The system of relations between institutionalism and neoclassicism. Institutional and neoclassical approaches to the study of economic problems

Institutionalism and neoclassical economics

The concept of an institution. The role of institutions in the functioning of the economy

Question Principles and methods of education for preschool children.

RESEARCH METHODS help to study and summarize data from teaching practice. These methods include conversations, questionnaires, observations, experiments, analysis of specialized literature, and the work of preschoolers.
TEACHING METHODS represent methods of purposeful interconnected activity of the teacher and preschoolers, in which children acquire skills, knowledge and abilities, their worldview is formed, and their inherent abilities are developed.

METHODS of education are the most common ways to achieve educational goals. They can be divided into simpler subsystems of methods of pedagogical influence and upbringing.

Let's start our study of institutions with the etymology of the word institute.

to institute (English) - establish, establish.

The concept of institution was borrowed by economists from the social sciences, in particular from sociology.

Institute called a set of roles and statuses designed to satisfy a specific need.

Definitions of institutions can also be found in works of political philosophy and social psychology. For example, the category of institution is one of the central ones in John Rawls’s work “A Theory of Justice.”

Under institutions I will understand a public system of rules that define office and position with associated rights and duties, powers and immunities, and the like. These rules specify certain forms of action as permissible and others as prohibited, and they punish certain actions and protect others when violence occurs. As examples, or more general social practices, we can cite games, rituals, courts and parliaments, markets and property systems.

In economic theory, the concept of institution was first included in analysis by Thorstein Veblen.

Institutes- this is, in fact, a common way of thinking with regard to the individual relations between society and the individual and the individual functions they perform; and the system of social life, which is made up of the totality of those acting at a certain time or at any moment in the development of any society, can, from the psychological side, be characterized in general terms as the prevailing spiritual position or the widespread idea of \u200b\u200bthe way of life in society.

Veblen also understood institutions as:

habitual ways of responding to stimuli;
structure of the production or economic mechanism;
the currently accepted system of social life.

Another founder of institutionalism, John Commons, defines institution as follows:

Institute– collective action to control, liberate and expand individual action.

Another classic of institutionalism, Wesley Mitchell, can find the following definition:

Institutes- dominant, and highly standardized, social habits.

Currently, within the framework of modern institutionalism, the most common interpretation of institutions is Douglas North’s:

Institutes- these are the rules, the mechanisms that ensure their implementation, and the norms of behavior that structure repeated interactions between people.

The economic actions of an individual take place not in an isolated space, but in a certain society. And therefore it is of great importance how society will react to them. Thus, transactions that are acceptable and profitable in one place may not necessarily be viable even under similar conditions in another. An example of this is the restrictions imposed on human economic behavior by various religious cults.

In order to avoid the coordination of many external factors that influence success and the very possibility of making a particular decision, within the framework of economic and social orders, schemes or algorithms of behavior are developed that are the most effective under given conditions. These schemes and algorithms or matrices of individual behavior are nothing more than institutions.

There are several reasons why neoclassical theory (early 60s) ceased to meet the requirements placed on it by economists who were trying to understand the real events in modern economic practice:

Neoclassical theory is based on unrealistic assumptions and limitations, and, therefore, it uses models that are inadequate to economic practice. Coase called this state of affairs in neoclassical theory “blackboard economics.”
Economic science expands the range of phenomena (for example, such as ideology, law, norms of behavior, family) that can be successfully analyzed from the point of view of economic science. This process was called “economic imperialism”. The leading representative of this trend is Nobel laureate Harry Becker. But for the first time, Ludwig von Mises wrote about the need to create a general science that studies human action, proposing the term “praxeology” for this purpose.
Within the framework of neoclassics, there are practically no theories that satisfactorily explain dynamic changes in the economy, the importance of studying which became relevant against the backdrop of historical events of the 20th century. (In general, within the framework of economic science, until the 80s of the 20th century, this problem was considered almost exclusively within the framework of Marxist political economy).

Now let us dwell on the basic premises of neoclassical theory, which constitute its paradigm (hard core), as well as the “protective belt”, following the methodology of science put forward by Imre Lakatos:

Hard core :

stable preferences that are endogenous;
rational choice (maximizing behavior);
equilibrium in the market and general equilibrium in all markets.

Protective belt:

Property rights remain unchanged and clearly defined;
The information is completely accessible and complete;
Individuals satisfy their needs through exchanges that occur without costs, taking into account the initial distribution.

A Lakatosian research program, while leaving the hard core intact, should be aimed at clarifying, developing existing ones, or putting forward new auxiliary hypotheses that form a protective belt around this core.

