New Institutional Dimensions of Economics

Among economists the recognition of the importance of social and eco 1 nomic institutions has grown during the last ten years. Even be fore the more recent period, however, this trend of thought was 2 clearly noticeable. The origin and formation of institutions was one of the issues which, according to C. MENGER, should playa central 3 role in economics. Nevertheless, this tradition is not reflected in mainstream eco nomics. L. HURWICZ characterizes this failure by observing that "tra ditionally, economic analysis treats the economic system as one of the givens" (1973, p. 1). In this case "system" may be understood in a narrower or in a wider sense comprising only contracts (on markets) or a larger variety of procedures for the co-ordination of economic activities as, for instance, managerial hierarchies. In view of the prominent role of price theory in mainstream economics one would guess that-the system is perceived to comprise mainly contracts as co-ordinating procedures: prices form a constituent part of contracts on markets but not of other co-ordination procedures. This indicates an understanding in the narrow sense. There is an additional and even more convincing argument in favour of our contention that mainstream economics is based on this narrow interpretation of the economic system: It evaluates alternative situations by reference to the allocation of the factors of production, i. e. by comparing outcomes of the economic process. Doing so is only logical if the economic system is understood as a system of contracting on markets.

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This book looks at the economic system as a system of co-ordinated activities and tries to encompass several dimensions: - a larger variety of co-ordinating devices (institutions) than in mainstream economics; - a greater attention to the interdependence between types of co-ordinating devices of different (micro and macro) system levels than in most books on institutional economics; - a more penetrating treatment of the cost and behavioural consequences of those devices (mainly neglected by mainstream economics); - a more comprehensive than partial analytic approach to these matters (as compared to the agency, the transaction cost, the public choice, and the property rights approach) on the basis of the rational choice framework. The last perspective is new and offers possibilities for further attention and development. Its application to different types of economic systems (the Soviet, the Western and the Hungarian type) is demonstrated at some length. But the book also contains applications to the organization of typical industries with special attention to the impact of the specific macro system in which the industry is embedded.

Contenu
One: From Rational Choice Towards Institutional Variability.- 1: Economic Systems from the Co-Ordination Perspective.- 2: A Comprehensive Version of Institutional Choice.- 3: A Rational and More Comprehensive Framework for Industrial Organization Studies.- Two: The Co-Ordination Perspective Elaborated.- 4: The Scope of the Systems Approach.- 5: Co-Ordination Procedures between Subsystems: Economic Policy Regimes.- 6: Co-Ordination Procedures between Subsystems: Governance Procedures.- Three: The Co-Ordination Perspective with some Basic Behavioural and cost Relationships.- 7: Governance/Management Co-Ordination under Alternative Economic Policy Regimes.- 8: Incentive Failures and the Scale of Government Participation in the Co-Ordination of Industries.- 9: The Nature of Transaction Costs and Benefits.- 10: Towards an Integration of Structural and Behavioural Characteristics of Different Economic Systems.- Four: Behavioural and Economic Consequences of Different Economic Systems.- 11: A System with Dominant Government Directory Regimes.- 12: A System with Dominant Regulatory Regimes.- 13: A System with Dominant Commercial Regimes.- 14: Retrospect and Prospect.- Literature.