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Neoclassical theory and institutional direction of economics. “Neoclassical economic theory and institutional economics. German historical school

There are several reasons why neoclassical theory (early 60s) ceased to meet the requirements placed on it by economists who were trying to understand the real events in modern economic practice:

Neoclassical theory is based on unrealistic assumptions and limitations, and, therefore, it uses models that are inadequate to economic practice. Coase called this state of affairs in neoclassical theory “blackboard economics.”

Economic science expands the range of phenomena (for example, such as ideology, law, norms of behavior, family) that can be successfully analyzed from the point of view of economic science. This process was called “economic imperialism”. The leading representative of this trend is Nobel laureate Harry Becker. But for the first time, Ludwig von Mises wrote about the need to create a general science that studies human action, proposing the term “praxeology” for this purpose.

Within the framework of neoclassics, there are practically no theories that satisfactorily explain dynamic changes in the economy, the importance of studying which became relevant against the backdrop of historical events of the 20th century. (In general, within the framework of economic science, until the 80s of the 20th century, this problem was considered almost exclusively within the framework of Marxist political economy).

Now let us dwell on the basic premises of neoclassical theory, which constitute its paradigm (hard core), as well as the “protective belt”, following the methodology of science put forward by Imre Lakatos:

Hard core:

stable preferences that are endogenous;

rational choice (maximizing behavior);

equilibrium in the market and general equilibrium in all markets.

Protective belt:

Property rights remain unchanged and clearly defined;

The information is completely accessible and complete;

Individuals satisfy their needs through exchanges that occur without costs, taking into account the initial distribution.

A Lakatosian research program, while leaving the hard core intact, should be aimed at clarifying, developing existing ones, or putting forward new auxiliary hypotheses that form a protective belt around this core.

If the hard core is modified, then the theory is replaced by a new theory with its own research program.

Let us consider how the premises of neo-institutionalism and classical old institutionalism influence the neoclassical research program.

5. Old institutionalism and its representatives: T. Veblen, W. Mitchell, J. Commons.

The most prominent representatives of “Old Institutionalism” are: Thorstein Veblen, John Commons, Wesley Mitchell, John Galbraith. Despite the significant range of problems covered in the works of these economists, they were unable to form their own unified research program. As Coase noted, the work of American institutionalists came to nothing because they lacked a theory to organize the mass of descriptive material.

Old institutionalism criticized the provisions that constitute the “hard core of neoclassicalism.” In particular, Veblen rejected the concept of rationality and the corresponding principle of maximization as fundamental in explaining the behavior of economic agents. The object of analysis is institutions, not human interactions in space with the restrictions that are set by institutions.

Also, the works of old institutionalists are distinguished by significant interdisciplinarity, being, in fact, continuations of sociological, legal, and statistical research in their application to economic problems.

The predecessors of neo-institutionalism are the economists of the Austrian School, in particular Carl Menger and Friedrich von Hayek, who introduced the evolutionary method into economic science, and also raised the question of the synthesis of many sciences studying society.

6. New institutional economics and neoclassical economic theory: general and specific.

Modern neo-institutionalism has its roots in the pioneering works of Ronald Coase, The Nature of the Firm, and The Problem of Social Cost.

The neo-institutionalists attacked first of all the provisions of neoclassicism, which constitute its defensive core.

Economic exchange occurs only when each participant, carrying out an act of exchange, receives some increase in value to the value of the existing set of goods. This is proven by Carl Menger in his work “Foundations of Political Economy”, based on the assumption of the existence of two participants in the exchange. The first has good A with value W, and the second has good B with the same value W. As a result of the exchange that occurred between them, the value of goods at the disposal of the first will be W + x, and the second - W + y. From this we can conclude that during the exchange process, the value of the good for each participant increased by a certain amount. This example shows that activities related to exchange are not a waste of time and resources, but are as productive as the production of material goods.

When exploring exchange, one cannot help but dwell on the limits of exchange. The exchange will take place until the value of the goods at the disposal of each participant in the exchange will, according to his estimates, be less than the value of those goods that can be obtained as a result of the exchange. This thesis is true for all exchange counterparties. Using the symbolism of the above example, an exchange occurs if W(A)< W + х для первого и W (B) < W + у для второго участников обмена, или если х >0 and y > 0.

So far we have considered exchange as a process that occurs without costs. But in a real economy, any act of exchange is associated with certain costs. Such exchange costs are called transaction costs. They are usually interpreted as “the costs of collecting and processing information, the costs of negotiations and decision-making, the costs of monitoring and legal protection of the execution of the contract.”

The concept of transaction costs contradicts the thesis of neoclassical theory that the costs of functioning of the market mechanism are equal to zero. This assumption made it possible not to take into account the influence of various institutions in the economic analysis. Therefore, if transaction costs are positive, it is necessary to take into account the influence of economic and social institutions on the functioning of the economic system.

Secondly, recognizing the existence of transaction costs, there is a need to revise the thesis about the availability of information. Recognition of the thesis about the incompleteness and imperfection of information opens up new prospects for economic analysis, for example, in the study of contracts.

Thirdly, the thesis about the neutrality of the distribution and specification of property rights has been revised. Research in this direction served as a starting point for the development of such areas of institutionalism as the theory of property rights and economics of organizations. Within the framework of these directions, subjects of economic activity “economic organizations have ceased to be viewed as “black boxes”.

Within the framework of “modern” institutionalism, attempts are also being made to modify or even change the elements of the hard core of neoclassics. First of all, this is the neoclassical premise of rational choice. In institutional economics, classical rationality is modified by accepting assumptions about bounded rationality and opportunistic behavior.

Despite the differences, almost all representatives of neo-institutionalism view institutions through their influence on the decisions made by economic agents. The following fundamental tools related to the human model are used: methodological individualism, utility maximization, bounded rationality and opportunistic behavior.

Some representatives of modern institutionalism go even further and question the very premise of the utility-maximizing behavior of economic man, proposing its replacement by the principle of satisfaction. In accordance with the classification of Tran Eggertsson, representatives of this direction form their own direction in institutionalism - New Institutional Economics, the representatives of which can be considered O. Williamson and G. Simon. Thus, the distinction between neo-institutionalism and new institutional economics can be drawn depending on which premises are replaced or modified within their framework - the “hard core” or the “protective belt”.

The main representatives of neo-institutionalism are: R. Coase, O. Williamson, D. North, A. Alchian, Simon G., L. Thévenot, Menard K., Buchanan J., Olson M., R. Posner, G. Demsetz, S. Pejovic, T. Eggertsson et al.

Institutionalism and neoclassical economics

The concept of an institution. The role of institutions in the functioning of the economy

Let's start our study of institutions with the etymology of the word institute.

to institute (English) - establish, establish.

The concept of institution was borrowed by economists from the social sciences, in particular from sociology.

Institute called a set of roles and statuses designed to satisfy a specific need.

Definitions of institutions can also be found in works of political philosophy and social psychology. For example, the category of institution is one of the central ones in John Rawls’s work “A Theory of Justice.”

Under institutions I will understand a public system of rules that define office and position with associated rights and duties, powers and immunities, and the like. These rules specify certain forms of action as permissible and others as prohibited, and they punish certain actions and protect others when violence occurs. As examples, or more general social practices, we can cite games, rituals, courts and parliaments, markets and property systems.

In economic theory, the concept of institution was first included in analysis by Thorstein Veblen.

Institutes- this is, in fact, a common way of thinking with regard to the individual relations between society and the individual and the individual functions they perform; and the system of social life, which is made up of the totality of those acting at a certain time or at any moment in the development of any society, can, from the psychological side, be characterized in general terms as the prevailing spiritual position or the widespread idea of \u200b\u200bthe way of life in society.

Veblen also understood institutions as:

habitual ways of responding to stimuli;
structure of the production or economic mechanism;
the currently accepted system of social life.

Another founder of institutionalism, John Commons, defines institution as follows:

Institute– collective action to control, liberate and expand individual action.

Another classic of institutionalism, Wesley Mitchell, can find the following definition:

Institutions are dominant, and highly standardized, social habits.

Currently, within the framework of modern institutionalism, the most common interpretation of institutions is Douglas North’s:

Institutions are the rules, the mechanisms that enforce them, and the norms of behavior that structure repeated interactions between people.

In order to avoid the coordination of many external factors that influence success and the very possibility of making a particular decision, within the framework of economic and social orders, schemes or algorithms of behavior are developed that are the most effective under given conditions. These schemes and algorithms or matrices of individual behavior are nothing more than institutions.

There are several reasons why neoclassical theory (early 60s) ceased to meet the requirements placed on it by economists who were trying to understand the real events in modern economic practice:

Neoclassical theory is based on unrealistic assumptions and limitations, and, therefore, it uses models that are inadequate to economic practice. Coase called this state of affairs in neoclassical theory “blackboard economics.”
Economic science expands the range of phenomena (for example, such as ideology, law, norms of behavior, family) that can be successfully analyzed from the point of view of economic science. This process was called “economic imperialism”. The leading representative of this trend is Nobel laureate Harry Becker. But for the first time, Ludwig von Mises wrote about the need to create a general science that studies human action, proposing the term “praxeology” for this purpose.
Within the framework of neoclassics, there are practically no theories that satisfactorily explain dynamic changes in the economy, the importance of studying which became relevant against the backdrop of historical events of the 20th century. (In general, within the framework of economic science, until the 80s of the 20th century, this problem was considered almost exclusively within the framework of Marxist political economy).

Hard core :

stable preferences that are endogenous;
rational choice (maximizing behavior);
equilibrium in the market and general equilibrium in all markets.

