“It is strange that two authors that have provided us with the deepest understanding of the workings of modern capitalism, Marx and Hayek, have little to say about specific economic policies. Marx advocates the broad but undetailed policy of central or collective planning and public ownership. Hayek’s policy stance is diametrically opposed to that of Marx but is hardly less bland: we are offered the generalities of more market competition and extended private ownership. Hayek, like Marx and his followers, has very little to say in detailed, policy terms. The common blindness to varieties of capitalism disables their theoretical systems in policy terms.
The way out of this difficulty is to place the detailed analysis of capitalist institutions and of national and corporate cultures at the centre of the stage. Institutional economics thus provides a fruitful approach to the formulation of relevant and operational economic policies. With the notable exception of Veblen, many leading institutionalists in the past have been deeply involved in the development of economic policy. Much of this work was based on empirical study, but there is no reason why work in the future should not be guided by the deepest theoretical and methodological insights. Instead of empty formalism there is the possibility that economics may thus be capable of providing inspiration and sagacious guidance for those in government, finance and business.”
Geoffrey M. Hodgson (1999), Economics and Utopia, p.148
There is much to admire and draw on in Hodgson’s reboot of ‘old institutionalist’ economics, Continue reading →
A short talk with Cambridge economist Ha-Joon Chang, who explains how mainstream economics tends to assume that individuals are entirely (and rationally) self-interested and why this is wrong and damaging to society. He illustrates how our broader motivations in the workplace and elsewhere are beneficial and should not be ignored in economic theory.
I think that modern behavioural economics has begun to address this, but it still begins with the idea of the individual, to the neglect of larger social structures and institutions, from class to society as a whole.
Some of my readers may well be enjoying coverage of the Olympic Games in Rio de Janeiro at the moment, if that’s your thing; others may be fed up with it and doing all they can to avoid it. Yes, this post is about sport, but it is also about political economy and social science, whose practitioners have throughout their history debated the meaning of and relationship between the individual and the social in society. I want to explore the lessons for these subjects of countries such as Great Britain, which has done very well in last three Olympic Games in terms of medals won, and overall team performance. Continue reading →