An Institutionalist Perspective on the Future of the Capitalist World-Economy

By Ozcelik, Emre; Ozveren, Eyup | Journal of Economic Issues, June 2006 | Go to article overview

An Institutionalist Perspective on the Future of the Capitalist World-Economy


Ozcelik, Emre, Ozveren, Eyup, Journal of Economic Issues


The term world-economy in our title must have already given a hint to the careful reader of our purpose in writing this paper: We intend to bridge institutional economics with world-systems analysis in order to enhance the global applicability of the former. World-economy is a term used by Fernand Braudel and Immanuel Wallerstein and means a space defined by the existence of a single division of labor (coexistent with multiple States) whereas world economy would indicate the arithmetic summation of national economies each of which would possess a division of labor and a State of its own (Wallerstein 1979, 6). World-economy is useful for treating the unity by recourse to its common dynamics constitutive of economic inequalities and power asymmetries. If in the wake of so-called "globalization" there is now a pervasive discourse on global governance as the nascent institutional setup of the global economy, we might as well as treat this new concept in relation with the systemic unity and asymmetries to which it corresponds. Nevertheless, the two approaches remain wide apart in spite of a common heritage they share. For example, in the syllabus of a postdoctoral seminar, Wallerstein identified Karl Polanyi along with Joseph Schumpeter as among the few "immediate and forgotten predecessors of world-systems analysis" (1994). His colleague Terence K. Hopkins was a young participant in Polanyi's interdisciplinary research team at Colombia University on economic anthropology. Giovanni Arrighi, who gave a new impetus to world-systems studies with his Long Twentieth Century (1994), relied heavily upon his reinterpretations of Polanyi's idea of "double movement" and Schumpeter's idea of "symbiosis" as "political exchange" so much so as to qualify as a disguised institutionalist. In short, world-systems analysts have benefited greatly from the institutionalist tradition. In turn, institutional economists have so far not reciprocated. We hope to take a step in this direction in order to advance further the critique of economic liberalism to which both schools of thought remains deeply committed.

If there is one essence of economic liberalism from the philosophers Of Scottish Enlightenment to the contemporary neoliberals it can best be summarized as "Spontaneity yields efficiency." The argument goes that self-regulating economic processes lead to a spontaneous order in the form of an efficient market economy, whereas political institutions constitute "the State" as a cumbersome structure, which distorts spontaneous efficiency. Hence, the State must be strictly separated from the economic processes so that efficiency can be ensured through the operation of the self-regulating market. In this regard, The Great Transformation of Polanyi ([1944] 1957) offers an effective antidote by arguing that separation of economic processes and political institutions implies the destruction of social cohesion. Hence, any viable social system must maintain the embeddedness of economic processes and political institutions. Separation of the market and the State entails the destruction of embeddedness, which, in turn, paves the way for the collapse of the social system as a whole.

In this paper, we elaborate Polanyi's concept of embeddedness so as to construct an institutionalist framework to understand the contemporary world-economy. We contend that embeddedness can be deployed to analyze the so-called "global governance model" (GGM) as the most recent liberal recipe. The Washington Consensus had led many countries to minimize the role of the State in economic affairs during the 1980s up until the worldwide financial crises of the 1990s. The advocates of orthodoxy have nevertheless continued to put the blame on the State: If the State were able to work in accordance with the spontaneous and efficient logic of the market, neoliberalism could still succeed. In the meantime, "commanding heights" of the world-economy proved to be a late-comer in realizing that "institutions matter. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

An Institutionalist Perspective on the Future of the Capitalist World-Economy
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.