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Institutions, Contracts and Organizations

Institutions, Contracts and Organizations

Perspectives from New Institutional Economics

Edited by Claude Ménard

This outstanding book presents new original contributions from some of the world’s leading economists including Ronald Coase, Douglass C. North, Masahiko Aoki, Oliver E. Williamson and Harold Demsetz. It demonstrates the extent and depth of the New Institutional Economics research programme which is having a worldwide impact on the economics profession.

Chapter 13: Experimental economics in the bush: why institutions matter

Jean Ensminger

Subjects: economics and finance, industrial organisation, institutional economics


Jean Ensminger* INTRODUCTION ‘Social capital’ is receiving a lot of attention in the social sciences today. One testament to its popularity is the extent to which it is being invoked across the social sciences. Rarely does one see so much simultaneous interest in a subject among political scientists, economists (especially in development), anthropologists and sociologists. As used by Robert Putnam (1993), social capital refers to social connections or networks, norms and trust, all of which he argues facilitate cooperation in society, and ultimately have effects on economic performance. Putnam contends that in societies where social capital is low, economic performance is likely to suffer. These are intriguing and provocative ideas. But they are not simple matters to test empirically. Nor for that matter, is it easy to see specifically how norms and trust translate into cooperation in an economic sense. In short, there is very little that we really understand about the mechanics of social capital. The findings from some recent African research presented here do not resolve any of these issues, but are suggestive of a new focus in our discussions of this current thinking about social capital. Namely, which way do the causal arrows flow? Should our attention be focussed on differences in the generalized indigenous level of ‘trust’ and cooperation, or on the effect of formal institutions in fostering and generating trust and cooperation? In other words, how much is social capital itself a function of the larger institutional environment rather than an explanation for it...

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