Protective belt:

Property rights remain unchanged and clearly defined;
The information is completely accessible and complete;
Individuals satisfy their needs through exchanges that occur without costs, taking into account the initial distribution.

If the hard core is modified, then the theory is replaced by a new theory with its own research program.

Let us consider how the premises of neo-institutionalism and classical old institutionalism influence the neoclassical research program.

Modern neo-institutionalism has its roots in the pioneering works of Ronald Coase, The Nature of the Firm, and The Problem of Social Cost.

The neo-institutionalists attacked first of all the provisions of neoclassicism, which constitute its defensive core.

First, the assumption that exchange occurs without costs has been criticized. Criticism of this position can be found in Coase's early works. Although, it should be noted that Menger wrote about the possibility of the existence of exchange costs and their influence on the decisions of exchanging subjects in his “Foundations of Political Economy.”
Economic exchange occurs only when each participant, carrying out an act of exchange, receives some increase in value to the value of the existing set of goods. This is proven by Carl Menger in his work “Foundations of Political Economy”, based on the assumption of the existence of two participants in the exchange. The first has good A with value W, and the second has good B with the same value W. As a result of the exchange that occurred between them, the value of goods at the disposal of the first will be W + x, and the second - W + y. From this we can conclude that during the exchange process, the value of the good for each participant increased by a certain amount. This example shows that activities related to exchange are not a waste of time and resources, but are as productive as the production of material goods.
When exploring exchange, one cannot help but dwell on the limits of exchange. The exchange will take place until the value of the goods at the disposal of each participant in the exchange will, according to his estimates, be less than the value of those goods that can be obtained as a result of the exchange. This thesis is true for all exchange counterparties. Using the symbolism of the above example, an exchange occurs if W(A)< W + х для первого и W (B) < W + у для второго участников обмена, или если х > 0 and y > 0.
So far we have considered exchange as a process that occurs without costs. But in a real economy, any act of exchange is associated with certain costs. These exchange costs are called transactional. They are usually interpreted as “the costs of collecting and processing information, the costs of negotiations and decision-making, the costs of monitoring and legal protection of the execution of the contract.”
The concept of transaction costs contradicts the thesis of neoclassical theory that the costs of functioning of the market mechanism are equal to zero. This assumption made it possible not to take into account the influence of various institutions in the economic analysis. Therefore, if transaction costs are positive, it is necessary to take into account the influence of economic and social institutions on the functioning of the economic system.
Secondly, recognizing the existence of transaction costs, there is a need to revise the thesis about the availability of information. Recognition of the thesis about the incompleteness and imperfection of information opens up new prospects for economic analysis, for example, in the study of contracts.
Thirdly, the thesis about the neutrality of the distribution and specification of property rights has been revised. Research in this direction served as a starting point for the development of such areas of institutionalism as the theory of property rights and economics of organizations. Within the framework of these directions, subjects of economic activity “economic organizations have ceased to be viewed as “black boxes”.

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COURSE WORK

Neoclassicalism and institutionalism: comparative analysis

Introduction

The course work is devoted to the study of neoclassicism and institutionalism, both at the theoretical level and in practice. This topic is relevant; in modern conditions of increasing globalization of socio-economic processes, general patterns and trends in the development of economic entities, including organizations, have emerged. Organizations as economic systems are studied from the perspective of various schools and directions of Western economic thought. Methodological approaches in Western economic thought are represented mainly by two leading directions: neoclassical and institutional.

Objectives of studying coursework:

Get an idea of the emergence, formation and modern development of neoclassical and institutional economic theory;

Familiarize yourself with the main research programs of neoclassical and institutionalism;

Show the essence and specificity of the neoclassical and institutional methodology for studying economic phenomena and processes;

Objectives of studying coursework:

Give a holistic idea of the basic concepts of neoclassical and institutional economic theory, show their role and significance for the development of modern models of economic systems;

Understand and master the role and importance of institutions in the development of micro- and macrosystems;

Acquire skills in economic analysis of law, politics, psychology, ethics, traditions, habits, organizational culture and codes of economic conduct;

Determine the specifics of the neoclassical and institutional environment and take it into account when making economic decisions.

The subject of study of neoclassical and institutional theory is economic relations and interactions, and the object is neoclassicism and institutionalism as the basis of economic policy. When selecting information for the course work, the views of different scientists were considered in order to understand how ideas about neoclassical and institutional theory changed. Also, when studying the topic, statistical data from economic journals was used, and literature from recent publications was used. Thus, the course work information is compiled using reliable sources of information and provides objective knowledge on the topic: neoclassicism and institutionalism: a comparative analysis.

1 . Theoreticalprovisions of neoclassicism and institutionalism

1.1 Neoclassical economics

The emergence and evolution of neoclassicism

Neoclassical economics emerged in the 1870s. The neoclassical direction studies the behavior of an economic person (consumer, entrepreneur, employee) who seeks to maximize income and minimize costs. The main categories of analysis are limit values. Neoclassical economists developed the theory of marginal utility and the theory of marginal productivity, the theory of general economic equilibrium, according to which the mechanism of free competition and market pricing ensures fair distribution of income and full use of economic resources, the economic theory of welfare, the principles of which form the basis of the modern theory of public finance (P Samuelson), the theory of rational expectations, etc. In the second half of the 19th century, along with Marxism, neoclassical economic theory emerged and developed. Of all its many representatives, the most famous was the English scientist Alfred Marshall (1842-1924). He was Professor and Head of the Department of Political Economy at Cambridge University. A. Marshall summarized the results of new economic research in the fundamental work “Principles of Economic Theory” (1890). In his works, A. Marshall relied on both the ideas of classical theory and the ideas of marginalism. Marginalism (from the English marginal - limit, extreme) is a trend in economic theory that arose in the second half of the 19th century. Marginal economists in their studies used marginal values, such as marginal utility (the utility of the last, additional unit of good), marginal productivity (products produced by the last hired worker). These concepts were used by them in the theory of price, the theory of wages and in explaining many other economic processes and phenomena. In his theory of price, A. Marshall relies on the concepts of supply and demand. The price of a good is determined by the relationship between supply and demand. The demand for a good is based on subjective assessments of the marginal utility of the good by consumers (buyers). The supply of a good is based on production costs. The manufacturer cannot sell at a price that does not cover its production costs. If classical economic theory considered price formation from the position of the producer, then neoclassical theory considers pricing both from the position of the consumer (demand) and from the position of the producer (supply). Neoclassical economic theory, just like the classics, is based on the principle of economic liberalism, the principle of free competition. But in their research, neoclassicists place greater emphasis on the study of applied practical problems; they use quantitative analysis and mathematics to a greater extent than qualitative (substantive, cause-and-effect). The greatest attention is paid to the problems of efficient use of limited resources at the microeconomic level, at the enterprise and household levels. Neoclassical economic theory is one of the foundations of many areas of modern economic thought.

The main representatives of neoclassicism

A. Marshall: Principles of Political Economy

It was he who introduced the term “economics” into use, thereby emphasizing his understanding of the subject of economic science. In his opinion, this term more fully reflects research. Economic science examines the economic aspects of the conditions of social life and the incentives for economic activity. Being a purely applied science, it cannot ignore practical issues; but economic policy issues are not its subject. Economic life must be considered outside of political influences, outside of government intervention. There were discussions among economists about the source of value: labor costs, utility, and production factors. Marshall took the debate to a different plane, coming to the conclusion that it was necessary not to look for the source of value, but to study the factors that determine prices, their level, and dynamics. The concept developed by Marshall was a compromise between various areas of economic science. The main idea put forward by him is to switch efforts from theoretical disputes around value to studying the problems of interaction between supply and demand as forces that determine processes occurring in the market. Economic science studies not only the nature of wealth, but also the incentives for economic activity. “Economist's scales” - monetary estimates. Money measures the intensity of incentives that motivate a person to act and make decisions. The analysis of individual behavior forms the basis of the “Principles of Political Economy”. The author's attention is focused on considering the specific mechanism of economic activity. The mechanism of a market economy is studied first of all at the micro level, and subsequently at the macro level. The postulates of the neoclassical school, at the origins of which Marshall stood, represent the theoretical basis for applied research.

J.B. Clark: Theory of Income Distribution

The classical school considered the problem of distribution as an integral element of the general theory of value. Prices of goods consisted of shares of remuneration of production factors. Each factor had its own theory. According to the views of the Austrian school, factor incomes were formed as derivatives of market prices for manufactured products. An attempt to find a common basis for the value of both factors and products on the basis of common principles was made by economists of the neoclassical school. The American economist John Bates Clark set out to “show that the distribution of social income is regulated by social law and that this law, if it operated without resistance, would give to each factor of production the amount that that factor creates.” Already in the formulation of the goal there is a summary - each factor receives the share of the product that it creates. All subsequent contents of the book represent a detailed rationale for this summary - argument, illustrations, comments. In an effort to find a principle of income distribution that would determine the share of each factor in the product, Clark uses the concept of diminishing utility, which he transfers to factors of production. In this case, the theory of consumer behavior, the theory of consumer demand is replaced by the theory of the choice of production factors. Every entrepreneur strives to find a combination of factors used that ensures a minimum of costs and a maximum of income. Clark argues as follows. Two factors are taken, if one of them is taken unchanged, then the use of the other factor as its quantitative increase will bring less and less income. Labor brings its owner wages, capital - interest. If additional workers are hired with the same capital, then income increases, but not in proportion to the increase in the number of new workers.

