of doing things, they suppress others (through prohibitions or higher costs) and thus influence the choice of individuals.
Back to main elements bunch of rights property usually includes 1:
1) the right to exclude other agents from access to the resource;
2) the right to use the resource;
3) the right to receive income from it;
4) the right to transfer all previous powers.
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COURSE WORK
Neoclassicism and institutionalism: comparative analysis
Introduction
The course work is devoted to the study of neoclassicism and institutionalism, both at the theoretical level and in practice. This topic is relevant in modern conditions strengthening of the globalization of socio-economic processes, there have been general patterns and development trends of business entities, including organizations. Organizations as economic systems are studied from the standpoint of various schools and directions of Western economic thought. Methodological approaches in Western economic thought are mainly represented by two leading trends: neoclassical and institutional.
The objectives of the course work:
Get an idea about the origin, formation and modern development of neoclassical and institutional economic theory;
Familiarize yourself with the main research programs of neoclassicism and institutionalism;
Show the essence and specifics of the neoclassical and institutional methodology for the study of economic phenomena and processes;
The tasks of studying the course work:
To give a holistic view of the basic concepts of neoclassical and institutional economic theory, to show their role and significance for the development of modern models of economic systems;
Understand and assimilate the role and importance of institutions in the development of micro- and macrosystems;
Acquire the skills of economic analysis of law, politics, psychology, ethics, traditions, habits, organizational culture and codes of economic conduct;
Determine the specifics of the neoclassical and institutional environment and take it into account when making economic decisions.
The subject of study of neoclassical and institutional theory are economic relations and interactions, and the object is neoclassicism and institutionalism as the basis of economic policy. When selecting information for the course work, the views of various scientists were considered in order to understand how ideas about neoclassical and institutional theory have changed. Also, when studying the topic, statistical data of economic journals were used, the literature of the latest editions was used. Thus, the course work information is compiled using reliable sources of information and provides objective knowledge on the topic: neoclassicism and institutionalism: a comparative analysis.
1 . Theoreticalprovisions of neoclassicism and institutionalism
1.1 Neoclassical economic theory
The emergence and evolution of neoclassicism
Neoclassical economic theory emerged in the 1870s. The neoclassical direction explores the behavior of an economic person (consumer, entrepreneur, employee), who seeks to maximize income and minimize costs. The main categories of analysis are limiting values. Neoclassical economists developed the theory of marginal utility and the theory of marginal productivity, the theory of general economic equilibrium, according to which the mechanism of free competition and market pricing ensures a fair distribution of income and the full use of economic resources, the economic theory of welfare, the principles of which form the basis modern theory public finance(P. Samuelson), the theory of rational expectations, etc. In the second half of the 19th century, along with Marxism, neoclassical economic theory arose and developed. Of all its numerous representatives, the English scientist Alfred Marshall (1842-1924) gained the greatest fame. He was a professor and chair of political economy at the University of Cambridge. A. Marshall summarized the results of new economic research in the fundamental work "Principles of Economic Theory" (1890). In his works, A. Marshall relied both on the ideas of classical theory and on the ideas of marginalism. Marginalism (from the English marginal - limiting, extreme) is a trend in economic theory that arose in the second half of the 19th century. Marginal economists in their studies used marginal values, such as marginal utility (the utility of the last, additional unit of good), marginal productivity (production produced by the last hired worker). These concepts were used by them in the theory of prices, the theory of wages and in explaining many other economic processes and phenomena. In his theory of price, A. Marshall relies on the concepts of supply and demand. The price of a good is determined by the ratio of supply and demand. The demand for a good is based on subjective assessments of the marginal utility of the good by consumers (buyers). The supply of a good is based on the cost of production. The producer cannot sell at a price that does not cover his production costs. If the classical economic theory considered the formation of prices from the standpoint of the producer, then the neoclassical theory considers pricing both from the standpoint of the consumer (demand) and from the standpoint of the producer (supply). Neoclassical economic theory, like the classics, proceeds from the principle of economic liberalism, the principle of free competition. But in their studies, neoclassicists place more emphasis on the study of applied practical problems, use quantitative analysis and mathematics to a greater extent than qualitative (meaningful, cause-and-effect). The greatest attention is paid to the problems of efficient use of limited resources at the microeconomic level, at the level of the enterprise and household. Neoclassical economic theory is one of the foundations of many areas of modern economic thought.
The main representatives of neoclassicism
A. Marshall: Principles of political economy
It was he who introduced the term "economics", thereby emphasizing his understanding of the subject of economic science. In his opinion, this term more fully reflects research. Economic science explores the economic aspects of the conditions of social life, incentives for economic activity. Being a purely applied science, it cannot ignore questions of practice; but questions of economic policy are not its subject. Economic life must be considered outside of political influences, outside of government intervention. Among economists there were discussions around what is the source of value, labor costs, utility, production factors. Marshall took the debate to a different plane, coming to the conclusion that it is necessary not to look for the source of value, but to investigate the factors that determine prices, their level, and dynamics. The concept developed by Marshall was his Roma compromise between different areas of economic science. The main idea put forward by him is to switch efforts from theoretical disputes around value to the study of the problems of the interaction of supply and demand as forces that determine the processes taking place in the market. Economics studies not only the nature of wealth, but also the motives behind economic activity. "Economist's scales" - monetary estimates. Money measures the intensity of incentives that encourage a person to act, to make decisions. The analysis of the behavior of individuals is the basis of the "Principles of Political Economy". The author's attention is focused on the consideration of a specific mechanism of economic activity. The mechanism of a market economy is studied primarily at the micro level, and subsequently at the macro level. The postulates of the neoclassical school, at the origins of which stood Marshall, are theoretical basis applied research.
J.B. Clark: income distribution theory
The problem of distribution was considered by the classical school as an integral element general theory values. The prices of goods were made up of the shares of the remuneration of production factors. Each factor had its own theory. According to the views of the Austrian school, factor incomes were formed as derivatives of market prices for manufactured products. Trying to find common ground the values of both factors and products on the basis of common principles were undertaken by economists of the neoclassical school. The American economist John Bates Clark set out to "show that the distribution of social income is governed by a social law, and that this law, if it operated without resistance, would give to each factor of production the amount that this factor creates." Already in the formulation of the goal there is a summary - each factor receives the share of the product that it creates. All subsequent content of the book provides a detailed rationale for this summary - argument, illustrations, comments. In an effort to find a principle of income distribution that would determine the share of each factor in the product, Clark uses the concept of diminishing utility, which he transfers to production factors. At the same time, the theory of consumer behavior, the theory of consumer demand is replaced by the theory of choice of production factors. Each entrepreneur seeks to find such a combination of applied factors that ensures the minimum cost and maximum income. Clarke argues as follows. Two factors are taken, if one of them is taken unchanged, then the use of the other factor as its quantitative increase will bring less and less income. Labor brings wages to its owner, capital - interest. If additional workers are hired with the same capital, then income increases, but not in proportion to the increase in the number of new workers.
A. Pigou: economic theory of welfare
The economic theory of A. Pigou considers the problem of the distribution of national income, in Pigou's terminology - the national dividend. He refers to it "everything that people buy with their money income, as well as services provided to a person by a dwelling that he owns and in which he lives." However, services rendered to oneself and in the household, and the use of items that are in public property, are not included in this category.
The national dividend is the flow of goods and services produced in a society during the year. In other words, this is the share of society's income that can be expressed in money: goods and services that are part of final consumption. If Marshall appears before us as a systematist and theoretician, striving to cover the entire system of relations of "economics", then Pigou was mainly engaged in the analysis of individual problems. Along with theoretical questions, he was interested in economic policy. He was occupied, in particular, with the question of how to reconcile private and public interests, to combine private and public costs. Pigou focuses on the theory of social welfare, it is designed to answer what is the common good? How is it achieved? How is the redistribution of benefits from the standpoint of improving the position of members of society; especially the poorest strata. construction railway benefits not only those who built and operate, but also the owners of nearby land plots. As a result of the laying of the railway, the price of land located near it will inevitably age. Owners of land participants, although not engaged in construction, are benefiting from rising land prices. The total national dividend is also growing. The criterion to be taken into account is the dynamics of market prices. According to Pigou, "the main indicator is not the product itself or material goods, but in relation to the conditions of a market economy - market prices." But the construction of the railway can be accompanied by negative and very undesirable consequences, deterioration of the environmental situation. People will suffer from noise, smoke, garbage.
The "piece of iron" harms crops, reduces yields, and undermines the quality of products.
The use of new technology often gives rise to difficulties, creates problems that require additional costs.
Limits of applicability of the neoclassical approach
1. Neoclassical theory is based on unrealistic assumptions and limitations, and therefore it uses models that are inadequate to economic practice. Coase called this neoclassical state of affairs "chalkboard economics."
2. Economic science expands the range of phenomena (for example, such as ideology, law, norms of behavior, family) that can be successfully analyzed from the point of view of economic science. This process was called "economic imperialism". The leading representative of this trend is Nobel laureate Harry Becker. But for the first time about the need to create general science, studying human action, was written by Ludwig von Mises, who proposed the term “praxeology” for this.
3. Within the framework of neoclassicism, there are practically no theories that satisfactorily explain the dynamic changes in the economy, the importance of studying which has become relevant against the backdrop of historical events XX century
Rigid Core and Protective Belt of Neoclassicism
hard core :
1. Stable preferences that are endogenous;
2. Rational choice (maximizing behavior);
3. Equilibrium in the market and general equilibrium in all markets.
Protective belt:
1. Ownership rights remain unchanged and clearly defined;
2. The information is completely accessible and complete;
3. Individuals satisfy their needs through exchange, which occurs without cost, taking into account the initial distribution.
