In the 1990s, economics as an academic discipline and a determinant of policy became more open to debate. Dissatisfaction with some of the outcomes of economic decision-making at a national and international level have led not only to intellectual challenge and dissent but also to riots and demonstrations. In this climate of questioning and criticism, the dominance of neo-classical, free market economic thinking found itself challenged from five key directions:
* Globalisation. Doubts are being aired over the neoclassical claim that the global extension of market forces is conducive to increased global human wellbeing.
* Redistribution. Inequality and poverty are back on the economics agenda as their incidence becomes more visible and as the risks associated with doing nothing escalate. More encouragingly, their causes and consequences are being recognised as complex: no easy, pain-free solutions.
* Environment. There is a growing acceptance that market forces alone will not induce a sustainable physical environment for human wellbeing, and a more widespread belief in a need to shift stances within international institutions.
* Ethics. In a world in which many millions of people have no worthwhile economic choices, the implicit ethics of radical individualism underpinning neo-classical economics are being widely questioned.
* Data. Statistical institutions have suffered greatly from reduced government spending and there is a need to re-specify the economics data required to enable policy makers to address current needs and aspirations.
In our view, these challenges require that schools' economics syllabuses are more than merely tinkered with. Rather, there is a need to reform syllabuses so that there is within and throughout them a rigorous comparative alternative to neoclassical economics. Such a comparative approach that encourages principled debate on all aspects of economic thought and practice is consistent with the delivery of 'informed citizenship' as a theme that permeates the whole school curriculum.
Our claim is that the necessary alternative is now available in the form of New Institutional Economics (NIE). We further claim that NIE concepts are already familiar to many economics teachers and that supportive materials are already available to teachers and students.
THE NIE APPROACH
In building a theory around the behaviour of large corporations, the NIE guru O.E. Williamson has already heightened awareness of the potential for individual economic agents, as people and corporations, to behave in ways that do not conform to neoclassical economic models (Williamson, 1985).
For NIE activists who have researched more widely, the issue of behaviour that appears dysfunctional in terms of neoclassical economics is not one that is confined to a few people in top management of major corporations; it also pervades the values, motivations and aspirations of most people in most of their resourceallocating activities.
In NIE, the axiomatic rationality propositions of neoclassical economics, such as insatiability and access to complete information, are not treated as universal characteristics of the human predicament.
At a more macro-economic level, there has been a growing interest in NIE, especially amongst development economists, (eg North, 1981, 1989, 1990). Within development economics, the positive interest in NIE needs to be understood in the context of the recent beleagured history of this area of economics. In the 1980s mainstream development economics came under vigorous attack from pro-market, neoclassical economists on the grounds that it lacked intellectual rigour (Lal 1983).
Concerns about institutions (broadly defined) have always featured strongly in development economics. These concerns have ranged from the very local to the global, and from individual and community values and beliefs to the rationale and activities of formal bureaucratic organisations (Cameron andNdhlovu, 2000). …