Economics and Institutions

Traditionally, economists have attributed consistency and rational calculation to the action of ‘economic man’. In a powerful challenge to orthodox thinking, Geoffrey Hodgson maintains that social institutions play a central and essential role in molding preferences and guiding action: institutions are regarded as enabling action rather than merely providing constraints. From this perspective, the author takes on the ‘free marketers’ such as Milton Friedman and the ‘new institutionalism’ of Oliver Williamson. He argues against the neo-classical and Austrian views of the operation of markets, offering instead a convincing new synthesis of the work of Keynes, Veblen, Simon and Marx. Taking up the implications of his argument, Hodgson calls for a radically new policy perspective based on structural reform and institutional intervention. This work will be required reading for economics students in their second and third years and will be of interest to students and academics throughout the social sciences.

PART 1 PRELUDE: Introduction and Outline On Methodology and Assumptions PART 2 A FAREWELL TO `ECONOMIC MAN': Behind Methodological Individualism The Maximisation Hypothesis The Rationalist Conception of Action Action and Institutions PART 3 ELEMENTS OF AN INSTITUTIONAL ECONOMICS: Contracts and Property Rights Markets as Institutions Firms and Markets Expectations and the Limits to Keynes Directions and Policy Implications