If the hard core is modified, then the theory is replaced by a new theory with its own research program.

Let us consider how the premises of neo-institutionalism and classical old institutionalism influence the neoclassical research program.

The most prominent representatives of “Old Institutionalism” are: Thorstein Veblen, John Commons, Wesley Mitchell, John Galbraith. Despite the significant range of problems covered in the works of these economists, they failed to form their own unified research program. As Coase noted, the work of American institutionalists came to nothing because they lacked a theory to organize the mass of descriptive material.

Old institutionalism criticized the provisions that constitute the “hard core of neoclassicalism.” In particular, Veblen rejected the concept of rationality and the corresponding principle of maximization as fundamental in explaining the behavior of economic agents. The object of analysis is institutions, not human interactions in space with the restrictions that are set by institutions.

Also, the works of old institutionalists are distinguished by significant interdisciplinarity, being, in fact, continuations of sociological, legal, and statistical research in their application to economic problems.

The predecessors of neo-institutionalism are the economists of the Austrian School, in particular Carl Menger and Friedrich von Hayek, who introduced the evolutionary method into economic science, and also raised the question of the synthesis of many sciences studying society.

Modern neo-institutionalism has its roots in the pioneering works of Ronald Coase, The Nature of the Firm, and The Problem of Social Cost.

The neo-institutionalists attacked first of all the provisions of neoclassicism, which constitute its defensive core.

First, the assumption that exchange occurs without costs has been criticized. Criticism of this position can be found in Coase's early works. Although, it should be noted that Menger wrote about the possibility of the existence of exchange costs and their influence on the decisions of exchanging subjects in his “Foundations of Political Economy.”
Economic exchange occurs only when each participant, carrying out an act of exchange, receives some increase in value to the value of the existing set of goods. This is proven by Carl Menger in his work “Foundations of Political Economy”, based on the assumption of the existence of two participants in the exchange. The first has good A with value W, and the second has good B with the same value W. As a result of the exchange that occurred between them, the value of goods at the disposal of the first will be W + x, and the second - W + y. From this we can conclude that during the exchange process, the value of the good for each participant increased by a certain amount. This example shows that activities related to exchange are not a waste of time and resources, but are as productive as the production of material goods.
When exploring exchange, one cannot help but dwell on the limits of exchange. The exchange will take place until the value of the goods at the disposal of each participant in the exchange will, according to his estimates, be less than the value of those goods that can be obtained as a result of the exchange. This thesis is true for all exchange counterparties. Using the symbolism of the above example, an exchange occurs if W(A)< W + х для первого и W (B) < W + у для второго участников обмена, или если х > 0 and y > 0.
So far we have considered exchange as a process that occurs without costs. But in a real economy, any act of exchange is associated with certain costs. These exchange costs are called transactional. They are usually interpreted as “the costs of collecting and processing information, the costs of negotiations and decision-making, the costs of monitoring and legal protection of the execution of the contract.”
The concept of transaction costs contradicts the thesis of neoclassical theory that the costs of functioning of the market mechanism are equal to zero. This assumption made it possible not to take into account the influence of various institutions in the economic analysis. Therefore, if transaction costs are positive, it is necessary to take into account the influence of economic and social institutions on the functioning of the economic system.
Secondly, recognizing the existence of transaction costs, there is a need to revise the thesis about the availability of information. Recognition of the thesis about the incompleteness and imperfection of information opens up new prospects for economic analysis, for example, in the study of contracts.
Thirdly, the thesis about the neutrality of the distribution and specification of property rights has been revised. Research in this direction served as a starting point for the development of such areas of institutionalism as the theory of property rights and economics of organizations. Within the framework of these directions, subjects of economic activity “economic organizations have ceased to be viewed as “black boxes”.

Within the framework of “modern” institutionalism, attempts are also being made to modify or even change the elements of the hard core of neoclassics. First of all, this is the neoclassical premise of rational choice. In institutional economics, classical rationality is modified by accepting assumptions of bounded rationality and opportunistic behavior.

Despite the differences, almost all representatives of neo-institutionalism view institutions through their influence on the decisions made by economic agents. The following fundamental tools related to the human model are used: methodological individualism, utility maximization, bounded rationality and opportunistic behavior.

Some representatives of modern institutionalism go even further and question the very premise of the utility-maximizing behavior of economic man, proposing its replacement by the principle of satisfaction. In accordance with the classification of Tran Eggertsson, representatives of this direction form their own direction in institutionalism - New Institutional Economics, the representatives of which can be considered O. Williamson and G. Simon. Thus, the distinction between neo-institutionalism and new institutional economics can be drawn depending on which premises are replaced or modified within their framework - the “hard core” or the “protective belt”.

