Original Institutional Economics Research Articles

The 2030 Agenda for Sustainable Development and Institutional Change

From the perspective of an individual country, it is necessary to implement a series of policy measures and strategies to achieve long-term multiple goals and targets. As a result, whether adjustments or changes in institutions can be timely aligned from the short term to the long term becomes vital. Since “[p]romote sustained, inclusive, and sustainable economic growth” and “[e]nsure sustainable consumption and production patterns” have been clearly stated in the United Nations Sustainable Development Goals 8 and 12, respectively, it is necessary to make an institutional transition from the conventional linear economy to a circular and sustainable economy. This transition involves substantial changes in the value structure of society’s institutions. For instance, the mainstream curricula have little relevance to the subject matter of sustainability and should be revised to accommodate more socio-economic elements of sustainability in the original institutional economics (OIE) tradition.

Industrial Development and Social Values: an Econometric Approach

The article delves into how original institutional economics elucidates processes of industrial development through the lenses of technological, institutional, and social factors. By employing econometric methods, we can further enhance theoretical research within the realm of original institutionalism by quantitatively analyzing social values. Fundamentally, social values form the basis for selecting behavioral patterns, institutions, and institutional frameworks to shape both individual and collective development trajectories. Research on social values yields crucial insights into how the public perceives specific contemporary challenges and issues. The Veblenian dichotomy aptly conceptualizes industrial and technological transformations alongside social values and institutions. Leveraging this dichotomy draws attention to the limitations of market mechanisms driven by contracts and profit motives, underscoring the need for a comprehensive analysis of modern industrial production in light of evolving social values. Through econometric modeling, specifically the use of the ordered logit model, we investigate the impact of industrial development levels and metrics assessing institutional progress in countries, as well as the significance of technology advancement in the future. While Russia exhibits relatively lower indices reflecting both personalized and institutional trust, the model validates a correlation between respondents' subjective evaluations of institutional quality in the country and their perceptions of future technology significance. Moreover, the model confirms a positive association between a country's industrial development level and respondents' views on the importance of technology progression in the future.

From Petrodollar to Energy-Yuan: Currency Internationalization in the Light of Original Institutional Economics

The present article relies on an original institutional economics perspective of the international monetary system to argue that contrary to what is generally maintained in international relations literature, China’s effort to internationalize the renminbi has not stalled after its inclusion in the International Monetary Fund’s (IMF) Special Drawing Rights in 2015. This argument rests upon on the evaluation of the global petroleum market as a possible reinforcement of China’s establishment of the renminbi as an international unit of account and means of payment through its participation in both fossil and renewable energy markets. To that end, we analyze China’s energy-yuan strategy aimed at both fostering renminbi internationalization and securing energy provision.

Connections Between Thorstein Veblen’s Institutionalism and Celso Furtado’s Mature Writings

This study associates Original Institutional Economics and four books by Celso Furtado from the 1990s and early 2000s, as he discusses the cultural dimensions of underdevelopment in those writings. We rely on the association of issues from Thorstein Veblen’s institutionalism with the cultural aspects of Furtado’s investigation. The Veblenian concepts of pecuniary emulation and conspicuous consumption support the understanding of the habits of the Brazilian elite as addressed by Furtado. Hence, this study examines an unexplored connection between institutionalism and structuralism as such associations usually rely on the ceremonial-instrumental dichotomy. We introduce a reading of the current Brazilian society to illustrate our argument. Such reading relies on changes promoted in higher education and the lower classes’ purchasing power.

A Heterodox Approach to Masstige: Brand Fetishism, Corporate Pricing, and Rules of Consumer Choice

Masstige, or luxury for the masses, is a phenomenon that requires a heterodox economic approach based on Original Institutional Economics view of corporate power combined with Marxian concept of brand fetishism and post-Keynesian theories of pricing and consumer choice. The attitude toward luxury in classical works on political economy is briefly outlined. By applying the post-Keynesian theory of oligopolistic pricing, we show how the power of luxury brands enables high profits of luxury conglomerates. We use the post-Keynesian theory of consumer choice to differentiate between various types of masstige buyers. JEL Classification: B52, D11, D21, D43

An Historical Background of Andalusia’s Unemployment: An Institutional Perspective

This work aims to shed light on the ultimate causes of structural unemployment in the Spanish region of Andalusia where it persistently exceeds the already high national average. The origins of modern Andalusia hark back to the Early Modern Age when most Iberian states amalgamated into a single entity. Unlike its northern counterparts, Andalusia was mostly a Muslim country and its incorporation in the Western European world was implemented through forced assimilation. Five centuries after the conquest, the transposition of northern institutions into the South has resulted in a backward region with age-old problems of economic development and unemployment. I have brought together elements such as violence, landownership, trust, and the role of the state, from the point of view of the original institutional economics

