What theories preceded the development of institutionalism. Lobacheva E.N. Economic theory Institutionalism and stages of its development. Objectives of this work
The main stages in the development of institutionalism and its significance for economic science
institutionalism , as an economic doctrine, was formed at the turn of the 19th and 20th centuries. This term is associated with two concepts: 1) "institution" as an order, custom, and 2) "institution" as the consolidation of customs and procedures in the form of laws and institutions. Therefore, institutionalism considers together the phenomena of an economic and non-economic order, such as the state, legislation, the customs of the nation, various public organizations (trade unions, parties), the family, etc.
Unlike neoclassical economists, institutional economists deny the ability of the market economy to self-regulate and support the ideas state regulation , wide use of mathematical methods.
Institutionalists emphasize that in economic life people act not as autonomous individuals, but as representatives of separate social structures. Numerous (organizations, formal and informal norms) severely limit the freedom of individual choice and force each person to obey certain generally accepted rules. The most important feature of institutionalism is idea of "social control" over the economy.
In its development, institutionalism as a scientific trend has gone through three stages .
First step falls on the 20-30s. XX century, when the basic concepts of institutionalism are formulated. The leading representatives of the period of formation of institutionalism as a scientific school are Thorstein Veblen, John Commons, Wesley Mitchell. These institutionalists advocated the ideas of social control and the intervention of society, mainly the state, in economic processes.
Second phase falls on the post-war period until the 60-70s. 20th century At this stage, demographic problems, the trade union movement, the contradictions of the socio-economic development of capitalism are being studied. The leading exponent of this period is John Maurice Clark.
Third stage - 60-70s 20th century Here the role of economic processes in the social life of society is studied. This stage is called neo-institutionalism . Its leading representative is Ronald Coase, known for such works: "The Nature of the Firm", "The Problem of Social Costs".
Neo-institutionalists they are no longer just criticizing, but modifying neoclassical economic theory, considering institutions through their influence on decisions made by economic agents (participants in economic processes).
The Significance of Institutionalism for Economic Theory and Practice is as follows:
- in the revision of the dominant economic theory - a step has been taken towards the integration of social sciences and the gap between economic theory and practice has been reduced;
- representatives of institutionalism questioned the central postulates of the classical political economy : rationality of the individual's behavior, automatic achievement of the optimal state of the economic system, identity of private property interest to the public good;
- in social achievements: minimum wage, limitation of working hours, social insurance, trade union activities – all this should not be in accordance with orthodox economic thinking
General characteristics of American institutionalism.
Institutionalism arises and becomes widespread in the United States in the 20-30s of the twentieth century. The United States during this period became the leading industrial power. The main component of success was the various technical innovations widely used in production, supported by the government. Almost all scientific and technical discoveries of the late XIX - early XX century. (power plants, streetcars, automotive, telegraph) were used in American industry. Formed new methods of trade, focused on meeting a variety of needs based on advertising.
At the same time, rapid economic growth was accompanied by the strengthening of monopolistic tendencies and the dominance of highly concentrated industries in the markets. The dominance of big capital appeared, the specific features of which contrasted sharply with the model of the individual economy, which was the starting point of the neoclassical approach.
During this period, sharp social contradictions arose between workers and entrepreneurs in the American market system. At the same time, new social groups were being formed within the framework of the "middle class", demanding the protection of their interests through economic reform.
As in most other Western countries, economics in the United States at the beginning of the 20th century was dominated by ideas of economic liberalism. Active intervention of the state in the economic life of society was considered unacceptable, and capitalism was seen as a stable self-regulating system capable of achieving and ensuring equilibrium in the market, eliminating unemployment, and preventing protracted crisis situations. A necessary condition for economic and social progress was considered private property and free enterprise, protected by law. At the center of the liberal concept was the "economic man", and the most important methodological device was individualism - the analysis of the actions of an isolated, rationally acting subject.
Since its inception, institutionalism has developed as an oppositional critical trend in Western science, requiring the reform of official economic science in the following areas:
creation of a new behavioral model "homo economicus" ("economic man"); revision of the market model of "perfect competition"; rejection of the equilibrium approach to the study of economic processes.
Institutionalists criticized the neoclassical school, firstly, for the narrowness of the original methodology, ignoring the role of sociological, political, socio-psychological factors in the functioning of the economic mechanism, and secondly, for ignoring the most important structural institutional features of the real economy.
It is necessary to single out the main methodological principles of institutionalism, common to all supporters of this direction:
The first is the principle of holism or an interdisciplinary approach associated with the very object of study - institutions, structural and functional aspects of the economic system as part of the social mechanism. Such problems involve expanding the scope of economic analysis by introducing elements of other social disciplines - sociology, political science, psychology, law, ethics, etc.; Another methodological principle proclaimed by the institutionalists - the principle of historicism - is expressed in the desire to identify the driving forces and factors of development, the main trends in social evolution, as well as to justify a targeted impact on the prospects for social development.
