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There are a total of 13 presentations in the topic

INSTITUTIONALISM

Presentation

Korchagina Anastasia

Student of State Budget Educational Institution Lyceum No. 1571

Moscow

• Institutionalism- direction of socio-economic research, in particular considering the political organization of society as a complex of various associations of citizens - institutions(family, party, trade union, etc.)

• The concept of institutionalism includes two aspects: “institutions” - norms, customs of behavior in society, and “institutions” - consolidation of norms and customs in the form of laws, organizations, institutions.

• Institutionalism originated in the United States and then became widespread in many countries around the world.

• Institutionalism went through 3 stages in its development. The founders of the first stage of institutionalism are T. Veblen, John Commons, Welsey Mitchell.

• T. Veblen came up with a program for the transfer of power to the engineering and technical intelligentsia, considering it an independent driving force of socio-economic growth.
• D. Commons believed that with an increase in the role of the state and its intervention in the economy, the government will be able to ensure a balance of interests of various sectors of society.
• W. Mitchell defended the possibility of eliminating crises through the use of government spending and advocated the organization of national planning.

• Since the 60-70s, the influence of institutionalism has increased again and is currently one of the theoretical foundations of state economic policy in many countries of the world.

• Its representatives are American economists J. Galbraith, James Beau Kennen, J. Clark, Means and others.

BASIC DIRECTIONS OF DEVELOPMENT OF INSTITUTIONALISM

There are 3 main currents of institutionalism:

• 1. Socio-psychological institutionalism of T. Veblen
• 2. Socio-legal institutionalism of D. Commons.
• 3. Conjunctural-statistical institutionalism of W. Mitchell.

• The founder of old institutionalism is an American of Norwegian origin, T. Veblen.
• A person, according to T. Veblen, is not “a calculator that instantly calculates the pleasure and pain” associated with the acquisition of goods, i.e. benefits and costs of obtaining them.

• John Commons created a legal version of institutionalism, in which law takes precedence over economics. For him, an institution is, first of all, rules of law.

• Mitchell's personal contribution to institutional theory is to identify the influence on economic factors (in the categories of money circulation, credit, finance, etc.).
• He replaced the term “crisis” with the term “business cycle”. In his opinion, cyclical development is not an accidental phenomenon, but a permanent feature of the capitalist economy. They determine the dynamics of production. It is influenced by investments, money circulation, stock prices, trade, savings, etc.

1. The principle of methodological collectivism or Institutional determinism.

2. Assumption about stereotypes of thinking and habits as the main driver of economic behavior.

3. The principle of cumulative causation.

4. Reducing the main task of economic science to “understanding” the functioning of the economy, and not to forecasting and prediction.

5. Favorable attitude towards government intervention in the market economy.

Institutionalism of the twentieth centuries.

Creation of a system of prerequisites,

different from neoclassical ( new neo-institutionalism)

1930s – Ronald Coase “The Theory of the Firm”

1950-60s Armen Alchian, Harold Demsetz: A Theory of Property Rights

1970s – Oliver Williamson, Mechanisms of Control, Akerlof and Spence

1980s – Douglas Norm, Institutions and Economic Performance

1970-90 – Roger Myerson, Paul Milgrom, et al.: Theory of Mechanisms

2000s – Acemoglu, Tabbelini, Rodrik and others – empirical assessment of institutions

New institutionalism 1930-1940s.

Firm, market and law

Nobel laureate 1991

"for discovering and clarifying the implications of transaction values ​​and property rights for the institutional structure and functioning of the economy."

Ronald Coase (b. 1910)

New institutionalism 1970-1980s

Oliver Eaton Williamson (b. 1932)

Neo-institutionalism 1980s

Institutes,

institutional changes and economic performance

1993 Nobel Prize shared with Robert Fogel "for renewing the methodology of economic history by applying economic theory and quantitative methods to explain economic and institutional change"

Douglas Cecil North

Basic assumptions of neo-institutionalism

1. The principle of bounded rationality

2. Opportunism as a characteristic of economic behavior.

3. Assumption of incomplete specification and protection of property rights.

4. Emphasizing the importance of transaction costs.

5. Deriving the role of non-market institutions from the incompleteness of specification and protection of property rights and from the existence of positive transaction costs.

Bounded rationality : a characteristic of human behavior under conditions of structural uncertainty, suggesting his inability to foresee all possible contingencies and calculate the optimal line of behavior.

