The Elgar Companion to Social Economics
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The Elgar Companion to Social Economics

Edited by John B. Davis and Wilfred Dolfsma

As this comprehensive Companion demonstrates, social economics is a dynamic and growing field that emphasizes the key role that values play in the economy and in economic life. Social economics treats the economy and economics as being embedded in the larger web of social and ethical relationships. It also regards economics and ethics as essentially connected, and adds values such as justice, fairness, dignity, well-being, freedom and equality to the standard emphasis on efficiency. The Elgar Companion to Social Economics brings together the leading contributors in the field to elucidate a wide range of recent developments across different subject areas and topics. In so doing the contributors also map the likely trends and directions of future research. This Companion will undoubtedly become a leading reference source and guide to social economics for many years to come.
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Chapter 15: Markets

Geoffrey M. Hodgson


Geoffrey M. Hodgson Economists have long been concerned with market prices and quantities. However, despite this ongoing preoccupation, they have until recently paid relatively little attention to the institutional structure of markets and the details of market rules and mechanisms. It is odd that for a period of time more discussion of such structures was carried on by those describing themselves as sociologists. Markets dominate the modern world economy, yet economists have had little to say about market institutions. Why? In part this is explained by a reluctance of many post-1945 economists to adopt historically specific definitions (Hodgson, 2001), especially with a concept so central as the market. Yet an adequate recognition of markets as institutions must also acknowledge that they are historically specific phenomena. This chapter first considers the historical evolution of markets and several alternative definitions of them, involving different degrees of historical specificity. It is proposed that developments since the 1980s point to a more nuanced view of markets, recognizing different types of market mechanisms and institutions. These developments include work in economic sociology, experimental economics and auction theory. A definition of markets is offered that is consistent with these developments. The astonishing lacuna No fewer than three Nobel Laureates have noted the paradoxical omission of discussion of markets institutions in the literature in economics. George Stigler (1967, p. 291) wrote: ‘The efficacy of markets should be of great interest to the economist: Economic theory is...

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