Most institutionalists did not limit themselves to criticizing the market system, offering various options for reforming it from the standpoint of "social control" over the economy - society's control over business, subordinating it to public interests.
compressed
Characteristic features of institutionalism:
The basis of the analysis is the method of describing economic phenomena;
The object of analysis is the evolution of social psychology;
The driving force of the economy, along with material factors, are moral, ethical and legal elements in historical development;
Interpretation of socio-economic phenomena from the point of view of social psychology;
Dissatisfaction with the use of abstractions inherent in neoclassicism;
Striving for the integration of economics with the social sciences;
The need for a detailed quantitative study of phenomena;
Protection of the antimonopoly policy of the state.
Stages of development of institutionalism
There are three stages in the development of institutionalism.
The first stage is the period of widespread institutionalism in the 20-30s of the 20th century. - the old negative school of institutionalism. Its founders were T. Veblen (1857-1929), J. Commons (1862-1945), W. Mitchell (1874-1948). During this period, the theoretical and methodological foundations of institutionalism are formed;
The second stage is the post-war period until the mid-60s-70s of the twentieth century. The main representatives of this period are J. M. Clark, who published the book “Economic Institutions and the Welfare of People”, A. Burley, who published the work “Power without Property”, G. Minz, who stated in his articles the growth in the number of shareholders and the process of separation of capital-property from the capital-function;
The third stage - 60-70s of the XX century; this stage is called neo-institutionalism, in which economic processes are made dependent on technocracy, and the importance of economic processes in the social life of society is explained; prominent ideologists of this stage are N. Nove, J. Galbraith, R. Heilbroner, R. Coase.
Institutional Economics arose and developed as an oppositional doctrine - opposition, first of all, to neoclassical "economics".
Representatives of institutionalism tried to put forward an alternative concept to the main teaching, they sought to reflect in not only formal models and strict logical schemes, but also living life in all its diversity. In order to understand the causes and patterns of development of institutionalism, as well as the main directions of its criticism of the mainstream of economic thought, we briefly characterize the methodological basis -.
Old institutionalism
Formed on American soil, institutionalism absorbed many of the ideas of the German historical school, the English Fabians, and the French sociological tradition. The influence of Marxism on institutionalism cannot be denied either. The old institutionalism arose at the end of the 19th century. and took shape as a trend in 1920-1930. He tried to occupy the "middle line" between neoclassical "economics" and Marxism.
In 1898 Thorstein Veblen (1857-1929) criticized G. Schmoller, the leading representative of the German historical school, for excessive empiricism. Trying to answer the question "Why is economics not an evolutionary science", instead of a narrowly economic one, he proposes an interdisciplinary approach that would include social philosophy, anthropology and psychology. This was an attempt to turn economic theory towards social problems.
In 1918, the concept of "institutionalism" appeared. He is introduced by Wilton Hamilton. He defines an institution as "a common way of thinking or acting, imprinted in the habits of groups and the customs of a people." From his point of view, institutions fix established procedures, reflect the general agreement, the agreement that has developed in society. He understood institutions as customs, corporations, trade unions, the state, etc. This approach to understanding institutions is typical of traditional (“old”) institutionalists, which include such well-known economists as Thorstein Veblen, Wesley Clare Mitchell, John Richard Commons, Karl -August Wittfogel, Gunnar Myrdal, John Kenneth Galbraith, Robert Heilbroner. Let's get acquainted with the concepts of some of them a little closer.
In The Theory of Business Enterprise (1904), T. Veblen analyzes the dichotomy of industry and business, rationality and irrationality. He contrasts behavior determined by actual knowledge with behavior determined by habits of thought, considering the former as a source of change in progress, and the latter as a factor that counteracts it.
In the works written during and after the First World War—The Instinct for Mastery and the State of Industrial Skills (1914), The Place of Science in Modern Civilization (1919), Engineers and the Price System (1921)—Veblen considered important problems of scientific and technological progress, focusing on the role of "technocrats" (engineers, scientists, managers) in creating a rational industrial system. It was with them that he linked the future of capitalism.
Wesley Claire Mitchell (1874-1948) studied in Chicago, trained in Vienna and worked at Columbia University (1913 - 1948) Since 1920, he headed the National Bureau of Economic Research. His focus was on business cycles and economic research. W.K. Mitchell turned out to be the first institutionalist to analyze real processes "with numbers in hand." In his work "Business Cycles" (1927), he explores the gap between the dynamics of industrial production and the dynamics of prices.
In Art Backwardness Spending Money (1937), Mitchell criticized neoclassical "economics" based on the behavior of the rational individual. He sharply opposed the "blissful calculator" I. Bentham, showing various forms of human irrationality. He sought to statistically prove the difference between real behavior in the economy and the hedonic normotype. For Mitchell, the real economic agent is the average person. Analyzing the irrationality of spending money in family budgets, he clearly showed that in America the art of "making money" was far ahead of the ability to spend it rationally.
