REM 420 Lecture Notes - Lecture 3: Public Choice, Material Flow Analysis, Wishful Thinking
5 Feb 2017
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Document Summary
The institutional embodiment of the voluntary exchange process. We are observed to cooperate with one another, to reach agreements, to trade. The network of relationship that emerges or evolves out of this trading process, the institutional framework - is called the market. A market is not competitive by assumption or construction. A market becomes competitive and competitive rules come to be established as institutions emerge to place limits on individual behaviour patterns. It is a setting or arena in which individuals can be seen attempting to accomplish their own purposes. The rules of the game in a society. The humanly devised constraints that structure political, economic and social interaction. Informal constraints (sanctions, taboos, customs, traditions, and codes of conduct). Throughout history, institutions have been devised by human beings to create order and reduce uncertainty in exchange. Institutions are the fundamental cause of long term growth (north, 1990).