Bounded rationality –

a consequence of the limited cognitive abilities of individuals.

Opportunistic behavior - behavior aimed at pursuing one's own interest and not limited by moral considerations (associated with the use of deception, cunning and deceit).

Limited cognitive abilities Limited opportunism rationality

The concept of "institution"

An institution is any mechanism that providescoordination and/or effective motivation of economic behavior.

– Coordination - docking plans.

– Motivation - connection incentives

The coordination mechanism is what guides economic behavior, that is, it helps make decisions regarding fundamental economic issues such as what, how and for whom to produce.

The need for such a mechanism arises in any economy based on

social division of labor.

Institutions are what determine

placement of resources.

Coordination function of institutions – reducing the level of uncertainty in the environment in which economic agents operate.

Motivational function of institutions – stimulating the participation of individuals in collective action.

Distributive function of institutions – distribution of resources between individuals.

Description of the presentation by individual slides:

1 slide

Slide description:

Discipline: State regulation of the economy Topic: Institutionalism as one of the predecessors of the theories of state regulation of the economy Completed by: ZF student of group 513-111-5-1 Vegerina S.M. Chelyabinsk 2017 MINISTRY OF EDUCATION AND SCIENCE OF THE RUSSIAN FEDERATION Federal State Budgetary Educational Institution of Higher Education "SOUTH URAL STATE HUMANITIES AND PEDAGOGICAL UNIVERSITY" (FSBEI VO "SUURGGPU")

2 slide

Slide description:

In parallel with the economic-mathematical approach, an institutional approach to the problems of government intervention in economic processes was being formed in economic science. A distinctive feature of this approach is that the greatest attention is paid to the development of not only self-regulation mechanisms, but also state control over the economy.

3 slide

Slide description:

The very concept of “institutionalism” (from the Greek institutio - custom, instruction, direction) was first used in 1918 by the American economist Walton Hamilton, who defined the category “institution” as “a verbal symbol that describes a bundle of social customs. It means a way of thinking or acting, with sufficient prevalence and strength, imprinted in the habits of groups or the customs of a people. In ordinary speech, it is another word for "procedure", "general agreement" or "agreement"; in bookish language, morals, folk customs, as well as the monetary economy, classical education, fundamentalism and democracy are “institutions”

4 slide

Slide description:

Modern institutionalism arose with its predecessors. At the end of the 19th and beginning of the 20th centuries, as is known, there was a massive centralization of banking capital. Monopolistic tendencies in the development of capital have sharply intensified. The interests of the “middle class” suffered significant damage.

5 slide

Slide description:

US economists of the 20-30s. XX century intensified the analysis of these trends in the economy. Their theories marked the beginning of a completely new direction in the issue of state regulation of the economy - institutionalism. Institutionalism in the study of issues of state regulation of the economy uses the methodology of holism (in contrast to the methodology of individualism, neoclassical theory, which explains institutions through the behavior and interests of individuals: it is the individual who becomes the support in the analysis of institutions, the characteristics of the state are derived from the interests of its citizens), in which the initial The point of analysis becomes not individuals, but institutions.

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Slide description:

In other words, the behavior and interests of individuals are explained through the characteristics of institutions that predetermine their interaction. Moreover, institutions are primary, individuals are secondary. Institutions (a set of socio-economic factors, taking into account the state’s social control over the economy) set the framework for the entire course of subsequent development. Thus, T. Veblen (1857 - 1929) in “The Theory of the Leisure Class” (1899) expresses the idea of ​​a “new order”, within the framework of which the state promotes the growth of scientific and technological progress. Later, W. Mitchell (1874 - 1948) would add provisions for the state to carry out banking reform, use government spending as a balancer, and create an unemployment insurance system.

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Slide description:

Institutionalism in the analysis of government regulation also uses the methodology of “dichotomy”: the Veblenian dichotomy of “industry and business”, because the subordination of industry to the goals of increasing monetary wealth deforms the system, causing crises. The state establishes a new order in which industry is managed not by a financial oligarchy, but by a “council of technicians.” In W. Mitchell, the idea of ​​dichotomy is manifested in the gap between the dynamics of industrial production and the dynamics of prices, taking into account the contradictory motives in people's behavior. The same thing is observed in the two-sector economy of J. Galbraith in the form of many small firms forming a market system, and a small number of largest firms forming a “planning system”, the optimal size of which is determined by the effect of scale of production.

