The ‘Institutions-Individual’ Conceptual Nexus as a Basis of Alternative Economic Methodologies

This paper discusses issues of methodological basis of contemporary economic theory, from the perspective of rival research orientations and their conceptual sensitization to the role and impacts of institutional structures. In this regard, the paper presents methodological individualism, research support of economic orthodoxy, based on a consistent interpretation of all social phenomena as outcomes of individual choice. It is shown that even in its most rigid versions this approach has to take to a certain degree into account the social interactions that go beyond the individualist framework. The opposing research orientation, methodological holism, gives explanatory primacy to (different) social collective entities and structures, characteristics of which are autonomous in nature and essential for the explanation of the individual as an entity of a lower order, whose individual properties are not significant. Both approaches are subjected to reductionist tendencies - whether explanations of the socioeconomic reality are individual or culturally over-determined. Integrating institutions in consideration of socioeconomic reality has repercussions on the mentioned methodological dichotomy, given that in conceptual terms it has the potential to bridge the extremely individualistic or collectivist methodological positions. Awareness of the impact of institutions on the socioeconomic reality has produced distinctive methodological orientations. Institutional individualism considers institutions as exogenous mechanism whose explanation is at the service of shedding light on the behaviour of the individuals as the main actors of social dynamics, and in that sense this approach can be considered as a milder variant of methodological individualism. The institutionalist extension of methodological holism, methodological institutionalism, understands individual acting as a product of an integrated institutional framework, whose dynamics takes place independently of the individuals, according to its own regularities. Some kind of balance between the aforementioned orientations is offered by methodological systemism, which affirms the dual nature of the actors of social dynamics - as both product of units of a lower order, but also as entities with autonomous, emergent properties. The contextualisation of relations between institutions and individuals in accordance with a system perspective may be a suitable way, with more tuned reality, theoretical valuation and overcoming differences between opponent methodological traditions.