Contemporary Economic thought. The Contribution of Neo-Institutional Economics

This article examines the historical developments of the institutionalist theory of the business enterprise since the early 1900s in order to demonstrate its distinctive characteristics that are often overlooked or belittled by some institutional-evolutionary economists and most mainstream economists. I argue that the institutionalist theory is an evolving and emergent theory, which bears a reciprocal, evolutionary, and cumulative relationship between the business enterprise and society. The institutionalist theory is, therefore, suitable for the understanding of the real-world business enterprise as it can be modified and refined along with the evolution of capitalism. The article begins with a discussion of the present state of the institutionalist theory. The following section is devoted to the major contributions to the institutionalist theory situated in the evolution of U.S. capitalism. The penultimate section provides a critical discussion of new institutional and evolutionary approaches to the firm. The article concludes with a brief discussion as to what should be done for the further development of the institutionalist theory of the business enterprise.     

Paternalistic Capitalism

Brazil’s political-economic structure has rapidly evolved over the past decade, shedding its shallow policy alignment with neoliberalism of the 1990s. Brazil’s large, diversified industrial base was painfully constructed over the course of the twentieth century. A major and sustained political realignment, which began in 2003, has resulted in two essential thrusts in development policy: (i) a “growth with equity” strategy that has dramatically reduced poverty and inequality; and (ii) a state-led “industrial policy” designed to upgrade manufacturing and direct the accumulation process toward specific sectors, highlighting and consolidating the National Innovation System (NIS). Nonetheless, as a result of the commodity boom that swept through Latin America, Brazil’s natural resource sector achieved outsized growth from 2002 to 2012. One result has been a shift toward resource intensive activities and a broad opening to low-cost Chinese manufactures. Utilizing an institutionalist framework and method, this article analyzes the cohesion of the NIS and the emergence of the “deindustrialization” debate. Also, it assesses the instrumental nature of the “growth with equity” strategy. The article hypothesizes the viability of an endogenous “neo-developmentalist” strategy, while acknowledging the emergence of fundamental exogenous forces and structural ceremonial/institutional factors that have impeded the consolidation of a Brazilian social structure of accumulation.     

Toward a Humanist Reconstruction of Economic Science

This paper examines whether governance matters for the economic growth of developing countries, empirically captured within the institutional economics theoretical framework using the panel data estimation procedure. In doing so, it tests the effect of several dimensions of governance on the growth of 84 low and middle-income economies using regression specifications common in the growth literature. The empirical results show that political stability and government effectiveness is significantly positively correlated with growth. Voice and accountability and corruption are statistically significantly negatively correlated with growth. The regulatory quality and rule of law dimensions of governance are negatively but statistically insignificantly correlated with growth. The findings of this study imply that the dynamics of the current modern economy makes it necessary for developing countries to act now and within their own country, improve the dimensions of governance and establish good governance practices that are domestically relevant and internationally comparable and consistent.     

A Reconsideration of the Protectionism Debate: Keynes and Import Controls

One of the most important elements of financial crises is the credit restriction that follows and the immediate consequences it has on investment and employment. In the post-Keynesian vision, an exit from economic crises frequently requires increased demand, specifically through public expenditure and employment. Furthermore, it requires the exploration of various policies and institutional reforms that could counteract the credit rationing emerging from the first moments of the financial crisis, particularly in regard to the financing of small business. This is one of the principal lessons this paper explores when studying a sample of Mexican immigrant entrepreneurs in three cities in the United States, and their conditions of survival amid the financial crisis.     

The Emptiness of Peasant “Rationality”: “Demirationality” as an Alternative

This article discusses consumption as a social process that is part of social provisioning and is in an evolutionary interplay with other social processes. The analysis provides grounds for a context-specific research that explores consumption in the context of a culture-nature life process, and draws on material from various disciplines. The article seeks to contribute to the literature on social provisioning as an organizing concept in heterodox economics. The first section explains what is meant by social process and delineates its elements. The second section formulates a categorization of social processes, and locates a consumption process within a system of culture-nature life processes. The rest of the article delineates the elements of the consumption process, providing illustrations based on literature from various disciplines. Specifically, the third section discusses consumption activities. The fourth section discusses institutions and systems of provision of goods and services. The fifth section applies the concept of habits of life and thought to the consumption process. Finally, the article concludes that the formulated analysis transcends dualisms such as social-economic, cultural-material, society-nature, and micro-macro, and draws implications for heterodox economics.