A theory of institutional legitimacy
AbstractInstitutions matter: they affect individual action, influence cooperation and are crucial in making the difference between wealth and poverty, growth and stagnation. Yet, the explanatory power of modern institutional economics has not been exceedingly satisfactory. This paper criticizes the mainstream institutional view and maintains that its key weakness consists in its consequentialist nature. In contrast with the traditional perspective, therefore, we suggest a theory of institutional dynamics based on the notions of justice, social and procedural legitimacy and fairness. In particular, we put forward a stylized model of society, which includes two groups of individuals: the socialists and the libertarians. We discuss under which conditions they are likely to cooperate, when instability emerges and when demand for institutional change builds up. Finally, we draw on these insights in order to articulate a new research agenda for institutional economics.
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Bibliographic InfoPaper provided by ICER - International Centre for Economic Research in its series ICER Working Papers with number 05-2012.
Length: 37 pages
Date of creation: Jun 2012
Date of revision:
Legitimacy; fairness; justice; institutions; cooperation;
Find related papers by JEL classification:
- B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches
- Z1 - Other Special Topics - - Cultural Economics
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- Angeles, Luis, 2011.
"Institutions, Property Rights, and Economic Development in Historical Perspective,"
SIRE Discussion Papers
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- Berggren, Niclas, 2003. "The Benefits of Economic Freedom: A Survey," Ratio Working Papers 4, The Ratio Institute.
- Andreas Bergh & Christian Bjørnskov, 2011. "Historical Trust Levels Predict the Current Size of the Welfare State," Kyklos, Wiley Blackwell, vol. 64(1), pages 1-19, 02.
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