1.2 Institutional Economics
The concept of an institution. The role of institutions in the functioning of the economy
The concept of institution was borrowed by economists from the social sciences, in particular from sociology. An institution is a set of roles and statuses designed to meet a specific need. Definitions of institutions can also be found in works of political philosophy and social psychology. For example, the category of institution is one of the central ones in the work of John Rawls "The Theory of Justice". Institutions are understood as a public system of rules that define the position and position with the corresponding rights and duties, power and immunity, and the like. These rules specify certain forms of action as permitted and others as forbidden, and they also punish some acts and protect others when violence occurs. As examples, or more general social practices, we can cite games, rituals, courts and parliaments, markets and property systems.
In economic theory, the concept of institution was first included in the analysis by Thorstein Veblen. Institutions are a common way of thinking as regards the particular relationships between society and the individual and the particular functions they perform; and the system of life of society, which is composed of a combination of acting in certain time or at any moment in the development of any society, psychological side be characterized in general terms as a prevailing spiritual position or a widespread idea of a way of life in society.
Veblen also understood institutions as:
Behavior habits;
The structure of the production or economic mechanism;
The currently accepted system of social life.
Another founder of institutionalism, John Commons, defines an institution as follows: an institution is a collective action to control, liberate and expand individual action.
Another classic of institutionalism, Wesley Mitchell, has the following definition: institutions are the dominant, and highly standardized, social habits. Currently, within the framework of modern institutionalism, the most common interpretation of institutions is Douglas North: Institutions are rules, mechanisms that ensure their implementation, and norms of behavior that structure repetitive interactions between people.
The economic actions of an individual do not take place in an isolated space, but in a certain society. And therefore it is of great importance how society will react to them. Thus, transactions that are acceptable and profitable in one place may not necessarily be viable even under similar conditions in another. An example of this is the restrictions imposed on the economic behavior of a person by various religious cults. To avoid set matching external factors, affecting success and the very possibility of making a particular decision, within the framework of the economic and social orders, schemes or algorithms of behavior are developed that are most effective under given conditions. These schemes and algorithms or matrices of individual behavior are nothing but institutions.
Traditional institutionalism
The "old" institutionalism, as an economic trend, arose at the turn of the 19th and 20th centuries. He was closely associated with the historical trend in economic theory, with the so-called historical and new historical school (F. List, G. Schmoler, L. Bretano, K. Bucher). From the very beginning of its development, institutionalism was characterized by the advocacy of the idea of social control and the intervention of society, mainly the state, in economic processes. This was the legacy of the historical school, whose representatives not only denied the existence of stable deterministic relationships and laws in the economy, but also supported the idea that the well-being of society can be achieved on the basis of strict state regulation of the nationalist economy. The most prominent representatives of the "Old Institutionalism" are: Thorstein Veblen, John Commons, Wesley Mitchell, John Galbraith. Despite the significant range of problems covered in the works of these economists, they failed to form their own unified research program. As Coase noted, the work of the American institutionalists led nowhere because they lacked a theory to organize the mass of descriptive material. The old institutionalism criticized the provisions that constitute the "hard core of neoclassicism." In particular, Veblen rejected the concept of rationality and the principle of maximization corresponding to it as fundamental in explaining the behavior of economic agents. The object of analysis is institutions, and not human interactions in space with restrictions that are set by institutions. Also, the works of the old institutionalists are distinguished by significant interdisciplinarity, being, in fact, continuations of sociological, legal, statistical studies in their application to economic problems.
Neo-institutionalism
Modern neo-institutionalism originates from the works of Ronald Coase "The Nature of the Firm", "The Problem of Social Costs". Neo-institutionalists attacked, first of all, the provisions of neoclassicism, which constitute its defensive core.
1) First, the premise that exchange occurs without cost has been criticized. Criticism of this position can be found in the first works of Coase. Although, it should be noted that Menger wrote about the possibility of the existence of exchange costs and their influence on the decisions of exchanging subjects in his Foundations of Political Economy. Economic exchange occurs only when each of its participants, by carrying out the act of exchange, receives some increment of value to the value of the existing set of goods. This is proved by Karl Menger in his Foundations of Political Economy, based on the assumption that there are two participants in the exchange. The concept of transaction costs contradicts the thesis of the neoclassical theory that the costs of the functioning of the market mechanism are equal to zero. This assumption made it possible not to take into account the influence of various institutions in the economic analysis. Therefore, if transaction costs are positive, it is necessary to take into account the impact of economic and social institutions on the functioning of the economic system.
2) Secondly, recognizing the existence of transaction costs, there is a need to revise the thesis about the availability of information (information asymmetry). Recognition of the thesis about the incompleteness and imperfection of information opens up new perspectives for economic analysis, for example, in the study of contracts.
3) Thirdly, the thesis about the neutrality of distribution and the specification of property rights has been revised. Research in this direction served as a starting point for the development of such areas of institutionalism as the theory of property rights and economics.
organizations. Within the framework of these areas, the subjects of economic activity "economic organizations have ceased to be considered as" black boxes ". Within the framework of "modern" institutionalism, attempts are also being made to modify or even change the elements of the hard core of neoclassicism. First of all, this is the neoclassical premise of rational choice. In institutional economics, classical rationality is modified with assumptions about bounded rationality and opportunistic behavior. Despite the differences, almost all representatives of neo-institutionalism consider institutions through their influence on decisions made by economic agents. This uses the following fundamental tools related to the human model: methodological individualism, utility maximization, bounded rationality and opportunistic behavior. Some representatives of modern institutionalism go even further and question the very premise of the utility-maximizing behavior of economic man, suggesting its replacement by the principle of satisfaction. In accordance with the classification of Tran Eggertsson, representatives of this trend form their own trend in institutionalism - a new institutional economics, whose representatives can be considered O. Williamson and G. Simon. Thus, the differences between neo-institutionalism and the new institutional economics can be drawn depending on what prerequisites are being replaced or modified within their framework - a “hard core” or a “protective belt”.
The main representatives of neo-institutionalism are: R. Coase, O. Williamson, D. North, A. Alchian, Simon G., L. Thevenot, K. Menard, J. Buchanan, M. Olson, R. Posner, G. Demsetz, S. Pejovich, T. Eggertsson.
1.3 Comparison of neoclassical and andinstitutionalism
What all neo-institutionalists have in common is, first, that social institutions matter, and second, that they are amenable to analysis using standard microeconomic tools. In the 1960s-1970s. a phenomenon called by G. Becker "economic imperialism" began. It was during this period that economic concepts: maximization, balance, efficiency, etc. - began to be actively used in such areas related to the economy as education, family relations, healthcare, crime, politics, etc. This led to the fact that the basic economic categories of neoclassicism received deeper interpretation and wider application.
Each theory consists of a core and a protective layer. Neo-institutionalism is no exception. Among the main prerequisites, he, like neoclassicism as a whole, primarily refers to:
§ methodological individualism;
§ the concept of economic man;
§ activity as an exchange.
However, unlike neoclassicism, these principles began to be carried out more consistently.
1) Methodological individualism. In conditions of limited resources, each of us is faced with the choice of one of the available alternatives. Methods for analyzing the market behavior of an individual are universal. They can be successfully applied to any of the areas where a person must make a choice.
The basic premise of neo-institutional theory is that people act in any area in pursuit of their own interests, and that there is no insurmountable line between business and social sphere or politics. 2) The concept of economic man . The second premise of neo-institutional choice theory is the concept of "economic man". According to this concept, a person in a market economy identifies his preferences with a product. He seeks to make decisions that maximize the value of his utility function. His behavior is rational. The rationality of the individual has a universal meaning in this theory. This means that all people are guided in their activities primarily by the economic principle, i.e. compare marginal benefits and marginal costs (and, above all, the benefits and costs associated with decision-making): However, unlike neoclassical science, which deals mainly with physical (rare resources) and technological limitations (lack of knowledge, practical skills, etc.) etc.), neo-institutional theory also considers transaction costs, i.e. costs associated with the exchange of property rights. This happened because any activity is seen as an exchange.
3) Activity as an exchange. Proponents of neo-institutional theory consider any area by analogy with the commodity market. The state, for example, with this approach is an arena of people's competition for influence on decision-making, for access to the distribution of resources, for places in the hierarchical ladder. However, the state is a special kind of market. Its participants have unusual property rights: voters can choose representatives to the highest bodies of the state, deputies - to pass laws, officials - to monitor their implementation. Voters and politicians are treated as individuals exchanging votes and campaign promises. It is important to emphasize that neo-institutionalists are more realistic about the features of this exchange, given that people are inherently bounded rationality, and decision-making is associated with risk and uncertainty. In addition, it is not always necessary to make the best decisions. Therefore, institutionalists compare decision-making costs not with the situation considered exemplary in microeconomics (perfect competition), but with those real alternatives that exist in practice. Such an approach can be supplemented by an analysis of collective action, which involves considering phenomena and processes from the point of view of the interaction not of one individual, but of a whole group of persons. People can be united into groups on social or property grounds, religious or party affiliation. At the same time, institutionalists can even somewhat deviate from the principle of methodological individualism, assuming that the group can be considered as the final indivisible object of analysis, with its own utility function, limitations, etc. However, it seems more rational to consider a group as an association of several individuals with their own utility functions and interests.
The institutional approach occupies a special place in the system of theoretical economic trends. Unlike the neoclassical approach, it focuses not so much on the analysis of the results of the behavior of economic agents, but on this behavior itself, its forms and methods. Thus, the identity of the theoretical object of analysis and historical reality is achieved.
Institutionalism is characterized by the predominance of the explanation of any processes, and not their prediction, as in neoclassical theory. Institutional models are less formalized, therefore, within the framework of institutional forecasting, many more different predictions can be made.
The institutional approach is associated with the analysis of a specific situation, which leads to more generalized results. Analyzing a specific economic situation, institutionalists compare not with an ideal one, as in neoclassicism, but with a different, real situation.
