Introduction to the symposium on institutional analysis, market processes, and interdisciplinary social science

Heterodox economic approaches such as Austrian economics and market process analysis rely upon a less formalistic approach to rationality than neoclassical frameworks. We argue such looser formalism provides a unique opportunity for interdisciplinary engagement to investigating and understanding social institutions, outcomes and complex phenomenon. This introduction briefly summarizes the contents of this invited issue as effective examples of such interdisciplinarity.

The Scientisation of Economics

Lionel Robbins was appointed head of the Department of Economics at the London School of Economics (LSE) in 1929 following the sudden death of Allyn Young, the incumbent professor. Young had not made any significant alteration to the teaching at LSE, but from the very first Robbins set about reorganising the profile of economics teaching. The framework within which he did this was one of a ‘science’ based upon ‘economic principles’, and in 1932 his Essay on the Nature and Significance of Economic Science provided the methodological template for his project. This work appears to owe a great deal to Austrian economics, but it can be demonstrated that this was indirect, chiefly through the work of Wicksteed and Wicksell, hence reflecting economics where it had stood in the 1880s. Nonetheless, Robbins was successful in repackaging this work, and his Essay stimulated the development of discussions of economic method. In addition, Robbins’s lectures provided the template for the textbook literature of the 1950s, cementing the influence of the LSE on the training of young economists. However, this training remained at the undergraduate level for the most part due to the lack of labour market demand for economists in Britain; in the United States, by contrast, graduate teaching became the motor through which American economics came to dominate the international teaching of economics.

Wage Exploitation as Disequilibrium Price

There are two opposing views concerning intuitive cases of wage exploitation. The first denies that they are cases of exploitation at all. It is based on the nonworseness claim: there is nothing wrong with a discretionary mutually beneficial employment relationship. The second is the reasonable view: some employment relationships can be exploitative even if employers have no duty towards their employees. This article argues that the reasonable view does not completely defeat defences of wage exploitation, because these do not rely solely on the nonworseness claim. They also rely on the idea, popularised by Alan Wertheimer, that exploitation is a form of disequilibrium price occurring in defective markets. The article then proceeds to criticise Wertheimer’s account through neoclassical, new institutional, and Austrian economics. It concludes that considerations for economic efficiency are irrelevant to assessing intuitions regarding exploitation.

An Austrian Take on ESG

This paper analyzes the contemporary debate about ESG – Environment, Social, Governance – using economic insights from Austrian Economics; particularly, on entrepreneurship, agency, and information asymmetry. These insights are contrasted to similar concepts in “mainstream” economics suggesting that the Austrian insight goes beyond them, first by stressing effectiveness in addition to efficiency and institutions in addition to law-likeliness. When applied to ESG, the Austrian insight portraits ESG as a special case of the socialist, or economic calculation debate causing misalignments between inter- and intrafirm goals, exacerbates agency problems and suffers from serious flaws in its conceptualization as well as methodology. Relying on entrepreneurship, however, could make ESG work. This paper, thus, applies Austrian economics to contemporary debates claiming that its insights provide a unique perspective but at the same time updating its research program.

Consumption needs and Quality of Life: Austrian Economics and the causes of migration

This paper re-introduces the view on migration causes by the Austrian School of Economics. Austrian economics has not earned its fame in the field of migration, but rather on advocating libertarian economics. Nonetheless Mises outlined a migration model, which can be understood by adding some clarifications by Hayek. Given that the institutional barriers to migration raised by the state are removed, the interplay between market wages, standard wages, attachment component and cost component will determine the migration. While the attachment component relates to fundamental freedoms and to what is referred to as quality-of-life aspects today, the cost component relates to subjective consumption needs. Hitherto unexplored, this model offers new insights to the complex interplay between economic and sociological aspects determining migration drivers.