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Slide description:

Like other institutions, the state begins to more clearly represent the result of the division of labor, demonstrating the institutionalization of its management functions in three directions: on the side of small firms, on the side of mature corporations, and at the same time maintains the balance of interests of all social groups, the integrity of the national economy as a whole. Thus, the sides of the dichotomy, strengthening functionally, become a factor of economic sustainability.

Slide 9

Slide description:

Neo-institutionalism, the founder of which is considered to be R. Coase, builds its methodology for analyzing government regulation on the motivation of human behavior. He is directly interested in the decision-making process and its conditions. In this regard, the norms and rules of human behavior that have developed in society become of great importance. It proceeds from the primary importance of the formation not of property rights as such, but of social norms and rules. In this regard, two functions of the state, substantiated by D. Buchanan, are important: 1. “The defending state,” as a result of an agreement between people. The implementation of this agreement serves as a kind of guarantor of their compliance with the constitutional agreement. Ensuring rights in society means making the leap from anarchy to political organization. 2. “Producing states.” This function represents the state as a producer of public goods. It is implemented on the basis of constitutional rights and freedoms, as a kind of agreement between citizens regarding the satisfaction of their joint needs for a number of goods and services. But precisely here lies the danger of the state degenerating into a totalitarian one.

10 slide

Slide description:

One of the obstacles on this path is, in our opinion, the implementation of social norms and rules. It is no coincidence that A. Oleinik, in contrast to the traditional approach, proceeds from the primary importance of the formation not of property rights “according to Coase,” but of social norms and rules. For the concept of “norm”, as a basic regulator of human interaction, is voluntary or sanctioned (either as a result of choice, or as a prerequisite for rational behavior), and is fundamental in the system of categories of institutional economics.

11 slide

Slide description:

The legal institutionalism of J. Commons (1862 – 1945) was outlined in his book “Institutional Economics” (1934), in which he explores the state as a collective institution. To the Marxist doctrine of class struggle, J. Commons put forward an alternative position on the state carrying out reforms in the field of legislation and the creation of a government represented by the leaders of various “collective institutions.” He was convinced of the need to create a government that would be controlled by public opinion and would demonopolize the economy. State legal decisions within the framework of economic reforms will eliminate contradictions and conflicts in society and determine the transition to the stage of administrative capitalism. In general, the legal aspects of “collective action” of J. Commons, initiated by the state, found application during the “New Deal” period of US President F. Roosevelt.

12 slide

Slide description:

In Russia, there has been a “deformilization of institutional space,” when there is a transition from formal “rules of the game” to informal ways of organizing interaction in the market space, when any formal institutions immediately sprout informal relationships and personal connections. Any formal institutions turn out to be “parallel” to the market, switching to the mode of personalized bargaining (recall that modern analysis understands institutions as general “rules of the game” - formal, informal - that structure the space of economic interactions; instances and procedures that ensure compliance with these rules).

Slide 13

Slide description:

In general, institutionalism is one of the theoretical predecessors of the concept that emerged in the 30s. Keynesian concept of state regulation of the economy, the main idea of ​​which is state intervention in the economy. In the modern institutional approach, there are two ideal models of the state, described by A.N. Oleynik (following D. North): “contract state” and “exploitative state”. The contract state uses the monopoly on violence only within the framework of the powers delegated to it by citizens in their interests, and citizens view the payment of taxes not as a duty, but as their responsibility. In conditions of zero transaction costs, the state acts as a guarantor for those transactions in which it is more profitable to entrust the protection of property rights to the state.

Slide 2

Main questions

1. Predecessors of institutionalism 2. Thorstein Veblen - founder of institutionalism

Slide 3

German historical school and Marxism

The German historical school proclaimed the specificity of the country's socio-economic conditions as the most important factor in the functioning and development of the national economy. The main method of this school was empiricism, that is, the derivation of scientific generalizations based on a dispassionate study of social practice, analysis of objective statistical data. The German historical school opposed the thesis of the classics about “ invisible hand" concept of national interests, which involves active government intervention in the economy

Slide 4

Friedrich List

1789-1846 - national economy; -association of individual forces; -productive forces: moral and social; -role of the state