The credibility thesis – A commentary from an original institutionalist position

This paper delivers an evaluation of the credibility thesis (CT) based on perspectives from original institutional economics. I first ask in what kind of explanation CT is grounded. Emphasizing functionality and denouncing intentionality, may indicate that it adheres to a functionalist type. At the same time, it does not seem to fulfil the criteria for such an explanation. CT explicitly refutes the idea of institutions in equilibrium. Second, I evaluate the proposal underlying CT that function supersedes form. I conclude that such a position cannot be generally defended. Form may even in some cases define what is understood as functional. Third, I therefore ask how to explain what institutions evolve and persist if they neither are chosen intentionally nor stabilized by functionalist mechanisms like an equilibrium. While there is definitive merit to the thesis and the research it has motivated, my analysis points towards a need for some reformulations.

The power of wind: The global wind energy industry's successes and failures

The global shift to renewable energy is imperative for preventing catastrophic climate change, and wind energy is playing a leading role in meeting emissions reduction targets under the 2015 Paris Agreement. Wind is one of the fastest growing, most competitive, and least harmful of the renewable energy technologies. Using an Original Institutional Economics (OIE) approach to examine real world developments, we argue that the global wind energy industry is increasingly volatile and concentrated, with implications for future growth and the trajectory for decarbonization. Moreover, OIE recognizes markets as social constructions that hold specific values, from which we argue that wind energy is operating within “first generation” electricity markets that favour conventional energy. This could further undermine the necessary investment and continued growth of wind energy, while continuing to overlook other positive social benefits wind provides. Like ecological economics, OIE remains sceptical that markets can fully capture the value of wind energy even if they internalise these costs. This has significant implications for the future trajectory of wind energy compared with both traditional and new energy technologies and underscores the limits of market mechanisms for a sustainable energy transition.

Apropriação, crenças e inculcação: algumas outras conexões entre o pragmatismo americano e o consumidor conspícuo de Veblen

ABSTRACT Thorstein Veblen was a founding father of the original institutional economics. Veblen’s first book, The Theory of the Leisure Class (1899), introduced to economists an interdisciplinary perspective to understand consumers’ decision-making. This perspective relied on the processual nature of instincts, habits, and institutions. Veblen’s ideas on human behavior were not completely original, and it has been widely recognized that some of his insights clearly reference the teachings of the American pragmatic school of philosophy. In light of this, our study offers an interpretation of Veblen’s ideas on consumer behavior through the viewpoints of the main thinkers of the pragmatist school of his time. This study explores some important themes within pragmatism, such as William James’s concept of appropriation, Charles Peirce’s understanding of belief and social impulse, and John Dewey’s ideas on socialization and the inculcation of habits. Based on these references, we seek to generate new insights into Veblen’s perspective on consumers’ decision-making in broader terms and at the same time preserve his main philosophical references.

Не тот эффект назвали блокировкой… («исправление имен» в российском институционализме)

In this article, we explore a well-known concept that explains how institutions can become deeply ingrained in a community, so that it becomes difficult to remove, even if most people consider them ineffective. This phenomenon can occur when institutions emerge by chance or are intentionally implemented. In English, this phenomenon is referred to as “lock-in”, but in Russian it has been inaccurately translated as blokirovka (literally “blockage”). This Russian word, however, conveys the opposite meaning, referring to the rejection or delibe­ra­te exclusion of a foreign or extrinsic institution from its native context. Our analysis of relevant sources uncovers the evolution of the “lock-in narrative” within institutionalist discourse and its transformation into the concept of “the effect of blockage” in Russian-language literature. To address this translation inaccuracy, which originated in 1997, we propose to reserve the term “blocking” exclusively for instances involving the rejection of a new institution. “Lock-in” is better understood as indicating irreversibility, a strong commitment to, or unwavering adherence to a specific social practice. We explain why it should not be confused with another widely recognized phenomenon in institutional evolution known as “path dependence”. Furthermore, we examine the frequently used Russian-language metaphor “institutional trap”, which is often interchanged with “lock-in”. We highlight that Original Institutional Economics had previously explored these unique cases of institutional evolution long before they were reintroduced into economic theory as part of the lock-in and path dependence narratives. Our paper contributes to the rectification of names (zhèngmíng) aimed at getting rid of redundant substances in academic discourse.