A great contribution to the development of the old institutionalism was made by John Richard Commons (1862-1945). His focus in The Distribution of Wealth (1893) was the search for instruments of compromise between organized labor and big capital. These include the eight-hour work day and higher wages, which increase the purchasing power of the population. He also noted the beneficial effect of the concentration of industry to improve the efficiency of the economy.
In the books "Industrial Goodwill" (1919), "Industrial Management" (1923), "The Legal Foundations of Capitalism" (1924), the idea of a social agreement between workers and entrepreneurs through mutual concessions is consistently promoted, it is shown how the diffusion of capitalist property contributes to a more even distribution of wealth.
In 1934, his book "Institutional Economic Theory" was published, in which the concept of a transaction (deal) was introduced. In its structure, Commons distinguishes three main elements - negotiations, acceptance of obligations and its implementation - and also characterizes various types of transactions (trade, management and rationing). From his point of view, the transactional process is the process of determining "reasonable value", which ends with a contract that implements "guarantees of expectations". In recent years, J. Commons has focused on the legal framework for collective action, and above all on the courts. This was reflected in the work published after his death - "The Economics of Collective Action" (1951).
Attention to civilization as a complex social system played a methodological role in post-war institutional concepts. In particular, this was reflected in the works of the American institutionalist historian, professor at Columbia and Washington Universities. Karl-August Wittfogel (1896-1988)- first of all, in his monograph "Oriental Despotism. A Comparative Study of Total Power". The structure-forming element in the concept of K.A. Wittfogel is despotism, which is characterized by the leading role of the state. The state relies on the bureaucratic apparatus and suppresses the development of private ownership tendencies. The wealth of the ruling class in this society is determined not by ownership of the means of production, but by a place in the hierarchical system of the state. Wittfogel believes that natural conditions and external influences determine the form of the state, and it, in turn, determines the type of social stratification.
A very important role in the development of the methodology of modern institutionalism was played by the works Carla Polanyi (1886-1964) and above all his "Great Transformation" (1944). In his work "The Economy as an Institutionalized Process", he singled out three types of exchange relations: reciprocity or mutual exchange on a natural basis, redistribution as a developed system of redistribution, and commodity exchange, which underlies the market economy.
Although each of the institutional theories is vulnerable to criticism, nevertheless, the very enumeration of the reasons for dissatisfaction with modernization shows how the views of scientists are changing. The focus is not on weak purchasing power and inefficient consumer demand, nor low levels of savings and investment, but on the importance of the value system, problems of exclusion, traditions and culture. Even if resources and technology are considered, it is in connection with the social role of knowledge and the problems of environmental protection.
The focus of the modern American institutionalist John Kenneth Galbraith (b. 1908) there are questions of technostructure. Already in "American Capitalism. The Theory of the Balancing Force" (1952), he writes about managers as the bearers of progress and considers labor unions as a balancing force along with big business and government.
However, the topic of scientific and technological progress and post-industrial society is most developed in the works "The New Industrial Society" (1967) and "Economic Theory and the Goals of Society" (1973). In modern society, - writes Galbraith, - there are two systems: planning and market. In the first, the leading role is played by the technostructure, which is based on the monopolization of knowledge. It is she who makes the main decisions in addition to the owners of capital. Such technostructures exist under both capitalism and socialism. It is their growth that brings the development of these systems together, predetermining the trends of convergence.
The Development of the Classical Tradition: Neoclassicism and Neoinstitutionalism
The concept of rationality and its development in the course of the formation of neo-institutionalism
Public choice and its main stages
constitutional choice. Back in the 1954 article “Individual Voting Choice and the Market,” James Buchanan identified two levels of public choice: 1) initial, constitutional choice (which takes place even before a constitution is adopted) and 2) post-constitutional. At the initial stage, the rights of individuals are determined, the rules for the relationship between them are established. At the post-constitutional stage, a strategy for the behavior of individuals is formed within the framework of established rules.
J. Buchanan draws a clear analogy with the game: first, the rules of the game are determined, and then, within the framework of these rules, the game itself is carried out. The constitution, from the point of view of James Buchanan, is such a set of rules for conducting a political game. The current policy is the result of playing within the constitutional rules. Therefore, the effectiveness and efficiency of policy depends to a large extent on how deep and comprehensive the original constitution was drafted; after all, according to Buchanan, the constitution is, first of all, the fundamental law not of the state, but of civil society.
However, here the problem of “bad infinity” arises: in order to adopt a constitution, it is necessary to develop pre-constitutional rules according to which it is adopted, and so on. To get out of this "hopeless methodological dilemma", Buchanan and Tulloch propose a seemingly self-evident rule of unanimity in a democratic society for the adoption of an initial constitution. Of course, this does not solve the problem, since the substantive question is replaced by a procedural one. However, there is such an example in history - the United States in 1787 showed a classic (and in many ways unique) example of a conscious choice of the rules of the political game. In the absence of universal suffrage, the US Constitution was adopted at a constitutional convention.
post-constitutional choice. The post-constitutional choice means the choice, first of all, of the "rules of the game" - legal doctrines and "working rules" (working rules), on the basis of which specific directions of economic policy aimed at production and distribution are determined.
