Institutions and capitalist development: a critique of the new institutional economics

Abstract

New Institutional Economics (NIE) is a branch of neoclassical economics that regards the institutional setting of exchange (markets) as the key force accounting for differences in nations' economic performance. Though originally focused on economic institutions, this approach has paid increasing attention to the political institutions giving birth to the former. Why Nations Fail? by Acemoglu and Robinson (2012) is a leading example of such attempts. As with other NIE works, it suffers from empirical and theoretical problems. It fails to properly uncover the historical character of institutional forms of social reproduction. Consequently, it fails to understand capital accumulation as an autonomously regulated, global-scale process. Contrary to NIE authors, national developmental and institutional patterns, and inter-state relations, should be seen as particular expressions of the general dynamics and historical potencies of capital accumulation on a global scale.