Abstract
If neoclassicism, the reigning orthodoxy of Western economics, can usefully be described as a quantitative theory of outcomes, then American institutional economics is best understood as a qualitative theory of process. The distinctive characteristics of neoclassical theory are its focus on the equilibrium values of numerically defined economic variables and its consequent exogenizing of the complex network of social, political and legal relationships that constrain economic activity and the specific organizational arrangements within which it is carried on. Institutionalism, in contrast, is concerned with the multidisciplinary analysis of just these neoclassical givens, and thus with questions of organization, power and control in economic systems broadly conceived to include the market as one of many interacting mechanisms of resource allocation. Where orthodox theory predicts prices and quantities with ahistorical models of optimization and equilibrium, institutionalists look to the forces that create observed patterns of demand and supply, and to the indeterminate evolutionary processes that produce the cultural norms and social formations that condition economic behaviour and interaction (Samuels 1995: 571–6).
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Adelstein, R. (2002). American Institutional Economics and the Legal System. In: Newman, P. (eds) The New Palgrave Dictionary of Economics and the Law. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-74173-1_15
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