A. Pigou: economic theory of welfare

The economic theory of A. Pigou examines the problem of distribution of national income, in Pigou's terminology - the national dividend. He includes “everything that people buy with their monetary income, as well as the services provided to a person by the home that he owns and in which he lives.” However, services provided to oneself and in the household, and the use of items in public ownership, are not included in this category.

The national dividend is the flow of goods and services produced in a society during the year. In other words, this is the share of society’s income that can be expressed in money: goods and services that are part of final consumption. If Marshall appears before us as a taxonomist and theorist, striving to cover the entire system of relations of the “economix,” then Pigou was primarily engaged in the analysis of individual problems. Along with theoretical issues, he was interested in economic policy. He was interested, in particular, in the question of how to reconcile private and public interests and combine private and public costs. Pigou's focus is on the theory of social welfare, it aims to answer what is the common good? How is it achieved? How is the redistribution of benefits carried out from the standpoint of improving the situation of members of society; especially the poorest. The construction of a railway provides benefits not only to those who built and operate it, but also to the owners of nearby land plots. As a result of the construction of the railway, the price of land located near it inevitably increases. Owners of land participants, although they were not involved in construction, are benefiting due to rising land prices. The overall national dividend also increases. The criterion that must be taken into account is the dynamics of market prices. According to Pigou, “the main indicator is not the product itself or material goods, but in relation to the conditions of a market economy - market prices.” But the construction of a railway can be accompanied by negative and very undesirable consequences, a deterioration of the environmental situation. People will suffer from noise, smoke, and garbage.

The “piece of iron” harms crops, reduces yields, and undermines product quality.

The use of new technology often gives rise to difficulties and creates problems that require additional costs.

Limits of applicability of the neoclassical approach

1. Neoclassical theory is based on unrealistic assumptions and limitations, and, therefore, it uses models that are inadequate to economic practice. Coase called this state of affairs in neoclassical theory “blackboard economics.”

2. Economic science expands the range of phenomena (for example, such as ideology, law, norms of behavior, family) that can be successfully analyzed from the point of view of economic science. This process was called “economic imperialism”. The leading representative of this trend is Nobel laureate Harry Becker. But for the first time, Ludwig von Mises wrote about the need to create a general science that studies human action, proposing the term “praxeology” for this purpose.

3. Within the framework of neoclassics, there are practically no theories that satisfactorily explain dynamic changes in the economy, the importance of studying which became relevant against the backdrop of historical events of the 20th century

Neoclassical hard core and protective belt

Hard core :

1. Stable preferences that are endogenous in nature;

2. Rational choice (maximizing behavior);

3. Equilibrium in the market and general equilibrium in all markets.

Protective belt:

1. Property rights remain unchanged and clearly defined;

2. The information is completely accessible and complete;

3. Individuals satisfy their needs through exchange, which occurs without costs, taking into account the initial distribution.

1.2 Institutional economic theory

The concept of an institution. The role of institutions in the functioning of the economy

The concept of institution was borrowed by economists from the social sciences, in particular from sociology. An institution is a set of roles and statuses designed to satisfy a specific need. Definitions of institutions can also be found in works of political philosophy and social psychology. For example, the category of institution is one of the central ones in John Rawls’s work “A Theory of Justice.” Institutions mean a public system of rules that define office and position with corresponding rights and responsibilities, power and immunities, and the like. These rules specify certain forms of action as permissible and others as prohibited, and they punish certain actions and protect others when violence occurs. As examples, or more general social practices, we can cite games, rituals, courts and parliaments, markets and property systems.

In economic theory, the concept of institution was first included in analysis by Thorstein Veblen. Institutions are a common way of thinking as regards the particular relations between society and the individual and the particular functions they perform; and the system of social life, which is composed of the totality of those acting at a certain time or at any moment in the development of any society, can, from the psychological side, be characterized in general terms as the prevailing spiritual position or the widespread idea of \u200b\u200bthe way of life in society.

Veblen also understood institutions as:

Behavioral habits;

The structure of the production or economic mechanism;

The currently accepted system of social life.

Another founder of institutionalism, John Commons, defines institution as follows: institution is a collective action to control, liberate and expand individual action.

Another classic of institutionalism, Wesley Mitchell, has the following definition: institutions are dominant, and highly standardized, social habits. Currently, within the framework of modern institutionalism, the most common interpretation of institutions is Douglas North: Institutions are rules, mechanisms that ensure their implementation, and norms of behavior that structure repeated interactions between people.

The economic actions of an individual take place not in an isolated space, but in a certain society. And therefore it is of great importance how society will react to them. Thus, transactions that are acceptable and profitable in one place may not necessarily be viable even under similar conditions in another. An example of this is the restrictions imposed on human economic behavior by various religious cults. In order to avoid the coordination of many external factors that influence success and the very possibility of making a particular decision, within the framework of economic and social orders, schemes or algorithms of behavior are developed that are the most effective under given conditions. These schemes and algorithms or matrices of individual behavior are nothing more than institutions.

Traditional institutionalism

“Old” institutionalism, as an economic movement, arose at the turn of the 19th and 20th centuries. He was closely connected with the historical direction in economic theory, with the so-called historical and new historical school (F. List, G. Schmoler, L. Bretano, K. Bücher). From the very beginning of its development, institutionalism was characterized by upholding the idea of social control and intervention of society, mainly the state, in economic processes. This was the legacy of the historical school, whose representatives not only denied the existence of stable deterministic connections and laws in the economy, but were also supporters of the idea that the welfare of society can be achieved on the basis of strict state regulation of the nationalist economy. The most prominent representatives of “Old Institutionalism” are: Thorstein Veblen, John Commons, Wesley Mitchell, John Galbraith. Despite the significant range of problems covered in the works of these economists, they were unable to form their own unified research program. As Coase noted, the work of American institutionalists came to nothing because they lacked a theory to organize the mass of descriptive material. Old institutionalism criticized the provisions that constitute the “hard core of neoclassicalism.” In particular, Veblen rejected the concept of rationality and the corresponding principle of maximization as fundamental in explaining the behavior of economic agents. The object of analysis is institutions, not human interactions in space with the restrictions that are set by institutions. Also, the works of old institutionalists are distinguished by significant interdisciplinarity, being, in fact, continuations of sociological, legal, and statistical research in their application to economic problems.

Neo-institutionalism

Modern neo-institutionalism originates from the works of Ronald Coase “The Nature of the Firm”, “The Problem of Social Costs”. The neo-institutionalists attacked first of all the provisions of neoclassicism, which constitute its defensive core.

1) First, the premise that exchange occurs without costs has been criticized. Criticism of this position can be found in Coase's early works. Although, it should be noted that Menger wrote about the possibility of the existence of exchange costs and their influence on the decisions of exchanging subjects in his “Foundations of Political Economy.” Economic exchange occurs only when each participant, carrying out an act of exchange, receives some increase in value to the value of the existing set of goods. This is proven by Carl Menger in his work “Foundations of Political Economy”, based on the assumption of the existence of two participants in the exchange. The concept of transaction costs contradicts the thesis of neoclassical theory that the costs of functioning of the market mechanism are equal to zero. This assumption made it possible not to take into account the influence of various institutions in the economic analysis. Therefore, if transaction costs are positive, it is necessary to take into account the influence of economic and social institutions on the functioning of the economic system.

2) Secondly, recognizing the existence of transaction costs, there is a need to revise the thesis about the availability of information (information asymmetry). Recognition of the thesis about the incompleteness and imperfection of information opens up new prospects for economic analysis, for example, in the study of contracts.

organizations. Within the framework of these directions, subjects of economic activity “economic organizations have ceased to be viewed as “black boxes”. Within the framework of “modern” institutionalism, attempts are also being made to modify or even change the elements of the hard core of neoclassics. First of all, this is the neoclassical premise of rational choice. In institutional economics, classical rationality is modified by accepting assumptions about bounded rationality and opportunistic behavior. Despite the differences, almost all representatives of neo-institutionalism view institutions through their influence on the decisions made by economic agents. The following fundamental tools related to the human model are used: methodological individualism, utility maximization, bounded rationality and opportunistic behavior. Some representatives of modern institutionalism go even further and question the very premise of the utility-maximizing behavior of economic man, proposing its replacement by the principle of satisfaction. In accordance with the classification of Tran Eggertsson, representatives of this direction form their own direction in institutionalism - the new institutional economics, the representatives of which can be considered O. Williamson and G. Simon. Thus, the distinctions between neo-institutionalism and new institutional economics can be drawn depending on which premises are replaced or modified within their framework - the “hard core” or the “protective belt”.

1.3 Comparison of neoclassical and andinstitutionalism

What all neo-institutionalists have in common is the following: first, that social institutions matter and second, that they can be analyzed using the standard tools of microeconomics. In the 1960-1970s. a phenomenon called “economic imperialism” by G. Becker began. It was during this period that economic concepts: maximization, equilibrium, efficiency, etc. - began to be actively used in such areas related to economics as education, family relations, health care, crime, politics, etc. This led to the fact that the basic economic categories of neoclassics received deeper interpretation and wider application.

Each theory consists of a core and a protective layer. Neo-institutionalism is no exception. Among the basic prerequisites, he, like neoclassicism as a whole, primarily considers:

§ methodological individualism;

§ concept of economic man;

§ activity as an exchange.

However, unlike neoclassicism, these principles began to be applied more consistently.

1) Methodological individualism. In conditions of limited resources, each of us is faced with choosing one of the available alternatives. Methods for analyzing an individual's market behavior are universal. They can be successfully applied to any area where a person must make a choice.

