Social Dilemmas and Rational Individuals: An Essay on the New Institutionalism

摘要

According to the 'new institutionalism,' institutions enable rational individualsto engage in transactions that are welfare enhancing. They enable people to transcend the impact of perverse incentives that arise in situations of market failure. Variations in the efficiency and growth of economies can thus be attributed to differences in their institutional endowments. Tracing the origins of the 'new institutionalism' to intellectual crises arising in economics, this article documents its impact on the field of development. The approach, it argues, has gained currency in part because it provides a critique of neo-classical approaches to government, a justification for a return to state intervention, and a defense for the role of NGOs in the development process. The article locates two major flaws in the new institutionalism. The first is the failure to engage in comparative evaluations of the economic role of non-market institutions this failure results in a bias in favor of the retention of forms of market intervention that may be inefficient. The second is the failure to realize that economic institutions are the product of politics. The failure to look at the macro-political environment leads to an overestimation of the significance of institutions and to a failure to account for variations in their structure and impact upon economic performance. Includes bibliography.