A Modern Reader in Institutional and Evolutionary Economics

A Modern Reader in Institutional and Evolutionary Economics

Key Concepts

Edited by Geoffrey M. Hodgson

In the 1990s, institutional and evolutionary economics emerged as one of the most creative and successful approaches in the modern social sciences. This timely reader gathers together seminal contributions from leading international authors in the field of institutional and evolutionary economics including Eileen Appelbaum, Benjamin Coriat, Giovanni Dosi, Sheila C. Dow, Bengt-Åke Lundvall, Uskali Mäki, Bart Nooteboom and Marc R. Tool. The emphasis is on key concepts such as learning, trust, power, pricing and markets, with some essays devoted to methodology and others to the comparison of different forms of capitalism. An extensive introduction places the contributions in the context of the historical and theoretical background of

Chapter 3: The meaning and role of power in economic theories

David Young

Subjects: economics and finance, evolutionary economics, institutional economics


David Young INTRODUCTION The meaning and significance of power in economic analysis has seldom been a subject that has engaged the efforts of mainstream neoclassical theorists. That is not to say that the term ‘power’ is never used or that it does not play a significant role in certain models. But, it tends to be used in a very specific and narrow way and its alternative meanings and wider significance are seldom acknowledged. In 1971 Rothschild commented that as ‘in other important social fields we should expect that individuals and groups will struggle for position; that power will be used to improve one’s chances in the economic “game”. Power should, therefore, be a recurrent theme in economic studies of a theoretical or applied nature. Yet if we look at the main run of economic theory over the past hundred years we find that it is characterized by a strange lack of power considerations’ (Rothschild, 1971, p. 7). This state of affairs has fundamentally changed very little. To a large extent, this neglect has continued almost uninterrupted as mainstream economists refine and extend the basic model postulated by neoclassical theory. Despite more common usage of the term ‘power’ in mainstream game-theoretic analysis, its meaning is still constrained by the conception of neoclassical competition, and so the general neglect of ‘power’ in mainstream analysis remains. The main objectives of this chapter are to consider the alternative meanings of ‘power’ and to assess the different interpretations and roles...

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