The main representatives of neo-institutionalism are: R. Coase, O. Williamson, D. North, A. Alchian, Simon G., L. Thévenot, Menard K., Buchanan J., Olson M., R. Posner, G. Demsetz, S. Pejovic, T. Eggertsson et al.

There are several reasons why neoclassical theory (early 60s) ceased to meet the requirements placed on it by economists who were trying to understand the real events in modern economic practice:

Neoclassical theory is based on unrealistic assumptions and limitations, and, therefore, it uses models that are inadequate to economic practice.

Coase called this state of affairs in neoclassical theory “blackboard economics.” .

Economic science expands the range of phenomena (for example, such as ideology, law, norms of behavior, family) that can be successfully analyzed from the point of view of economic science. This process was called “economic imperialism”. The leading representative of this trend is Nobel laureate Harry Becker. But for the first time, Ludwig von Mises wrote about the need to create a general science that studies human action, proposing the term “praxeology” for this purpose. ).

Within the framework of neoclassics, there are practically no theories that satisfactorily explain dynamic changes in the economy, the importance of studying which became relevant against the backdrop of historical events of the 20th century. (In general, within the framework of economic science until the 80s of the 20th century, this problem was considered almost exclusively within the framework of Marxist political economy Now let's look at the basic premises of neoclassical theory, :

which constitute its paradigm (hard core), as well as a “protective belt”, following the methodology of science put forward by Imre Lakatos :

Hard core

stable preferences that are endogenous;

rational choice (maximizing behavior);

equilibrium in the market and general equilibrium in all markets.

Protective belt:

Property rights remain unchanged and clearly defined;

The information is completely accessible and complete;

Individuals satisfy their needs through exchanges that occur without costs, taking into account the initial distribution.

Let us consider how the premises of neo-institutionalism and classical old institutionalism influence the neoclassical research program.

3. Old and new institutionalism

Modern neo-institutionalism has its roots in the pioneering works of Ronald Coase, The Nature of the Firm, and The Problem of Social Cost.

The neo-institutionalists attacked first of all the provisions of neoclassicism, which constitute its defensive core.

First, the assumption that exchange occurs without costs has been criticized. Criticism of this position can be found in Coase's early works. Although, it should be noted that Menger wrote about the possibility of the existence of exchange costs and their influence on the decisions of exchanging subjects in his “Foundations of Political Economy”. Economic exchange occurs only when each participant, carrying out an act of exchange, receives some increase in value to the value of the existing set of goods. This is proven by Carl Menger in his work “Foundations of Political Economy”, based on the assumption of the existence of two participants in the exchange.< W + х для первого и W (B) < W + у для второго участников обмена, или если х > The first has good A with value W, and the second has good B with the same value W. As a result of the exchange that occurred between them, the value of goods at the disposal of the first will be W + x, and the second - W + y. From this we can conclude that during the exchange process, the value of the good for each participant increased by a certain amount. This example shows that activities related to exchange are not a waste of time and resources, but are as productive as the production of material goods. When exploring exchange, one cannot help but dwell on the limits of exchange. The exchange will take place until the value of the goods at the disposal of each participant in the exchange will, according to his estimates, be less than the value of those goods that can be obtained as a result of the exchange. This thesis is true for all exchange counterparties. Using the symbolism of the above example, an exchange occurs if W(A) > 0 and y transactional. 0. Until now, we have considered exchange as a process that occurs without costs. But in a real economy, any act of exchange is associated with certain costs. These exchange costs are called

Secondly, recognizing the existence of transaction costs, there is a need to revise the thesis about the availability of information. Recognition of the thesis about the incompleteness and imperfection of information opens up new prospects for economic analysis, for example, in the study of contracts.

Thirdly, the thesis about the neutrality of the distribution and specification of property rights has been revised. Research in this direction served as a starting point for the development of such areas of institutionalism as the theory of property rights and economics of organizations.

Within the framework of these directions, subjects of economic activity “economic organizations have ceased to be viewed as “black boxes”.

