In the last of our lecture series, our guest speaker Ha-Joon Chang gave a great emphasis on letting the spectrum of schools of economic thought “cross-fertilise” to promote the kind of heterodox Economics that will help us understand the complexity of the world better. Institutional Economics takes this notion of truly determining the mechanics of human behaviour one step further, integrating the findings of non-market studysuch psychology, sociology and cultural history in its explanation and predictions of how economic agents make choices.
We are pleased to present the second of our lecture series with Geoffrey Hodgson, the Editor-in-Chief of the ‘Journal of Institutional Economics’ (Cambridge University Press).
Taking Institutions Seriously: An Introduction to Institutional Economics
Tuesday 22nd October, 6.00pm – Roscoe Theatre B
Professor Hodgson is an influential voice in the space of Evolutionary Economics for his analysis of Darwinism, expressed in the book “Darwin’s Conjecture” which brings light to how evolutionary principles have had an effect at the socio-economic level. Intriguingly, it is discussed that Biological phenomena such as variation, inheritance and “survival of the fittest” have consequentially revolutionised human decision making. It is the fascinating idea that the literal, undisputed Science behind “Social Science” could provide the basis for new predictive economic models; that your biological programming has an effect on your economic decision. Thoughts on Darwinism may be further discussed on the Darwin’s Conjecture Reading Group Blog.
Institutional Economics points to how economic interactions are subject to the rules of tangible institutions of the law, government and also to the intangible institutions of inherent human nature and evolution, such as the institution of marriage and family. One key example of Institutionalism is The Coase Theorem, a recognised economic theory that explicitly subjects itself to the holdings of the Law. Briefly, this theorem states assigning well-defined property rights between two parties will lead to more efficient negotiation between parties and a mutually beneficial outcome for both. The “well defined” condition of this economic theory is dependent of the Institution of the Law; the socially optimal decision here cannot be reached purely through neo-classical theories of market interaction and we ultimately benefit from interaction with institutions.