ABSTRACT
This chapter explores what it means to have institutionalist and radical-institutionalist theories of the state. While the expression “school of economic thought” appears often, writers seldom define “school.” Orthodox economics maintains that social systems are analytically separable into the economic and noneconomic realms. Thus, the economic system operates—and can be understood—as an entity independent of legal and other social subsystems. Neoclassical economics also contains the belief that market mechanisms are naturally self-regulating. This view of the economic process permits an aggregation of quantities (including labor, capital, and money), but prohibits interpersonal comparisons of utility (a prohibition necessarily circumvented by assumptions made prior to public finance, welfare, and similar analyses). Because orthodox economists focus on markets, economic “value” is equated—assuming no “externalities”—to the price at which items are exchanged in markets. While the orthodox school includes “monetarists” and “Keynesians,” on issues of scientific methodology even the latter group depends upon the work of Milton Friedman.
