Theory of institutional and economic disfunctions in the Russian school: Retrospective and prospective views

Abstract

The article challenges the stereotype which underestimates the accomplishments of the national scientists which generate and develop the current institutional and economic dysfunction theory and provide the pragmatic opportunities for the dysfunction theory. The research aims to consider the contribution of the modern Russian institutional economic school into generating and developing the institutional effects theory with the focus on its tool segment - the theory of economic and institutional dysfunctions. Methodologically, the article is based on the economic theory of institutions, provisions of the modern theory of institutional effects, including the institution dysfunctions, management theories for the economic systems of different complexity levels, as well as the comparative analysis, elements of mathematical modeling, and solutions of the differential equations. Tool capabilities of the dysfunction theory are illustrated for the developing of management recommendations, a measurement device is created to identify a dysfunction and to apply it in order to access the quality of the institutions and economic systems, the possibilities for applying the dysfunctions in the institutional modeling are defined. To do this, a function equation for the financial support of the institution is obtained to examine the connections between the institution monetization, the quality of their functions and their dysfunctions. The differences between the lock-in and dysfunction effects which characterize their connections with the categories, including stability, efficiency/inefficiency, institutions’ quality, are specified, and a dysfunction is defined as a dynamically changing condition, while lock-in can be static. The article points out the key prospective developments of the institutional and economic dysfunction theories: 1) better tools for measuring the dysfunctions; 2) evaluation of the institutional efficiency and functional potential of the institutions, as well as the quality of the institutions and economic systems; 3) dysfunction modeling, including at the level of its connection with the macroeconomic parameters. Further research into the Russian institutional school of the economic science is seen in the development of the dysfunction theory and its methodological tools for its application to analyze different socio-economic phenomena.