Whither ‘New Institutional Economics’?

Abstract

The International Society for New Institutional Economics has changed its name to Society of Institutional and Organizational Economics (SIOE). Does this mean that its Coasean mission, ‘to replace the current analysis with something better’, will be abandoned? We do not think so. The insights of the ‘New Institutional Economics’ were too big of an ‘aha’ experience for economists for its ideas to vanish into thin air due to a renaming of its scientific society. In any case, economists can hardly continue trying to adapt reality to their mechanical micro- or macroeconomic devices by neglecting or bending information on ‘economic structure’ (read: ‘economic institutions’) as they see fit. The New Institutional Economics might help economists to become more open-minded towards the social sciences, and more willing to include detailed institutional structures into their analysis. We proceed as follows: taking the European Monetary Union (EMU) as an example, we demonstrate that the analytic techniques of the New Institutional Economics as applied to relationships between private people can also be applied to relationships amongst public bodies. For that purpose, we first give a short description of the early history and structure of EMU. After that, we illustrate how the advantages and drawbacks of this supranational organisation appear from the perspective of the New Institutional Economics.