Institutional Law and Economics: The Legal-Economic Nexus

A key part of the work Eric Scorsone and I have been doing has centered around this idea of creating a general awareness in students and peers of the institutional, legal underpinnings of economic organization and action.  We borrow heavily from the work done by Al Schmid for the foundation of our institutional thought -- Al was incredibly well read and missed little-- but have noticed a need for more concrete vocabulary and structure for how to teach and talk about institutional structure and changes in it.  Consider this excerpt from Warren Samuels' "Some Fundamentals of the Economic Role of Government"(1989),  "People tend to define socioeconomic reality in terms of legal rights. Government selectively protects, as rights, certain interests and not others-and it is rights that form, structure, and operate through the market and the economy in toto. What people define as reality is thereby formed and reformed. In helping to define and create socioeconomic reali...

 There has been a lot written about the relationship between the work of John Maynard Keynes and Institutional Economics (IE).  Here, I want to specifically look at the work of Hyman Minksy and his view on this question (Joan Robinson who will we talk about later as well). Minsky was a financial and macro economist who took seriously the work of Kenyes.  The "Minsky moment" became famous during the 2008 financial crisis, defined as a moment when major financial players realized that everybody was bound up with everybody else and liquidity was drying up everywhere leading to collapse. Minsky actually wrote a book called “ John Maynard Keynes ” in the 1970’s which was re-released in 2008.  Minsky had bona fide institutional credibility as a winner of the Commons-Veblen award from the Association of Evolutionary Economics. Minsky writes in the first chapter of his Keynes book that, “ The General Theory , although concerned with the implications of institutional ...