Frank A. Fetter is often classified as an American representative of the Austrian school, yet surprisingly, there is practically no published record of his views of the Austrians or theirs of him, and there is no indication that he ever seriously interacted with them after the First World War. However, Fetter enjoyed many personal and professional relationships with the Austrians, and they shared a reciprocal influence on each other's ideas that deeply influenced their respective research programs. This paper draws on unpublished archival records to explore Fetter's unique place in the history of economics, in particular, his positive and negative interactions with the leading individuals and institutions of the Austrian school. Their half-century of influence sheds light on Fetter and his role in American economics, but also brings to light a wide range of information about the lives, works, and personal relations of the Austrians that have not been included in their biographies or institutional histories.

In robot torts, robots carry out activities that are partially controlled by a human operator. Several legal and economic scholars across the world have argued for the need to rethink legal remedies as we apply them to robot torts. Yet, to date, there exists no general formulation of liability in case of robot accidents, and the proposed solutions differ across jurisdictions. We proceed in our research with a set of two companion papers. In this paper, we present the novel problems posed by robot accidents, and assess the legal challenges and institutional prospects that policymakers face in the regulation of robot torts. In the companion paper, we build on the present analysis and use an economic model to propose a new liability regime which blends negligence-based rules and strict manufacturer liability rules to create optimal incentives for robot torts.

Development scholars have identified several Hofstede (1980, 2001) cultural dimensions as critically important determinants of long-run economic development across countries. Does economic progress, in turn, shape culture in a predictable direction? This paper investigates whether economic change since 1970 has induced shifts in five of the Hofstede value orientations in a sample of up to 72 countries. To achieve identification, we employ a unique data set on country-level cleavages in the values of two non-overlapping age cohorts approximately one generation (30 years) apart, on average. We find evidence that faster-growing countries during the period of coming of age and personality development of the younger cohort witnessed the rise of more individualistic and politically egalitarian generations, suggesting the existence of a self-perpetuating cycle between certain “good-for-development” cultural attitudes and economic development.

Frank H. Knight's magnum opus Risk, Uncertainty, and Profit, published in 1921, is widely recognized for introducing and establishing the distinction between risk and uncertainty. It is also known for developing a novel theory of the firm and business profit based on entrepreneurial judgment. However, the work's relevance for institutionalism has only rarely been addressed or even acknowledged. This introduction to the special issue organized to celebrate the centenary of Knight's tome briefly summarizes the work's institutionalist implications and the articles that comprise the special issue.

The legal realist Robert Lee Hale offered a definition of freedom as a zero-sum game: each volitional freedom implies some degree of coercion over other people's freedom, and at the same time one's freedom is subject to some degree of control and coercion by others. The objective of our work is to develop this idea along with the theory of positional goods. This allows us to illustrate the externalities deriving from the ‘consumption’ of freedom and detail the role of the lawmaker in accordance with the Halean contribution.

Coase's (1960) contractual single-exchange framework is challenged by Arruñada (2017) as a framework that cannot be used to understand the complex nature of property law and related institutions. Arruñada proposes the sequential exchange model as an alternative framework. Differences between the two approaches are considered and some applications in land and natural resources are used to evaluate his critique. These cases support Arruñada's critique of the simple contracting approach to property, showing that for many natural resources private contracting has not been the solution and that a mix of property institutions govern. Contrary to Arruñada, however, I argue that the limits of the single-exchange framework arise not because of sequential exchange, but because assets (parcels of land) are complex and physically connected.

We investigate the relationship between economic development and the growth of the state by testing Wagner's Law. We begin with a general test, and find it does not hold in all cases: it breaks down at higher levels of development and in more recent time periods. This suggests that Wagner's law has specific scope conditions, beyond which states do not continue to grow as economies grow. We use a series of models to explore the temporal scope of Wagner's law and the point at which state growth may hit a ceiling. We conclude limits on the growth of the state are set by limits on the capacity of states to increase taxation. States can avoid this problem temporarily by running budget deficits, but eventually accumulated debt forces them to cut expenditures. Spending is tied to tax revenue like a rubber band, it can stretch only so far before being pulled back.

