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A Framework of Socioeconomic Organisation: Redefining Original Institutional Economics Along Critical Realist Philosophical Lines

Listed author(s):
  • Paschalis Arvanitidis


The paper develops a theoretical framework of socioeconomic organisation to enrich understanding of the complex interrelation between economy and institutional environment. To achieve this, key elements from both new and old institutional economics are combined and integrated under the philosophical platform of critical realism. Institutionalist research can be, and has been, informed by a range of philosophical positions and analytical standpoints. Critical realism, in turn, has certain advantages, over the other philosophical perspectives, in discussing the institutional organisation of urban socioeconomy. These mainly stem from its ontological arguments that allow the dissociation of institutional structure from human agency, and acknowledge the separate identity and causal powers of institutions without undermining their agent-dependent nature. This is important because it enables a neat identification and analysis of the institutional qualities, mechanisms, causal powers and relations that characterise the socioeconomic fabric. Moreover, the fact that the realist ontology is compatible with a variety of economic theories renders its fusion with institutionalism on the whole both valid and feasible. The paper starts delineating the philosophical tenets of critical realism, which provide the basis for the development of a stratified ontological framework discussing the institutional organisation of the urban socioeconomy. In particular, a three-layer, interlocked reality is identified describing the complexity, multidimensionality, and dynamic character of the socioeconomic world. It is argued that deeper tendencies, capacities, ‘instincts’ and qualities of the human essence (understood as ‘creativity’, ‘emulation’ and ‘culture’) condition the institutional environment (differentiated in economic, political, legal, and social terms), which in turn constitutes the terrain upon which organisational arrangements are manifested and socioeconomic events are actualised. In these terms, institutions are defined as ingrained regularities or established rules of human life that mould and determine agents’ perception, expectations and behaviour, providing order, stability and certainty in social interaction and economic organisation. The paper closes summarising the epistemological and methodological position espoused to establish a generic analytical framework that can be used to investigate the institutional texture of the urban/regional socioeconomic environment.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa06p575.

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Date of creation: Aug 2006
Handle: RePEc:wiw:wiwrsa:ersa06p575
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  1. Geoffrey M. Hodgson, 2003. "The hidden persuaders: institutions and individuals in economic theory," Cambridge Journal of Economics, Oxford University Press, vol. 27(2), pages 159-175, March.
  2. Rutherford,Malcolm, 1996. "Institutions in Economics," Cambridge Books, Cambridge University Press, number 9780521574471, August.
  3. Greif, Avner, 1998. "Historical and Comparative Institutional Analysis," American Economic Review, American Economic Association, vol. 88(2), pages 80-84, May.
  4. Samuels, Warren J, 1995. "The Present State of Institutional Economics," Cambridge Journal of Economics, Oxford University Press, vol. 19(4), pages 569-590, August.
  5. T. Lawson., 2006. "A Realist Perspective on Contemporary "Economic Theory"," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 2.
  6. Geoffrey M. Hodgson, 1998. "The Approach of Institutional Economics," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 166-192, March.
  7. Theodore C. Bergstrom, 2002. "Evolution of Social Behavior: Individual and Group Selection," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 67-88, Spring.
  8. Samuels, Warren J, 1990. "Institutional Economics and the Theory of Cognition: Review Article," Cambridge Journal of Economics, Oxford University Press, vol. 14(2), pages 219-227, June.
  9. Tony Lawson, 1997. "Situated rationality," Journal of Economic Methodology, Taylor & Francis Journals, vol. 4(1), pages 101-125.
  10. Commons, John R., 1931. "Institutional Economics," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 21, pages 648-657.
  11. G. Hodgson., 2007. "What Are Institutions?," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 8.
  12. Hodgson, Geoffrey M, 1997. "The Ubiquity of Habits and Rules," Cambridge Journal of Economics, Oxford University Press, vol. 21(6), pages 663-684, November.
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