Solving the problem of market failures, the state apparatus at the same time sought to solve two interrelated tasks: to ensure the normal operation of the market and to solve (or at least mitigate) acute socio-economic problems. Antimonopoly policy, social insurance, limitation of production with negative and expansion of production with positive external effects, production of public goods are aimed at this.
Comparative characteristics of "old" and "new" institutionalism
Although institutionalism as a special trend was formed at the beginning of the 20th century, for a long time it was on the periphery of economic thought. The explanation of the movement of economic goods only by institutional factors did not find a large number of supporters. This was partly due to the uncertainty of the very concept of "institution", by which some researchers understood mainly customs, others - trade unions, still others - the state, fourth corporations - etc., etc. Partly - with the fact that institutionalists tried to use the methods of other social sciences in economics: law, sociology, political science, etc. As a result, they lost the opportunity to speak the common language of economic science, which was considered the language of graphs and formulas. There were, of course, other objective reasons why this movement was not in demand by contemporaries.
The situation, however, changed radically in the 1960s and 1970s. To understand why, it suffices to make at least a cursory comparison of "old" and "new" institutionalism. Between the "old" institutionalists (like T. Veblen, J. Commons, J. K. Galbraith) and neo-institutionalists (like R. Coase, D. North or J. Buchanan) there are at least three fundamental differences.
Firstly, the "old" institutionalists (for example, J. Commons in "The Legal Foundations of Capitalism") went to the economy from law and politics, trying to study the problems of modern economic theory using the methods of other social sciences; neo-institutionalists go the exact opposite way - they study political science and legal problems using the methods of neoclassical economic theory, and above all, using the apparatus of modern microeconomics and game theory.
Secondly, traditional institutionalism was based mainly on the inductive method, strove to go from particular cases to generalizations, as a result of which a general institutional theory did not take shape; neo-institutionalism follows a deductive path - from the general principles of neoclassical economic theory to the explanation of specific phenomena of social life.
Fundamental differences between "old" institutionalism and neo-institutionalism
signs |
Old institutionalism |
Non-institutionalism |
Motion |
From law and politics |
From economics to politics and law |
Methodology |
Other humanities (law, political science, sociology, etc.) |
Economic neoclassical (methods of microeconomics and game theory) |
Method |
Inductive |
Deductive |
Focus of attention |
collective action |
Independent individual |
Analysis background |
Methodological individualism |
Thirdly, the "old" institutionalism, as a trend of radical economic thought, paid primary attention to the actions of collectives (mainly trade unions and the government) to protect the interests of the individual; Neo-institutionalism, on the other hand, puts at the forefront an independent individual who, by his own will and in accordance with his interests, decides which collectives it is more profitable for him to be a member of (see Tables 1-2).
In recent decades, there has been a growing interest in institutional studies. This is partly due to an attempt to overcome the limitations of a number of prerequisites characteristic of economics (the axioms of complete rationality, absolute awareness, perfect competition, establishing equilibrium only through the price mechanism, etc.) and consider modern economic, social and political processes more comprehensively and comprehensively; partly - with an attempt to analyze the phenomena that arose in the era of scientific and technological revolution, the application of traditional research methods to which does not yet give the desired result. Therefore, we will first show how the development of the premises of neoclassical theory took place within it.
Neoclassicism and neoinstitutionalism: unity and differences
What all neo-institutionalists have in common is the following: first, that social institutions matter, and second, that they are amenable to analysis using the standard tools of microeconomics. In the 1960s-1970s. a phenomenon called G. Becker "economic imperialism" began. It was during this period that economic concepts: maximization, equilibrium, efficiency, etc., began to be actively used in such areas related to the economy as education, family relations, health care, 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;
- concept of economic man;
- activity as an exchange.
However, unlike neoclassicism, these principles began to be carried out more consistently.
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 or politics.
The concept of economic man. The second premise of neo-institutional choice theory is the concept of "economic man" (homo oeconomicus). 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. they compare marginal benefits and marginal costs (and, above all, the benefits and costs associated with decision-making):
where MB is the marginal benefit;
MC - marginal cost.
However, unlike neoclassical theory, which considers mainly physical (rare resources) and technological limitations (lack of knowledge, practical skills, etc.), neoinstitutional 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.
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 can pass laws, officials can 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, and so on. However, it seems more rational to consider a group as an association of several individuals with their own utility functions and interests.