Thus, the institutional approach is more practical and closer to reality. Models of institutional economics are more flexible and can be transformed depending on the situation. Despite the fact that institutionalism does not tend to engage in forecasting, the importance of this theory is by no means diminished.
It should be noted that in recent years, an increasing number of economists tend to the institutional approach in the analysis of economic reality. And this is justified, since it is the institutional analysis that makes it possible to achieve the most reliable, close to reality results in the study of the economic system. In addition, institutional analysis is an analysis of the qualitative side of all phenomena.
Thus, G. Simon notes that “as economic theory expands beyond its key area of interest - the theory of price, which deals with the quantities of goods and money, there is a shift from a purely quantitative analysis, where the central role is assigned to equalization of marginal values, in the direction of more qualitative institutional analysis, where discrete alternative structures are compared. And by carrying out a qualitative analysis, it is easier to understand how development occurs, which, as it was found out earlier, is precisely qualitative changes. By studying the process of development, one can more confidently pursue a positive economic policy.
In the theory of human capital, relatively little attention is paid to institutional aspects, especially the mechanisms of interaction between the institutional environment and human capital under conditions of innovative economy. The static approach of neoclassical theory to the explanation of economic phenomena does not allow to explain the real processes taking place in the transitive economies of a number of countries, accompanied by negative impact for the reproduction of human capital. The institutional approach has such an opportunity, by explaining the mechanism of institutional dynamics and building theoretical structures of the mutual influence of the institutional environment and human capital.
With the sufficiency of developments in the field of institutional problems of the functioning of the national economy, in the modern economic domestic and foreign literature there are practically no comprehensive studies of the reproduction of human capital based on the institutional approach.
So far, the influence of socio-economic institutions on the formation of the productive abilities of individuals and their further movement through the stages of the reproductive process has been poorly studied. In addition, the issues of forming the institutional system of society, clarifying the trends in its functioning and development, as well as the impact of these trends on the qualitative level of human capital, need to be seriously studied. In determining the essence of an institution, T. Veblen proceeded from two types of phenomena that affect people's behavior. On the one hand, institutions are “habitual ways of responding to incentives that are created by changing circumstances”, on the other hand, institutions are “ special ways the existence of society, which form a special system of social relations.
The neo-institutional direction considers the concept of institutions in a different way, interpreting them as norms of economic behavior that arise directly from the interaction of individuals.
They form a framework, restrictions for human activity. D. North defines institutions as formal rules, reached agreements, internal restrictions on activities, certain characteristics of coercion to their implementation, embodied in legal norms, traditions, informal rules, cultural stereotypes.
The mechanism for ensuring the effectiveness of the institutional system is especially important. The degree of correspondence between the achievement of the goals of the institutional system and the decisions of individuals depends on the effectiveness of coercion. Coercion, notes D. North, is carried out through the internal restrictions of the individual, fear of punishment for violating the relevant norms, through state violence and public sanctions. It follows from this that formal and informal institutions are involved in the implementation of coercion.
The functioning of diverse institutional forms contributes to the formation of the institutional system of society. Consequently, the main object of optimizing the process of human capital reproduction should be recognized not as organizations themselves, but as socio-economic institutions as norms, rules and mechanisms for their implementation, changing and improving which can achieve the desired result.
2 . Neoclassicism and institutionalism as the theoretical foundations of market reforms
2.1 Neoclassical scenario of market reforms in Russia and its consequences
Since neoclassicals believe that state intervention in the economy is not effective, and therefore should be minimal or absent altogether, consider privatization in Russia in the 1990s. Many experts, primarily supporters of the Washington Consensus and shock therapy, considered privatization the core of the entire reform program, called for its large-scale implementation and the use of the experience of Western countries, justifying the need for the simultaneous introduction of a market system and the transformation of state-owned enterprises into private ones. At the same time, one of the main arguments in favor of accelerated privatization was the assertion that private enterprises are always more efficient than state enterprises, therefore, privatization should be the most important means reallocation of resources, improved management and general increase economic efficiency. However, they understood that privatization would face certain difficulties. Among them, the lack of market infrastructure, in particular the capital market, and the underdevelopment of the banking sector, the lack of sufficient investment, managerial and entrepreneurial skills, resistance from managers and employees, problems of “nomenklatura privatization”, imperfection of the legislative framework, including in the field of taxation. Proponents of vigorous privatization noted that it was carried out in an environment of high inflation and low growth rates and led to mass unemployment. They also pointed to the inconsistency of reforms and the lack of clear guarantees and conditions for the exercise of property rights, the need to reform the banking sector, the pension system, and create an effective stock market. Important is the opinion of many experts about the need for preconditions for successful privatization, namely the implementation of macroeconomic reforms and the creation of a business culture in the country. This group of specialists is characterized by the opinion that in the conditions of Russia it is expedient to widely attract Western investors, creditors and consultants for the successful implementation of measures in the field of privatization. According to many experts, given the lack of private capital, the choice was reduced to: a) finding a form for the redistribution of state property among citizens; b) the choice of a few owners of private capital (often acquired illegally); c) appeal to foreign capital subject to restrictive measures. Privatization "according to Chubais" is rather denationalization than real privatization. Privatization was supposed to create a large class of private owners, but instead, "the richest monsters" appeared, forming an alliance with the nomenklatura. The role of the state remains excessive, producers still have more incentives to steal than to produce, the monopoly of producers has not been eliminated, and small business is developing very poorly. American specialists A. Shleifer and R. Vishni, based on a study of the state of affairs at the initial stage of privatization, characterized it as “spontaneous”. They noted that property rights were informally redistributed among a limited number of institutional actors, such as the party-state apparatus, line ministries, local authorities, labor collectives, and enterprise administration. Hence, the inevitability of conflicts, the cause of which lies in the intersection of the control rights of such co-owners, the presence of many subjects of ownership with indefinite ownership rights.
The real privatization, according to the authors, is the redistribution of the rights to control the assets of state-owned enterprises with the obligatory fixing of the property rights of the owners. In this regard, they proposed a large-scale corporatization of enterprises.
It should be noted that further development events have largely followed this path. Large state-owned enterprises were turned into joint-stock companies, and there was a process of actual redistribution of property.
A voucher system that aims to distribute share capital equally among the population of a country may not be bad, but there must be mechanisms in place to ensure that share capital is not concentrated in the hands of a “wealthy minority”. However, in reality, ill-conceived privatization has transferred the property of an essentially prosperous country into the hands of a corrupt politically powerful elite.
Russian mass privatization, launched to eliminate the old economic power and accelerate the restructuring of enterprises, did not produce the desired results, but led to an extreme concentration of ownership, and in Russia this phenomenon, which is usual for the process of mass privatization, has assumed especially large proportions. As a result of the transformation of the old ministries and related departmental banks, a powerful financial oligarchy arose. “Property,” writes I. Samson, “is an institution that does not change by any decree, not at once. If in the economy one tries too hastily to impose private property everywhere through mass privatization, then it will quickly concentrate where there is economic power.
According to T. Weiskopf, in the conditions of Russia, where capital markets are completely undeveloped, labor mobility is limited, it is difficult to imagine that the very mechanism of industrial restructuring that is highly dependent on the mobility of capital and labor would work. It would be more expedient to create incentives and opportunities for improving the activities of enterprises by the administration and
workers, rather than attract outside shareholders.
The initial failure to form a large sector of new enterprises led to significant negative consequences, including making it easier for mafia groups to seize control of a large part of state property. “The main problem today, as in 1992, is to create an infrastructure that promotes competition. K. Arrow recalls that “under capitalism, the expansion and even maintenance of supply at the same level often takes the form of new firms entering the industry, and not the development or simple reproduction of old ones; this applies especially to small-scale and low-capital-intensive industries.” With regard to the privatization of heavy industry, this process must necessarily be slow, but here too “the priority task is not to transfer existing capital assets and enterprises into private hands, but to gradually replace them with new assets and new enterprises.
Thus, one of the urgent tasks of the transition period is to increase the number of enterprises of all levels, to intensify entrepreneurial initiative. According to M. Goldman, instead of quick voucher privatization, efforts should have been directed towards stimulating the creation of new enterprises and the formation of a market with an appropriate infrastructure that is distinguished by transparency, the presence of the rules of the game, the necessary specialists and economic legislation. In this regard, the question arises of creating the necessary business climate in the country, stimulating the development of small and medium-sized businesses, and eliminating bureaucratic barriers. Experts note the far from satisfactory state of affairs in this area and the lack of grounds to expect it to improve, as evidenced by the slowdown in growth and even the reduction in the number of enterprises since the mid-1990s, as well as the number of unprofitable enterprises. All this requires the improvement and simplification of regulation, licensing, the tax system, the provision of affordable credit, the creation of a network to support small businesses, training programs, business incubators, etc.
Comparing the results of privatization in various countries, J. Kornai notes that the most sad example of the failure of the accelerated privatization strategy is Russia, where all the characteristics of this strategy manifested themselves in an extreme form: voucher privatization imposed on the country, coupled with mass manipulations in the transfer of property into the hands of managers and close officials . Under these conditions, instead of "people's capitalism", there was actually a sharp concentration of former state property and the development of "an absurd, perverted and extremely unjust form of oligarchic capitalism."
Thus, the discussion of the problems and results of privatization showed that forcing it does not automatically lead to market behavior of enterprises, and the methods of its implementation actually meant ignoring the principles of social justice. Privatization, especially of large industry, requires large-scale preparation, reorganization and restructuring of enterprises. Of great importance in the formation of a market mechanism is the creation of new enterprises ready to enter the market, which requires appropriate conditions and support for entrepreneurship. At the same time, one should not overestimate the importance of changes in the forms of ownership, which are important not in themselves, but as a means of increasing the efficiency and competitiveness of enterprises.
Liberalization
Price liberalization was the first item on Boris Yeltsin's program of urgent economic reforms, proposed to the Fifth Congress of People's Deputies of the RSFSR, held in October 1991. The liberalization proposal met with the unconditional support of the congress (878 votes in favor and only 16 against).
