Search results

The paper provides a detailed historical account of Douglass C. North's early intellectual contributions and analytical developments in pursuing a Grand Theory for why some countries are rich and others poor.

The author approaches the discussion using a theoretical and historical reconstruction based on published and unpublished materials.

The systematic, continuous and profound attempt to answer the Smithian social coordination problem shaped North's journey from being a young serious Marxist to becoming one of the founders of New Institutional Economics. In the process, he was converted in the early 1950s into a rigid neoclassical economist, being one of the leaders in promoting New Economic History. The success of the cliometric revolution exposed the frailties of the movement itself, namely, the limitations of neoclassical economic theory to explain economic growth and social change. Incorporating transaction costs, the institutional framework in which property rights and contracts are measured, defined and enforced assumes a prominent role in explaining economic performance.

In the early 1970s, North adopted a naive theory of institutions and property rights still grounded in neoclassical assumptions. Institutional and organizational analysis is modeled as a social maximizing efficient equilibrium outcome. However, the increasing tension between the neoclassical theoretical apparatus and its failure to account for contrasting political and institutional structures, diverging economic paths and social change propelled the modification of its assumptions and progressive conceptual innovation. In the later 1970s and early 1980s, North abandoned the efficiency view and gradually became more critical of the objective rationality postulate. In this intellectual movement, North's avant-garde research program contributed significantly to the creation of New Institutional Economics.

The Neoclassical approach to analysing personal choice is compared with an approach contained in a Biblical Christian mode of analysis. This paper compares the Neoclassical and Christian positions via analysis of characteristics of the Neoclassical rational choice model. The main characteristic examined is a basic assumption of the rational choice model that human choice is explained as the optimisation of utility via rational self‐interest. The two positions are compared in terms of how they treat self‐interest and rationality, the degree to which basic assumptions about human behaviour are specified, the importance they attach to the realism of assumptions underlying their models, and the explanatory and predictive purposes for which the models are used. The conclusion of the comparison is that the Biblical Christian perspective encompasses the variables regarded as important in Neoclassical explanation, but presents them in the context of a more embracing worldview perspective than the Neoclassical. This Christian belief perspective is applicable to human behaviour in both “economic” and “non‐economic” domains.

The purpose of this paper is to critically assess the assumptions regarding human behaviour in orthodox neoclassical economic theory. The orthodox neoclassical economic theory prescribes rational models of human behaviour, but the strictness of the criteria, developed to promote theoretical consistency and conceptual elegance, commonly fails to fully accommodate all of the empirical material. To save the core of the orthodox neoclassical economic theory research program and to neutralize and mute criticism regarding its predictive failures, its proponents engage in expedient theorizing, the expansion of the initial theoretical framework by adding ad hoc hypotheses and/or including additional explanatory factors; in many cases, dismissed as “unnecessary complications” (as in the case of morality and ethics – two conspicuously “non-economic” concepts) in the initial formulation of theoretical propositions of the core theories.

The paper reviews a body of heterogeneous literature to introduce and examine the use of expedient theorizing in economic thinking.

In the present case, the hyperrationalist axiom regarding the efficacy of calculative practices to maximize individual utility is accompanied by moralist concerns (and, by implication, corrective and disciplinary action) regarding the failure to adhere to such prescriptions. Expedient theorizing, thus, becomes a key mechanism in the political economy of truth that currently grants orthodox neoclassical economic theory significant authority to inform policy-making in substantial ways and considerable prestige.

The orthodox neoclassical economic theory constitutes the blueprint for policy-making and institutional change, and, therefore, the key economic ideas being the constitutive elements of the contemporary economy demand scholarly attention. The paper thus points at theoretical inconsistencies in the orthodox neoclassical economic theory and introduces the concept of expedient theorizing as its remedy.

Societies highly value economic growth because economic growth results in increase in societal standards of living. This paper addresses the issue of why economies grow and what public policy makers should favor in order to increase economic growth.

This paper reviews and contrasts the two major, rival ways to account for economic growth: the neoclassical model, which maintains that growth results from increases in investment, and the dynamic competition model, which maintains that growth results from the innovations that stem from the process of competition.