The basic premise of neo-institutional theory is that people act in every sphere in pursuit of their self-interest, and that there is no insurmountable line between business and the social sphere or politics. 2) The concept of economic man . The second premise of neo-institutional choice theory is the concept of “economic man.” According to this concept, a person in a market economy identifies his preferences with a product. He strives to make decisions that maximize the value of his utility function. His behavior is rational. The rationality of the individual has universal significance in this theory. This means that all people are guided in their activities primarily by the economic principle, i.e. compare marginal benefits and marginal costs (and, above all, benefits and costs associated with decision-making): However, unlike neoclassics, which considers mainly physical (scarcity of resources) and technological limitations (lack of knowledge, practical skill, etc.) etc.), neo-institutional theory also considers transaction costs, i.e. costs associated with the exchange of property rights. This happened because any activity is considered as an exchange.

3) Activity as an exchange. Proponents of neo-institutional theory consider any sphere by analogy with the commodity market. The state, for example, with this approach is an arena of competition between people for influence on decision-making, for access to the distribution of resources, for places in the hierarchical ladder. However, the state is a special kind of market. Its participants have unusual property rights: voters can elect representatives to the highest bodies of the state, deputies can pass laws, and officials can monitor their implementation. Voters and politicians are treated as individuals exchanging votes and election promises. It is important to emphasize that neo-institutionalists have a more realistic assessment of the features of this exchange, given that people are characterized by limited rationality, and decision-making is associated with risk and uncertainty. In addition, it is not always possible to make the best decisions. Therefore, institutionalists compare the costs of decision-making not with the situation considered exemplary in microeconomics (perfect competition), but with those real alternatives that exist in practice. This approach can be complemented by the analysis of collective action, which involves considering phenomena and processes from the point of view of interaction not of one individual, but of a whole group of individuals. People can be united into groups based on social or property characteristics, religion or party affiliation. At the same time, institutionalists can even deviate somewhat from the principle of methodological individualism, suggesting that the group can be considered as a final indivisible object of analysis, with its own utility function, limitations, etc. However, a more rational approach seems to be to consider a group as an association of several individuals with their own utility functions and interests.

The institutional approach occupies a special place in the system of theoretical economic directions. Unlike the neoclassical approach, it places emphasis not so much on the analysis of the results of the behavior of economic agents, but on this behavior itself, its forms and methods. Thus, the identity of the theoretical object of analysis and historical reality is achieved.

Institutionalism is characterized by the predominance of explaining any processes, rather than predicting them, as in neoclassical theory. Institutional models are less formalized, so many more different predictions can be made within the framework of institutional forecasting.

The institutional approach is associated with the analysis of a specific situation, which leads to more generalized results. When analyzing a specific economic situation, institutionalists make a comparison not with an ideal one, as in neoclassics, but with another, real situation.

Thus, the institutional approach is more practical and closer to reality. Models of institutional economics are more flexible and can be transformed depending on the situation. Despite the fact that institutionalism does not tend to engage in forecasting, the importance of this theory does not diminish at all.

It should be noted that recently an increasing number of economists have been leaning towards an institutional approach in the analysis of economic reality. And this is justified, since it is institutional analysis that allows us to achieve the most reliable results, close to reality, in the study of the economic system. In addition, institutional analysis is an analysis of the qualitative side of all phenomena.

Thus, G. Simon notes that “as economic theory expands beyond its key sphere of interest - the theory of price, which deals with quantities of goods and money, there is a shift from purely quantitative analysis, where the central role is given to the equalization of marginal values, in the direction of more qualitative institutional analysis, where discrete alternative structures are compared. And by carrying out a qualitative analysis, it is easier to understand how development occurs, which, as was clarified earlier, represents precisely qualitative changes. Having studied the development process, one can pursue positive economic policies with greater confidence.”

In the theory of human capital, relatively little attention is paid to institutional aspects, especially to the mechanisms of interaction between the institutional environment and human capital in an innovative economy. The static approach of neoclassical theory to explaining economic phenomena does not allow us to explain the real processes occurring in the transitional economies of a number of countries, accompanied by a negative impact on the reproduction of human capital. The institutional approach has this opportunity by explaining the mechanism of institutional dynamics and constructing theoretical constructs of the mutual influence of the institutional environment and human capital.

Despite the sufficiency of developments in the field of institutional problems of the functioning of the national economy, in modern economic domestic and foreign literature there are practically no comprehensive studies of the reproduction of human capital based on the institutional approach.

The influence of socio-economic institutions on the formation of the productive abilities of individuals and their further movement through the stages of the reproduction process has still been poorly studied. In addition, the issues of forming the institutional system of society, identifying trends in its functioning and development, as well as the influence of these trends on the qualitative level of human capital require serious study. When determining the essence of an institution, T. Veblen proceeded from two types of phenomena that influence people's behavior. On the one hand, institutions are “habitual ways of responding to stimuli that are created by changing circumstances,” on the other hand, institutions are “special ways of existence of society that form a special system of social relations.”

The neo-institutional direction views the concept of institutions differently, treating them as norms of economic behavior that arise directly from the interaction of individuals.

They form frameworks and restrictions for human activity. D. North defines institutions as formal rules, reached agreements, internal restrictions on activity, certain characteristics of compulsion to fulfill them, embodied in legal norms, traditions, informal rules, and cultural stereotypes.

The mechanism for ensuring the effectiveness of the institutional system is especially important. The degree of consistency between the achievement of goals set by the institutional system and the decisions of individuals depends on the effectiveness of coercion. Coercion, notes D. North, is carried out through the internal limitations of the individual, fear of punishment for violating relevant norms, through state violence and public sanctions. It follows from this that formal and informal institutions are involved in the implementation of coercion.

The functioning of diverse institutional forms contributes to the formation of the institutional system of society. Consequently, the main object of optimizing the process of reproduction of human capital should be recognized not as organizations themselves, but as socio-economic institutions as norms, rules and mechanisms for their implementation, by changing and improving which the desired result can be achieved.

2 . Neoclassicalism and institutionalism as theoretical foundations of market reforms

2.1 Neoclassical scenario of market reforms in Russia and its consequences

Just as neoclassical economists believe that government intervention in the economy is ineffective and should therefore be minimal or absent, consider privatization in Russia in the 1990s. Many experts, primarily supporters of the “Washington Consensus” and “shock therapy,” considered privatization the core of the entire reform program, called for its large-scale implementation and the use of the experience of Western countries, justifying the need for the simultaneous introduction of a market system and the transformation of state-owned enterprises into private ones. At the same time, one of the main arguments in favor of accelerated privatization was the assertion that private enterprises are always more efficient than state-owned enterprises, therefore, privatization should be the most important means of redistributing resources, improving management and generally increasing the efficiency of the economy. However, they understood that privatization would face certain difficulties. Among them, the lack of market infrastructure, in particular the capital market, and the underdevelopment of the banking sector, lack of sufficient investment, managerial and entrepreneurial skills, resistance from managers and employees, problems of “nomenklatura privatization”, imperfection of the legislative framework, including in the field of taxation. Proponents of vigorous privatization noted that it was carried out in an environment of high inflation and low growth rates and led to mass unemployment. The inconsistency of reforms and the lack of clear guarantees and conditions for the implementation of property rights, the need to reform the banking sector, the pension system, and the creation of an effective stock market were also pointed out. The opinion of many experts about the need for preconditions for successful privatization, namely the implementation of macroeconomic reforms and the creation of a business culture in the country, seems important. This group of specialists is characterized by the opinion that in Russian conditions it is advisable to widely attract Western investors, creditors and consultants for the successful implementation of measures in the field of privatization. According to many experts, in the conditions of a shortage of private capital, the choice came down to: a) finding a form of redistribution of state property between citizens; b) the choice of a few owners of private capital (often acquired illegally); c) appeal to foreign capital, taking into account restrictive measures. Privatization “according to Chubais” is more likely denationalization than real privatization. Privatization was supposed to create a large class of private owners, but instead “the richest monsters” appeared, forming an alliance with the nomenklatura. The role of the state remains excessive, producers still have more incentives to steal than to produce, the monopoly of producers has not been eliminated, small business is developing very poorly. American specialists A. Shleifer and R. Vishny, based on a study of the state of affairs at the initial stage of privatization, characterized it as “spontaneous.” They noted that property rights were informally redistributed among a limited range of institutional actors, such as the party-state apparatus, line ministries, local authorities, labor collectives and enterprise administrations. Hence the inevitability of conflicts, the reason for which lies in the intersection of the control rights of such co-owners, the presence of many property subjects with uncertain ownership rights.

Real privatization, according to the authors, is the redistribution of control rights over the assets of state-owned enterprises with the mandatory consolidation of property rights of owners. In this regard, they proposed large-scale corporatization of enterprises.

It should be noted that further developments largely followed this path. Large state-owned enterprises were transformed into joint-stock companies, and a process of actual redistribution of property took place.

A voucher system aimed at equal distribution of share capital among the population of a country may not be a bad thing, but there must be mechanisms in place to ensure that share capital is not concentrated in the hands of a “rich minority.” However, in reality, ill-conceived privatization transferred the property of an essentially prosperous country into the hands of a corrupt politically powerful elite.

Russian mass privatization, launched with the aim of eliminating the old economic power and accelerating the restructuring of enterprises, did not produce the desired results, but led to extreme concentration of ownership, and in Russia this phenomenon, usual for the process of mass privatization, took on particularly large proportions. As a result of the transformation of the old ministries and the departmental banks related to them, a powerful financial oligarchy arose. “Property,” writes I. Samson, “is an institution that does not change either by decree or at once. If in the economy we try too hastily to impose private property everywhere through mass privatization, then it will quickly concentrate where there is economic power.”