The differences listed above are characterized by some institutionalists (R. Coase, O. Williamson, and others) as a genuine revolution in economic theory. Without diminishing their contribution to the development of economic theory, other economists (R. Posner and others) consider their work to be rather a further development of the mainstream of economic thought. Indeed, it is now more and more difficult to imagine the main stream without the work of neo-institutionalists. They are more and more fully included in modern textbooks on Economics. However, not all directions are equally capable of entering the neoclassical "economics". To see this, let's take a closer look at the structure of modern institutional theory.
The main directions of neo-institutional theory
Structure of institutional theory
A unified classification of institutional theories has not yet developed. First of all, the dualism of the "old" institutionalism and neo-institutional theories is still preserved. Both directions of modern institutionalism were formed either on the basis of neoclassical theory, or under its significant influence (Fig. 1-2). Thus, neo-institutionalism developed, expanding and supplementing the main direction of "economics". Invading the sphere of other social sciences (law, sociology, psychology, politics, etc.), this school used traditional microeconomic methods of analysis, trying to explore all social relations from the standpoint of a rationally thinking "economic man" (homo oeconomicus). Therefore, any relationship between people is viewed through the prism of mutually beneficial exchange. Since the time of J. Commons, this approach has been called the contract (contractual) paradigm.
If, within the framework of the first direction (neo-institutional economics), the institutional approach only expanded and modified the traditional neoclassic, remaining within its limits and removing only some of the most unrealistic prerequisites (the axioms of complete rationality, absolute awareness, perfect competition, establishing equilibrium only through the price mechanism, etc.) , then the second direction (institutional economics) relied to a much greater extent on the "old" institutionalism (often of a very "left" persuasion).
If the first direction ultimately strengthens and expands the neoclassical paradigm, subordinating to it more and more new areas of research (family relations, ethics, political life, interracial relations, crime, the historical development of society, etc.), then the second direction comes to a complete rejection of neoclassicism. , giving rise to an institutional economy that is in opposition to the neoclassical "mainstream". This modern institutional economics rejects the methods of marginal and equilibrium analysis, adopting evolutionary sociological methods. (We are talking about such areas as the concepts of convergence, post-industrial, post-economic society, the economy of global problems). Therefore, representatives of these schools choose areas of analysis that go beyond the market economy (problems of creative labor, overcoming private property, eliminating exploitation, etc.). Relatively apart in this direction is only the French economy of agreements, trying to lay a new foundation for the neo-institutional economy and, above all, for its contractual paradigm. This basis, from the point of view of representatives of the economy of agreements, are norms.
Rice. 1-2. Classification of institutional conceptsThe contract paradigm of the first direction arose thanks to the research of J. Commons. However, in its modern form, it received a slightly different interpretation, different from the original interpretation. The contract paradigm can be implemented both from the outside, i.e. through the institutional environment (the choice of social, legal and political "rules of the game"), and from within, that is, through the relationships underlying organizations. In the first case, constitutional law, property law, administrative law, various legislative acts, etc., can act as the rules of the game, in the second case, the internal regulations of the organizations themselves. Within this direction, the theory of property rights (R. Coase, A. Alchian, G. Demsets, R. Posner, etc.) studies the institutional environment for the activities of economic organizations in the private sector of the economy, and the theory of public choice (J. Buchanan, G. Tulloch , M. Olson, R. Tollison, etc.) - the institutional environment for the activities of individuals and organizations in the public sector. If the first direction focuses on the welfare gain that can be obtained due to a clear specification of property rights, then the second one focuses on the losses associated with the activities of the state (the economy of bureaucracy, the search for political rent, etc.).
It is important to emphasize that property rights are primarily understood as a system of norms regulating access to scarce or limited resources. With this approach, property rights acquire important behavioral significance, since they can be likened to the original rules of the game that regulate relations between individual economic agents.
The theory of agents (relationships "principal-agent" - J. Stiglitz) focuses on the preliminary premises (incentives) of contracts (ex ante), and the theory of transaction costs (O. Williamson) - on already implemented agreements (ex post), generating various management structures. The theory of agents considers various mechanisms for stimulating the activity of subordinates, as well as organizational schemes that ensure the optimal distribution of risk between the principal and the agent. These problems arise in connection with the separation of capital-property from capital-function, i.e. separation of ownership and control - problems posed in the works of W. Berl and G. Minz in the 1930s. Modern researchers (W. Meckling, M. Jenson, Y. Fama, and others) are studying the measures necessary to ensure that the behavior of agents deviates to the least extent from the interests of the principals. Moreover, if they try to foresee these problems in advance, even when concluding contracts (ex ante), then the theory of transaction costs (S. Chen, Y Barzel, etc.) focuses on the behavior of economic agents after the contract is concluded (ex post) . A special direction within this theory is represented by the works of O. Williamson, whose focus is on the problem of governance structure.
Of course, the differences between theories are quite relative, and one can often observe how the same scholar works in different areas of neo-institutionalism. This is especially true for such specific areas as "law and economics" (economics of law), economics of organizations, new economic history, etc.
