Skip to main content
SpringerLink
Log in

The Dynamics of the Institutional Change and the Market Economy: Understanding Contemporaneous Market Development Processes

  • Published:
The Review of Austrian Economics Aims and scope Submit manuscript

Abstract

The Austrian theory of institutions shows the particularity of being tied into a market process analysis. If such a specificity gave rise to a great number of analytical as well as methodological or epistemological contributions, its empirical dimension has been neglected to the benefit of the so-called Institutional works. The aim of my contribution is to come back to this untapped potential in order to exhibit the operational nature of Austrian analyses of institutions, particularly those of Lachmann. The objective here is to establish, through an appropriate temporal articulation of different institutions, the conditions for a harmonious development of market processes. I particularly show the great benefit of such a framework in order to, on one side, offer some explanations of the recent financial crisis faced by the emerging economies, and on the other side, to understand the specificity as well as the coherence of the Chinese economic transition.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Adkins, R. L. (1991) “East European Economic Reform: Are New Institutions Emerging?” Journal of Economic Issues, XXV(2).

  • Allegret, J.-P. and Dulbecco, Ph. (1999) Financial Liberalisation and Stability of the Financial System in Emerging Markets: The Institutional Dimension of Financial Crises, Communication to the Global Development Network Conference 99, Bonn, Germany, 6-8 December.

  • Boettke, P., Horwitz, S., and Prychitko, D. (1994) “Beyond Equilibrium Economics: Reflections on the Uniqueness of the Austrian Tradition.” In: Boettke, P. and Prychitko, D. (Eds.) The Market Process, Essays in Contemporary Austrian Economics. Edward Elgar.

  • Brown, W. S. (1993) “Economic Transition in Estonia,” Journal of Economic Issues, XXVII(2).

  • Cao, Y., Qian, Y., and Weingast, B. (1999) “From Federalism, Chinese Style to Privatization, Chinese Style.” Economics of Transition, 7(1).

  • Chang, H. J., Park, H. J., and Yoo, C. G. (1998) “Interpreting the Korean Crisis: Financial Liberalisation, Industrial Policy and Corporate Governance.” Cambridge Journal of Economics, 22.

  • Demirgüc-Kunt, A. and Detragiache, E. (1998) “Financial Liberalization and Financial Fragility.” IMF Working Paper, WP/98/83, June.

  • Dulbecco, Ph. and Dutraive,V. (2001) “The Meaning of Market: Comparing Austrian and Institutional Economics.” In: Garrouste, P. and Ioannides, S. (Eds) Evolution and Path-dependence in Economic Ideas: Past and Present, Edward Elgar.

  • Dulbecco, Ph. and Renard, M.-F. (1999) Permanency and Flexibility of Institutions: The Role of Decentralisation in Chinese Economic Reforms. Communication to the EAEPE 1999 Conference, Charles University, Prague, Czech Republic, 4-7 November.

    Google Scholar 

  • Elliott, J. E. and Dowlah, A. F. (1993) “Transition Crises in the Post-Soviet Era.” Journal of Economic Issues, XXVII(2).

  • Fan, G. (1995) “Incremental Changes and Dual-Track Transition: Understanding the Case of China.” Economic Policy, December.

  • Fan, G. (1996) “Political Economy Perspective of China's Economic Transition.” IDREC Working Paper, CERDI University of Clermont 1 (France), Nov.

    Google Scholar 

  • Garrisson, R. (1986) “From Lachmann to Lucas: On Institutions, Expectations and Equilibrating Tendencies.” In: Kirzner, I. (Ed.) Subjectivism, Intelligibility and Economic Understanding. New York University Press.

  • Garrouste, P. (1994) “Menger and Hayek on Institutions: Continuity and Discontinuities.” Journal of the History of Economic Thought, 16(2).

  • Gloria, S. (1996) Discovery versus Creation: Implications on the Austrian View of the Market Process. Communication to the EAEPE Conference in Antwerp, Belgium, 8-9 Nov.

  • Goldstein, M. and Turner, P. (1996) “Banking Crises in Emerging Economies: Origins and Policy Options.” BIS Economic Papers, No. 46.

  • Group of Ten (1996) Financial Stability in Emerging Market Economies. April.

  • Hayek, F. A. (1945) “The Use of Knowledge in Society.” American Economic Review, 35.

  • Hayek, F. A. (1978) New Studies in Philosophy, Politics, Economics and the History of Ideas, 2nd ed. London: Routledge & Kegan Paul.