In fact, a radical liberalization of consumer prices was carried out on January 2, 1992 in accordance with the Decree of the President of the RSFSR dated December 3, 1991 No. 297 “On measures to liberalize prices”, as a result of which 90% of retail prices and 80% of wholesale prices were exempted from state regulation. At the same time, control over the level of prices for a number of socially significant consumer goods and services (bread, milk, public transport) was left to the state (and some of them are still preserved). At first, margins on such goods were limited, but in March 1992 it became possible to cancel these restrictions, which was used by most regions. In addition to price liberalization, since January 1992, a number of other important economic reforms have been implemented, in particular, the liberalization of wages, the freedom of retail trade, etc.
Initially, the prospects for price liberalization were in serious doubt, as the ability of market forces to determine the prices of goods was limited by a number of factors. First of all, price liberalization began before privatization, so the economy was predominantly state-owned. Second, reforms were initiated at the federal level, while price controls were traditionally exercised at the local level, and in some cases local authorities chose to maintain this control directly, despite the government's refusal to provide subsidies to such regions.
In January 1995, prices for about 30% of goods continued to be regulated in one way or another. For example, the authorities put pressure on privatized stores, using the fact that land, real estate and utilities were still in the hands of the state. Local authorities also created barriers to trade, such as prohibiting the export of food to other areas. Thirdly, powerful criminal gangs arose that blocked access to existing markets and collected tribute through racketeering, thereby distorting market pricing mechanisms. Fourth, the poor state of communications and high transportation costs made it difficult for companies and individuals to respond effectively to market signals. Despite these difficulties, in practice, market forces began to play a significant role in pricing, and imbalances in the economy began to narrow.
Price liberalization has become one of the critical steps on the way of transition of the country's economy to market principles. According to the authors of the reforms, in particular, Gaidar, thanks to liberalization, the country's stores were filled with goods in a fairly short time, their assortment and quality increased, and the main prerequisites were created for the formation of market economic mechanisms in society. As Vladimir Mau, an employee of the Gaidar Institute, wrote, “the main thing that was achieved as a result of the first steps of economic reforms was to overcome the commodity deficit and avert the threat of impending famine from the country in the winter of 1991-1992, and also to ensure the internal convertibility of the ruble.”
Before the start of the reforms, representatives of the Russian Government argued that the liberalization of prices would lead to their moderate growth - an adjustment between supply and demand. According to the generally accepted view, fixed prices for consumer goods were underestimated in the USSR, which caused increased demand, and this, in turn, caused a shortage of goods.
It was assumed that as a result of the correction, the commodity supply, expressed in new market prices, would be about three times higher than the old one, which would ensure economic equilibrium. However, price liberalization was not coordinated with monetary policy. As a result of price liberalization, by mid-1992, Russian enterprises were left practically without working capital.
Price liberalization has led to rampant inflation, devaluation of wages, incomes and savings of the population, rising unemployment, as well as an increase in the problem of irregular payment of wages. The combination of these factors with the economic downturn, increased income inequality and uneven distribution of earnings across regions has led to a rapid fall in real earnings for a large part of the population and its impoverishment. In 1998, GDP per capita was 61% of the 1991 level - an effect that came as a surprise to the reformers themselves, who expected the opposite result from price liberalization, but which was observed to a lesser extent in other countries where "shock therapy" was carried out. ".
Thus, in conditions of almost complete monopolization of production, price liberalization actually led to a change in the bodies that set them: instead of state committee monopoly structures themselves began to deal with this, which resulted in a sharp increase in prices and a simultaneous decrease in production volumes. Price liberalization, which was not accompanied by the creation of restraining mechanisms, did not lead to the creation of market competition mechanisms, but to the establishment of control over the market by organized criminal groups that extract super profits by inflating prices, moreover, the mistakes made provoked hyperinflation of costs, which not only disorganized production, but also led to to the depreciation of income and savings of citizens.
2.2 Institutional factors of market reform
market neoclassic institutionalism economic
The formation of a modern, that is, adequate to the challenges of the post-industrial era, a system of institutions is the most important prerequisite for achieving the strategic goals of Russia's development. It is necessary to ensure the coordinated and effective development of institutions,
regulating the political, social and economic aspects of the country's development.
The institutional environment necessary for an innovative socially oriented type of development will be formed in the long term in the following areas. First, political and legal institutions aimed at ensuring the civil and political rights of citizens, as well as the enforcement of legislation. It's about on the protection of basic rights, including the inviolability of person and property, the independence of the judiciary, the effectiveness of the law enforcement system, freedom of means mass media. Secondly, institutions that ensure the development of human capital. First of all, this concerns education, healthcare, the pension system and housing. The key problem in the development of these sectors is the implementation of institutional reforms - the development of new rules for their functioning. Thirdly, economic institutions, that is, legislation that ensures the sustainable functioning and development of the national economy. Modern economic legislation should ensure economic growth and structural modernization of the economy. Fourth, development institutions aimed at solving specific systemic problems of economic growth, that is, the rules of the game that are not aimed at all participants in the economic or political life, and on some of them. Fifth, a system of strategic management that ensures the harmonious formation and development of these types of institutions and is aimed at coordinating budgetary, monetary, structural, regional and social policies in solving systemic internal problems of development and responding to external challenges. It includes interconnected programs of institutional reforms, long-term and medium-term forecasts for the development of the economy, science and technology, strategies and programs for the development of key sectors of the economy and regions, a long-term financial plan and a budgeting system based on results. The basis of sustainable economic growth is formed by the first type of institutions - guarantees of basic rights.
To improve the effectiveness of political and legal institutions, to ensure the implementation of legislation, it is necessary to solve the following problems:
effective protection of private property, the formation in society of an understanding that the ability to protect property is one of the criteria for a favorable investment climate and the effectiveness of state power. Particular attention should be paid to the suppression of raider seizures of property;
conducting a judicial reform that ensures the effectiveness and fairness of decisions made by the court;
creating conditions under which it would be beneficial for Russian companies to remain in Russian jurisdiction, rather than registering offshore and using the Russian judicial system to resolve disputes, including property disputes;
the fight against corruption not only in public authorities, but also in public institutions providing social services to the population, and in large economic structures associated with the state (natural monopolies). This requires a radical increase in transparency, a change in the motivation system, counteraction to the criminal use of official position by public servants for personal interests in order to promote business, the creation of unreasonable administrative restrictions on business, increased liability for offenses related to corruption and abuse of official position, including on the basis of indirect signs of corruption;
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Institute of Economics
Weekend group
Test
By discipline: "Institutional economy".
On the topic In: "Neoclassical Economic Theory and Institutional Economics".
Completed by a student
Groups EMZV-3-06
Dushkova E.V.
checked
Malinovsky L.F.
Moscow 2007.
The subject and features of neoclassicism.
Initial representations.
Modern evolutionary institutionalism.
Key Features.
Bibliography.
Introduction:
The rules of economic behavior, together with the mechanisms that force people to comply with them, are called institutions by economists. Institute (to institute (English)) - to establish, establish.
In economic theory, the concept of institution was first included in the analysis by Thorstein Veblen. By institutions, Veblen meant:
Habitual ways of responding to stimuli;
The structure of the production or economic mechanism;
The currently accepted system of social life.
Another founder of institutionalism, John Commons, defines an institution as follows:
Institute- collective action to control, liberate and expand individual action.
Wesley Mitchell has the following definition:
Institutes- dominant, and highly standardized, social habits.
Currently, within the framework of modern institutionalism, the most common interpretation of the institutions of Douglas North is:
Institutes These are the rules, the mechanisms that ensure their implementation, and the norms of behavior that structure the repetitive interactions between people.
Institutions play a huge role in the economic and social life of society. In the last decade, the term institute has become one of the most used: it is used by scientists, journalists, and ordinary people.
What are effective institutions?
How to assess whether an institution is effective?
How to create and maintain effective institutions in society?
These questions are answered by institutional economics.
neoclassical economic theory.
1.1. The subject and features of neoclassicism.
By the middle of the XX century. The main current of economic thought was neoclassical economic theory. Its basic model was the model of L. Walras (1834-1910), which considered the relationship of economic agents, built on the basis of the exchange of economic benefits. Agents act in their own interests. The goods presented on the market are homogeneous. It is assumed that the market itself is concentrated at one point in space and the exchange occurs instantly. All agents are clearly aware of their preferences and simultaneously exchange their goods and money. They have full and perfect information about the goods offered to each other, and about the conditions of exchange. The presence of such information gives them confidence that they will not let themselves be deceived. And if they are deceived, they will find effective protection in a court. Therefore, the implementation of the exchange does not require other efforts, except for the expenditure of a certain amount of money. Prices are the main tool for the optimal allocation of resources. In other words, to choose the optimal course of action, you do not need to know anything but prices. By pursuing their own interests, individuals, nevertheless, contribute to the achievement of an effective balance. This is how the invisible hand of the market works.
The English philosopher Imre Lakatosh (1922–1974) divides any research program into two parts: the rigid core of the program and its protective belt. If not only the hard core remains unchanged, but also the protective belt, then the program is orthodox. A program becomes modified when the elements that make up its protective belt change. Finally, if the changes affect the elements that form the rigid core, a new research program appears.
In the economic theory of the XX century. neoclassical theory became dominant. R. Coase, the winner of the A. Nobel Prize in Economics, wrote: “Currently, the understanding of economic science that is expressed in the definition of L. Robbins (1898–1984) dominates: Economics is a science that studies human behavior from the point of view relationship between its ends and limited means that allow for alternative uses. This definition turns economics into a science of choice. In fact, most economists, including Robbins himself, limit their work to a much narrower range of choices than this definition suggests. The prerequisites of neoclassical economic theory, which constitute its rigid core, as well as the protective belt, are the following concepts.
