Institutional Economics Needs Interdisciplinary Studies of Social Sciences

Abstract

If we interpret the present age from the viewpoint of the opposing ideologies of socialism and capitalism, we reach the conclusions that the Russian type of socialism should be rejected and that relying on capitalism is now impossible. However, we could observe modern history from a somewhat different viewpoint-the evolution of institutions. Karl Polanyi termed the present economy a [Polanyi 1957]. Here, social structure embraces strained and sometimes contradictory relations between market and non-market elements. We are now facing a society that is characterized by a mixed market and non-market structure. Modern economics treats the market economy, which is part of society as a whole, as a self-adjusting system created by homo economicus. This concept of the human being is based upon the modern individual who aims to fulfill his or her own interests by rational means. Recently, an extreme emphasis on market panaceas has expanded the notion of homo economicus into legal, governmental, and social worlds. Proponents of law and economics, constitutional economics, and the economics of marriage and family regard homo economicus as playing a role in the composition of law, power, and social relations. This means that legal, political, and social relations are interpreted as rational interactions of autonomous individuals. These branches of economics treat individuals, created by the modern European market economy, as universal. These ideas do not facilitate the accurate understanding of historical developments. We need to make it clear that modern human