Institutions, Naturalism and Evolution

The paper recasts old and new institutionalist economics (OIE and NIE) in light of naturalism. While OIE views institutions as 'paradigms' which define the nature of the actor, NIE views institutions as 'conventions' which act as insubstantial traits, i.e. products of optimization subject to constraint. While the two conceptions are different, they are not alternatives: each one is a special theory limited to one kind of institution. In addition, the paper critically assesses the limits of OIE with regard to the theory of evolution of paradigms. The paper advances a developmentalist perspective of institutions which parallels non-Darwinian biological theory.