There are quite profound differences between American and Western European institutionalism. The American tradition of economics as a whole is far ahead of the European level, however, in the field of institutional studies, the Europeans turned out to be strong competitors of their overseas counterparts. These differences can be explained by the difference in national and cultural traditions. America is a country "without history", and therefore the approach from the standpoint of an abstract rational individual is typical for an American researcher. On the contrary, Western Europe, the cradle of modern culture, fundamentally rejects the extreme opposition of the individual and society, the reduction of interpersonal relations only to market transactions. Therefore, Americans are often stronger in the use of the mathematical apparatus, but weaker in understanding the role of traditions, cultural norms, mental stereotypes, etc. - all of which is precisely the strength of the new institutionalism. If representatives of American neo-institutionalism consider norms primarily as a result of choice, then French neo-institutionalists consider norms as a prerequisite for rational behavior. Rationality is therefore also revealed as a norm of behavior.
New institutionalism
In modern theory, institutions are understood as the "rules of the game" in society, or "man-made" restrictive framework that organizes relationships between people, as well as a system of measures that ensures their implementation (enforcement). They create a structure of incentives for human interaction, reduce uncertainty by organizing everyday life.
Institutions are divided into formal (for example, the US Constitution) and informal (for example, the Soviet "telephone law").
Under informal institutions usually understand generally accepted conventions and ethical codes of human behavior. These are customs, "laws", habits or normative rules, which are the result of the close coexistence of people. Thanks to them, people easily find out what others want from them, and understand each other well. These codes of conduct are shaped by culture.
Under formal institutions refers to the rules created and maintained by specially authorized people (government officials).
The process of formalizing restrictions is associated with increasing their impact and reducing costs through the introduction of uniform standards. The costs of protecting the rules are, in turn, associated with establishing the fact of a violation, measuring the degree of violation and punishing the violator, provided that the marginal benefits exceed the marginal costs, or at least not higher than them (MB ≥ MC). Property rights are realized through a system of incentives (anti-incentives) in a set of alternatives facing economic agents. The choice of a certain course of action ends with the conclusion of a contract.
Control over compliance with contracts can be both personalized and non-personalized. The first is based on family ties, personal loyalty, shared beliefs or ideological convictions. The second is on the provision of information, the application of sanctions, the formal control exercised by a third party, and ultimately leads to the need for organizations.
The range of domestic works that touch upon issues of neo-institutional theory is already quite wide, although, as a rule, these monographs are not very accessible to most teachers and students, since they are published in a limited edition, rarely exceeding a thousand copies, which, of course, for such a large country as Russia very little. Among Russian scientists who actively apply neo-institutional concepts in the analysis of the modern Russian economy, one should single out S. Avdasheva, V. Avtonomov, O. Ananin, A. Auzan, S. Afontsev, R. Kapelyushnikov, Ya. Kuzminov, Yu. Latov, V. Mayevsky, S. Malakhov, V. Mau, V. Naishul, A. Nesterenko, R. Nureyev, A. Oleinik, V. Polterovich, V. Radaev, V. Tambovtsev, L. Timofeev, A. Shastitko, M. Yudkevich, A. Yakovleva and others. But a very serious barrier to the establishment of this paradigm in Russia is the lack of organizational unity and specialized periodicals, where the foundations of the institutional approach would be systematized.
The 20-30s of the 20th century are considered to be the period of widespread institutionalism.
Late institutionalism refers to the post-war period (50-60s of the XX century). In the theoretical field, the evolution of institutionalism at this stage in the development of capitalism was expressed in the emergence of an industrialist-technocratic trend. Industrialist concepts expressed optimistic ideas about the limitless possibilities of scientific and technological revolution and the prospects that it opens up. The concepts of "industrial society" and the illusions of a technocratic nature, which became widespread in one form or another among some institutionalists, reflected the rosy ideas that dominated political economy about the beneficial nature of economic growth and the unlimited possibilities of social progress. The position of the theorists of the industrialist branch of institutionalism is most fully reflected in the works of J. Galbraith.
The second line in the direction of the development of institutionalism of that time is reflected, first of all, in the works of A. Burley, where he tried to substantiate the thesis about the gradual and natural process of "collectivization of capitalism" through a change in the system of ownership and control. Since the mid-1960s, as a result of the growing symptoms of the crisis of the "mass consumption" society, there has been a steady process of destruction of the industrialist ideology of social progress.
Among those who during this period raised problems related to the substantive goals of economic growth and its contradictions, the nature of economic development, one can name J.M., Clark, G. Colm, R. Heilbroner. All of them posed the problem of "managed development", linking it with the substantiation of the need for a national planning system.
Since the mid-1960s, there has been an increase in the influence of institutionalism and an increase in interest in it. The growing interest in institutionalism during this period was due to the revealed inconsistency of theories of state welfare.
By the mid-1970s, the traditional methods of state regulation fully revealed their limitations and failure. The theoretical debates that have unfolded in the United States since the 1970s on the fundamental questions of political economy are oriented towards the development of a practically meaningful theory of public policy.