Hard core:
1) stable preferences;
2) rational choice model;
3) equilibrium schemes of interaction.
Protective belt:
1) precise definition of the type of situational constraints facing the agent;
2) a precise definition of the type of information available to agents about the situation in which they find themselves;
3) precise definition of the type of interaction being studied.
The protective belt can be reformulated in other words:
1. Ownership rights remain unchanged and clearly defined.
2. The information is completely accessible and complete.
3. Individuals satisfy their needs through exchange, which occurs without cost, taking into account the initial distribution.
The following points should be added to the characteristics of neoclassicism. The first - methodological individualism, which consists in explaining collective entities (as well as institutions) on the basis of the activities of individuals. It is the individual who becomes the starting point in the analysis of institutions. For example, the characteristics of the state are derived from the interests and behavior of its citizens. Second moment - ignoring the institutional structure of production and exchange, since it does not matter in determining the relative efficiency of the final allocation of resources. A special view of the neoclassicists on the process of the emergence of institutions is known - the concept of the spontaneous evolution of institutions. This concept comes from the following assumption: institutions arise as a result of people's actions, but not necessarily as a result of their desires, i.e. spontaneously. In addition, the achievement of equilibrium is studied by the method of comparative statics, i.e. the starting point of the analysis is the state of equilibrium, and then it is shown how a change in parameters causes an adaptation process leading to a new equilibrium.
Criticism of neoclassical economic theory.
Neoclassical theory has ceased to meet the requirements of those economists who tried to comprehend the really occurring economic events, for several reasons.
1. Neoclassical theory is based on unrealistic assumptions and limitations, which means that it uses models that are inadequate to economic reality.
2. Economics considers it possible to expand the range of analyzed phenomena, such as ideology, law, property, norms of behavior, family, etc. This process is called economic imperialism.
3. Within the framework of neoclassicism, a “timeless” approach is applied, there are practically no theories that satisfactorily explain the dynamic changes in the economy.
4. Neoclassical models are abstract and overly formalized.
Nobel laureate 1973 Wassily Leontiev in his article "Academic Economics" (1982) wrote: "Each page of economic journals is replete with mathematical formulas that lead the reader from more or less plausible, but absolutely arbitrary assumptions to precisely formulated, but irrelevant theoretical conclusions... Year after year, theoretical economists continue to create dozens of mathematical models and study their formal properties in detail, while econometricians continue to adapt algebraic functions various kinds and forms to previous sets of statistical data, being unable to make significant progress in a systematic understanding of the structure and principles of the functioning of the real economic system.
Let us consider some criticisms that may provide some scope for change in economic theory.
1. The core concept of rational, maximizing behavior was heavily criticized by Herbert Simon decades ago. These criticisms were largely ignored until recently, when the development of game theory gave rise to a new kind of "bounded rationality" concept. Game theory has legitimized the discussion of both types of bounded rationality - "close rationality" and "irrationality" as well as a departure from the originally supported assumption of perfect knowledge. Now the neoclassicals, albeit on a limited scale, have accepted the discussion about the problems of imperfect or asymmetric information. These favorable changes undermine orthodox premises.
2. Theoretical work in game theory and elsewhere raises questions about the very meaning of core propositions such as rationality. Robert Sugden in 1990 argued that "game theory can leave behind the concept of rationality what will eventually become little more than a convention." He writes: “There was a time not so long ago when the foundations of rational choice theory seemed solid... But it is becoming increasingly clear that these foundations are less solid than we thought, and that they need to be tested and perhaps revised. Economic theorists must become as much philosophers as mathematicians." Therefore, the assumption of a "rational economic man" now looks much more problematic to informed neoclassical theorists than it did a decade or more ago.
3. The intrusion of chaos theory into economics has led to the general idea that economics can continue simply on the criteria of "correct predictions". In non-linear models, the results are hypersensitive to initial conditions and therefore reliable predictions cannot be made over any long period of time. Chaos theory especially confused rational expectations theorists by the fact that even if most agents knew the basic structure of the economic model, they could not in general make reliable predictions of outcomes and therefore form any meaningful "rational expectations" of the future.
4. Nicholas Kaldor has repeatedly argued that the key problem of neoclassical theory was its neglect of the phenomenon of positive feedback based on increasing returns. He also pointed to the related problem of path dependency in economic models. In 1990 Brian Arthur has shown that many of the technological and structural features of the modern economy involve positive feedback loops that magnify the effects of small changes. Therefore, initial accidents can have a huge impact on the outcome. Perhaps there will be technological "blocking" and instead of gravitating towards a predetermined equilibrium, the results may be path-dependent. Therefore, there may be several possible and suboptimal equilibrium outcomes. The work of Arthur and other economists brought Kaldor's ideas back on the agenda.
5. The development of general equilibrium theory (neoclassical microeconomics at its theoretical apogee) has now reached a serious impasse. More recently, it has been realized that potential heterogeneity among individuals threatens the viability of the project. As a result, many types of interaction between individuals must be ignored. Even with limited psychological assumptions about rational behavior, serious difficulties arise when the actions of many agents are carried out together. The leading neoclassical general equilibrium theorist and Nobel Laureate in Economics (1972) Kenneth Arrow stated in 1986: "On the whole, the hypothesis of rational behavior makes no sense at all." Therefore, it is widely assumed that all individuals have the same utility function. But this negates the possibility of benefiting from trade arising from individual differences. Thus, despite the traditional glorification of individualism and competition, despite decades of formal development, the rigid core of neoclassical theory can be treated as nothing more than a gray uniformity among actors.
6. Modern research problems of uniqueness and stability of general equilibrium have shown that it can be indefinite and unstable unless very strong assumptions are made, such that society behaves as if it were one individual. The typical way of economic analysis is that the rationality of selfish and autonomous individuals is sufficient to create and achieve equilibrium and social order; what is equilibrium effectively; that social institutions such as the state can intervene only to disturb the equilibrium conditions. These ideas have had a long following since they were proclaimed by Bernard Mandeville in The Fable of the Bees (1714). The underlying assumption is that from private vices come public virtues. From the uncertain and unstable results obtained by modern theory, it can be concluded that an economy consisting of atomistic agents does not have a structure sufficient for survival.
"Old" and "New" institutionalism.
The "old" institutionalism, as an economic trend, arose at the turn of the 19th and 20th centuries. He was closely associated with the historical trend in economic theory, with the so-called historical and new historical school (F. List, G. Schmoler, L. Bretano, K. Bucher). From the very beginning of its development, institutionalism was characterized by the advocacy of the idea of social control and the intervention of society, mainly the state, in economic processes. This was the legacy of the historical school, whose representatives not only denied the existence of stable deterministic relationships and laws in the economy, but also supported the idea that the well-being of society can be achieved on the basis of strict state regulation of the nationalist economy.
The most prominent representatives of the "Old Institutionalism" are: Thorstein Veblen, John Commons, Wesley Mitchell, John Galbraith. Despite the significant range of problems covered in the works of these economists, they failed to form their own unified research program. As Coase noted, the work of the American institutionalists led nowhere because they lacked a theory to organize the mass of descriptive material.
The old institutionalism criticized the provisions that constitute the "hard core of neoclassicism." In particular, Veblen rejected the concept of rationality and the principle of maximization corresponding to it as fundamental in explaining the behavior of economic agents. The object of analysis is institutions, and not human interactions in space with restrictions that are set by institutions.
Also, the works of the old institutionalists are distinguished by significant interdisciplinarity, being, in fact, continuations of sociological, legal, and statistical studies in their application to economic problems.
The forerunners of neo-institutionalism are economists of the Austrian school, in particular Karl Menger and Friedrich von Hayek, who introduced the evolutionary method into economics and also raised the question of the synthesis of many sciences studying society.
Modern neo-institutionalism originates from the pioneering works of Ronald Coase, The Nature of the Firm, The Problem of Social Costs.
Neo-institutionalists attacked, first of all, the provisions of neoclassicism, which constitute its defensive core.
1) First, the premise that exchange occurs without cost has been criticized. Criticism of this position can be found in the first works of Coase. Although, it should be noted that Menger wrote about the possibility of the existence of exchange costs and their influence on the decisions of exchanging subjects in his Foundations of Political Economy.
Economic exchange occurs only when each of its participants, by carrying out the act of exchange, receives some increment of value to the value of the existing set of goods. This is proved by Karl Menger in his Foundations of Political Economy, based on the assumption that there are two participants in the exchange. The first has a good A, which has a value W, and the second has a good B with the same value W. As a result of the exchange that took place between them, the value of the goods at the disposal of the first will be W + x, and the second - W + y. From this we can conclude that in the process of exchange the value of the good for each participant increased by a certain amount. This example shows that the activity associated with the exchange is not a waste of time and resources, but the same productive activity as the production of material goods.
When investigating exchange, one cannot but stop at the limits of exchange. The exchange will take place as long as the value of the goods at the disposal of each participant in the exchange will, according to his estimates, be less than the value of those goods that can be obtained as a result of the exchange. This thesis is true for all counterparties of the exchange. Using the symbolism of the above example, the exchange occurs if W(A) > 0 and y > 0.
So far, we have considered exchange as a costless process. But in a real economy, any act of exchange is associated with certain costs. Such exchange costs are called transactional. They are usually interpreted as "the costs of collecting and processing information, the costs of negotiation and decision-making, the costs of monitoring and legal protection of the performance of the contract."
The concept of transaction costs contradicts the thesis of the neoclassical theory that the costs of the functioning of the market mechanism are equal to zero. This assumption made it possible not to take into account the influence of various institutions in the economic analysis. Therefore, if transaction costs are positive, it is necessary to take into account the influence of economic and social institutions on the functioning of the economic system.
2) Secondly, recognizing the existence of transaction costs, there is a need to revise the thesis about the availability of information. Recognition of the thesis about the incompleteness and imperfection of information opens up new perspectives for economic analysis, for example, in the study of contracts.