As T. Weiskopf believes, in the conditions of Russia, where capital markets are completely undeveloped and labor mobility is limited, it is difficult to imagine that exactly the mechanism for industrial restructuring that is highly dependent on the mobility of capital and labor will work. It would be more expedient to create incentives and opportunities to improve the activities of enterprises through the administration and

workers rather than attract outside shareholders.

The early failure to develop a large sector of new enterprises led to significant negative consequences, including making it easier for mafia groups to seize control of a large part of state property. “The main challenge today, as in 1992, is creating an infrastructure that promotes competition. K. Arrow recalls that “under capitalism, the expansion and even maintenance of supply at the same level often takes the form of new firms entering the industry, rather than the development or simple reproduction of old ones; this applies particularly to small-scale and low-capital-intensive industries.” As for the privatization of heavy industry, this process must necessarily be slow, but here too “the priority task is not the transfer of existing capital assets and enterprises into private hands, but their gradual replacement with new assets and new enterprises.

Thus, one of the urgent tasks of the transition period is to increase the number of enterprises at all levels and intensify entrepreneurial initiative. According to M. Goldman, instead of rapid voucher privatization, efforts should have been directed towards stimulating the creation of new enterprises and the formation of a market with an appropriate infrastructure, characterized by transparency, the presence of rules of the game, the necessary specialists and economic legislation. In this regard, the question arises of creating the necessary business climate in the country, stimulating the development of small and medium-sized businesses, and eliminating bureaucratic barriers. Experts note that the state of affairs in this area is far from satisfactory and there is no reason to expect its improvement, as evidenced by the slowdown in growth and even the reduction in the number of enterprises since the mid-90s, as well as the number of unprofitable enterprises. All this requires improving and simplifying regulation, licensing, the tax system, providing affordable credit, creating a network to support small businesses, training programs, business incubators, etc.

Comparing the results of privatization in different countries, J. Kornai notes that the saddest example of the failure of the accelerated privatization strategy is Russia, where all the characteristics of this strategy manifested themselves in extreme form: voucher privatization imposed on the country, coupled with mass manipulations in the transfer of property into the hands of managers and close officials . Under these conditions, instead of “people's capitalism,” there actually occurred a sharp concentration of former state property and the development of an “absurd, perverted and extremely unfair form of oligarchic capitalism.”

Thus, the discussion of the problems and results of privatization showed that its acceleration does not automatically lead to market behavior of enterprises, and the methods of its implementation actually meant ignoring the principles of social justice. Privatization, especially of large industries, requires large-scale preparation, reorganization and restructuring of enterprises. Of great importance in the development of the market mechanism is the creation of new enterprises ready to enter the market, which requires appropriate conditions and support for entrepreneurship. At the same time, one should not overestimate the importance of changes in forms of ownership, which are important not in themselves, but as a means of increasing the efficiency and competitiveness of enterprises.

Liberalization

Price liberalization was the first point of Boris Yeltsin's program of urgent economic reforms, proposed to the V Congress of People's Deputies of the RSFSR, held in October 1991. The liberalization proposal met with the unconditional support of the congress (878 votes in favor and only 16 against).

In fact, radical liberalization of consumer prices was carried out on January 2, 1992 in accordance with the decree of the President of the RSFSR dated December 3, 1991 No. 297 “On measures to liberalize prices,” as a result of which 90% of retail prices and 80% of wholesale prices were exempted from state regulation. At the same time, control over the price level for a number of socially significant consumer goods and services (bread, milk, public transport) was left to the state (and for some of them it still remains). At first, markups on such goods were limited, but in March 1992 it became possible to cancel these restrictions, which most regions took advantage of. In addition to price liberalization, starting in January 1992, a number of other important economic reforms were implemented, in particular, wage liberalization, freedom of retail trade, etc.

Initially, the prospects for price liberalization raised serious doubts because the ability of market forces to determine prices for goods was limited by a number of factors. First of all, price liberalization began before privatization, so that the economy was predominantly owned by the state. Second, the reforms were initiated at the federal level, while price controls had traditionally been exercised at the local level, and in some cases local authorities chose to retain these controls directly, despite the government's refusal to provide subsidies to such regions.

In January 1995, prices for about 30% of goods continued to be regulated in one way or another. For example, the authorities put pressure on privatized shops, taking advantage of the fact that land, real estate and utilities were still in the hands of the state. Local authorities also created barriers to trade, for example by prohibiting the export of food to other areas. Third, powerful criminal groups emerged that blocked access to existing markets and collected tribute through racketeering, thereby distorting market pricing mechanisms. Fourth, poor communications and high transportation costs complicated the ability of companies and individuals to respond effectively to market signals. Despite these difficulties, in practice market forces began to play a significant role in price formation, and imbalances in the economy began to decrease.

Price liberalization has become one of the most important steps towards the transition of the country's economy to market principles. According to the authors of the reforms themselves, in particular Gaidar, thanks to liberalization, the country's stores were filled with goods in a fairly short time, their range and quality increased, and the main prerequisites were created for the formation of market economic mechanisms in society. As Vladimir Mau, an employee of the Gaidar Institute, wrote, “the main thing that was achieved as a result of the first steps of economic reforms was to overcome the commodity deficit and avert the threat of impending famine in the winter of 1991-1992 from the country, as well as to ensure the internal convertibility of the ruble.”

Before the start of reforms, representatives of the Russian Government argued that price liberalization would lead to a moderate increase in prices - an adjustment between supply and demand. According to the generally accepted point of view, fixed prices for consumer goods were lowered in the USSR, which caused increased demand, and this, in turn, caused a shortage of goods.

It was assumed that as a result of the correction, the supply of goods, expressed in new market prices, would be approximately three times higher than the old one, which would ensure economic equilibrium. However, price liberalization was not coordinated with monetary policy. As a result of price liberalization, by mid-1992, Russian enterprises were left with virtually no working capital.

Price liberalization has led to galloping inflation, depreciation of wages, income and savings of the population, increased unemployment, as well as an increase in the problem of irregular payment of wages. The combination of these factors with the economic downturn, increased income inequality and the uneven distribution of earnings between regions has led to a rapid decline in real earnings for a large part of the population and its impoverishment. In 1998, GDP per capita was 61% of the 1991 level - an effect that came as a surprise to the reformers themselves, who expected the opposite result from price liberalization, but which was observed to a lesser extent in other countries where "shock therapy" was carried out "

Thus, in conditions of almost complete monopolization of production, the liberalization of prices actually led to a change in the bodies that set them: instead of the state committee, the monopoly structures themselves began to do this, which resulted in a sharp increase in prices and a simultaneous decrease in production volumes. Price liberalization, which was not accompanied by the creation of restraining mechanisms, led not to the creation of market competition mechanisms, but to the establishment of control over the market by organized criminal groups, extracting excess profits by inflating prices; moreover, the mistakes made provoked hyperinflation of costs, which not only disorganized production, but also led to to the depreciation of income and savings of citizens.

2.2 Institutional factors of market reform

market neoclassical institutionalism economic

The formation of a modern, that is, adequate to the challenges of the post-industrial era, system of institutions is the most important prerequisite for achieving the strategic goals of Russia's development. It is necessary to ensure the coordinated and effective development of institutions,

regulating the political, social and economic aspects of the country's development.

The institutional environment necessary for an innovative socially oriented type of development will be formed in the long term within the framework of the following directions. Firstly, political and legal institutions aimed at ensuring the civil and political rights of citizens, as well as the implementation of legislation. We are talking about the protection of basic rights, including the inviolability of person and property, the independence of the judiciary, the effectiveness of the law enforcement system, and freedom of the media. Secondly, institutions that ensure the development of human capital. First of all, this concerns education, healthcare, the pension system and housing. The key problem in the development of these sectors is the implementation of institutional reforms - the development of new rules for their functioning. Thirdly, economic institutions, that is, legislation that ensures the sustainable functioning and development of the national economy. Modern economic legislation must ensure economic growth and structural modernization of the economy. Fourthly, development institutions aimed at solving specific systemic problems of economic growth, that is, rules of the game aimed not at all participants in economic or political life, but at some of them. Fifthly, a strategic management system that allows for the harmonious formation and development of these types of institutions and is aimed at coordinating budgetary, monetary, structural, regional and social policies in solving systemic internal development problems and responding to external challenges. It includes interconnected programs of institutional reforms, long- and medium-term forecasts for the development of the economy, science and technology, strategies and programs for the development of key sectors of the economy and regions, a long-term financial plan and a results-based budgeting system. The basis for sustainable economic growth is formed by the first type of institutions - guarantees of basic rights.

To increase the efficiency of political and legal institutions and ensure the implementation of legislation, it is necessary to solve the following problems:

effective protection of private property, the formation in society of an understanding that the ability to ensure the protection of property is one of the criteria for a favorable investment climate and the effectiveness of government. Particular attention should be paid to suppressing raider seizures of property;

carrying out judicial reform to ensure the effectiveness and fairness of court decisions;

creating conditions under which it would be beneficial for Russian companies to remain in Russian jurisdiction, rather than registering offshore and using the Russian judicial system to resolve disputes, including property disputes;

the fight against corruption not only in government bodies, but also in government institutions that provide social services to the population, and in large economic structures associated with the state (natural monopolies). This requires a radical increase in transparency, changes in the motivation system, countering the criminal use of official position by civil servants for personal interests in order to promote business, the creation of unreasonable administrative restrictions on business, strengthening liability for offenses related to corruption and abuse of official position, including on the basis of indirect signs of corruption;

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Moscow Academy of Economics and Law
Institute of Economics
Weekend group

Test
By discipline: "Institutional economy".