Understanding Value Change in the Energy Transition: Exploring the Perspective of Original Institutional Economics

In this paper, we take inspiration from original institutional economics (OIE) as an approach to study value change within the highly complex assembly of sociotechnical transformations that make up the energy transition. OIE is examined here as a suitable perspective, as it combines Dewey’s pragmatist philosophy and a methodological interactionist perspective on value change, behavior and institutions, with technology figuring as a transformational factor. This combination overcomes conceptual and methodological shortcomings of alternative accounts of values. We will present the contours of an OIE based conceptual framework connecting nature, humans, technology, the economic process, society, culture and institutions and habits, valuation and behavior. We illustrate how to use this framework to examine and understand how environmental, ecologic, safety, economic, and social concerns about the energy transition are (re)framed as (new) values in the belief systems and habits of individuals and groups. Moreover, we will explore how that may give rise to collective action, via the institutionalization of such revised values in the procedures, arrangements, norms and incentives guiding transactions. As such, this approach allows us in a fine-grained manner to conceptually and theoretically understand the way in which values change in the energy-transition, as a complex interaction of technology development and social relations.

Spatial political economy: the case of metropolitan industrial policy

Industrial policy has become the focus of much more interest in recent times. Of particular note is mainstream economists’ fascination and their peculiar claims about how and why this new industrial policy promotes growth, redistribution, and sustainability. Such contentions warrant scrutiny. Using metropolitan data, plans, and laws, along with regional and national data from census and survey reports, this paper addresses three questions related to growth, inequality, and sustainability. On the basis of the evidence, collected and interpreted from the lens of original institutional economics, it is argued that industrial policy has been too strictly tied to (urban) economic growth which has not, contrary to expectations, led to ecologically sensitive and inclusive (urban) economic development. Instead, growth policies have cumulatively generated rising urban inequalities and ecological problems in cities and regions. This lack of congruence between the case for, and outcomes from, the pursuit of a particular type of industrial policy can be partly explained by the presence of absentee land ownership. Its entanglements with rent theft, profit seeking, and problematic engagement with persistent inequalities and unsustainability complement the explanation. A different industrial policy could seek to recoup socially-created, but privately appropriated, unearned income, reinvest this resulting revenue in ways that directly build state capacity, address persistent urban inequalities, attend to ecological challenges, and seek to create industries that avoid the problems of ‘progress and poverty’.

Center and Periphery: An Original Institutional Economics Analysis of Raúl Prebisch’s Structuralism

ABSTRACT The present article focuses on Raúl Prebisch’s center and periphery framework, connecting his early, mid-career, and later work to cast a different light on one of his most enduring contributions. Using an original institutional economics approach, the article shows that Prebisch held a structuralist perspective throughout his career, but while early on he maintained a standard structuralist position, by the 1960s Prebisch embraced a less rigid version of structuralism, understanding the relationship between center and periphery through a multi-layered analysis. A movement in such direction enriches economic theory, creating a dynamic framework that views social, economic, and political transformation as a result of interactive actions (Lawson [1997]. Economics and Reality. London: Routledge) between agents and structures.

The future of pluralistic institutional theory

The article criticizes the stereotypes about the current state of institutional economics and the logic of its development. These stereotypes are based on underestimating the growth of its internal diversity, blurring the methodological boundaries of new and original institutional economics (NIE and OIE), the emergence of numerous alternative institutionalisms. The history of OIE and NIE shows that their competition has been replaced by methodological exchange, and research programs are becoming more heterogeneous and eclectic. Alternative institutionalisms — interdisciplinary movements focused on new trends in the analysis of institutions — are of growing importance. The paper proposes to move from the narrative about the struggle between NIE and OIE to rethinking institutional economics as a continuum of co-evolving and complementary schools and approaches. The article makes the case for creating an institutional theory based on epistemological pluralism, a combination of qualitative and quantitative methods, and the transition to postdisciplinarity. A pluralistic paradigm can be an adequate response to the challenge of increasing institutional complexity in modern economies.

The Dynamics of Encapsulation: Innovation, Annihilation, and Contradiction in Practice

This article proposes an institutionalist analytical framework designed to understand the contradictory relationship between innovation and annihilation within modern capitalism. Following original institutional economics’ perspectives on technology, encapsulation, corporate hegemony, and the potential mismatch between institutions and social provisioning, we present an analytical framework devised to understand contemporary innovative and annihilative processes. In this sense, we selected two different phenomena to demonstrate our perspective. The first concerns the contradictory relationship between biotechnology, genetic engineering, and biodiversity. The second concerns the problematic relationship between heterodox and mainstream economics in the beginning of the twenty-first century.