3) Thirdly, the thesis about the neutrality of distribution and the specification of property rights has been revised. Research in this direction served as a starting point for the development of such areas of institutionalism as the theory of property rights and the economics of organizations. Within the framework of these areas, the subjects of economic activity "economic organizations have ceased to be considered as" black boxes ".
Within the framework of "modern" institutionalism, attempts are also being made to modify or even change the elements of the hard core of neoclassicism. First of all, this is the neoclassical premise of rational choice. In institutional economics, classical rationality is modified with assumptions about bounded rationality and opportunistic behavior.
Despite the differences, almost all representatives of neo-institutionalism consider institutions through their influence on decisions made by economic agents. This uses the following fundamental tools related to the human model: methodological individualism, utility maximization, bounded rationality and opportunistic behavior.
Some representatives of modern institutionalism go even further and question the very premise of the utility-maximizing behavior of economic man, suggesting its replacement by the principle of satisfaction. In accordance with the classification of Tran Eggertsson, representatives of this trend form their own trend in institutionalism - the New Institutional Economics, whose representatives can be considered O. Williamson and G. Simon. Thus, the differences between neo-institutionalism and the new institutional economics can be drawn depending on what prerequisites are being replaced or modified within their framework - a “hard core” or a “protective belt”.
The main representatives of neo-institutionalism are: R. Coase, O. Williamson, D. North, A. Alchian, Simon G., L. Thevenot, K. Menard, J. Buchanan, M. Olson, R. Posner, G. Demsetz, S. Pejovich, T. Eggertsson and others.
Comparative characteristics of the "old" and "new"
institutionalism
Characteristic |
"Old" institutionalism |
"New" institutionalism |
|
1. Emergence |
From a critique of the orthodox assumptions of classical liberalism |
Through improving the core of modern orthodox theory |
|
2. Inspiring Science |
Biology |
Physics (mechanics) |
|
3. Analysis element |
Institutes |
Atomistic, abstract individual |
|
4. Individual |
We change, his preferences and goals are endogenous |
Taken as given, its preferences and goals are exogenous |
|
5. Institutions |
Form preferences, the individuals themselves |
Give external restrictions and opportunities for individuals: conditions of choice, restrictions and information |
|
6. Technology |
Technological change is endogenous |
Technology is exogenous |
|
7. Methodology |
Organic approach, evolutionary approach |
Methodological individualism, equilibrium approach, optimality |
|
8. Time |
Early 20th century |
Last third of the 20th century |
|
9. Representatives |
T. Veblen, J. Commons, W. Mitchell |
O. Williamson, G. Demsets, D. North, R. Posner, E. Shotter, R. Coase and others. |
The "new" institutionalism, true to its neoclassical roots, speculates on equilibrium and mechanistic conceptions of process, as opposed to the biologically inspired evolutionism of the "old" ones.
Both "new" and "old" institutionalisms have something to offer, but the warnings of "old" institutionalism to continue to use obsolete classical liberal assumptions should not be ignored. In this regard, the "old" institutionalism retains some advantages over the "new".
evolutionary institutionalism.
3.1. Initial representations.
With the emergence of institutionalism at the turn of the XIX-XX centuries. connected with the birth of evolutionary economic theory (EET). After the creation of the evolutionary theory by Charles Darwin, the English philosopher G. Spencer, based on his ideas of universal development and selection, developed a universal philosophical system that describes the movement of natural and social life on the principles of evolution. Attempts to transfer evolutionary ideas to economic soil were fruitless until a “selection unit” was singled out - that substance that is stable over time, is transferred from one economic entity to another and, at the same time, is capable of change. T. Veblen is the author of the key ideas and concepts that form the modern institutional-evolutionary theory. Rejecting the idea of a person as a rational individual and putting forward the very concept of institutions as “sustainable habits of thought inherent in a large community of people”, examining their origin from instincts, habits, traditions and social norms, T. Veblen for the first time subjected scientific analysis ways and forms of development of institutions. T. Veblen also owns the very idea that institutions can be likened to genes and that evolution in the economic system and in wildlife proceeds, if not according to general, then according to similar laws.
From the mid-1970s, it became clear that it was institutionalism, leading from T. Veblen and J. Commons, having significantly changed, that managed to act as the theoretical force that united around itself heterogeneous trends that oppose neoclassicism.
As an example, let us characterize the ideas of the 1970s by the American economist David Hamilton. In "Evolutionary Economic Theory" (1970), D. Hamilton presented classical and neoclassical theories as "Newtonian", i.e. guided by the principle of mechanical equilibrium, which governs the movement of the economic system. He adhered to the Darwinian understanding of economic evolution as an "open" process that does not have a given "center of gravity" and is based on the historical selection of social institutions. Changes in human nature, social organization, technology and culture in general. D. Hamilton dwells on the difference between the neoclassical and institutional understanding of the market. He emphasizes the primacy of "production" in relation to "business", invention - in relation to the accumulation of capital, technical activity - in relation to profit-making activities. Hence, the market for institutionalists is not a reflection of the “natural order”, but “a product of culture, designed to register what society considers it necessary to register.”
3.2. Modern evolutionary institutionalism.
Modern representatives of evolutionary institutionalism are R. Nelson, S. Winter, J. Hodgson and others. Evolutionary institutionalism develops under the influence of the works of T. Veblen, J. Schumpeter (1883–1950), D. North and others. Evolutionary economic theory received a new impetus in 1982, when the well-known work of R. Nelson and S. Winter "The Evolutionary Theory of Economic Change", published in Russian in 2000, was published. If in the United States an institutionalized trend of institutional economic thought has existed for a long time, then the European Association for Evolutionary Political Economy (EAEPE) was created only in 1988.
In the 1990s, evolutionary theory began to develop in Russia as well. Active research in this direction is being carried out by scientists from the Institute of Economics of the Russian Academy of Sciences, CEMI RAS and others. scientific institutions. For example, research is being conducted aimed at developing evolutionary macroeconomics. The Center for Evolutionary Economics operates in Moscow, including the publication of works by well-known institutionalists.
Using the review by A.N. Nesterenko, we will characterize evolutionary institutionalism.
In contrast to the neoclassical doctrine, which considers the economic system as a mechanical community of individuals isolated from each other (atomism) and derives the properties of the system from the properties of its constituent elements (individuals), institutionalists emphasize the importance of relationships between elements for the formation of properties of both the elements themselves and the system in in general. This approach, referred to as "holism"or"organism", proclaims the dominance social relations over the psychophysical qualities of individuals, which determines the essential properties of the economic system. The organic approach was also shared by some representatives of the classical school, but none of them, with the exception of K. Marx, did not occupy a central place with this idea. Modern science is increasingly focused on the study of the interaction between the elements of the system, following the provisions of systems theory and cybernetics.
Most representatives of this trend share the point of view accepted by modern science about dualistic nature of the elements of the system. Each element has "independent" properties as an autonomous unit, striving to maintain and function as a "whole", and "dependent" properties, determined by the element's belonging to the system (whole). Thus, the system determines the properties of its constituent elements, but not completely, but partially. In turn, the properties of the system incorporate the characteristics of its constituent elements, but they also have special properties that are not represented in any of the elements.
According to the modern scientific vision, the economy is seen as an evolutionary open system that is constantly affected by the external environment (culture, political situation, nature, etc.) and reacts to them. Therefore, evolutionary institutionalism denies the most important postulate of neoclassical theory - the desire of the economy for equilibrium, considering it as an atypical and very short-term state. The influence of factors contributing to the approach of the system to equilibrium is blocked by more powerful external influences and, most importantly, by endogenous forces that generate an endless process of changes and development in the system.
The main endogenous mechanism of this kind is "cumulative causality"- a concept formulated by T. Veblen, which can be translated as "positive feedback". The effect of cumulative causality T. Veblen explained by the fact that actions aimed at achieving a goal can, in principle, unfold to infinity: in the process of activity, both the person and the goal to which he strives change. A similar observation applies to economics. That's why " modern science is increasingly becoming a theory of the process of successive changes, understood as changes that are self-sustaining, self-developing and without an ultimate goal. Processes characterized by positive feedback are inherent in an open system (neoclassical equilibrium is the result of a process with negative feedback in a closed system).
Positive feedback can lead to the completion of the process if the achieved result has self-sustaining properties and stability. (blocking effect). Stable socio-psychological and socio-economic structures become what T. Veblen and his followers call "institution". As an illustration of the blocking effect, T. Veblen cites the political and economic structures of Great Britain on the eve of the First World War, which were formed at the beginning of the era of the industrial revolution. Having become stable and self-sustaining, these institutions ceased to meet the requirements of the time and caused the British economy to lag behind the German one.
The stability of the system, which arises from the blocking effect, is broken from time to time when internal and external factors undermine the compatibility and mutual "cohesion" of institutions. One of the main factors of economic change (and, unlike the neoclassical school, not exogenous, but endogenous), institutionalists consider technological development.
The socioeconomic institution is the central element of analysis in institutional evolutionary theory. But the principles of the functioning of institutions are also applicable to the individual, since the individual tends to act on the basis of self-supporting sociocultural norms (habits, stereotypes) and generally accepted practices - various "routines". They serve as guidelines in a very complex and changing world, the full knowledge of which is not available to man. Therefore, the individual's economic behavior is only partially rational (the principle of "bounded rationality"), does not maximize utility, and is highly rigid (inflexible).
In general, criticism of neoclassical positions takes a very great place in the writings of contemporary evolutionary institutionalists. Although representatives of this direction want to establish relatively new approaches in the scientific community, however, their scientific and practical conclusions are not as impressive as in NIE. Some eminent scholars acknowledge that the relationship between EET and neoclassicism is much more complex. The institutional-evolutionary theory is much broader than the neoclassical one, both in terms of the object of analysis (socio-economic and socio-psychological foundations of economic activity) and methodology (the study of institutions in the process of their evolutionary development). This allows us to consider neoclassicism as a theory that provides a simplified vision of economic processes compared to the institutional-evolutionary theory.
