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A Modern Reader in Institutional and Evolutionary Economics EUROPEAN ASSOCIATION FOR EVOLUTIONARY POLITICAL ECONOMY Series Editor: Geoffrey M. Hodgson, University of Hertfordshire Business School, UK Mixed Economies in Europe: An Evolutionary Perspective on their Emergence, Transition and Regulation Edited by Wolfgang Blaas and John Foster The Political Economy of Diversity: Evolutionary Perspectives on Economic Order and Disorder Edited by Robert Delorme and Kurt Dopfer On Economic Institutions: Theory and Applications Edited by John Groenewegen, Christos Pitelis and Sven-Erik Sjöstrand Rethinking Economics: Markets, Technology and Economic Evolution Edited by Geoffrey M. Hodgson and Ernesto Screpanti Environment, Technology and Economic Growth: The Challenge to Sustainable Development Edited by Andrew Tylecote and Jan van der Straaten Institutions and Economic Change: New Perspectives on Markets, Firms and Technology Edited by Klaus Nielsen and Björn Johnson Pluralism in Economics: New Perspectives in History and Methodology Edited by Andrea Salanti and Ernesto Screpanti Beyond Market and Hierarchy: Interactive Governance and Social Complexity Edited by Ash Amin and Jerzy Hausner Employment, Technology and Economic Needs: Theory, Evidence and Public Policy Edited by Jonathan Michie and Angelo Reati Institutions and the Evolution of Capitalism: Implications of Evolutionary Economics Edited by John Groenewegen and Jack Vromen Is Economics an Evolutionary Science? The Legacy of Thorstein Veblen Edited by Francisco Louçã and Mark Perlman Technology and Knowledge: From the Firm to Innovation Systems Edited by Pier Paolo Saviotti and Bart Nooteboom Evolution and Path Dependence in Economic Ideas: Past and Present Edited by Pierre Garrouste and Stavros Ioannides A Modern Reader in Institutional and Evolutionary Economics: Key Concepts Edited by Geoffrey M. Hodgson A Modern Reader in Institutional and Evolutionary Economics Key Concepts Edited by Geoffrey M. Hodgson Research Professor, University of Hertfordshire Business School, UK EUROPEAN ASSOCIATION OF EVOLUTIONARY POLITICAL ECONOMY Edward Elgar Cheltenham, UK • Northampton, MA, USA © European Association of Evolutionary Political Economy 2002 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited Glensanda House Montpellier Parade Cheltenham Glos GL50 1UA UK Edward Elgar Publishing, Inc. 136 West Street Suite 202 Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data A modern reader in institutional and evolutionary economics : key concepts / edited by Geoffrey M. Hodgson. p. cm. “European Association of Evolutionary Political Economy.” Includes bibliographical references and index. 1. Institutional economics. 2. Evolutionary economics. I. Hodgson, Geoffrey Martin, 1946– II. European Association for Evolutionary Political Economy. HB99.5 .M63 2002 330—dc21 2002016665 ISBN 1 84064 474 5 (cased) 1 84064 495 8 (paperback) Typeset by Manton Typesetters, Louth, Lincolnshire, UK. Printed and bound in Great Britain by Biddles Ltd, www.biddles.co.uk Contents List of figures vii List of tables viii List of contributors ix Introduction by Geoffrey M. Hodgson xiii I LEARNING, TRUST, POWER AND MARKETS 1 Marc R. Tool, ‘Contributions to an institutionalist theory of price determination’, in Geoffrey M. Hodgson and Ernesto Screpanti (eds) (1991), Rethinking Economics: Markets, Technology and Economic Evolution, Aldershot: Edward Elgar, pp. 19–39 3 2 Bengt-Åke Lundvall, ‘The learning economy: challenges to economic theory and policy’, in Klaus Nielsen and Björn Johnson (eds) (1998), Institutions and Economic Change: New Perspectives on Markets, Firms and Technology, Cheltenham: Edward Elgar, pp. 33–54 26 3 David Young, ‘The meaning and role of power in economic theories’, in John Groenewegen, Christos Pitelis and Sven-Erik Sjöstrand (eds) (1995), On Economic Institutions: Theory and Applications, Aldershot: Edward Elgar, pp. 85–100 48 4 Sandye Gloria-Palermo, ‘Discovery versus creation: implications of the Austrian view of the market process’, in John Groenewegen and Jack Vromen (eds) (1999), Institutions and the Evolution of Capitalism: Implications of Evolutionary Economics, Cheltenham: Edward Elgar, pp. 78–91 62 5 Hans Berger, Niels G. Noorderhaven and Bart Nooteboom, ‘Determinants of supplier dependence: an empirical study’, in John Groenewegen, Christos Pitelis and Sven-Erik Sjöstrand (eds) (1995), On Economic Institutions: Theory and Applications, Aldershot: Edward Elgar, pp. 195–212 76 v vi Contents II PLURALISM AND COMPARATIVE PARADIGMS 6 Benjamin Coriat and Giovanni Dosi, ‘The institutional embeddedness