From Market to Transition Economics: The Institutional Road to Ecological Economics

Drawing upon the Institutionalist tradition, this article offers a few principles for a possible transition of capitalist market economies to sustainable ecological economies. The overall result of the worldwide economic liberalization of the 1980s is loosely regulated market-led and financialized economies that usually function in systemic crisis mode. Economic, political, and social decisions are related to the financial markets efficiency criterion. Such radical change relies on radical institutional changes that have replaced public regulation and collective action mechanisms with self-regulating market rules. This private-interest-led regime that relies on de-institutionalization and de-socialization of governance structures (regulation, supervision, and incentivization of markets) has led to the 2007–2008 global financial crisis that we have not yet recovered from. This path that the evolution of societies takes at the global level regarding ecological and social issues is an unsustainable and unviable way of organizing society and economy. Environmental and resource depletion and hysteresis of inequalities are some of the consequences of this episode. Thus, the transition of market economies to a sustainable society calls for an institutional revolution that would offer an alternative organization of economies through collective action, capable of enabling an eco-transition towards a livable future.