The paper finds that the dynamic‐competition model, as represented by resource‐advantage (R‐A) theory, best explains economic growth.

Public policy should focus on promoting R‐A competition in order to foster economic growth.

This issue of which approach best accounts for economic growth is important because the two approaches imply very different decisions in the public policy arena.

Considers two main strands of literature. The first deals with the tension between the falsificationist view of how economic know‐ledge could or should be acquired, and the view that economics is a separate, deductive science. The second concerns the metaphors used in economic analysis, the main contrast being between metaphors which involve homeostasis and time reversibility, and those that involve hysteresis and time irreversibility.

The conflict between institutionalism and neoclassicism in the 20th century has been investigated by scholars over the years. Many of them believe that in the postwar period, neoclassicism triumphed while institutionalism largely disappeared. The present chapter takes a very different view. The late 20th century represents a broad synthesis of neoclassical and institutional themes in a methodology we call pragmatic empiricism. That approach combines the mathematical model building and theoretical formalism of neoclassical economics with the institutional economist’s data-driven statistical analysis and concern for developing institutional forms. We use as a case study the history of American locational economics from the 1930s to the present. The mixing of institutional and neoclassical themes is quite evident in the work of three young scholars at Harvard who effectively initiated American locational economics. In the postwar period, we find a series of outstanding, well-published papers that capture the spirit of the “founders.” These papers do use more modeling, but they also focus on major institutional developments. A broader review of locational works is consistent with the pragmatic empiricism label. The history of locational economics supports the claim that institutionalism, far from disappearing, continues to provide fundamental questions and techniques for modern pragmatic empiricism.

This chapter is a radical critique of the neoclassical growth theory, justifying ways out of mainstream economics. It has three parts. The first one analyzes growth theories from the Classical representation to the endogenous growth models. The second part demonstrates that the “new growth theory” is not a break with Solow's formalization. To prove it, we build an original Solowian endogenous growth model. Then, this neoclassical macrodynamic framework is technically, deeply critized in a third part. We show that both exogenous and endogenous neoclassical models prove to be incapable to explain growth in the long period. We concentrate on the ambiguities surrounding the hypothesis of single agent, as well as on the role of the state, in particular when it is considered as a “planner” by the neoclassicals. Endogenous growth models do not correspond to macrodynamization of the Walrasian general equilibrium, nor have solid microeconomic bases. We advocate in favor of rehabilitating state's intervention in social areas and of reactivating Marxist theoretical reflections regarding social planning and class analysis in the current time of structural crisis of the capitalist world system.

Addresses the question: “Are Christian values reflected in contemporary American economic ethics?” Compares the ethics dictated by neoclassical production theory with the Christian production values found in Pope John Paul II′s encyclical, Laborem Exercens . The encyclical rejects the notion that output is the primary goal of production. The implication is that neoclassical production theory is necessary, but not sufficient. Public policy in the United States has long been based on neoclassical production theory. In the last decade, the downsizing and restructuring of production has heightened emphasis on neoclassical production efficiencies. During this period, prevailing economic ethics were largely in conflict with Christian values. The fledgling policy initiatives of the Clinton administration suggest a commitment to reshape policy in ways which more positively incorporate a number of the reforms suggested by Laborem Exercens. If a new economic (production) ethic evolves out of these commitments, the compatibility between economic ethics and Christian values will be greater a decade from now.

The modern concept of labor hoarding emerged in early 1960s, and soon became a standard part of mainstream economists’ explanation of the working of labor markets. The concept represents the convergence of three important elements: an empirical finding that labor productivity was procyclical; a framing of this finding as a “puzzle” or anomaly for the basic neoclassical theory of the firm, and a proposed resolution of the puzzle based on optimizing behavior of the firm in the presence of costs of hiring, firing, and training workers. This paper recounts the history of each of these elements, and how they were woven together into the labor hoarding concept. Each history involves people associated with various research traditions and motivated by an array of questions, many of which were unrelated to the questions that the modern labor hoarding concept was ultimately created to address.