The nature and meaning of institutions: Towards a theory of institutional change
Introduction The term “institution” is easy to defi ne; but although defi nitions are easy to produce, they may also easily mislead us if they remain unrelated to the framework of analysis and the general perspective that give them their meaning. This is as true for the defi - nition of homo oeconomicus as it is for that of homo institutionalis. Homo oeconomicus is a concept which serves very specifi c purposes within the framework of neoclassical analysis. No simple defi nition of either can hope to express adequately the specifi c purposes to which each concept is intended to be used, and without which each concept remains equivocal and undetermined. Therefore, rather than merely providing a simple defi nition of institutions, the aim of this chapter is to discuss the role of institutions and institutional change within the context of a body of economic analysis which is customarily labeled institutional economics. The following questions will be examined: What is meant by institutions within the context of institutional economics? How do institutional economists use the term? How do institutions originate, and in what way are they related to the concept of man and society from which they are derived and which they refl ect? What functions do institutions perform, and what are their effects? And, fi nally, what practical and theoretical difference does it make to approach the study of economic problems in the light of the perspective and questions suggested by the phenomena of institutions?