31532 - Economic Theory Of Institutions

Learning outcomes

At the end of the course student is able to assess alternative theories of co-ordination under institutional constraints, and to develop critical thinking skills applied to the analysis of specific instances of institutional change. Main topics are: - institutions versus organizations - civil associations versus enterprise associations - cognitive frames and institutional equilibria - institutional variety - theories of institutional dynamics - evaluation benchmarks for institutional set-ups.

Course contents

1. Economic theory of institutions: an introduction
2. Civil associations and enterprise associations
3. Institutions and organizations
4. Institutional arrangements and ‘social equilibria'
5. Cognitive frames and institutional arrangements
6. Institutional variety and institutional change
7. Exchange networks and productive networks
   
8. Institutional dynamics and economic dynamics

     Class: Reading and discussion of Adam Smith's  The Theory of Moral Sentiments

Readings/Bibliography

• J.Pocock, 'Time, Institutions and Action: An Essay on Traditions and Their Understanding', in J.G.A. Pocock, Political Thought and History. Essays on Theory and Method, Cambridge, Cambridge University Press, 2009, pp. 187-216.
• M. Baranzini and R. Scazzieri ‘Institutions in Economic Theory', in M. Baranzini e R. Scazzieri (eds.), The Economic Theory of Structure and Change, Cambridge, Cambridge University Press, 1990, pp. 243-267.
• M. Aoki, Toward a Comparative Institutional Analysis, Cambridge, Massachusetts and London, England, 2001 (pp. 1-29).
• H. Bortis, Institutions, Behaviour and Economic Theory. A Contribution to Classical-Keynesian Political Economy, Cambridge, Cambridge University Press, 1997 ( pp. 75-95).
• D. C. North, Institutions, Institutional Change and Economic Performance, Cambridge, Cambridge University Press, 1990 ( chapters 1, 4, 5,6) .
• D.C. North, Understanding the Process of Economic Change, Princeton and Oxford, Princeton University Press, 2006.
• Greif, A. (2006) Institutions and the Path to the Modern Economy, Cambridge, Cambridge University Press, 2006 (chapters 1-3).
• L.L.Pasinetti, Keynes and the Cambridge Keynesians, Cambridge, Cambridge University Press, 2007 (Book III).

Classwork is based on reading and discussion of Adam Smith's 'The Theory of Moral Sentiments' (TMS), originally published in 1759. The reading material is in the public domain and accessible via the web address below: http://www.econlib.org/library/Smith/smMS.html . Students wishing to work on a printed copy of Smith's work should make use of one or the other of the two following editions of TMS:  A. Smith, The Theory of Moral Sentiments, edited by D.D. Raphael and A.L. Macfie, Oxford, Oxford University Press, 1976 (also available in paperback edition published by LibertyPress/LibertyClassics, Indianapolis,Indiana, 1982), or: A.Smith, The Theory of Moral Sentiments, edited by Knud Haakonssen,  Cambridge, Cambridge University Press, 2007.

Further readings:

• J. S. Coleman, Foundations of Social Theory, Cambridge, Mass., Harvard University Press, mainly pp. 300-321.
• D. Ruiter, Institutional Legal Facts. Legal Powers and their Effects, Dordrecht, Kluwer, 1993.
• R. Scazzieri, ‘Economic Beliefs, Economic Theory and Rational Reconstruction', in R. Rossini Favretti, G. Sandri e R. Scazzieri (eds) Incommensurability and Translation, Cheltenham, UK and Northampton, MA, USA, 1999 (mainly sections 2 (‘Economic Beliefs and Linguistic Artifacts'), 3 (‘The Meaning of Economic Beliefs) and 5 (‘Translatability, Trust and Theory Change').
• R. Boudon, ‘Explaining Behaviour by Cause or by Reason? The Cognitive Model', in R. Rossini Favretti, G. Sandri e R Scazzieri (eds), Incommensurability and Translation, Cheltenham, UK e Northampton, MA USA, 1999 pp. 267-287.
• V.L. Smith, Rationality in Economics. Constructivist and Ecological Forms, Cambridge, Cambridge University Press, 2008
• N. Georgescu-Roegen, ‘Institutional Aspects of Peasant Economies: an Analytical View', in N. Georgescu-Roegen, Energy and Economic Myths-Institutional and Analytical Economic Essays, New York and Oxford, Pergamon Press, 1976, pp. 199-231.
• T. C. Schelling, The Strategy of Conflict, Cambridge, Mass., Harvard University Press, 1960 (in particular chapter  4 (‘Toward a Theory of Interdependent Decision',  pp. 83-118).
• R. Sugden, ‘A Theory of Focal Points', The Economic Journal, vol. 105, May, pp. 533-550.
• R. Scazzieri, ‘Patterns of Rationality and the Varieties of Inference', Journal of Economic Methodology, vol. 8, n.1, 2001, pp. 105-110.
• E. Giannetti Da Fonseca, Beliefs in Action. Economic Philosophy and Social Change, Cambridge, Cambridge University Press, 1991.
• P. L. Porta e R. Scazzieri, ‘Towards an Economic Theory of International Civil Society: Trade, Trust and Open Governmemt', Structural Change and Economic Dynamics, vol. 8, n.1, March 1997, pp. 5-28.
• D. Lal, Unintended Consequences. The Impact of Factor Endowments, Culture, and Politics on Long-Run Economic Performance, Cambridge, Massachusetts and London , England, MIT Press, 1999.
• A. O. Hirschman, ‘Against Parsimony: Three Easy Ways of Complicating Some Categories of Economic Discourse', American Economic Review, vol.74, n.2, May 1984.
• A.O.  Hirschman, The Passions and the Interests. Political Arguments for Capitalism before its Triumph, Princeton, Princeton University Press,1997.
• M. Olson, The Logic of Collective Choice. Public Goods and the Theory of Groups, Cambridge, Massachusetts and London, Harvard University Press, 1972 (mainly chapters 1-2).
• P. David, ‘Why are Institutions the Carriers of History? Path Dependence and the Evolution of Conventions, Organizations and Institutions', Structural Change and Economic Dynamics, vol. 5.
• C. Poni and R. Scazzieri (eds.), Production Networks: Market Rules and Social Norms, Bologna, mimeo, 1994. (papers presented at the Eleventh International Economic History Congress, Milan, Bocconi University, 12-16 September 1994).
• M. Landesmann and U. Pagano (eds), Institutions and Economic Change, special issue of Structural Change and Economic Dynamics (papers by P.A. David, U. Pagano e R. Rowthorn, G.K.Dow, C. Clague, H.-J. Chang, A. Nagy, I. Adelman e J.-B. Lohmoller), Oxford, Oxford University Press, 1994.

 

Teaching methods

Critical survey of the literature, discussion of general interpretive framework, analysis of fundamental sources. Research seminar led by Antonio Andreoni (Clare Hall, Cambridge).

Assessment methods

Active participation in classwork, drafting and presentation of two research papers (short  essay: 3.000- 4.000 words; long essay: 4.000-5.000 words).

Teaching tools

The course consists of formal lectures and classes. Active participation in classwork and discussion is required.

Office hours

See the website of Roberto Scazzieri