Zoran Stefanović’s research while affiliated with University of Nis and other places

This paper discusses issues of methodological basis of contemporary economic theory, from the perspective of rival research orientations and their conceptual sensitization to the role and impacts of institutional structures. In this regard, the paper presents methodological individualism, research support of economic orthodoxy, based on a consistent interpretation of all social phenomena as outcomes of individual choice. It is shown that even in its most rigid versions this approach has to take to a certain degree into account the social interactions that go beyond the individualist framework. The opposing research orientation, methodological holism, gives explanatory primacy to (different) social collective entities and structures, characteristics of which are autonomous in nature and essential for the explanation of the individual as an entity of a lower order, whose individual properties are not significant. Both approaches are subjected to reductionist tendencies - whether explanations of the socioeconomic reality are individual or culturally over-determined. Integrating institutions in consideration of socioeconomic reality has repercussions on the mentioned methodological dichotomy, given that in conceptual terms it has the potential to bridge the extremely individualistic or collectivist methodological positions. Awareness of the impact of institutions on the socioeconomic reality has produced distinctive methodological orientations. Institutional individualism considers institutions as exogenous mechanism whose explanation is at the service of shedding light on the behaviour of the individuals as the main actors of social dynamics, and in that sense this approach can be considered as a milder variant of methodological individualism. The institutionalist extension of methodological holism, methodological institutionalism, understands individual acting as a product of an integrated institutional framework, whose dynamics takes place independently of the individuals, according to its own regularities. Some kind of balance between the aforementioned orientations is offered by methodological systemism, which affirms the dual nature of the actors of social dynamics - as both product of units of a lower order, but also as entities with autonomous, emergent properties. The contextualisation of relations between institutions and individuals in accordance with a system perspective may be a suitable way, with more tuned reality, theoretical valuation and overcoming differences between opponent methodological traditions.

The paper provides an insight into the dominant trends of contemporary evolutionary economics and outlines the important issues related to the articulation of this approach in thinking about the economy. The paper also affirms a proposition on institutions as carrier structures of socio-economic evolution, whose numerous effects at the societal level are decoded through the coordination function. In addition to the market, the process of coordination also employs other non-market institutional structures, whose profile and operational principles are the product of the trajectories of cultural and historical evolution, different among social orders. Projects aimed at the transformation of the economic system are to be sensitized to an objectively conditioned diversity of the institutional structures of the world economy, and in this sense, should be very careful in the installation of „universal” reform solutions.

The impact of institutional arrangements, the “rules of the game”, in terms of Douglass North’s definition, on macroeconomic dynamics has been largely detected in the economic-historical records. However, clarification of the nature of institutional currents and their relationship with the paths of economic growth is a challenge for contemporary economic theory. The paper will present a retrospective of the conceptualization of institutional change as a process that mimics the evolutionary systems, relying on relevant theoretical concepts and selective empirical material that is contained herein. In this sense, the paper gives insight into the important contributions reflecting on the relationship between instiutions and economic growth, the evolutionary theory of socio-economic changes and their possible implications for the current reform process. Total of argumentation offered in the paper indicates stability and inertia of institutional structures, whose dynamics is prone to path dependency. Insisting on universal reform solutions, neutral with respect to local circumstances in the process of stimulating economic growth, turns out to be ineffective.