METHODOLOGICAL DEVELOPMENTS IN THE OLD AND THE NEW INSTITUTIONAL ECONOMICS

The present article focuses on some methodological developments that are taking place in both the New Institutional Economics (NIE) and the so-called Old-or-Original Institutional Economics (OIE). It shows that not all NIE oriented scholars rely now exclusively on the rules of methodological individualism. Not all OIE oriented ones are now building their explanatory analyses upon the rules of methodological holism. A different middle way mode of explanation exists and is being used in both traditions. It was Agassi (1960) who firstly referred to it as institutional individualism. Individual agency and social structure are now being combined also in a way that assigns analytical primacy to both of them, not to one or the other as is usually done in reductionist and holist economic explanations. The paper shows that the three rules of institutional individualism allow for building non-systemic and non-reductionist explanations as the same time as they allow for the incorporation into economic models and theories of the many formal and informal institutional aspects surrounding all human interactions. Some examples of analyses so built in both camps are mentioned, including contributions by Nobel laureates such as North and Ostrom. This is not to mean that a kind of convergence is occurring between different approaches in institutional analysis. No statement in favor of such a convergence is made in the present article. Epistemological issues are not addressed in the paper either.