- Elgar original reference
Edited by John B. Davis, Alain Marciano and Jochen Runde
Chapter 2: The Historical and Philosophical Foundations of New Political Economy
2 The historical and philosophical foundations of new political economy Alain Marciano Introduction Since the 1950s, economists have shown an increasing recognition that ‘institutions matter’ (Frey 1990), and have worked to develop economic analyses of institutions and rules, analysing their origins and how they shape and inﬂuence individual behaviour. These contributions have subsequently led to the suggestion that the analyses of institutions in question – such as public choice, law and economics and, later, constitutional political economy – might form a new political economy reviving the spirit of the founders of classical political economy, Hume and Smith among others (Atkinson and Stiglitz 1980; Inman 1987; Hirshleifer 1982; Johnson 1991). While the various branches of the new political economy differ in many respects, they can nevertheless be captured in two broad categories. On the one hand, a contractualist (constructivist) approach considers that institutions are explicitly built from a state of nature characterised by the absence of any rule. On the other hand, a spontaneous order approach argues that institutions are not created or designed by human beings but emerge through a market process. Now, these two approaches claim to descend from the same ancestors, namely the classical political economists. In fact, and it is the argument that we develop in this chapter, neither can legitimately claim their heritage. With regard to contractualist new political economy, the alleged classical political economy heritage is a consequence of the fact that it emerged and developed at a time of economic imperialism, when economists were trying...
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