Representatives of modern institutionalism, or neo-institutionalism, are well-known American scientists D. Bell, J. Galbraith, W. Rostow, O. Toffler, R. Heilbroner, Swedish economist G. Myrdal, French economist F. Perroux and others.
The first, adhering to Veblen's traditions, still considers institutions, first of all, as socio-psychological phenomena, pays great attention to the study of the evolutionary mechanisms of institutional dynamics and the influence of socio-cultural norms on economic and technological development. The philosophical basis of this doctrine today is the epistemological theory of "transcendental realism" (R. Baskar, T. Lawson). According to it, human consciousness and behavior are the result of "subordination" of sensory empirical information to stereotypes and concepts that are formed in the minds of each person during the process of socialization and, ultimately, determine how a person perceives sensory information (what is recognized by him, what is discarded). what conclusions are drawn).
The “new” institutionalism developed in the works of D. North, M. Olson, R. Posner, O. Williamson, G. Demsetz, R. Nelson, S. Winter, J. Buchanan and others is not homogeneous in its structure. Between its individual branches, not only terminological, but also serious conceptual differences are found. Today, neo-institutionalism appears as a whole family of approaches united by several common ideas.
The "new" institutionalism combined the use of the neoclassical approach with the traditional interest for this movement in the formation and functioning of public institutions. Neo-institutionalists consider institutions not so much a cultural or psychological phenomenon as a set of legal norms and informal rules that rigidly guide the economic behavior of an individual and organizations (“rules of the game”, as defined by D. North).
Neo-institutionalists, like representatives of the "old", traditional institutionalism, tried to establish links between economic theory and law, sociology, political science, and so on. However, there are fundamental differences between the "old" institutionalists such as T. Veblen, J. Commons, J. K. Galbraith and the "new" institutionalists.
1. The "old" institutionalists went to economics from law and politics, trying to study the problems of modern economic theory using the methods of other social sciences; The "new" institutionalists go the exact opposite way - they study political science, legal and other problems using the methods of neoclassical economic theory, and above all, using the apparatus of modern microeconomics and game theory.
2. Traditional institutionalism was based mainly on the inductive method, strove to go from particular cases to generalizations; The "new" institutionalism follows a deductive path - from the general principles of neoclassical economic theory to the explanation of specific phenomena of political life.
3. The “old” institutionalism focused primarily on the actions of collectives (mainly trade unions and the government to protect the interests of individuals), while the new institutionalism puts at the forefront an independent individual who, of his own free will and in accordance with his interests, decides which collectives to be a member of. it is better for him to be.
In general, taking into account the general principles and approaches that unite the "old" and "new" versions of institutionalism, both currents appear today, as a rule, under the same name - institutional-evolutionary theory.
The theory of general economic equilibrium is based on the initial assumption that all actors in the economy are given and their interests are known. The institutional direction offers a different approach - evolutionary. The key point of the evolutionary approach is that the composition of actors in the economy changes according to the laws of natural selection. In the long process of evolution, phenomena are observed that the theory of general economic equilibrium cannot explain.
Although the history of using the evolutionary approach dates back to A. Smith and C. Darwin, the branch of economic science, which was called "evolutionary economics", took shape organizationally quite recently, in the last three decades. Attempts to transfer evolutionary ideas to economic soil were fruitless until a “selection unit” was singled out - a substance (institution) that is stable over time, transmitted from one economic entity to another and at the same time capable of change.
A great contribution to the development of evolutionary economics was made by J. Schumpeter, whose main works were published in the 1930s. 20th century He talked about the diversity of the evolution of firms and their different roles in the overall evolutionary process. He introduced the concept of "constructive destruction". We are talking about the mechanisms of destruction of the old in the process of evolution and making room for the creation and development of the new. In essence, Schumpeter argued that evolution itself creates such mechanisms that are in some sense optimal. Too fast, landslide destruction is bad, as it dominates and prevents the creation of a new one. The absence of a destructive mechanism is also bad, since the old blocks the way for the new. As a result, evolution produces a middle, balanced path.
Modern representatives of the new institutional theory R. Nelson and S. Winter consider the concept of economic “natural selection” to be the basic idea of evolutionary economics, when the development of the most competitive economic entities occurs due to the displacement of other members of the population of economic entities from the economic space.
An essential feature of modern institutionalism is its connection with sociology. According to Weber, sociology begins where it is discovered that economic man is an oversimplified model of man. Institutionalists bring new colors to the portrait of an economic man. Unlike almost all other areas of economic theory, they do not proceed from human nature as a given, but try to study the patterns of its formation and evolution. Institutionalists treat economic systems in exactly the same way.
An important role in the formation of institutionalism was played by the ideas of the founder of the French sociological school E. Durkheim, who substantiated the idea that any social, including economic, contracts are based on a foundation consisting of socially determined and historically limited laws, norms, habits and stereotypes, which are so obvious to the parties to the contractual relationship that they are almost never explicitly reflected in written and oral agreements.