Neoclassical economics emerged in the 1870s. The neoclassical direction studies the behavior of an economic person (consumer, entrepreneur, employee) who seeks to maximize income and minimize costs. The main categories of analysis are limit values. Neoclassical economists developed the theory of marginal utility and the theory of marginal productivity, the theory of general economic equilibrium, according to which the mechanism of free competition and market pricing ensures fair distribution of income and full use of economic resources, the economic theory of welfare, the principles of which form the basis of the modern theory of public finance (P Samuelson), the theory of rational expectations, etc. In the second half of the 19th century, along with Marxism, neoclassical economic theory emerged and developed. Of all its many representatives, the most famous was the English scientist Alfred Marshall (1842-1924). The supply of a good is based on production costs. The manufacturer cannot sell at a price that does not cover its production costs. If classical economic theory considered price formation from the position of the producer, then neoclassical theory considers pricing both from the position of the consumer (demand) and from the position of the producer (supply). Neoclassical economic theory, just like the classics, is based on the principle of economic liberalism, the principle of free competition. But in their research, neoclassicists place greater emphasis on the study of applied practical problems; they use quantitative analysis and mathematics to a greater extent than qualitative (substantive, cause-and-effect). The greatest attention is paid to the problems of efficient use of limited resources at the microeconomic level, at the enterprise and household levels. Neoclassical economic theory is one of the foundations of many areas of modern economic thought. (A. Marshall: Principles of Political Economy, J.B. Clark: Theory of Income Distribution, A. Pigou: Economic Theory of Welfare)

“Old” institutionalism, as an economic movement, arose at the turn of the 19th and 20th centuries. He was closely connected with the historical direction in economic theory, with the so-called historical and new historical school (F. List, G. Schmoler, L. Bretano, K. Bücher). From the very beginning of its development, institutionalism was characterized by upholding the idea of social control and intervention of society, mainly the state, in economic processes. This was the legacy of the historical school, whose representatives not only denied the existence of stable deterministic connections and laws in the economy, but were also supporters of the idea that the welfare of society can be achieved on the basis of strict state regulation of the nationalist economy. The most prominent representatives of “Old Institutionalism” are: Thorstein Veblen, John Commons, Wesley Mitchell, John Galbraith. Despite the significant range of problems covered in the works of these economists, they failed to form their own unified research program. As Coase noted, the work of American institutionalists came to nothing because they lacked a theory to organize the mass of descriptive material. Old institutionalism criticized the provisions that constitute the “hard core of neoclassicalism.” In particular, Veblen rejected the concept of rationality and the corresponding principle of maximization as fundamental in explaining the behavior of economic agents. The object of analysis is institutions, not human interactions in space with the restrictions that are set by institutions. Also, the works of old institutionalists are distinguished by significant interdisciplinarity, being, in fact, continuations of sociological, legal, and statistical research in their application to economic problems.

1. The institutional approach occupies a special place in the system of theoretical economic directions. Unlike the neoclassical approach, it places emphasis not so much on the analysis of the results of the behavior of economic agents, but on this behavior itself, its forms and methods. Thus, the identity of the theoretical object of analysis and historical reality is achieved.

2. Institutionalism is characterized by the predominance of explaining any processes, rather than predicting them, as in neoclassical theory. Institutional models are less formalized, so many more different predictions can be made within the framework of institutional forecasting.

3. The institutional approach is associated with the analysis of a specific situation, which leads to more generalized results. When analyzing a specific economic situation, institutionalists make a comparison not with an ideal one, as in neoclassics, but with another, real situation.

Development of a new institutional economic theory.

Even a simple listing of the main approaches within the framework of the new institutional theory shows how rapidly its development has proceeded and how widespread it has become in recent decades. It is now a legitimate part of the main body of modern economics. The emergence of a new institutional theory is associated with the emergence in economics of such concepts as transaction costs, property rights, and contractual relations. The awareness of the importance of the concept of transaction costs for the operation of the economic system is associated with Ronald Coase's article “The Nature of the Firm” (1937). Traditional neoclassical theory viewed the market as a perfect mechanism, where there is no need to take into account the costs of servicing transactions. However, R. Coase showed that with every transaction between economic entities, costs arise associated with its conclusion - transaction costs.

Today, it is customary to distinguish among transaction costs:

1) costs of searching for information - the cost of time and resources to obtain and process information about prices, about goods and services of interest, about available suppliers and consumers;

2) negotiation costs;

3) the costs of measuring the quantity and quality of goods and services entering into exchange;
4) costs for specification and protection of property rights;
5) costs of opportunistic behavior: with asymmetry of information, both an incentive and the opportunity to work not with full efficiency arise.

The theory of property rights was developed by A. Alchian and G. Demsetz; they laid the foundation for a systematic analysis of the economic significance of property relations. The system of property rights in the new institutional theory refers to the entire set of rules regulating access to rare resources. Such norms can be established and protected not only by the state, but also by other social mechanisms - customs, moral guidelines, religious commandments. Property rights can be thought of as “rules of the game” that regulate relationships between individual agents. Neo-institutionalism operates with the concept of a “bundle of property rights”: each such “bundle” can split, so that one part of the authority to make decisions regarding a particular resource begins to belong to one person, the other to another, etc.