In his comprehensive analysis of the relationship between institutions and economic growth, Ha-Joon Chang, in his article ‘Institutions and Economic Development: Theory, Policy and History’, reviews the empirical evidence on this relationship emphasizing the contrast between the conclusions that one can derive from the time-series evidence and the claims often made in favor of ‘liberalized institutions’ based on the results of cross-section studies. Does the time-series evidence contradict the results of cross-section studies regarding the relationship between institutions and growth? In this comment, I argue that in stressing the contrast between these two kinds of evidence, Chang falls short of a full criticism, consistent with his theoretical analysis, of cross-section studies while at the same time failing to infer what the time-series evidence really shows.

This essay outlines the contributions of Ronald Harry Coase (1910–2013) to institutional economics, noting his insistence on the importance of studying real world institutions and his personal contribution as an institution builder.

Standard health economics concentrates on the provision of care by medical professionals. Yet ‘care’ receives scant analysis; it is portrayed as a spillover effect or externality in the form of interdependent utility functions. In this context care can only be conceived as either acts of altruism or as social capital. Both conceptions are subject to considerable problems stemming from mainstream health economics’ reliance on a reductionist social model built around instrumental rationality and consequentialism. Subsequently, this implies a disregard for moral rules and duties and the compassionate aspects of behaviour. Care as an externality is a second-order concern relative to self-interested utility maximization, and is therefore crowded out by the parameters of the standard model. We outline an alternative relational approach to conceptualising care based on the social embeddedness of the individual that emphasises the ethical properties of care. The deontological dimension of care suggests that standard health economics is likely to undervalue the importance of care and caring in medicine.

This article demonstrates that the network structures of historical regimes influence the way information is spread, which in turn circumscribe the behaviors of the different groups that make up the system. It advances two central claims. The first is a methodological one showing that patterns of long-term historical change are best studied at the system level, rather than by a traditional equilibrium framework grounded in models of individual behavior. Then, an empirical claim is established by comparisons of China's hub-and-spoke hypernetwork with Europe's multi-hub hypernetwork to show that their different patterns of interconnectivity forged their respective capacities to weather intermittent socioeconomic transitions.

Social norms pervade society and when they conflict with legal norms, the former undermine the latter making them ineffective. In this study, we propose that the extortion racket in Sicily has turned into a social norm and this is why recent top-down interventions have failed in stalling this socially undesirable activity. One exception is represented by Addiopizzo, a grass root movement that uses non-legal means to fight the racket phenomenon in Sicily. During the last 15 years, Addiopizzo was able to produce an effective reduction in the payment of protection money in the Sicilian city of Palermo by triggering, we suggest, among other things, a process of change in social norms. Acknowledging the importance of a change in social norms to achieve social change allows us to link the theory of institutions as ‘rules’ with the theory of institutions as ‘equilibria’.

Formal economic models of entrepreneurship have two characteristics: they model entrepreneurship as an allocation of resources, and they identify common factors affecting this allocation. These common factors are represented as parameters of optimization models, and they are evaluated at the market level. We argue that although these models are useful, they are incomplete because certain aspects of entrepreneurial behavior, such as judgment, alertness, or innovativeness, cannot be easily transformed into allocative problems. Moreover, entrepreneurial acts involve idiosyncratic elements, which limit the applicability of the market-level analysis to individual cases. Thus, the traditional economic methods have to be complemented by approaches highlighting the role of individual and historical specificity. The study of entrepreneurship, therefore, requires a synthesis of both general theory and historicist approaches, as envisioned a century ago by Frank Knight.