On the topic: “Neoclassical economic theory and institutional economics.”

Completed by a student

Groups EMZV-3-06

Dushkova E.V.

Checked

Malinovsky L.F.

Moscow 2007.

1. Subject and features of neoclassicism.
1. Initial representations.
2. Modern evolutionary institutionalism.
3. Key Features.

Conclusion.

Bibliography.

Introduction:
The rules of economic behavior, together with the mechanisms that force people to comply with them, are called institutions by economists. Institute (to institute (English)) – to establish, establish.

In economic theory, the concept of institution was first included in analysis by Thorstein Veblen. By institutions Veblen understood:

Habitual ways of responding to stimuli;

The structure of the production or economic mechanism;

The currently accepted system of social life.

Another founder of institutionalism, John Commons, defines institution as follows:

Institute– collective action to control, liberate and expand individual action.

Wesley Mitchell has the following definition:

Institutes- dominant, and highly standardized, social habits.

Currently, within the framework of modern institutionalism, the most common interpretation of institutions is Douglas North’s:

Institutes- these are the rules, the mechanisms that ensure their implementation, and the norms of behavior that structure repeated interactions between people.

Institutions play a huge role in the economic and social life of society. In the last decade, the term institute has become one of the most commonly used: it is used by scientists, journalists, and ordinary people.

What are effective institutions?

How to assess whether an institution is effective?

How to create and maintain effective institutions in society?

Institutional economics answers these questions.

Neoclassical economic theory.

1.1. Subject and features of neoclassicism.
By the middle of the 20th century. The main current of economic thought was neoclassical economic theory. Its basic model was the model of L. Walras (1834-1910), which considered the relationships of economic agents built on the basis of the exchange of economic goods. Agents act based on their own interests. The products on the market are homogeneous. It is assumed that the market itself is concentrated at one point in space and the exchange occurs instantly. All agents are clearly aware of their preferences and at the same time exchange their goods and money. They have complete and perfect information about the goods offered to each other and about the conditions of exchange. Having such information gives them confidence that they will not be deceived. And if they are deceived, they will find effective defense in court. Therefore, making an exchange requires no effort other than spending a certain amount of money. Prices are the main tool for optimal resource allocation. In other words, to choose the optimal course of action, you don’t need to know anything other than prices. While pursuing their own interests, individuals nevertheless contribute to achieving an effective equilibrium. This is how the invisible hand of the market operates.

The English philosopher Imre Lakatos (1922–1974) divides any research program into two parts: the hard core of the program and its protective belt. If not only the hard core remains unchanged, but also the protective belt, then the program is orthodox. A program becomes modified when the elements that make up its protective belt change. Finally, if changes affect the elements that form the hard core, a new research program emerges.

In the economic theory of the 20th century. neoclassical theory became dominant. A. Nobel Prize laureate in the field of economics R. Coase wrote: “Currently, the dominant understanding of economic science is that expressed in the definition of L. Robbins (1898–1984): Economics is a science that studies human behavior from the point of view the relationship between its ends and limited means that admit of alternative uses. This definition turns economics into the science of choice. In fact, most economists, including Robbins himself, limit their work to a much narrower range of choices than this definition suggests.” The premises of neoclassical economic theory, which form its hard core, as well as its protective belt, are the following concepts.

Hard core:

1) stable preferences;

2) rational choice model;

3) equilibrium interaction schemes.

Protective belt:

1) precise determination of the type of situational constraints facing the agent;

2) precise determination of the type of information available to agents about the situation in which they find themselves;

3) precise determination of the type of interaction being studied.

The protective belt can be reformulated in other words:

1. Property rights remain unchanged and clearly defined.

2. The information is completely accessible and complete.

3. Individuals satisfy their needs through exchange, which occurs without costs, taking into account the initial distribution.

The following points should be added to the characteristics of neoclassicism. First - methodological individualism, which consists in explaining collective entities (as well as institutions) on the basis of the activities of individual people. It is the individual who becomes the starting point in the analysis of institutions. For example, the characteristics of a state are derived from the interests and behavioral characteristics of its citizens. Second point - ignoring the institutional structure of production and exchange, since it is not important in determining the comparative efficiency of the final allocation of resources. There is a well-known special view of neoclassical scholars on the process of the emergence of institutions - the concept of spontaneous evolution of institutions. This concept is based on the following assumption: institutions arise as a result of people's actions, but not necessarily as a result of their desires, i.e. spontaneously. In addition, achieving equilibrium is studied by the method of comparative statics, i.e. the starting point of the analysis is the equilibrium state, and then shows how changes in parameters cause an adaptation process leading to a new equilibrium.

Criticism of neoclassical economic theory.

Neoclassical theory no longer met the requirements of those economists who tried to comprehend the actually occurring economic events for several reasons.

1. Neoclassical theory is based on unrealistic premises and limitations, which means it uses models that are inadequate to economic reality.

2. Economic science considers it possible to expand the range of analyzed phenomena, for example, such as ideology, law, property, norms of behavior, family, etc. This process was called economic imperialism.

3. Within the framework of neoclassics, a “timeless” approach is used; there are practically no theories that satisfactorily explain dynamic changes in the economy.

4. Neoclassical models are abstract and overly formalized.

Nobel laureate 1973 Vasily Leontiev, in his article “Academic Economic Science” (1982), wrote: “Every page of economic journals is replete with mathematical formulas that lead the reader from more or less plausible but absolutely arbitrary assumptions to precisely formulated but irrelevant theoretical conclusions... Year after year, theoretical economists continue to create dozens of mathematical models and study their formal properties in detail, and econometricians continue to adapt algebraic functions of various types and forms to previous sets of statistical data, being unable to make significant progress in a systematic understanding of the structure and principles of functioning of the real economic system "

Let us consider some critical statements that may provide some opportunities for change in economic theory.

1. The core concept of rational, maximizing behavior was heavily criticized by Herbert Simon several decades ago. These criticisms were largely ignored until recently, when the development of game theory gave rise to a new type of "bounded rationality" concept. Game theory has legitimized debate about both types of bounded rationality—“near rationality” and “irrationality”—as well as a departure from the originally espoused assumption of perfect knowledge. Neoclassical scholars have now, albeit to a limited extent, embraced the discussion of problems of imperfect or asymmetric information. These favorable changes undermine orthodox assumptions.

2. Theoretical work in game theory and elsewhere raises questions about the very meaning of core propositions such as rationality. Robert Sugden in 1990 argued that "game theory may leave behind the concept of rationality what will ultimately become little more than a convention." He writes: “There was a time, not so long ago, when the foundations of rational choice theory seemed sound... But it is increasingly clear that these foundations are less solid than we thought, and that they need testing and perhaps revision. Economic theorists must become as much philosophers as mathematicians.” Therefore, the assumption of "rational economic man" now appears much more problematic for informed neoclassical theorists than it did a decade or more ago.

3. The invasion of chaos theory into economics has led to the general idea that economics can continue simply based on the criterion of “correct predictions.” In nonlinear models, the results are hypersensitive to initial conditions and therefore reliable predictions cannot be made for any long period of time. Chaos theory particularly troubled rational expectations theorists in that, even if most agents knew the basic structure of the economic model, they were generally unable to make reliable predictions of outcomes and therefore form any meaningful “rational expectations” of the future.

4. Nicholas Kaldor has repeatedly argued that the key problem with neoclassical theory was its neglect of the phenomenon of positive feedback based on increasing returns. He also pointed out the related problem of path dependence in economic models. In 1990 Brian Arthur has shown that many technological and structural features of modern economies involve positive feedbacks that magnify the effects of small changes. Consequently, initial randomness can have a huge impact on the outcome. Perhaps technological “blocking” will occur and instead of gravitating towards a predetermined equilibrium, the results may be path-dependent. Therefore, there may be several possible and suboptimal equilibrium outcomes. The work of Arthur and other economists brought Kaldor's ideas back onto the agenda.

5. The development of general equilibrium theory (neoclassical microeconomics at its theoretical apogee) has currently reached a serious impasse. More recently, it has been recognized that potential heterogeneity among individuals threatens the suitability of the project. As a result, many types of interactions between individuals must be ignored. Even with limited psychological assumptions about rational behavior, serious difficulties arise when the actions of many agents are carried out together. Leading neoclassical general equilibrium theorist and Nobel Prize winner in economics (1972) Kenneth Arrow stated in 1986: “On the whole, the hypothesis of rational behavior makes no sense at all.” Therefore, it is widely assumed that all individuals have the same utility function. But this denies the possibility of gains from trade arising from individual differences. Thus, despite the traditional glorification of individualism and competition, despite decades of formal development, the hard core of neoclassical theory can be read as little more than a gray uniformity among actors.

6. Modern research into the problems of uniqueness and stability of general equilibrium has shown that it can be uncertain and unstable unless very strong assumptions are made, such that society behaves as if it were a single individual. The typical mode of economic analysis is that the rationality of selfish and autonomous individuals is sufficient to create and achieve equilibrium and social order; what is equilibrium effectively; that social institutions such as the state can only intervene to upset equilibrium conditions. These ideas have had a long line of followers since they were proclaimed by Bernard Mandeville in The Fable of the Bees (1714). The basic assumption is that from private vices come public virtues. From the uncertain and unstable results obtained by modern theory, it can be concluded that an economy consisting of atomistic agents does not have a structure sufficient for survival.

"Old" and "New" institutionalism.

