The “economic” and interdisciplinary exchange in economics: institutional
economics vs. economics imperialism
Vítor Neves
Faculty of Economics
University of Coimbra
Av. Dias da Silva, 165; 3004-512 Coimbra – Portugal
phone: +351239790556; fax: +351239403511
vneves@fe.uc.pt
Research area: A – Methodology of Economics
Keywords: economic; interdisciplinary exchange; explanantia; explananda; institutional
economics
Abstract
The meaning of the “economic” and the nature of interdisciplinary exchange with the other
social sciences are controversial and evolving issues in economics. The mainstream view
considers the “economic” as whatever aspect of reality which involves a means-ends choice
under scarcity and tends to look at interdisciplinary relations mostly as a one-way, expanding
movement from a self-sufficient economics – supposed to be “the universal grammar of social
science” (Hirshleifer, 1985: 53) – towards traditionally non-economic territories once
exclusively occupied by other social sciences. This is now widely known as “economics
imperialism”. Such a view finds its roots in the Robbins’ classic An Essay on the Nature and
Significance of Economic Science and counts Gary Becker as one of its most remarkable
present exponents. It is also the conventional view in present economics education (especially
undergraduate) and in mainstream applied economic research. However, in the last twenty
years or so economics has gone through a remarkable process of change and is now a lively
and plural field (see Davis 2006), largely as a result of conceptual, theoretical and
methodological borrowings and spillovers across disciplines. Noticeable are interdisciplinary
exchanges – a kind of “import-export” relations – which have moved research frontiers and
given place to innovative, now very dynamic areas of research in economics. But in this
process it is also the old disciplinary unity and the formal meaning of the “economic” that
becomes increasingly questioned. What is the “economic” after all?
An important contending view on the meaning of the “economic” and on the nature of
interdisciplinary exchange which deserves close scrutiny is one that, although now minority,
is part of an older and respectable tradition in economics, whose roots go back to such
outstanding representatives of the discipline as J. Stuart Mill and Alfred Marshall and which
counts institutional economists as K.W. Kapp, Geoff Hodgson and Ronald Coase among its
staunchest supporters. It rejects the formalist meaning of the “economic” and the view of
economics as a toolbox of universal application and underlines instead the centrality of the
economy as the subject-matter of the discipline, conceived of as intermeshed with the other
parts of the broader social system. The distinguishing feature of economics is, according to
this view, a concern with the study of the “working of the social institutions which bind
together the economic system: firms, markets for goods and services, labour markets, capital
markets, the banking system, international trade and so on” (Coase 1994: 41), a study “hardly
possible” without consideration of the effects of the other parts of the social system on the
working of the economic system itself.
In this paper I intend to revisit this important (and old) methodological controversy on the
scope of economics, its boundaries and relations with other fields. I will contrast the positions
of institutional economics and economics imperialism, focusing attention mainly on the works
of two Nobel laureates: Ronald Coase and Gary Becker. Drawing on Mäki’s (1992, 1993,
2004) framework on isolation and interdisciplinary isolative strategies, I will examine the
explanantia (the set of explaining items) and the explananda (the set of explained items) of
those two approaches and will provide reasons for claiming the (ontological) superiority of
the institutionalist position.
References:
Coase, Ronald (1994), Essays on Economics and Economists, Chicago and London: The
University of Chicago Press
Davis, John (2006), “The turn in economics: neoclassical dominance to mainstream
pluralism?”, Journal of Institutionalism Economics, 2:1, pp. 1-20
Hirshleifer, Jack (1985), “The Expanding Domain of Economics”, The American Economic
Review, 75:6, pp.53-68
Mäki, Uskali (1992), “On the Method of Isolation in Economics”, Poznan Studies in the
Philosophy of the Sciences and the Humanities, 26, pp. 317-351.
__________ (1993), “Economics with Institutions: Agenda for a Methodological Enquiry”, in
Mäki, Uskali, Gustafsson, Bo and Knudsen, Christian (eds.), Rationality, Institutions and
Economic Methodology, pp. 3-42. London and New York: Routledge.
__________ (2004), “Theoretical isolation and explanatory progress: transaction cost
economics and the dynamic of dispute”, Cambridge Journal of Economics, 28, pp. 319-346.