The main elements of a bundle of property rights usually include:

1) the right to exclude other agents from access to the resource;

2) the right to use the resource;

3) the right to receive income from it;
4) the right to transfer all previous powers.

A necessary condition for the efficient functioning of the market is the precise definition, or "specification", of property rights. The fundamental thesis of the new institutional theory is that the specification of property rights is not free, therefore in the real economy it cannot be fully defined and protected with absolute reliability. One key term of the new institutional theory is contract. Any transaction involves the exchange of “bundles of property rights” and this occurs through a contract that fixes the powers and the conditions under which they are transferred. Neo-institutionalists study various forms of contracts (explicit and implicit, short- and long-term, etc.), the mechanism for ensuring the reliability of fulfillment of accepted obligations (court, arbitration, self-protected contracts).

In the 1960s, American scholar James Buchanan (b. 1919) advanced public choice theory (PCT) in his classic works: The Calculus of Consent, The Limits of Freedom, and The Constitution of Economic Policy. TOV studies the political mechanism for the formation of macroeconomic decisions or politics as a type of economic activity. The main areas of TOV research are: constitutional economics, model of political competition, public choice in a representative democracy, theory of bureaucracy, theory of political rent, theory of state failure. Buchanan in the theory of public choice proceeds from the fact that people follow self-interest in the political sphere, and, in addition, politics is similar to the market. The main subjects of political markets are voters, politicians and officials. In a democratic system, voters will cast their votes for those politicians whose election programs best suit their interests. Therefore, politicians, in order to achieve their goals (entry into power structures, career), must focus on voters. Thus, politicians adopt certain programs for which voters spoke, and officials specify and control the progress of these programs. Within the framework of the theory of public choice, all measures of state economic policy are understood as endogenous to the economic and political system, since their determination is carried out under the influence of the requests of subjects of the political market, which are also economic subjects.

The economic behavior of the bureaucracy was examined by U. Niskanen. He believes that the results of the activities of bureaucrats are often of an “intangible” nature (decrees, memos, etc.) and therefore it is difficult to monitor their activities. At the same time, it is assumed that the welfare of officials depends on the size of the agency’s budget: this opens up opportunities for increasing their remuneration, improving their official status, reputation, etc. As a result, it turns out that officials manage to significantly inflate agency budgets compared to the level actually necessary to perform the agency's functions. These arguments play a significant role in substantiating the thesis about the comparative inefficiency of the provision of public goods by government agencies, which is shared by the overwhelming majority of supporters of the theory of public choice. The political business cycle model was proposed by D. Gibbs. Gibbsu believes that the nature of economic policy depends on which party is in power. “Left” parties, traditionally focused on supporting employees, are pursuing policies aimed at increasing employment (even at the expense of rising inflation). “Right” parties support big business; they pay more attention to preventing inflation (even at the expense of rising unemployment). Thus, according to the simplest model, cyclical fluctuations in the economy are generated by changes in “right” and “left” governments, and the consequences of the policies pursued by the respective governments persist throughout their entire term of office. Thus, the emergence of a new institutional theory is associated with the emergence in economics of such concepts as transaction costs, property rights, and contractual relations. As part of transaction costs, it is customary to distinguish: costs of searching for information; negotiation costs; costs of measuring the quantity and quality of goods and services entered into exchange; costs of specification and protection of property rights; costs of opportunistic behavior.

Neoclassical.

Neoclassicism - arose at the end of the 19th century. a movement of economic thought that can be considered the beginning of modern economic science. It produced a marginalist revolution in the classical economics of the 19th century, which was represented by such names as A. Smith, D. Ricardo, J. Mill, K. Marx, etc. Neoclassicists developed the tools of marginal analysis of the economy, primarily the concept of marginal utility, which was almost simultaneously discovered W. Jevons, K. Menger and L. Walras, as well as marginal productivity, which was also used by some representatives of classical economics (for example, I. Thunen).

Among the largest representatives of neoclassicism, in addition to those mentioned, are J. Clark, F. Edgeworth, I. Fisher, A. Marshall, V. Pareto, K. Wicksell. They emphasized the importance of the scarcity of goods for determining their price, laid down a general idea of the essence of optimal distribution (given ) resources. At the same time, they proceeded from the theorems of limit analysis, determining the conditions for the optimal choice of goods, the optimal structure of production, the optimal intensity of use of factors, the optimal point in time (interest rate). All these concepts are summarized in the main criterion: subjective and objective rates of substitution between any two goods (products and resources) must be equal for all households and all production units, respectively. In addition to these basic conditions, second-order conditions were studied - the law of diminishing returns, as well as a system for ranking individual utilities, etc.