The founders of the first stage of institutionalism are T. Veblen, John Commons, Welsey Mitchell. This is the early period of institutionalism and its representatives proposed various methods of "social control". Thus, T. Veblen came up with a program for the transfer of power to the engineering and technical intelligentsia, considering it an independent driving force and his intervention in the economy, the government will be able to balance the interests of various sectors of society. W. Mitchell defended the possibility of eliminating crises through the use of public spending, advocated the organization of national planning. They believed that the period of "market equilibrium" and "harmony of interests" and called for new practical results in the theory and study of socio-economic processes at the macrolevel.The second stage in the development of institutionalism - the post-war period until the mid-60s-70s of the twentieth century.
The second stage (post-war period until the mid-1970s)
Post-war stage of development of institutionalism. Conjuncture-statistical institutionalism of W. Mitchell
The personal contribution of Wesley Mitchell (1874-1948) to economic theory is that he is the leader of the empirical trend in institutionalism. Over the course of a number of years, he compiled about a thousand dynamic series of various economic indicators. Based on the extrapolation of these series, it was supposed to predict the economic situation. So, in 1917, the famous "Harvard barometer" arose, which at first gave very reliable results, but in 1929-1933. failed, predicting prosperity on the eve of an economic disaster.
Mitchell shared the central idea of institutionalism about the need to increase social control over the economy. In 1923, he proposed the creation of a state unemployment insurance system. He was one of the first to put forward the demand for indicative planning of the American economy. Although institutionalism remained an independent current of economic thought, its concepts largely anticipated the emergence of Keynesian macroeconomic theory.
The differences between post-war institutionalism and the institutionalism of the 1930s are as follows:
- 1) If the main problem of the 30s. - monopolization of the economy and conflicts between workers and capitalists, then the evolution of institutionalism was expressed in the dominance of the industrial-technocratic approach. The roots of these views can be traced in the works of T. Veblen. The scientific and technological revolution is capable of solving fundamental social and political problems.
- 2) In the post-war period, the idea is expressed of the spontaneous transformation of capitalism due to a change in the nature of large corporations. These ideas were connected, firstly, with the concept of the revolution of managers, and secondly, with the doctrine of the democratization of ownership of capital.
- 3) The state has undergone dramatic changes, as a result of which its main goal has become to ensure "welfare for all members of society."
The most prominent representative of this period is John Kenneth Galbraith (1909-2006) - the author of the works American Capitalism (1952), Affluent Society (1958), New Industrial Society (1967), "Economic Theories and the Goals of Society" (1973).
Galbraith divides the American economy into two heterogeneous systems: "planning" and "market". The criteria for such a division are the technical and organizational factors of production (advanced technology and complex organization) and the presence of economic power, i.e. control over prices, costs, consumers. Such power is concentrated only in large corporations.
The market system, which includes small firms and individual entrepreneurs, is imperfect compared to the planning system. It can't influence prices or government policy, there are no unions, workers get lower wages.
The main thing in the concept of Galbraith is the analysis of the planning system and its main link in a mature corporation.
He identifies two stages in the development of a corporation:
- 1) The dominance of the “entrepreneurial corporation”, which still allows the individual who controls its capital to exercise economic power.
- 2) A mature corporation, in which power has passed to the technostructure.
Technostructure is a collection of scientists, engineers, technicians, specialists in sales, advertising, sales operations, managers. This process is called the “management revolution”.
Galbraith's conclusions:
- 1) In corporations, the real power is held not by the owners, but by the technostructure.
- 2) The power of the technostructure is faceless, since all its decisions are developed gradually and collectively. Top management only coordinates this process.
- 3) The technostructure is forced to plan the work of the corporation for years ahead. Only under this condition is it possible to conclude contracts for scientific and constructive developments, the supply of raw materials and components ahead of time.
- 4) The technostructure is interested not so much in maximizing the return on capital as in creating conditions for the owner to need the services of the technostructure. Once the technostructure manages to secure itself with a minimum level of profit, it has the freedom to choose its goals. In most cases, the goal is to achieve the highest possible rate of corporate growth as measured by sales. This growth means more employees, more accountability, and therefore more opportunities for advancement and higher pay.
- 5) Planning requires stability so that you can anticipate the future outcome of decisions made today. Therefore, in the modern economy, a continuous network of mini-corporate contracts is being formed, which makes the market manageable and predictable.
The idea of replacing the market elements with industrial planning is used to substantiate the process of transformation of capitalism into an industrial society. Galbraith considered the developed corporation as the basis and instrument for replacing the market with planning, and the economic activity of the state was considered as a necessary element. State intervention is necessary to solve the main problems of capitalism, which are based on the contradiction between the planning system and the market system, which includes small business, agriculture, education, health, transport and other areas of social services.