Our Toxic Bill of Rights

Franklin Roosevelt’s famous “Four Freedoms” and “Second Bill of Rights” are steeped in the empirical realism of Original Institutional Economics (OIE). FDR’s intent was to supplant elements of the self-destructive illogic of capitalism with instrumentalist policies strongly reflective of OIE. Influenced during his first administration by Rexford Tugwell and other institutionalists, FDR’s proposed remedies for a structurally malfunctioning economy continued to exhibit enduring OIE influences throughout his four terms in office, culminating with the Four Freedoms (1941) and the Second Bill of Rights (1944). Alarming shifts in the political economy landscape of contemporary America suggest the need for an ongoing examination of the role of countervailing power in reversing the terrifying trend toward authoritarianism. Rugged, boorish individualism and negative, faddish personal freedoms saturate American culture paradoxically propping up past-binding institutions of corporate hegemony which undercut substantive positive freedoms and democracy. The time is nigh for renewed calls for a Second Bill of Rights. This article explores Tugwell’s thoughts on basic rights and responsibilities of citizens/businessmen and their influence on Roosevelt and reciprocal influences of Roosevelt on Tugwell as part and parcel of the OIE legacy.

Original Institutional Economics Outside the United States: The Brazilian Chapter

This study intends to examine the roots of Original Institutional Economics (OIE) in Brazil. We rely on two methodologies to analyze the dissemination of OIE in Brazil: a bibliometric study, which identifies key Brazilian authors who published their studies in the Journal of Economic Issues (JEI); and an analysis of academic curriculum vitae (CVs) through an online compilation of Brazilian researchers’ CVs, the Lattes Platform, where it is possible to identify researchers by field. After identifying the Brazilian institutionalists, we study their writings, professor–student relationship, co- authorship, and teaching. We identify three groups of Brazilian institutionalists: (1) a heterogeneous group in São Paulo, (2) a group in Paraná that is concentrated at the same university, and (3) a cohesive group in Rio Grande do Sul.

Corporate Capital and (De)Monopolization of Public Health in the USA: An Institutionalist Perspective

From the original institutional economics perspective, this article discusses the patent-driven R&D models and public support to the pharmaceutical industry that is linked to a rising monopoly power of corporate capital over public health in the USA. Using the U.S. historical health data, we analyze the effects of institutional changes, shaped by large corporate capital, on public health outcomes in terms of accessibility and affordability of the medical advances arising from R&D. The analysis reveals that private returns from publicly funded R&D is higher than its social returns, despite a growing public interest in providing more comprehensive medical coverage.

An Institutional Economics of Gift?

We will try to show the potential of a research perspective that we have tentatively called an Institutional Economics of Gift (IEG). For this purpose, we dwell on two key issues that any nascent research perspective is expected to address: the subject matter and the method. Without any claim to exhaustiveness, the subject matter of an IEG will be explored through the analysis of three important forms of institutionalized gift-giving: the welfare state, the third sector, and the percentage philanthropy tax scheme. All of them raise the issue: to what extent gift-giving can be institutionalized and even legally enforced without losing some of its characteristics such as spontaneity, freedom and/or voluntariness? Moreover, this investigation points to the need to reflect more on the relationship between obligation and freedom as well as to go beyond the State/Market dichotomy. Methods will be explored by addressing the question: which methodological approaches are most suitable for an IEG? Methodology is a contentious issue between Original Institutional Economics and New Institutional Economics. However, both approaches, New Institutional Economics implicitly and Original Institutional Economics explicitly, tend to rely on qualitative and mixed empirical research methods. Particular emphasis is placed on anthropology and ethnography.

Narrative Institutional Analysis and The National Innovation System in Russia

The paper deals with the widespread narratives describing the institutions specific to Russia’s innovation system. Narrative economics provides an interdisciplinary research perspective, due to its focus on qualitative data that were ignored by the conventional economics for a long time. We emphasize that narrative analysis is rooted in the methodological framework of original institutional economics. Literature review using the PRISMA method did not identified any examples of applying narrative analysis to institutional studied of Russia’s innovation system. The empirical data for this paper involve popular narratives contained in 43 rating media sources extracted from a Russian information analysis agency Integrum. The sources were selected using the real-time media monitoring and analysis system Medialogia. The study covered the period from January 1, 2010 to July 1, 2021. Content analysis of the core ideas extracted from scholarly publications and media sources allowed to identify common narratives on institutional arrangement of Russia’s innovation system, that impede commercialization of innovations. However, conflicting approaches are provided by the literature to deal with related problem situations. The viral spread of popular narratives that affect the actors of Russia’s innovation system is illustrated by one of the typical narratives about the Russian innovation system. The research implications can be useful for developing a strategy for state innovation policy. Improved methodology for assessing virality of narratives and their power, as well as the empirical testing of proposed hypotheses remain the subject for future research.