Apparently, the main achievement of this school is the model of competitive equilibrium developed by Walras. Nevertheless, in general, for N. t. characterized by a microeconomic approach to economic phenomena, in contrast to Keynesianism, in the theory of which the macroeconomic approach dominates. Neoclassical economists laid the foundation for later economic concepts such as welfare economics and growth theory (eg, the Harrod-Domar model). These concepts are sometimes called the modern neoclassical school. A number of recent economists have also tried to combine some of the provisions of classical theory, neoclassicism and Keynesianism - this movement is called neoclassical synthesis. Ideas N. t. e. were most fully set out in A. Marshall’s “Principles of Economic Theory,” which “... must be recognized as one of the most durable and viable books in the history of economic science: this is the only treatise of the 19th century. on Economic Theory, which still sells by the hundreds every year, and which can still be read with great profit by the modern reader.” Let us add that in Russia Marshall’s three-volume work was published in 1993. The neoclassical direction of political economy arose in the 70s of the 19th century. Its representatives: K. Menger, F. Wieser, E. Böhm-Bawerk (Austrian school); W. Jevons, L. Walras (mathematical school); A. Marshall, A. Pigou (Cambridge school); J.B. Clark (American school).

The neoclassical movement is based on the principle of state non-interference in the economy. The market mechanism is capable of regulating the economy itself, establishing a balance between supply and demand, between production and consumption. Neoclassicists advocate freedom of private enterprise.

Neoclassical theory is the theory that unforeseen changes in the price level can give rise to macroeconomic instability in the short term; in the long term, the economy remains stable in the production of a national product, ensuring full employment of resources due to the flexibility of prices and wages. The neoclassical direction examines the behavior of the so-called economic person (consumer, entrepreneur, employee), who seeks to maximize income and minimize costs. Neoclassical economists developed the theory of marginal utility and the theory of marginal productivity, the theory of general economic equilibrium, according to which the mechanism of free competition and market pricing ensures fair distribution of income and full use of economic resources; economic theory of welfare, the principles of which form the basis of the modern theory of public finance.

Neoclassical synthesis is a combination of Keynesian macrotheory and neoclassical microtheory in a single system. The essence of the concept of neoclassical synthesis is the combination of state and market regulation of the economy. The combination of state production and private enterprise produces a mixed economy.

In the mid-50s, monetarism arose - an economic theory that ascribes to the money supply in circulation the role of a determining factor in the process of formation of economic conditions and establishes a causal relationship between changes in the quantity of money and the size of the gross final product. M. Friedman tried to prove that the market economy is characterized by special stability, making government intervention unnecessary. Thus, the neoclassicists developed the tools of marginal analysis of the economy, primarily the concept of marginal utility, while they proceeded from the theorems of marginal analysis, determining the conditions for the optimal choice of goods, the optimal structure of production, the optimal intensity of use of factors, the optimal moment in time. The neoclassical movement is based on the principle of state non-interference in the economy. The market mechanism is capable of regulating the economy itself.

Comparative analysis of neoclassicalism and institutionalism.

The key difference between the new institutional economic theory, the founder of which is O. Williamson, and neo-institutional economic theory, the ideas of which are most fully reflected in the numerous works of D. S. North, lies in the scope of the methodology used. The new institutional economic theory is based on two basic methodological postulates that diverge from the main provisions of the methodology of traditional neoclassical theory. This is a significant weakening of the premise of rationality of economic entities, suggesting the impossibility of concluding complete (taking into account all possible circumstances) contracts. Accordingly, the postulate about the optimizing behavior of market agents is replaced by the postulate of finding a satisfactory result, and the focus is on the category of “relational contracts”, that is, contracts that fix the general rules of interaction between the parties to a transaction to adapt the structure of their mutual relations to changing conditions. The inevitable discrepancy under these conditions between the terms of contractual agreements at the stage of their conclusion and implementation necessitates the study of contracting as an integral process that occurs over time.

Thus, the new institutional economic theory differs from the neoclassical one not only by the introduction of the category of transaction costs into the analysis, but also by the modification of some fundamental methodological principles while maintaining others (in particular, the neoclassical postulate about the strict orientation of individuals to follow their own interests is not questioned). On the contrary, neo-institutional economic theory is based on the same methodological principles as traditional neoclassical economic theory - that is, on the principles of rational optimizing behavior of economic entities under a given system of restrictions.