The works of the institutionalists of this trend contain attempts to highlight the characteristic features of modern economic evolution. Thus, J. Hodgson notes that the physics of the 19th century had the main influence on economic theory, and the evolutionary paradigm is an alternative to the neoclassical idea of mechanical maximization under static constraints. Among the theories of economic evolution, J. Hodgson identifies two areas: the theory of development (K. Marx and his followers, J. Schumpeter, etc.) and the theory of genetics (A. Smith, T. Veblen, etc.). The fundamental difference between them is that the former do not recognize the "genetic code" transmitted from one stage of evolution to another; the latter proceed from the presence of "genes". The evolutionary process is "genetic" because it follows in some way from the totality of the unchanging essential properties of man. Biological genes are one possible explanation, but alternatives include human habits, personality, established organization, social institutions, even entire economic systems.
Within the framework of the first direction, J. Hodgson distinguishes between the supporters of "single-linear", deterministic development (this is primarily K. Marx) and the theorists of "multi-linear", i.e. polyvariant development (a number of followers of K. Marx). Within the framework of the second (genetic) direction, a division is also made into “ontogenetic” (A. Smith, K. Menger, etc.) and “phylogenetic” (T. Malthus, T. Veblen, etc.) components. If the "ontogenetic" theory assumes the immutability of the "genetic code", then the "phylogenetic" one proceeds from its transformation. Phylogenetic evolution involves the development of different genetic rules through some cumulative feedback process and subsequent effect. But phylogenetic evolution does not include the need for an end result, a state of equilibrium or rest. However, the "phylogenetic" theory breaks down into two contradictory approaches - Darwinian and Lamarckian. The first, as you know, denies, and the second recognizes the possibility of inheriting acquired traits. According to J. Hodgson, modern followers of T. Veblen are closer to genetics in the Lamarckian sense than to Darwinism. In general, modern evolutionary theory shares the phylogenetic approach in its Darwinian or Lamarckian variants.
3.3. Key Features.
Thus, the main properties of modern evolutionary theory are:
1. Rejection of optimization prerequisites and methodological individualism. Evolutionary institutionalists, following the old ones, reject the idea of a person as a "rational optimizer", acting in isolation from society.
2. Emphasis on the study of economic change. Evolutionists, following T. Veblen and other old institutionalists, consider the market economy as a dynamic system.
3. Making biological analogies. If many classics and neoclassics likened the market economy to a mechanical system, then evolutionists interpret economic changes largely by analogy with biological ones (for example, likening a set of firms to a population).
4. Accounting for the role of historical time. In this regard, evolutionary institutionalists are similar to post-Keynesians, but if the latter pay more attention to the uncertainty of the future, then the former pay more attention to the irreversibility of the past, emphasizing in this regard various dynamic phenomena that are a consequence of the irreversibility of historical time and lead to suboptimal results for the economy as a whole. Such phenomena are manifestations of dependence on the past path of development.
These phenomena include cumulative causality,
as well as hysteresis and blocking. Hysteresis is the dependence of the final results of a system on its previous results. Lock-in is a non-optimal state of the system, which is the result of past events and from which there is no instant exit.
5. Using the concept of "routine". According to evolutionists, the dominant role in the behavior of economic entities is played by routines - standardized rules for making decisions and carrying out activities that are applied for a certain period without adjustment (although under certain circumstances they may undergo minor changes). This concept is basic in the evolutionary theory of the firm, which will be discussed in Chap. 6.
6. Favorable attitude towards government intervention. The previous properties of evolutionary-institutional analysis indicate that economic changes do not have an inherent tendency to provide optimal results. Therefore, from the point of view of evolutionists, government intervention can have a positive impact on the economy.
The researchers note that economic theory includes two mutually exclusive aspects: the first is the theory of development (evolution) of the economic system and the second is the theory of its structure and functioning. In the second aspect, economic theory can never become evolutionary (as in biology, genetics will not replace anatomy and physiology). For system analysis evolutionary institutionalism should create not only the theory of economic evolution, but also the theory of the functioning of the economic system.
Conclusion.
The relationships between the directions of modern institutionalism are multifaceted, complex and often difficult to detect, their assessment depends both on the understanding of each of the directions separately, and on the context of comparison and the field of phenomena being studied.
At the present stage of development of institutional economic theory, it is very difficult to talk about a single subject of this important and interesting science. This circumstance is also related to the diversity of ideas about subject areas, and with the heterogeneity of the methods and models used.
Understanding the essence and interrelationships between the concepts and ideas of representatives of modern institutionalism will make it possible to better understand not only the nature of economic phenomena themselves, but also the possibilities and prospects for the development of economic theory based on the exchange of ideas between various research programs.
In addition, modern institutional theory and all its areas can become a fruitful base for numerous applied research in those areas of economic activity that are currently understudied.
Already now, NIE has various areas of application, which O. Williamson combined into three main areas. The first is related to functional areas, the second to applications in related disciplines, and the third to applications to economic policy issues. Within the framework of the first direction, O. Williamson lists six functional areas: finance, marketing, comparison of economic systems, economic development, business strategies, business history. For example, the comparative analysis of economic systems has been developed in the process of studying the problems of economic history and modern systems by analyzing the influence of institutions on the economic development of many countries. With the help of NIE, issues that are traditional for related disciplines are studied: political science, sociology, jurisprudence, the theory of international relations, etc. For example, the processes of institutional changes are studied through lawmaking, including in terms of applying methods for creating normative legal acts that meet the principles of institutional design . The third type of application of the NIE is its application to various areas of public policy. The most studied NIEs are antimonopoly policy and economic regulation. The researchers conclude that there are significant prospects for the development of NIE not only in terms of theoretical activities and the study of topical problems of entrepreneurship, economic policy, but also research in related disciplinary areas.
Bibliography:
Volchik V.V., “A course of lectures on institutional economics”, Rostov–n / D, 2000.
Kuzminov Ya.I., Bendukidze K.A., Yudkevich M.M., "Course of institutional economics": a textbook for students, Moscow, 2005.
Litvintseva G.P., "Institutional Economic Theory": textbook, Novosibirsk, 2003.
Neoclassical economic theory emerged in the 1870s. The neoclassical direction explores the behavior of an economic person (consumer, entrepreneur, employee), who seeks to maximize income and minimize costs. The main categories of analysis are limiting values. Neoclassical economists developed the theory of marginal utility and the theory of marginal productivity, the theory of general economic equilibrium, according to which the mechanism of free competition and market pricing ensures a fair distribution of income and the full use of economic resources, the economic theory of welfare, the principles of which form the basis of the modern theory of public finance (P Samuelson), the theory of rational expectations, etc. In the second half of the 19th century, along with Marxism, neoclassical economic theory arose and developed. Of all its numerous representatives, the English scientist Alfred Marshall (1842-1924) gained the greatest fame. The supply of a good is based on the cost of production. The producer cannot sell at a price that does not cover his production costs. If the classical economic theory considered the formation of prices from the standpoint of the producer, then the neoclassical theory considers pricing both from the standpoint of the consumer (demand) and from the standpoint of the producer (supply). Neoclassical economic theory, like the classics, proceeds from the principle of economic liberalism, the principle of free competition. But in their studies, neoclassicists place more emphasis on the study of applied practical problems, use quantitative analysis and mathematics to a greater extent than qualitative (meaningful, cause-and-effect). The greatest attention is paid to the problems of efficient use of limited resources at the microeconomic level, at the level of the enterprise and household. Neoclassical economic theory is one of the foundations of many areas of modern economic thought. (A. Marshall: Principles of Political Economy, J. B. Clark: Income Distribution Theory, A. Pigou: Welfare Economics)
The "old" institutionalism, as an economic trend, arose at the turn of the 19th and 20th centuries. He was closely associated with the historical trend in economic theory, with the so-called historical and new historical school (F. List, G. Schmoler, L. Bretano, K. Bucher). From the very beginning of its development, institutionalism was characterized by the advocacy of the idea of social control and the intervention of society, mainly the state, in economic processes. This was the legacy of the historical school, whose representatives not only denied the existence of stable deterministic relationships and laws in the economy, but also supported the idea that the well-being of society can be achieved on the basis of strict state regulation of the nationalist economy. The most prominent representatives of the "Old Institutionalism" are: Thorstein Veblen, John Commons, Wesley Mitchell, John Galbraith. Despite the significant range of problems covered in the works of these economists, they failed to form their own unified research program. As Coase noted, the work of the American institutionalists led nowhere because they lacked a theory to organize the mass of descriptive material. The old institutionalism criticized the provisions that constitute the "hard core of neoclassicism." In particular, Veblen rejected the concept of rationality and the principle of maximization corresponding to it as fundamental in explaining the behavior of economic agents. The object of analysis is institutions, and not human interactions in space with restrictions that are set by institutions. Also, the works of the old institutionalists are distinguished by significant interdisciplinarity, being, in fact, continuations of sociological, legal, and statistical studies in their application to economic problems.
1. The institutional approach occupies a special place in the system of theoretical economic directions. Unlike the neoclassical approach, it focuses not so much on the analysis of the results of the behavior of economic agents, but on this behavior itself, its forms and methods. Thus, the identity of the theoretical object of analysis and historical reality is achieved.
2. Institutionalism is characterized by the predominance of the explanation of any processes, and not their prediction, as in neoclassical theory. Institutional models are less formalized, therefore, within the framework of institutional forecasting, many more different predictions can be made.
3. The institutional approach is associated with the analysis of a specific situation, which leads to more generalized results. Analyzing a specific economic situation, institutionalists compare not with an ideal one, as in neoclassicism, but with a different, real situation.