    Google Scholar 

  • Hayek, F. A. [1976 (1937)] “Economics and Knowledge.” In: Hayek, F. A. (Ed.) Individualism and Economic Order, 2nd ed. London and Henley: Routledge & Kegan Paul.

    Google Scholar 

  • International Monetary Fund (1998) Toward a Framework for Financial Stability. World Economic and Financial Surveys, January, Washington, DC.

    Google Scholar 

  • Ioannides, S. (1992) The Market, Competition and Democracy, A Critique of Neo-Austrian Economics. Edward Elgar.

  • Jefferson, G. H. and Rawski, G. (1994) “Enterprise Reform in Chinese Industry.” Journal of EconomicPerspectives, 8(2, Spring): 47–70.

    Google Scholar 

  • Jin, D. and Haynes, K. E. (1997) “Economic Transition at the Edge of Order and Chaos: China's Dualist and Leading Sectoral Approach.” Journal of Economic Issues, XXXI(1).

  • Johnston, R. B. (1998) “Sequencing Capital Account Liberalizations and Financial Sector Reform.” IMF Paper on Policy Analysis and Assessment, PPAA/98/8, July.

  • Kaminsky, G. L. and Reinhart, C. M. (1996) “The Twin Crises: The Causes of Banking and Balance-of-Payments Problems.” Board of Governors of the Federal Reserve System, International Financial Discussion Papers, No. 544.

  • Kirzner, I. (1973) Competition and Entrepreneurship. Chicago: The University of Chicago Press.

    Google Scholar 

  • Kirzner, I. (1979) Perception, Opportunity, and Profit. Chicago: The University of Chicago Press.

    Google Scholar 

  • Kirzner, I. (1985) Discovery and the Capitalist Process. Chicago: The University of Chicago Press.

    Google Scholar 

  • Kirzner, I. (1992) The Meaning of Market Process, Essays in the development of Modern Austrian Economics. Routledge, London.

  • Koslowski, R. (1992) “Market Institutions, East European Reform, and Economic Theory.” Journal of Economic Issues, XXVI(3).

  • Lachmann, L. (1976) “On the Central Concept of Austrian Economics: Market Process.” In: Dolan, E. G. (Ed.) The Foundations of Modern Austrian Economics. Sheed & Ward, Inc., Kansas City.

    Google Scholar 

  • Lachmann, L. (1977) Capital, Expectations, and the Market Process, Essays on the Theory of the Market Economy. Edited with an Introduction by Walter E. Grinder, Sheed Andrews and McMeel, Kansas City.

    Google Scholar 

  • Lachmann, L. (1986) The Market as an Economic Process. Basil Blackwell.

  • Lachmann, L. (1994) “On the Economics of Time and Ignorance.” In: Boettke, P. and Prychitko, D. (Eds.) The Market Process, Essays in Contemporary Austrian Economics. Edward Elgar.

  • Lachmann, L. [1978 (1956)] Capital and its Structure. Sheed Andrews and McNell, Kansas City.

    Google Scholar 

  • Lachmann, L. (1970) The Legacy of Max Weber. Heinemann, London.

    Google Scholar 

  • Langlois, R. N. (1986) “The New Institutional Economics: An Introductory.” In: Langlois, R. N. (Ed.) Economics as a Process. Cambrige University Press.

  • Langlois, R. N. (1993) “Orders and Organizations: Toward an Austrian Theory of Social Institutions,” In: Caldwell, B. J. and St. Boehm (Eds.) Austrian Economics: Tensions and New Directions. Dordrecht: Kluwer Academic Publishers.

    Google Scholar 

  • Li, L. C. (1997) “Provincial Discretion and National Power: Investment Policy in Guandgong and Shangai, 1978-1993,” The China Quaterly.

  • Lichtenstein, P. M. (1996) “A New-Institutionalist Story about the Transformation of Former Socialist Economies: A Recounting and an Assessment.” Journal of Economic Issues, XXX(1).

  • Liew, L. H. (1995) “Gradualism in China's Economic Reform and the Role for a Strong Central State.” Journal of Economic Issues, XXIX(3).

  • Lin, J. Y. and Nugent, J. B. (1995) “ Institutions and Economic Development.” In: Behrman, J. and Srinivasan, T. N. (Eds.) Handbook of Development Economics. Elsevier Science B.V.

