Introduction to the inaugural issue by the Editor-in-Chief

Extract

Major shifts in thinking among economists and other social scientists in recent years have prepared the ground for the launch of the Journal of Institutional Economics. Within economics, for example, after a period of neglect from the earlier to the later decades of the twentieth century, the study of the nature and role of institutions has become a central topic. Explanations of economic growth and development used to focus on inputs, production functions, and outputs, often neglecting the institutional structures that constrain or empower individuals, and frame their incentives and disincentives. Accordingly, for a long time the firm was treated as a ‘black box’, with little regard to the structural determinants of its existence, boundaries, and performance. However, the study of the firm changed dramatically in the 1970s when Oliver Williamson, building on the earlier work of Ronald Coase and others, opened the black box to investigate the firm as an institution. Similarly, in a pioneering series of works, Douglass North has investigated the role of institutions in the historical development of the modern capitalism. There are many other examples of important achievements in this area, too numerous to mention here. The outcome is that institutions have become a central topic of analysis for economists.