Modern neo-institutionalism has its roots in the pioneering works of Ronald Coase, The Nature of the Firm, and The Problem of Social Cost.

The neo-institutionalists attacked first of all the provisions of neoclassicism, which constitute its defensive core.

Economic exchange occurs only when each participant, carrying out an act of exchange, receives some increase in value to the value of the existing set of goods. This is proven by Carl Menger in his work “Foundations of Political Economy”, based on the assumption of the existence of two participants in the exchange. The first has good A, which has a value W, and the second has good B with the same value W. As a result of the exchange that occurred between them, the value of goods at the disposal of the first will be W+ x, and the second - W+ y. From this we can conclude that during the exchange process, the value of the good for each participant increased by a certain amount. This example shows that activities related to exchange are not a waste of time and resources, but are as productive as the production of material goods.

So far we have considered exchange as a process that occurs without costs. But in a real economy, any act of exchange is associated with certain costs. These exchange costs are called transactional. They are usually interpreted as “the costs of collecting and processing information, the costs of negotiations and decision-making, the costs of monitoring and legal protection of the execution of the contract.”

2) Secondly, recognizing the existence of transaction costs, there is a need to revise the thesis about the availability of information. Recognition of the thesis about the incompleteness and imperfection of information opens up new prospects for economic analysis, for example, in the study of contracts.

3) Thirdly, the thesis about the neutrality of the distribution and specification of property rights was revised. Research in this direction served as a starting point for the development of such areas of institutionalism as the theory of property rights and economics of organizations. Within the framework of these directions, subjects of economic activity “economic organizations have ceased to be viewed as “black boxes”.

institutionalism

Characteristic		"Old" institutionalism	"New" institutionalism
1.Occurrence	From a critique of the orthodox assumptions of classical liberalism		Through improving the core of modern orthodox theory
2. Inspiring Science	Biology		Physics (mechanics)
3. Analysis element	Institutes		Atomistic, abstract individual
4. Individual	We change, his preferences and goals are endogenous		Taken as given, its preferences and goals are exogenous
5. Institutions	Form preferences of individuals themselves		Provide external constraints and opportunities for individuals: conditions of choice, restrictions and information
6. Technology	Technological change is endogenous		Technology is exogenous
7. Methodology	Organic approach, evolutionary approach		Methodological individualism, equilibrium approach, optimality
8. Time	Early 20th century		Last third of the twentieth century
9. Representatives	T. Veblen, J. Commons, W. Mitchell		O. Williamson, G. Demsets, D. North, R. Posner, E. Shotter, R. Coase et al.

The "new" institutionalism, true to its neoclassical roots, reflects on equilibrium and mechanistic concepts of process, in contrast to the biologically inspired evolutionism of the "old" ones.

Both "new" and "old" institutionalism have something to offer, but the warnings of "old" institutionalism about continuing to use outdated classical liberal assumptions should not be ignored. In this respect, the “old” institutionalism retains some advantages over the “new” one.

Evolutionary institutionalism.

3.1. Initial representations.
With the emergence of institutionalism at the turn of the 19th–20th centuries. The birth of evolutionary economic theory (EET) is also associated. After the creation of the evolutionary theory by Charles Darwin, the English philosopher G. Spencer, based on his ideas of universal development and selection, developed a universal philosophical system that describes the movement of natural and social life on the principles of evolution. Attempts to transfer evolutionary ideas to economic soil were unfruitful until the “unit of selection” was identified - that substance that is stable over time, transmitted from one economic entity to another and at the same time capable of change. T. Veblen is the author of the key ideas and concepts that form the modern institutional-evolutionary theory. Having rejected the idea of a person as a rational individual and put forward the very concept of institutions as “stable habits of thinking inherent in a large community of people”, examining their origin from instincts, habits, traditions and social norms, T. Veblen for the first time subjected to a scientific analysis of the ways and forms of development of institutions . T. Veblen also came up with the idea that institutions can be likened to genes and that evolution in the economic system and in living nature proceeds, if not according to general laws, then according to similar laws.

Since the mid-1970s, it became clear that it was institutionalism, originating from T. Veblen and J. Commons, which, having significantly transformed, managed to act as the theoretical force that united around itself disparate trends opposing neoclassicism.

As an example, let us characterize the ideas of the 1970s by the American economist David Hamilton. In “Evolutionary Economic Theory” (1970), D. Hamilton presented the classical and neoclassical theories as “Newtonian”, i.e. guided by the principle of mechanical equilibrium, which governs the movement of the economic system. He adhered to the Darwinian understanding of economic evolution as an “open” process that does not have a given “center of gravity” and is based on the historical selection of social institutions. Changes in human nature, social organization, technology and culture as a whole are seen as the driving factors of this evolution. D. Hamilton dwells on the difference between the neoclassical and institutional understanding of the market. He emphasizes the primacy of “production” in relation to “business”, inventions – in relation to the accumulation of capital, technical activity – in relation to profit-making activities. Hence, the market for institutionalists is not a reflection of the “natural order”, but “a cultural product designed to register what society considers necessary to register.”

3.2. Modern evolutionary institutionalism.
Modern representatives of evolutionary institutionalism are R. Nelson, S. Winter, J. Hodgson and others. Evolutionary institutionalism is developing under the influence of the works of T. Veblen, J. Schumpeter (1883–1950), D. North and others. Evolutionary economic theory has received a new impetus in 1982, when the famous work of R. Nelson and S. Winter “The Evolutionary Theory of Economic Change” was published, published in Russian in 2000. While in the United States an organized movement of institutional economic thought has existed for a long time, the European Association for Evolutionary Political Economy (EAEPE) was created only in 1988.

In the 1990s, evolutionary theory began to develop in Russia. Active research in this direction is being conducted by scientists from the Institute of Economics of the Russian Academy of Sciences, CEMI RAS and other scientific institutions. For example, research is being conducted aimed at developing evolutionary macroeconomics. The Center for Evolutionary Economics operates in Moscow, including publishing the works of famous institutionalists.

Using the review by A.N. Nesterenko, let us characterize evolutionary institutionalism.

In contrast to the neoclassical doctrine, which considers an economic system as a mechanical community of individuals isolated from each other (atomism) and deduces the properties of the system from the properties of its constituent elements (individuals), institutionalists emphasize the importance of connections between elements for the formation of the properties of both the elements themselves and the system in in general. This approach, referred to as "holism"or"organicism", proclaims the predominance of social relations over the psychophysical qualities of individuals, which determines the essential properties of the economic system. The organic approach was also shared by some representatives of the classical school, but none of them, with the exception of K. Marx, occupied a central place with this idea. Modern science is increasingly focusing on studying the interaction between elements of a system, following the principles of systems theory and cybernetics.

Most representatives of this direction share the point of view accepted by modern science about dualistic nature of the system elements. Each element has “independent” properties as an autonomous unit, trying to support them and function as a “whole,” and “dependent” properties, determined by the element’s membership in the system (the whole). Thus, the system determines the properties of its constituent elements, but not completely, but partially. In turn, the properties of the system absorb the characteristics of the elements that form it, but they also have special properties that are not represented in any of the elements.

According to the modern scientific vision, the economy is viewed as an evolutionary open system that experiences constant influences from the external environment (culture, political situation, nature, etc.) and reacts to them. Therefore, evolutionary institutionalism denies the most important postulate of neoclassical theory - the desire of the economy for equilibrium, considering it as an atypical and very short-term state. The influence of factors that help bring the system closer to equilibrium is overshadowed by more powerful external influences and, most importantly, by endogenous forces that generate an endless process of change and development in the system.

The main endogenous mechanism of this kind is "cumulative causation"– a concept formulated by T. Veblen, which can be translated as “positive feedback”. T. Veblen explained the effect of cumulative causation by the fact that actions aimed at achieving a goal can, in principle, unfold ad infinitum: in the process of activity, both the person and the goal to which he strives changes. A similar observation applies to economics. Therefore, “modern science is increasingly becoming a theory of the process of successive changes, understood as changes that are self-sustaining, self-developing and without an ultimate goal.” Processes characterized by positive feedback are inherent in an open system (neoclassical equilibrium is the result of a process with negative feedback in a closed system).

Positive feedback can lead to completion of the process if the achieved result has self-sustaining properties and sustainability (blocking effect). Stable sociopsychological and socioeconomic structures become what T. Veblen and his followers call an “institution.” To illustrate the blocking effect, T. Veblen cites the political and economic structures of Great Britain on the eve of the First World War, which took shape at the beginning of the industrial revolution. Having become stable and self-sustaining, these institutions no longer met the requirements of the time and caused the British economy to lag behind the German one.

The stability of the system resulting from the locking effect is disrupted from time to time when internal and external factors undermine the compatibility and mutual “cohesion” of institutions. Institutionalists consider technological development to be one of the main factors of economic change (and, unlike the neoclassical school, not exogenous, but endogenous).

The socioeconomic institution is the central element of analysis in institutional-evolutionary theory. But the principles of the functioning of institutions are also applicable to the individual, since the individual tends to act on the basis of self-sustaining sociocultural norms (habits, stereotypes) and generally accepted practices - various “routines”. They serve as guides in a very complex and changing world, complete knowledge of which is inaccessible to humans. Therefore, the economic behavior of an individual is only partially rational (the principle of “bounded rationality”), does not maximize utility and is highly rigid (inflexible).