The peculiarity of the conceptual approach inherent in neo-institutional economic theory is the integration of the category of transaction costs into the structure of neoclassical analysis, as well as the expansion of the category of restrictions by taking into account the specific features of the structure of property rights. Since institutional economics arose as an alternative to neoclassical economics, let us highlight the main fundamental differences between them. New institutional and neo-institutional theories represent alternative approaches to the study of issues related to the existence of transaction costs and specialized contractual structures that ensure their minimization. At the same time, the focus of both directions is the problem of economic organization. Although institutionalism as a special movement emerged at the beginning of the twentieth century, for a long time it was on the periphery of economic thought. Explaining the movement of economic goods only by institutional factors did not find many supporters. This was partly due to the uncertainty of the very concept of “institution”, by which some researchers understood mainly customs, others - trade unions, others - the state, fourth corporations - etc., etc.

Partly because institutionalists tried to use the methods of other social sciences in economics: law, sociology, political science, etc. As a result, they lost the opportunity to speak the unified language of economic science, which was considered the language of graphs and formulas. There were, of course, other objective reasons why this movement was not in demand by contemporaries.

The situation, however, changed radically in the 1960s and 1970s. To understand why, it is enough to make at least a cursory comparison of the “old” and “new” institutionalism. There are at least three fundamental differences between the “old” institutionalists (such as T. Veblen, J. Commons, J. C. Galbraith) and neo-institutionalists (such as R. Coase, D. North or J. Buchanan).

Firstly, the “old” institutionalists (for example, J. Commons in “The Legal Foundations of Capitalism”) approached economics from law and politics, trying to study the problems of modern economic theory using the methods of other social sciences; neo-institutionalists take the exact opposite path - they study political science and legal problems using the methods of neoclassical economic theory, and above all, using the apparatus of modern microeconomics and game theory.

Secondly, traditional institutionalism was based mainly on the inductive method and sought to move from particular cases to generalizations, as a result of which a general institutional theory never emerged; Neo-institutionalism follows a deductive path - from the general principles of neoclassical economic theory to the explanation of specific phenomena of social life.

Thus, the divergence between new institutional economics and neoclassical economics lies in the area of methodology used. The new institutional economic theory is based on two basic methodological postulates that diverge from the main provisions of the methodology of traditional neoclassical theory.

Criterion	Neoclassical	Institutionalism
Founding period	XVII>XIX>XX centuries	20-30s of the XX century
Place of development	Western Europe
	Industrial	Post-industrial
Analysis methodology	Methodological individualism - the explanation of institutions through the need of individuals for the existence of frameworks,	Holism is an explanation of the behavior and interests of individuals through the characteristics of institutions that predetermine their interactions.
Nature of reasoning	Deduction (from general to specific)	Induction (from particular to general)
Human rationality		Limited
Information and knowledge	Complete, limited knowledge	Partial, specialized knowledge
	Profit utility maximization	Cultural awareness, harmonization
	Determined independently	Determined by culture, team
Interaction	Commodity	Interpersonal
Dependence on the influence of social factors	Complete independence	Not strictly independent
Behavior of participants	No deceit (deception) and no coercion	Opportunistic behavior

Table - comparative analysis of neoclassicism and institutionalism.

Institutions: concept and role in the functioning of the economy

An institution is a set of roles and statuses designed to satisfy a specific need.

In economic theory, the concept of institution was first included in analysis by Thorstein Veblen.

Institutions are, in fact, a common way of thinking as regards the particular relations between society and the individual and the particular functions they perform; and the system of social life, which is composed of the totality of those acting at a certain time or at any moment in the development of any society, can, from the psychological side, be characterized in general terms as the prevailing spiritual position or the widespread idea of \u200b\u200bthe way of life in society.

Another founder of institutionalism, John Commons, defines institution as follows:

An institution is a collective action to control, liberate and expand individual action.

Another classic of institutionalism, Wesley Mitchell, has the following definition: institutions are dominant, and highly standardized, social habits.

Institutions regulate access to the legal use of rare and valuable resources, and also determine the principles of this access. They determine what these or those interests are and how they should be realized, taking into account the fact that the very rarity of these resources, which makes accessing them difficult, forms the basis for rivalry and even conflicts in the struggle for their possession.

The concept of institution proposed by D. North and A. Shotter

Currently, within the framework of modern institutionalism, the most common interpretation of institutions is Douglas North’s:

Institutions are the rules, the mechanisms that enforce them, and the norms of behavior that structure repeated interactions between people. Institutions as equilibria. (Schotter)Institutions are (institutional) equilibria realized in some kind of games (in a standard repeated coordination game).

The concept of institutionalism and the reasons for its emergence.

The reasons for the emergence of institutionalism include the transition of capitalism to the monopoly stage, which was accompanied by significant centralization of production and capital, which gave rise to social contradictions in society.

