ECONOMIC INSTITUTIONS AS SOCIAL CONSTRUCTIONS - A FRAMEWORK FOR ANALYSIS

Institutional economics has moved from a position, earlier in the twentieth century, of drawing eclectically on several other disciplines, to a stance of building its arguments almost entirely out of neoclassical materials. This paper argues that such a stance cannot provide a persuasive account of economic institutions, and suggests a broader foundation based on classical sociological arguments about the embeddedness of economic goals and activities in socially oriented goals and structures. Emphasis is placed on how economic activity comes to be coordinated by groups of people rather than carried out by isolated individuals. Firms in developing countries, business groups, and the origins of the electrical utility industry in the United States are posed as cases of the 'social construction of economic institutions'. It is argued that, although proper analysis of such cases involves a high level of contingency, these contingencies can be taken into account in a systematic theoretical argument, and that historicist pitfalls can be avoided. Such an argument is posed as the distinctive agenda for a new economic sociology.