How can the History of Economic thought Contribute to an Understanding of Institutional Change?

Abstract

Since Moses Abramovitz's “classic” paper on “Catching-Up, Forging Ahead, and Falling Behind” (1986) economists have become increasingly aware again of the significance of “social capability” for processes of economic change. During the past twenty years much research has been done on “soft” determinants of development and growth. Especially some of the so-called new institutionalists and evolutionary economists have now returned to the roots of the institutional research program by acknowledging that “ideas matter” in the process of institutional change. However, it is still often overlooked in the literature that the cognition of social reality is deeply intertwined with the general world-view prevailing in a given society. Certainly, such general world-views are partly determined by the level of economic and technological development, but they are also a reflection of deeply rooted cultural traditions. In particular, the highly divergent outcomes of economic and political transition in the formerly socialist countries of Central and Eastern Europe have brought the connection between culture, ideas, and institutions to the fore again (see, for example, Winiecki 2004). Therefore it is all but an accident that it is one of the leading transition experts who has recently called on economists to “seek a better understanding of the role of values and norms in shaping both ideas and institutions” (Roland 2004, p. 128).

Economic ideas, capital logic and class struggle: reflections towards a people’s history of economics

“…Ideas that allow people to articulate interests, problems and solutions, i.e. define a political project, can become rallying points for masses of people, turn into a mass ideology and thereby contribute to the making of social classes (for alternatives views on the power of economic ideas see: Guizo, 2021;Hall, 1989;Zweynert, 2007). If classes are strong enough to forge a historical bloc, ideas become increasingly important as a basis to formulate policies.…”