Two shifts of informal rules occurred in the decades around the turn of the 20th century that continue to shape U.S. fiscal policy outcomes. Spending norms in the electorate shifted to expand the scope of the government budget to promote economic security and macroeconomic stability. Simultaneously, norms for elected office shifted to careerism. Both norms were later codified into formal rules as legislation creating entitlement programs, macroeconomic responsibility, and organizational changes to the fiscal policy process. This institutional evolution increased demand for federal expenditures while creating budgetary commons, thus imparting strong motivations to spend through deficit finance in normal times. Despite the last four decades of legislative attempts to constrain spending relative to taxes, the informal norms have trumped the formal constraints. While the empirical literature on deficits has examined the constraining effects of informal rules, this paper offers a novel treatment of shifting norms as having expansionary effects on deficits.

We explain archaeological evidence of Sogdian merchants in central Asia in early medieval, remote long-distance trade on the emerging Silk Road. In fact, it began as barter, but was based on the social organization that Sogdians developed in their communities when migrating east. Their particular way of generating trust and institutionalized cooperation was by social leverage, involving third parties as contract witnesses and/or guarantors. These usually had own commercial relations with the contractors, facilitating crediting and exchange – and credible threat to defectors. While Greif (1989) had been criticized for overlooking courts in the Maghribi case, we discuss a differentiated (latent) role for courts. We also discuss property rights versus possession, transactions costs and price implications. We analyze the mechanism in historical cases and game-theoretical reconstructions, and explain trade flourishing under strong uncertainty.

It has been an enduring concern of institutional economics and critical realism to understand how individuals are able to exercise agency in the context of social structures, and to maintain appropriate connections, separations and balances between these two levels of causal power. This paper explores the contribution of Alasdair MacIntyre's neo-Aristotelian philosophy to the topic. Empirical data are provided from the career narratives of senior Scottish bankers recalled in the aftermath of the global financial crisis of 2007/8. The method of the study is interpretive, using themes drawn from MacIntyre's writings. These bankers faced moral choices as tensions developed between their own professional standards and the new corporate goals of the banks. We discuss MacIntyre's understanding of individual moral agency as a narrative quest in the context of different types of institution with different and often conflicting ideas about what constitutes good or right action. Habituation and deliberation are important in enabling action, but fully developed moral agency also depends on individuals being able to make choices in the space opened up by tensions within and between institutions.

This article provides comments on the article titled ‘Institutions and Economic Development: Theory, Policy and History’ by Ha-Joon Chang.

This comment criticizes Ha-Joon Chang's assessment of contemporary institutionalism, in his article entitled ‘Institutions and Economic Development: Theory, Policy and History’, for failing to show fundamental problems in the discourse. I argue that the current discourse's insights are structurally biased because it fails to satisfactorily address methodological problems of doing meaningful comparative research. The discourse is characterized by a limited focus on differences of degree, a neglect of interaction, and a tendency to represent societies from a partial perspective. The result is an unbalanced debate that tends towards equating developed country institutions with economic success.

This article builds on a legal institutionalist approach to assess market-based regulatory change in British television production over the last three decades. It explores how formal rules governing television production constitute market relations, and whether these rules are likely to be evaded by television producers and commissioners in a context where contracting depends heavily on social norms of cooperation, reciprocity and flexibility. Using qualitative data, this article suggests that changes in law and terms of trade intended to promote a market in television production have not had a straightforward or linear effect: compulsory independent production quotas and licensing models of terms of trade have redrawn organizational boundaries in unexpected ways, disturbed the public service remit and engendered new financial flows. Formal rules were nonetheless central to the trajectory of the television production industry, as they were a constitutive element of changes in the power structure of the sector towards producers’ interests.

The purpose of this symposium is to shed light on the genealogy of the idea of a business corporation, an economic institution which has long been regarded with a mixture of awe and apprehension. Each of the four original contributions addresses the history of some of its key features. In the process, each contributor reveals some of the insights that history has to teach us regarding the central concepts that inform contemporary debates about the nature of the corporation, the contours of the corporation's purpose, the sources of corporate power, the functions of corporate law, the duties of directors, the status of shareholders, and the legitimacy of corporate rights.