From Neo-Classical Economics to New Institutional Economics and Beyond: Prospects for an Interdisciplinary Research Programme?

Abstract

Institutional approaches have seen a remarkable revival in social science research within the last decades. In particular New Institutional Economics (NIE) has progressed rapidly over the last years and attracted a considerable deal of attention by social scientists in particular from the disciplines of sociology, economics and political science. NIE is often either rejected as a hybrid concept that lumps together incompatible competing assumptions or it is championed and selectively instrumentalised as convenient catch-it-all ad-hocery.

This essay argues that NIE is nevertheless a very valuable concept that deserves its current place in the limelight. By reviewing the fundamental assumptions of neo-classical theorising and tracing their gradual elaboration, it attempts to make a point that NIE can be viewed as a consequent logical refinement of neo-classical methodology. NIE goes beyond the myopic and overly restrictive methodological framework that informs much of current applied neo-classical analysis and reopens orthodox economic thinking to sociological reasoning and paves the way for an interesting cross-fertilisation between these long-alienated disciplines.

Keywords: institutional economics, neo-institutionalism, institutions, collective action

JEL Classification: B25, B41, D80, D70, A14