In general, criticism of neoclassical positions occupies a very large place in the works of modern evolutionary institutionalists. Although representatives of this direction want to approve relatively new approaches in the scientific community, their scientific and practical conclusions are not as impressive as in NIET. Some prominent scholars acknowledge that the relationship between EET and neoclassicalism is much more complex. The institutional-evolutionary theory is much broader than the neoclassical one, both in terms of the object of analysis (socio-economic and socio-psychological foundations of economic activity) and in methodology (the study of institutions in the process of their evolutionary development). This allows us to consider neoclassics as a theory that provides a simplified vision of economic processes compared to institutional-evolutionary theory.

The works of institutionalists of this direction contain attempts to highlight the characteristic features of modern economic evolution. Thus, J. Hodgson notes that the main influence on economic theory was the physics of the 19th century, and the evolutionary paradigm is an alternative to the neoclassical idea of mechanical maximization under static restrictions. Among the theories of economic evolution, J. Hodgson distinguishes two directions: theories of development (K. Marx and his followers, J. Schumpeter, etc.) and theories of genetics (A. Smith, T. Veblen, etc.). The fundamental difference between them is that the former do not recognize the “genetic code” transmitted from one stage of evolution to another; the latter proceed from the presence of “genes”. The evolutionary process is “genetic” because it follows in some way from the totality of unchangeable essential properties of a person. Biological genes are one possible explanation, but alternatives include human habits, personality, established organizations, social institutions, even entire economic systems.

Within the first direction, J. Hodgson distinguishes between supporters of “unilinear”, deterministic development (this is primarily K. Marx) and theorists of “multilinear”, i.e. multivariate development (a number of followers of K. Marx). Within the framework of the second (genetic) direction, a division is also made into “ontogenetic” (A. Smith, K. Menger, etc.) and “phylogenetic” (T. Malthus, T. Veblen, etc.) components. If the “ontogenetic” theory assumes the immutability of the “genetic code,” then the “phylogenetic” theory proceeds from its transformation. Phylogenetic evolution involves the development of different genetic rules through some cumulative process of feedback and subsequent effect. But in phylogenetic evolution there is no need for an end result, a state of equilibrium or rest. However, the “phylogenetic” theory breaks down into two contradictory approaches - Darwinian and Lamarckian. The first, as is known, denies, and the second recognizes the possibility of inheritance of acquired characteristics. According to J. Hodgson, modern followers of T. Veblen are closer to genetics in the Lamarckian sense than to Darwinism. In general, modern evolutionary theory shares the phylogenetic approach in its Darwinian or Lamarckian variants.

3.3. Key Features.
Thus, the main properties of modern evolutionary theory:

1. Rejection of optimization assumptions and methodological individualism. Evolutionary institutionalists, following the old ones, reject the idea of a person as a “rational optimizer” acting in isolation from society.

2. Emphasis on the study of economic change. Evolutionists, following T. Veblen and other old institutionalists, view the market economy as a dynamic system.

3. Making biological analogies. If many classics and neoclassics likened the market economy to a mechanical system, then evolutionists interpret economic changes largely by analogy with biological ones (for example, likening a set of firms to a population).

4. Taking into account the role of historical time. In this regard, evolutionary institutionalists are similar to post-Keynesians, however, if the latter pay more attention to the uncertainty of the future, the former pay more attention to the irreversibility of the past, emphasizing in this regard various dynamic phenomena that are a consequence of the irreversibility of historical time and lead to suboptimal results for the economy as a whole. Such phenomena are manifestations of dependence on the past path of development.
They include cumulative causation among such phenomena,
as well as hysteresis and blocking. Hysteresis is the dependence of the final results of a system on its previous results. Lock-in is a suboptimal system state that is the result of past events and from which there is no immediate exit.

5. Using the concept of "routine". According to evolutionists, routines play a dominant role in the behavior of economic entities - standardized rules for making decisions and carrying out activities, applied for a certain period without adjustment (although under certain circumstances they may undergo minor changes). This concept is basic in the evolutionary theory of the firm, which will be discussed in Chapter. 6.

6. Favorable attitude towards government intervention. The previous properties of evolutionary-institutional analysis indicate that economic change does not have an intrinsic tendency to produce optimal outcomes. Therefore, from the point of view of evolutionists, government intervention can have a positive impact on the economy.

Researchers note that economic theory includes two mutually exclusive aspects: the first is the theory of development (evolution) of the economic system and the second is the theory of its structure and functioning. In the second aspect, economic theory can never become evolutionary (just as in biology genetics will not replace anatomy and physiology). For systemic analysis, evolutionary institutionalism must create not only a theory of economic evolution, but also a theory of the functioning of the economic system.

Conclusion.
The relationships between the areas of modern institutionalism are multifaceted, complex and often difficult to identify; their assessment depends both on the understanding of each of the areas separately, and on the context of comparison and the area of the phenomena being studied.

At the present stage of development of institutional economic theory, it is very difficult to talk about a single subject of this important and interesting science. This circumstance is connected both with the diversity of ideas about subject areas and with the heterogeneity of the methods and models used.

Understanding the essence and relationships between the concepts and ideas of representatives of modern institutionalism will allow us to better understand not only the nature of economic phenomena themselves, but also the possibilities and prospects for the development of economic theory based on the exchange of ideas between various research programs.

In addition, modern institutional theory and all its directions can become a fruitful basis for numerous applied studies in those areas of economic activity that are currently insufficiently studied.

Already, NIET has various areas of application, which O. Williamson combined into three main areas. The first deals with functional areas, the second with applications to related disciplines, and the third with applications to economic policy problems. Within the first direction, O. Williamson lists six functional areas: finance, marketing, comparison of economic systems, economic development, business strategies, business history. For example, comparative analysis of economic systems was developed in the process of studying problems of economic history and modern systems through the analysis of the influence of institutions on the economic development of many countries. With the help of NIET, issues that are traditional for related disciplines are studied: political science, sociology, law, theory of international relations, etc. For example, the processes of institutional change through lawmaking are studied, including in terms of the application of methods for creating normative legal acts that meet the principles of institutional design . The third type of application of NIET is its application to various areas of public policy. The most studied NIET can be considered antimonopoly policy and economic regulation. The researchers conclude that there are significant prospects for the development of NIET not only in terms of theoretical activities and the study of current problems of entrepreneurship and economic policy, but also in conducting research in related disciplinary areas.

Bibliography:

Volchik V.V., “Lecture course on institutional economics”, Rostov-n/D, 2000.

Kuzminov Ya.I., Bendukidze K.A., Yudkevich M.M., “Course in institutional economics”: a textbook for students, Moscow, 2005.

Litvintseva G.P., “Institutional economic theory”: textbook, Novosibirsk, 2003.

There are several reasons why neoclassical theory (early 60s) ceased to meet the requirements placed on it by economists who were trying to understand the real events in modern economic practice:

Within the framework of neoclassics, there are practically no theories that satisfactorily explain dynamic changes in the economy, the importance of studying which became relevant against the backdrop of historical events of the 20th century. (In general, within the framework of economic science until the 80s of the 20th century, this problem was considered almost exclusively within the framework of Marxist political economy ).

Now let's look at the basic premises of neoclassical theory, which constitute its paradigm (hard core), as well as a “protective belt”, following the methodology of science put forward by Imre Lakatos :

Hard core :

stable preferences that are endogenous;

rational choice (maximizing behavior);

equilibrium in the market and general equilibrium in all markets.

Protective belt:

Property rights remain unchanged and clearly defined;

The information is completely accessible and complete;

Individuals satisfy their needs through exchanges that occur without costs, taking into account the initial distribution.

If the hard core is modified, then the theory is replaced by a new theory with its own research program.

Let us consider how the premises of neo-institutionalism and classical old institutionalism influence the neoclassical research program.

3. Old and new institutionalism

Modern neo-institutionalism has its roots in the pioneering works of Ronald Coase, The Nature of the Firm, and The Problem of Social Cost.

The neo-institutionalists attacked first of all the provisions of neoclassicism, which constitute its defensive core.

First, the assumption that exchange occurs without costs has been criticized. Criticism of this position can be found in Coase's early works. Although, it should be noted that Menger wrote about the possibility of the existence of exchange costs and their influence on the decisions of exchanging subjects in his “Foundations of Political Economy.” Economic exchange occurs only when each participant, carrying out an act of exchange, receives some increase in value to the value of the existing set of goods. This is proven by Carl Menger in his work “Foundations of Political Economy”, based on the assumption of the existence of two participants in the exchange. The first has good A with value W, and the second has good B with the same value W. As a result of the exchange that occurred between them, the value of goods at the disposal of the first will be W + x, and the second - W + y. From this we can conclude that during the exchange process, the value of the good for each participant increased by a certain amount. This example shows that activities related to exchange are not a waste of time and resources, but are as productive as the production of material goods. When exploring exchange, one cannot help but dwell on the limits of exchange. The exchange will take place until the value of the goods at the disposal of each participant in the exchange will, according to his estimates, be less than the value of those goods that can be obtained as a result of the exchange. This thesis is true for all exchange counterparties. Using the symbolism of the above example, an exchange occurs if W(A)< W + х для первого и W (B) < W + у для второго участников обмена, или если х > 0 and y > 0. Until now, we have considered exchange as a process that occurs without costs. But in a real economy, any act of exchange is associated with certain costs. These exchange costs are called transactional. They are usually interpreted as “the costs of collecting and processing information, the costs of negotiations and decision-making, the costs of monitoring and legal protection of the execution of the contract” . The concept of transaction costs contradicts the thesis of neoclassical theory that the costs of functioning of the market mechanism are equal to zero. This assumption made it possible not to take into account the influence of various institutions in the economic analysis. Therefore, if transaction costs are positive, it is necessary to take into account the influence of economic and social institutions on the functioning of the economic system.

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