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This paper explores the interface between institutional theory and Austrian theory. We examine mainstream institutionalism as exemplified by D. C. North in his work with Wallis and Weingast on the elite compact theory of social order and of transitions to impersonal rights, and propose instead an Austrian process-oriented perspective. We argue that mainstream institutionalism does not fully account for the efficiency of impersonal rules. Their efficiency can be better explained by a market for rules, which in turn requires a stable plurality of governance providers. Since an equilibrium of plural providers requires stable power polycentricity, the implication goes against consolidating organized means for violence as a doorstep condition to successful transitions. The paper demonstrates how to employ Ostroms’ Bloomington School Institutionalism to shift, convert, and recalibrate mainstream institutionalism's themes into an Austrian process-oriented theory.

Culture shapes economic action and, as such, impacts economic life. Although there is a growing recognition amongst economists that culture matters, there is nothing approaching a universal agreement on how to incorporate culture into economic analysis. We provide a brief summary of how economists have discussed culture and then argue that Austrian School Economics is particularly well suited to contribute to our understanding of the relationship between culture and economic action. Indeed, Austrian economics has an advantage (1) because of its links to Max Weber’s approach to social science and (2) because of its emphasis on economics as a science of meaning. A Weber-inspired Austrian economics that stresses meaning, we argue, brings a focus on culture to the fore of economic analysis and opens the door for a progressive research program within cultural economics. Austrian economists can and have made significant contributions to our understanding of the relationship between culture and economic action. Moreover, we argue, explorations of the connection between culture and economic action can be a fruitful field of study within Austrian economics.

How should economists incorporate culture into their economic analysis? What empirical approaches to identifying, measuring, and analyzing the relationship between culture and economic action are most appropriate for economists? In particular, what can experimental economists learn from the methods of economic anthropologists, sociologists, and historians who study culture? We argue that while both quantitative and qualitative approaches can reveal interesting relationships between culture and economic actions/outcomes, especially in experimental research designs, qualitative methods help economists better understand people’s economic choices and the economic outcomes that emerge from those choices. This is because qualitative studies conceptualize culture as a pattern of meaning, take the relevant cultural data to be people’s thoughts and feelings, treat the market as a cultural phenomenon, and allow for novel explanations.

Max Weber and the Austrian School of Economics share many of the same intellectual influences as well as a similar commitment to a social science characterized by methodological individualism, methodological subjectivism, and value-freedom. Although many of the links between Weber and the Austrian school have been explored, one area of agreement between Weber and Mises that is yet to be explored is their shared understanding of the nature of the market. This chapter attempts to close this gap by examining the pictures of the market in Weber’s Economy and Society and Mises’ Human Action. We find that both portrayals share important features. These include similarities regarding (i) the nature of the market; (ii) the market’s autonomous logic; (iii) the impersonality of the market; and (iv) the market in society.