Economic Power and the Institutions of Capitalism: Reappraising the Legacy of François Perroux

Abstract:

The work of the French economist François Perroux has not given rise to a strong consensus in the academic world of economists. Thus, to appreciate the scope of Perrouxian thought, it is necessary to defuse the intellectual debate by exploring the ideas that are part of the current institutional issues. I seek to demonstrate the theoretical interest of the conceptualizations proposed by Perroux in terms of power analysis to understand the political, human, and social dimensions of the institutions of capitalism. In this view, I endeavor to shed light on the Perrouxian institutional legacy regarding the social cooperation/resistance issue, the institutional structure of production, firm theory, agonism theory, economic pluralism, and modern formalization techniques.

Keywords::

• cooperation
• economic pluralism
• François Perroux
• institutions
• power
• resistance
• the firm

JEL Classification Codes::

• A10
• B40
• L10
• L20
• P12

Notes

¹ The turn of 1948 suggests that Perroux wanted to “stand back” from the anti-capitalism tendency (see Maréchal 2003).

² See also James G. March (1962).

³ In this paper, all the citations of Perroux have been translated from French to English by the author (Virgile Chassagnon).

⁴ Perroux (1973, 217) considers the general equilibrium of Léon Walras and Vilfredo Pareto to be “the archetypal model of the economics of scientific intentions.”

⁵ It is important to note that, if the Perrouxian arguments seem to be in line with the notion of Herbert A. Simon's (1957) bounded rationality, he does not place great emphasis on this crucial behavioral hypothesis in this analysis of the institutions of capitalism.

⁶ Douglass North (1994, 361) considers that “if institutions are the rules of the game, organizations and their entrepreneurs are the players.”

⁷ For an interesting complementary analysis of institutions, see Geoffrey M. Hodgson (2006).

⁸ See the work of Thorstein Veblen (1898).

⁹ Perroux was acquainted with the work of Max and Alfred Weber (see Perroux 1961).

¹⁰ This argument is similar to the view of the Austrian economists, notably Joseph A. Schumpeter, (1943). Perroux was Schumpeter's student in Vienna during his Rockefeller scholarship. Furthermore, he participated in the Ludwig von Mises seminars and met Werner Sombart, the head of the “Youngest Historical School.”

¹¹ By “active unit,” Perroux (1973, 236) characterizes an entity “that by its own action and in its own interest is capable of changing its environment, i.e., the behavior of the units with which it is in relation.”

¹² I have to add that, for Perroux (1973, 185), “[t]he social relationship between agents for the disposal of countable things cannot be a pure conflict because the destructions that result from it decrease the disposal of these things.”

¹³ For them, it is the tangle of extrinsic motivations (the satisfaction resulting from the reward of an action) and intrinsic motivations (the satisfaction resulting from an action as such) that guides individual intentionality, creates collective cohesion, and conditions employee efficiency (see, for example, Deci and Ryan 1985).

Thus, Perroux proposes to see powerful actors also as strategic actors and seems to separate himself from the work of Albert O. Hirschman (1958) (see Perroux 1961).

Additional information

Notes on contributors

Virgile Chassagnon

Virgile Chassagnon is a full professor of economics at the UPMF-University of Grenoble, research fellow at CREG Research Center, and the scientific director of ESDES at the Business School of Catholic University of Lyon (France).