Bridging Original and New Institutional Economics?

Geoff Hodgson’s long-standing critique of the methodological individualism characteristic of both the mainstream and the new institutional economics revolves around the view that the economy is an open, evolving system in which actors and structures are mutually constituted. This position was instrumental in the formation of the European Association for Evolutionary Political Economy in 1988. It also runs through Hodgson’s defence of the habit-based conception of agency characteristic of the original institutional economics and his proposals of various non-efficiency explanations of the firm. The chapter shows that the boundaries between the original and the new institutional economics have more recently become blurred, to the point that it is no longer useful to differentiate between the two. Institutional economics can be usefully seen as belonging to a continuum along which different schools of thought are more complements than substitutes. This opens the door for multiple opportunities for mutual learning.