Institutionalism and neoclassical economics
The concept of an institution. The role of institutions in the functioning of the economy
Question Principles and methods of education of preschool children.
RESEARCH METHODS help explore and synthesize data teaching practice. These methods include conversations, questioning, observations, experiments, analysis of special literature, works of preschoolers.
TEACHING METHODS are methods of purposeful interrelated activities of a teacher and preschoolers, in which children learn skills, knowledge and skills, their worldview is formed, and inherent abilities develop.
METHODS of education - the most common ways achievement of educational goals. They can be broken down into simpler subsets of methods pedagogical impact and upbringing.
Let's start the study of institutions with the etymology of the word institution.
to institute (eng) - to establish, establish.
The concept of institution was borrowed by economists from the social sciences, in particular from sociology.
Institute called a set of roles and statuses, designed to meet a specific need.
Definitions of institutions can also be found in works of political philosophy and social psychology. For example, the category of institution is one of the central ones in the work of John Rawls "The Theory of Justice".
Under institutions I will understand the public system of rules that define office and position, with associated rights and duties, authority and immunity, and the like. These rules specify certain forms of action as permitted and others as forbidden, and they also punish some acts and protect others when violence occurs. As examples, or more general social practices, we can cite games, rituals, courts and parliaments, markets and property systems.
In economic theory, the concept of institution was first included in the analysis by Thorstein Veblen.
Institutes- this is, in fact, a common way of thinking with regard to individual relations between society and the individual and the individual functions performed by them; and the system of life of a society, which is composed of the totality of those active at a certain time or at any moment in the development of any society, can be psychologically characterized in general terms as the prevailing spiritual position or widespread idea of \u200b\u200bthe way of life in society.
Veblen also understood institutions as:
- habitual ways of responding to stimuli;
- the structure of the production or economic mechanism;
- currently accepted system of social life.
Another founder of institutionalism, John Commons, defines an institution as follows:
Institute- collective action to control, liberate and expand individual action.
Another classic of institutionalism, Wesley Mitchell, has the following definition:
Institutes- dominant, and highly standardized, social habits.
Currently, within the framework of modern institutionalism, the most common interpretation of the institutions of Douglas North is:
Institutes are the rules, the mechanisms that ensure their implementation, and the norms of behavior that structure the repetitive interactions between people.
The economic actions of an individual do not take place in an isolated space, but in a certain society. And therefore it is of great importance how society will react to them. Thus, transactions that are acceptable and profitable in one place may not necessarily be viable even under similar conditions in another. An example of this is the restrictions imposed on the economic behavior of a person by various religious cults.
In order to avoid coordinating many external factors that affect success and the very possibility of making one or another decision, schemes or algorithms of behavior are developed within the framework of the economic and social orders that are most effective under given conditions. These schemes and algorithms or matrices of individual behavior are nothing but institutions.
There are several reasons why neoclassical theory (of the early 1960s) ceased to meet the requirements placed on it by economists who tried to comprehend real events in modern economic practice:
- Neoclassical theory is based on unrealistic assumptions and limitations, and therefore it uses models that are inadequate to economic practice. Coase called this neoclassical state of affairs "chalkboard economics."
- Economic science expands the range of phenomena (for example, such as ideology, law, norms of behavior, family) that can be successfully analyzed from the point of view of economic science. This process was called "economic imperialism". The leading representative of this trend is the Nobel laureate Harry Becker. But for the first time, Ludwig von Mises wrote about the need to create a general science that studies human action, who proposed the term “praxeology” for this.
- Within the framework of neoclassicism, there are practically no theories that satisfactorily explain the dynamic changes in the economy, the importance of studying which became relevant against the backdrop of the historical events of the 20th century. (In general, within the framework of economic science until the 80s of the 20th century, this problem was considered almost exclusively within the framework of Marxist political economy).
Now let's dwell on the main premises of the neoclassical theory, which make up its paradigm (hard core), as well as the "protective belt", following the methodology of science put forward by Imre Lakatos:
hard core :
- stable preferences that are endogenous;
- rational choice (maximizing behavior);
- equilibrium in the market and general equilibrium in all markets.
Protective belt:
- Ownership rights remain unchanged and clearly defined;
- The information is completely accessible and complete;
- Individuals satisfy their needs through exchange, which occurs without cost, given the original distribution.
The research program on Lakatos, while leaving the rigid core intact, should be aimed at clarifying, developing existing ones or putting forward new auxiliary hypotheses that form a protective belt around this core.
If the hard core is modified, then the theory is replaced by a new theory with its own research program.
Let us consider how the premises of neo-institutionalism and classical old institutionalism affect the neoclassical research agenda.
The "old" institutionalism, as an economic trend, arose at the turn of the 19th and 20th centuries. He was closely associated with the historical trend in economic theory, with the so-called historical and new historical school (F. List, G. Schmoler, L. Bretano, K. Bucher). From the very beginning of its development, institutionalism was characterized by the advocacy of the idea of social control and the intervention of society, mainly the state, in economic processes. This was the legacy of the historical school, whose representatives not only denied the existence of stable deterministic relationships and laws in the economy, but also supported the idea that the well-being of society can be achieved on the basis of strict state regulation of the nationalist economy.
The most prominent representatives of the "Old Institutionalism" are: Thorstein Veblen, John Commons, Wesley Mitchell, John Galbraith. Despite the significant range of problems covered in the works of these economists, they failed to form their own unified research program. As Coase noted, the work of the American institutionalists led nowhere because they lacked a theory to organize the mass of descriptive material.
The old institutionalism criticized the provisions that constitute the "hard core of neoclassicism." In particular, Veblen rejected the concept of rationality and the principle of maximization corresponding to it as fundamental in explaining the behavior of economic agents. The object of analysis is institutions, and not human interactions in space with restrictions that are set by institutions.
Also, the works of the old institutionalists are distinguished by significant interdisciplinarity, being, in fact, continuations of sociological, legal, and statistical studies in their application to economic problems.
The forerunners of neo-institutionalism are economists of the Austrian school, in particular Karl Menger and Friedrich von Hayek, who introduced the evolutionary method into economics and also raised the question of the synthesis of many sciences studying society.
Modern neo-institutionalism originates from the pioneering works of Ronald Coase, The Nature of the Firm, The Problem of Social Costs.
Neo-institutionalists attacked, first of all, the provisions of neoclassicism, which constitute its defensive core.
- First, the premise that exchange is costless has been criticized. Criticism of this position can be found in the first works of Coase. Although, it should be noted that Menger wrote about the possibility of the existence of exchange costs and their influence on the decisions of exchanging subjects in his Foundations of Political Economy.
Economic exchange occurs only when each of its participants, by carrying out the act of exchange, receives some increment of value to the value of the existing set of goods. This is proved by Karl Menger in his Foundations of Political Economy, based on the assumption that there are two participants in the exchange. The first has a good A, which has a value W, and the second has a good B with the same value W. As a result of the exchange that took place between them, the value of goods at the disposal of the first will be W + x, and the second - W + y. From this we can conclude that in the process of exchange the value of the good for each participant increased by a certain amount. This example shows that the activity associated with the exchange is not a waste of time and resources, but the same productive activity as the production of material goods.
When investigating exchange, one cannot but stop at the limits of exchange. The exchange will take place as long as the value of the goods at the disposal of each participant in the exchange will, according to his estimates, be less than the value of those goods that can be obtained as a result of the exchange. This thesis is true for all counterparties of the exchange. Using the symbolism of the above example, the exchange occurs if W (A)< W + х для первого и W (B) < W + у для второго участников обмена, или если х > 0 and y > 0.
So far, we have considered exchange as a costless process. But in a real economy, any act of exchange is associated with certain costs. Such exchange costs are called transactional. They are usually interpreted as "the costs of collecting and processing information, the costs of negotiation and decision-making, the costs of monitoring and legal protection of the performance of the contract" .
The concept of transaction costs contradicts the thesis of the neoclassical theory that the costs of the functioning of the market mechanism are equal to zero. This assumption made it possible not to take into account the influence of various institutions in the economic analysis. Therefore, if transaction costs are positive, it is necessary to take into account the influence of economic and social institutions on the functioning of the economic system. - Secondly, recognizing the existence of transaction costs, there is a need to revise the thesis about the availability of information. Recognition of the thesis about the incompleteness and imperfection of information opens up new perspectives for economic analysis, for example, in the study of contracts.
- Thirdly, the thesis about the neutrality of distribution and the specification of property rights has been revised. Research in this direction served as a starting point for the development of such areas of institutionalism as the theory of property rights and the economics of organizations. Within the framework of these areas, the subjects of economic activity "economic organizations have ceased to be considered as" black boxes ".
Within the framework of "modern" institutionalism, attempts are also being made to modify or even change the elements of the hard core of neoclassicism. First of all, this is the neoclassical premise of rational choice. In institutional economics, classical rationality is modified with assumptions about bounded rationality and opportunistic behavior.
Despite the differences, almost all representatives of neo-institutionalism consider institutions through their influence on decisions made by economic agents. This uses the following fundamental tools related to the human model: methodological individualism, utility maximization, bounded rationality and opportunistic behavior.
Some representatives of modern institutionalism go even further and question the very premise of the utility-maximizing behavior of economic man, suggesting its replacement by the principle of satisfaction. In accordance with the classification of Tran Eggertsson, representatives of this trend form their own trend in institutionalism - the New Institutional Economics, whose representatives can be considered O. Williamson and G. Simon. Thus, the differences between neo-institutionalism and the new institutional economics can be drawn depending on what prerequisites are being replaced or modified within their framework - a “hard core” or a “protective belt”.
The main representatives of neo-institutionalism are: R. Coase, O. Williamson, D. North, A. Alchian, Simon G., L. Thevenot, K. Menard, J. Buchanan, M. Olson, R. Posner, G. Demsetz, S. Pejovich, T. Eggertsson and others.