At the end of the 19th and beginning of the 20th centuries, capitalism of free (perfect) competition developed into a monopolistic stage. Perfect competition has given way to corporate capital and imperfect competition. The concentration of production increased, and there was a massive centralization of banking capital. As a result, the capitalist system gave rise to acute social contradictions.
These circumstances led to the emergence of a completely new direction in economic theory - institutionalism. He set the task, firstly, to act as an opponent to monopoly capital and, secondly, to develop a concept for protecting the “middle class” by reforming, first of all, the economy.
Institutionalism (from the Latin institutio - “custom, instruction, instruction”) is a direction of economic thought that was formed and became widespread in the United States in the 20-30s of the 20th century. Representatives of institutionalism consider institutions to be the driving force of social development.

4. Stages of development of institutionalism. First stage falls on the 20-30s. XX century, when the basic concepts of institutionalism are formulated. The leading representatives of the period of formation of institutionalism as a scientific school are Thorstein Veblen, John Commons, Wesley Mitchell. These institutionalists defended the ideas of social control and intervention of society, mainly the state, in economic processes. Second phase falls on the post-war period until the 60-70s. XX century At this stage, demographic problems, the trade union movement, and the contradictions of the socio-economic development of capitalism are studied. The leading representative of this period is John Maurice Clark. Third stage - 60-70s XX century Here the role of economic processes in the social life of society is studied. This stage is called neo-institutionalism . Its leading representative is Ronald Coase, known for such works as “The Nature of the Firm” and “The Problem of Social Costs”. Neo-institutionalists they are no longer just trying to criticize, but to modify neoclassical economic theory, considering institutions through their influence on the decisions made by economic agents (participants in economic processes).

5. Basic provisions of institutionalism

Institutionalism is characterized by the following provisions:
– the basis of analysis is the method of describing economic phenomena;
– the object of analysis is the evolution of social psychology;
– the driving force of the economy, along with material factors, are moral, ethical and legal elements in historical development;
– interpretation of socio-economic phenomena from the point of view of social psychology;
– dissatisfaction with the use of abstractions inherent in neoclassicism;
– the desire to integrate economic science with social sciences;
– the need for detailed quantitative research of phenomena;
– protection of the implementation of the state’s antimonopoly policy.

T. Veblen and his contribution to the development of the theory of institutionalism

The founder of institutionalism was the American scientist T. Veblen. His main work is “The Theory of the Leisure Class” (1899).
Veblen's institutionalism is socio-psychological in nature, since it derives a number of economic phenomena from social psychology.
The economy is considered by Veblen as an evolutionary open system that experiences constant influences from the external environment, culture, politics, nature and reacts to them.
Veblen introduces scientific concepts into science: “institution” and “institution”. However, both are often called “institutions”.
Veblen emphasizes cultural norms and traditions, emphasizing that institutions do not so much limit as they guide, facilitate, and encourage human activity. According to Veblen, an institution by its nature has the properties of “continuity”, since it is a self-reproducing social phenomenon.
Analyzing capitalist society, Veblen creates the concept of an “industrial” system..

To cure disasters, Veblen creates the theory of “regulated capitalism.”

Institutionalism and neoclassical economics

According to institutionalists, neoclassical theory is based on unrealistic premises and restrictions: stable preferences, maximizing behavior, general economic equilibrium in all markets, unchanged property rights, availability of information, exchange occurs without costs (R. Coase called this state of affairs in neoclassics “classroom economics”). boards");
2) the subject of research in institutional economic theory is expanding significantly. Institutionalists, along with purely economic phenomena, study such phenomena as ideology, law, norms of behavior, family, and the research is conducted from an economic point of view. This process was called economic imperialism. The leading representative of this trend is the 1992 Nobel Prize winner in economics, Harry Becker (b. 1930). But for the first time, Ludwig von Mises (1881-1973) wrote about the need to create a general science that studies human action, proposing the term “praxeology” for this purpose;
3) economics is not a static sphere, but a dynamic one.

8. Statements forming<<жесткое ядро>> and<<защитный пояс>> neoclassical

The main premises of neoclassical theory, which constitute its paradigm (hard core), as well as the “protective belt”, following the methodology of science put forward by Imre Lakatos:

Hard core:

1. stable preferences that are endogenous in nature;

2. rational choice (maximizing behavior);

3. equilibrium in the market and general equilibrium in all markets.

Protective belt:

1. Property rights remain unchanged and clearly defined;

2. The information is completely accessible and complete;

3. Individuals satisfy their needs through exchange, which occurs without costs, taking into account the initial distribution.