  • Loasby, B. (1991) Equilibrium and Evolution, An Exploration of Connecting Principles in Economics. Manchester University Press.

  • McKinnon, R. I. (1973) Money and Capital in Economic Development. The Brooking Institution, Washington, DC.

    Google Scholar 

  • McKinnon, R. I. [1991 (1993)] The Order of Economic Liberalization, Financial Control in the Transition to a Market Economy, 2nd ed. Baltimore: The John Hopkins University Press.

    Google Scholar 

  • McKinnon, R. I. and Pill, H. (1998) “The Overborrowing Syndrome: Are East Asian Economies Different?” In: Glick, R. (Ed.) Managing Capital Flows and Exchange Rates, Perspectives From the Pacific Basin. Cambridge University Press.

  • Mises, L. (1949) Human Action, a Treatise on Economics. Yale University Press.

  • Naughton, B. (1994) “Chinese Institutional Innovation and Privatisation from Below.” American Economic Review, May.

  • Nelson, R. and Winter, S. (1982) An Evolutionary Theory of Economic Change. Cambridge, Massachusetts, and UK: The Belknap Press of Harvard University Press.

    Google Scholar 

  • North, D. (1986) “The New Institutional Economics.” Journal of Institutional and Theoretical Economics, 142/1.

    Google Scholar 

  • North, D. (1990) Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.

    Google Scholar 

  • North, D. (1994) “Economic Performance Through Time.” American Economic Review, 84(3).

  • O'Driscoll, G. P. Jr. and Rizzo, M. J. (1996) The Economics of Time and Ignorance, 2nd ed. London, Routledge.

  • Ostas, D. T. (1992) “Institutional Reform in East-Central Europe: Hungarian and Polish Contract Law.” Journal of Economic Issues, XXVI(2).

  • Perkins, D. (1994) “Completing China's Move to the Market.” Journal of Economic Perspectives, 8(2, Spring).

  • Qian, Y. and Roland, G. (1996) “The Soft Budget Constraint in China.” Japan and the World Economy, 8.

  • Rothbard, M. N. (1976) “Praxeology: The Methodology of Austrian Economics.” In: Dolan, E. G. (Ed.) The Foundations of Modern Austrian Economics. Sheed & Ward, Inc., Kansas City.

    Google Scholar 

  • Schlack, R. F. (1993) “Going to Market in Bulgaria: Uphill on a Knife Edge.” Journal of Economic Issues, XXVII(2).

  • Schotter, A. (1981) The Economic Theory of Social Institutions. New York: Cambridge University Press.

    Google Scholar 

  • Schotter, A. (1994) “Social Institutions and Game Theory,” In: Boettke, P. (Ed.) The Elgar Companion to Austrian Economics. Hants, Edward Elgar.

  • Singh, A. (1993) The Plan, the Market and Evolutionary Economic Reform in China. United Nations Conference on Trade and Development, Discussion Paper No. 76, December.

  • Singh, A. (1998) “Asian Capitalism and the Financial Crisis.” Center for Economic Policy Analysis, Working Paper No. 10, August.

  • Stiglitz, J. (1998a) “More Instruments and Broader Goals: Moving Toward the Post-Washington Consensus.” The 1998 WIDER annual Lecture, Helsinki, January.

  • Stiglitz, J. (1998b) “The Role of International Financial Institutions in the Current Global Economy.” Adress to the Chicago Council on Foreign Relations, February.

  • Stiglitz, J. (1998c) “Sound Finance and Sustainable Development in Asia.” Keynote address to the Asia Development Forum, Manila, March.

  • Walder, A. G. (1995) “Local Governements as Industrial Firms.” American Journal of Sociology, 101(2).

  • World Bank (1999) “Republic of Korea: Establishing a New Foundation for Sustained Growth.” November, Washington, DC.

  • Yang, D. L. (1994) China Deconstructs. Routledge.

Download references

Author information

Authors and Affiliations

  1. CERDI—University of Auvergne, 65 Bd. François Mitterrand, 63000, Clermont Ferrand

    Philippe Dulbecco

Authors
  1. Philippe Dulbecco
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

About this article

Cite this article

Dulbecco, P. The Dynamics of the Institutional Change and the Market Economy: Understanding Contemporaneous Market Development Processes. The Review of Austrian Economics 16, 231–251 (2003). https://doi.org/10.1023/A:1024596908542

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1023/A:1024596908542

Search

Navigation