THE PARADIGMATIC CRISIS AND THE “MAINSTREAM” POTENTIAL OF THE INSTITUTIONAL ECONOMICS

Abstract

The article analyzes the manifestations and causes of the paradigmatic crisis of the modern economic “mainstream”: the “monopolization” of economic theory and economic education by the neoclassical direction; Fragmentary nature of scientific research;  The  “fascination” of scientists with the problem of economic growth and ignoring other factors of social development. The emphasis is on the lack of interdisciplinary research, the “mathematization” of economic knowledge. It is noted that the role of mathematics in economic models is only instrumental, mathematically complex economic models make the world more incomprehensible than simplify, the connection with real life is lost.

Unlike  the  «mainstream»,  technology  and  individual taste in the institutional economy are endogenous variables. Institutionalists focus on the boundaries in which the actual future can be predicted, in contrast to the prediction in the «model context»; Institutionalists approach the economy as an organic and evolving «whole», and not as a static mechanism; Other advantages of the institutional economy are: the use of methodological collectivism instead of methodological individualism; Study of the processes of adaptation and disequilibrium, a  criticism  of  the  «neoclassical  search»  for optimal and equilibrium solutions; Instead of technology, focus on ownership and transaction costs; Recognition of ideology as the determining factor in economic history, which contradicts the neoclassical vision of the world; The refutation of the Pareto optimality principle; Emphasis on economic and political power.

The methodological orientation of the institutional economy and the possibility of practical application determine its potential for becoming a “new mainstream”.