of economic change: an appraisal of the “evolutionary” and “regulationist” research programmes’, in Klaus Nielsen and Björn Johnson (eds) (1998), Institutions and Economic Change: New Perspectives on Markets, Firms and Technology, Cheltenham: Edward Elgar, pp. 3–32 95 7 Uskali Mäki, ‘The one world and the many theories’, in Andrea Salanti and Ernesto Screpanti (eds) (1997), Pluralism in Economics: New Perspectives in History and Methodology, Aldershot: Edward Elgar, pp. 37–47 124 8 Sheila C. Dow (1997), ‘Methodological pluralism and pluralism of method’, in Andrea Salanti and Ernesto Screpanti (eds) (1997), Pluralism in Economics: New Perspectives in History and Methodology, Aldershot: Edward Elgar, pp. 89–99 136 III VARIETIES OF CAPITALISM 9 Eileen Appelbaum and Ronald Schettkat, ‘Institutions and employment performance in different growth regimes’, in Jonathan Michie and Angelo Reati (eds) (1998), Employment, Technology and Economic Needs: Theory, Evidence and Public Policy, Cheltenham: Edward Elgar, pp. 91–114 149 10 Bernard Chavance and Eric Magnin, ‘Emergence of path- dependent mixed economies in Central Europe’, in Ash Amin and Jerzy Hausner (eds) (1997), Beyond Market and Hierarchy: Interactive Governance and Social Complexity, Cheltenham: Edward Elgar, pp. 196–232 168 11 Geoffrey M. Hodgson, ‘Varieties of capitalism and varieties of economic theory’, in Klaus Nielsen and Björn Johnson (eds) (1998), Institutions and Economic Change: New Perspectives on Markets, Firms and Technology, Cheltenham: Edward Elgar, pp. 215–42 201 Index 231 Figures 4.1 A general representation of the Austrian market process 64 4.2 The Kirznerian view of the market process 65 4.3 The Hayekian conception of the market process 67 4.4 The Lachmannian view of the market process 69 5.1 A simple model based on TCE 76 5.2 Model based on extended TCE 82 9.1 Standard deviations of growth rates of GDP, employment to population ratios and unemployment rates 149 9.2 Possible relationships between negative effects and wage- bargaining systems 153 9.3 Behind the U-shape: stylized relations between private and public service employment growth and the wage-bargaining system 162 10.1 A Hungarian metamorphic network 182 10.2 The typical structure of a Czech enterprise’s capital after distribution through the voucher method 183 10.3 Ownership structure of the Czech economy after mass privatization 184 vii Tables 5.1 Means, standard deviations and correlations 86 5.2 Results of a regression analysis 88 6.1 Weak and strong varieties of institutionalism 100 6.2 Levels of analysis 114 9.1 A brief characterization of indices representing wage- bargaining systems 154 9.2 Bargaining indices, union density and wage differentials 156 9.3 Regression analysis of labour market performance on wage- bargaining systems 159 9.4 Coordination and comprehensiveness 161 10.1 Forces of identity and difference in post-socialist countries 170 10.2 Emerging configuration of ownership forms 174 10.3 Estimates of the relative importance of ownership forms 178 10.4 National privatization trajectories 180 10.5 A changing mix of coordination modes 188 11.1 Varieties of analysis and varieties of capitalism 224 viii Contributors Eileen Appelbaum is Research Director at the Economic Policy Institute, USA. She was formerly Professor of Economics at Temple University, USA, and Guest Research Fellow at the Wissenschaftszentrum Berlin, Germany. She has published numerous articles on employment and labour markets. She is co-editor of Labor Market Adjustments to Structural Change and Techno- logical Progress (1990) and author or co-author of Back to Work: Determinants of Women’s Successful Reentry (1981), Job Saving Strategies: Worker Buyouts and QWL (1988), The New American Workplace (1994) and Manufacturing Advantage: Why High Performance Work Systems Pay Off (2000). Hans Berger is Assistant Professor of Marketing at the Faculty of Manage- ment and Organization, University of Groningen, the Netherlands. His research interests include subcontracting, transaction cost theory, relational contract- ing and strategic positioning. Bernard Chavance is Professor of Economics at the University Paris VII – Denis Diderot, France. He has published Le Capital Socialiste: Histoire Critique de l’Economie Politique du Socialisme (1917–1954) (1980), Le Système Economique Soviétique: De Brejnev à Gorbatchev (1989), The Trans- formation of Communist Systems: Economic Reforms since the 1950s (1994), La Fin des Systèmes Socialistes: Crise, Réforme et Transformation (1994), Capitalisme et Socialisme en Perspective: Evolution et Transformation
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