How to bring D.C. North, O.E. Williamson, and D. Acemoglu et al. together, and start unifying Institutional Economics

Abstract

The main motive for this paper is the hypothesis that Institutional Economics (IE) has the potential to raise to the top of entire economics. A direct support is the growing evidence that the performance of economies depends more on their institutional features than on any other factor, including natural resources, technologies and education. An indirect support appears, when suitable conceptual correspondences are established, in the recent raise of genomics to the top of biology. This paper helps IE realize this potential by repairing its two actual flaws: terminological ambiguities and fragmentation into largely disconnected strands. The most embarrassing ambiguities concern the very term ‘institutions,’ used in many different and not always well-defined meanings. The fragmentation is exemplified by the three prominent strands of IE following the seminal contributions of O.E. Williamson, D.C. North, and D. Acemoglu with S. Johnson et J.A. Robinson, respectively. To repair these flaws, the paper proposes a logical model of an economy’s main institutional features, where each strand has a well-defined place. The model will disclose and bridge two deep gaps between them, with a suggestion for their fruitful division of labor on what the paper will define as the ultimate IE issue.