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Werner Sombart

1863-1941 Economic spirit: pre-capitalist and capitalist

Slide 7

Max Weber

1864-1920 Ideal type The spirit of capitalism

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ThorsteinVeblen

Slide 9

Phases of development of institutions according to Veblen

Peaceful savagery (formerly primitive society); Predatory society (late primitive society); Quasi-peaceful society (slave system, feudalism); Peaceful phase (capitalism)

Slide 10

Altruistic instinct; Instinct of mastery; Instinct of curiosity

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Living standard Consumer preferences Fashion Aesthetic views Sports Gambling tendencies

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3. The theory of monopoly capitalism by J. Hobson

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4. W. Mitchell and J. Clark

W. Mitchell: the market economy is unstable; The cause of instability is business cycles; Government intervention; Unemployment insurance. J. Clark: anti-crisis measures are the prerogative of the state; increased government spending; diffusion of benefits (benefits for everyone)

Slide 18

5. J. Commons' theory of collective action

1862-1945 Institutions as collective action

Slide 19

A transaction as an economic phenomenon is characterized by four factors: 1) transfer of property, 2) monetary price, 3) obligation to be fulfilled, 4) payment. Courts must consider all four of these factors simultaneously. From the point of view of sequence in time, the transaction process contains three stages: 1) negotiations, 2) acceptance of an obligation, 3) its implementation.

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Slide 21

6. New industrial society J.K. Galbraith

John Galbraith (1908-2006) - American institutionalist, author of the theory of a new industrial society. In the book “Economic Theory and the Goals of Society,” J. K. Galbraith notes that corporations governed by a technostructure constitute the planning subsystem of the economy, and small firms constitute the market subsystem. At the same time, the planning subsystem exploits the market one, thereby generating inequality in profits. J.C. Galbraith believes that in the economy of the USSR the technostructure also took a leading position, which ultimately should have led to the evolutionary convergence of market and planned economic systems. In this book, he introduces the category of “self-exploitation” - this is how he calls the activities of an employer or an entrepreneur working in his company.

Slide 22

A contract is a necessary mechanism for coordinating production plans between various firms included in the planning system.

Slide 23

Galbraith argues that power in the modern large corporation is gradually shifting from capital owners to managers. The need to obtain and evaluate information from many people in the decision-making process in modern industry is determined by three main points: Technological needs; Planning needs Coordination needs

Slide 24

conclusions

Galbraith emphasizes the group of those who contribute to the information used to make a group decision. He calls this group a technostructure. It is this group of people, and not the administration, that directs the activities of the enterprise and is its brain. The main goal of a technostructure, like any organization, is self-preservation. An organization is a system of consciously coordinated actions of several individuals. Galbraith identifies four types of incentives

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7. J. Schumpeter and the theory of the entrepreneur-innovator

One of the supporters of institutionalism, an American economist of Austrian origin, Harvard professor Joseph Schumpeter (1883–1950), considered entrepreneurship and the firm in the conditions of developing capitalism, when the economy had already begun to be shaken by economic crises. He came to the conclusion that the system itself, while developing, was heading towards collapse. In his opinion, the capitalist system does not die from economic collapse, but its very success undermines the social institutions that protect it and inevitably creates conditions in which it cannot survive.

Slide 27

The subject of development is an entrepreneur who creates new consumer goods, methods of production and transportation to consumers, new markets and other forms of economic organization. At the same time, new elements displace and replace the previous ones, i.e. such an innovative entrepreneur unwittingly performs the function of creative destruction. However, the existing development mechanism could not function sustainably if it did not have institutions that perform compensatory functions. Such institutions are patents, licenses, and trade secrets, which restrain and control the spread of innovations.

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8. Economic direction of institutionalism

R. Coase: gave the basis for a new institutional economics, exploring the firm and the market as alternative forms of economic organization, considering the relationship between property rights and the structure of production, justifying the right to carry out certain actions as a factor of production. Douglas North: proceeds from the fact that relations between private and equal individuals always develop as relations of dominance and subordination and are implemented in the form of various contractual relations. Institutional changes, which D. North considered, consist in improving the rules, the general direction of which is determined by the competition of various forms of economic organization. In fact, he argued that organizational change plays a more significant role in human history than technological change. They are associated with the identification and awareness by social groups of their special interests, which presupposes a volitional choice and the subsequent formulation of these interests in the form of rules.

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