The Evolution of Institutional Mechanisms

21 Apr

Looking at our current economic catastrophe one might wonder why none of the theoretical safeguards of neoclassical capitalism lead to a self correction. Leftists would argue – what safeguards of neoclassical capitalism? Rightists (I hate the moniker “conservative” — what are they conserving? certainly not energy!) claim that it was precisely the lack of capitalism — too much government regulation — that negated any hope that the safeguards of neoclassical capitalism would work. Fair enough. But my question is the following: If untramelled free markets are so wonderful then why don’t they develop organically and then persist as permanent institutions? Why do we have societies like Somalia? It is not enough for economists to claim that there are institutional differences between societies. They still have to explain WHY these differences develop and then why they persist. This is what this blog will investigate.

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