An Institutionalist–Conventionalist Approach to the Process of Economic Change

This paper highlights the problems that neoclassical theory encounters in providing a comprehensive explanation of the process of economic change. Whereas institutionalism combined with conventionalism has the merit of conceptualising economic and social processes, showing that institutions are the result of social interaction and not just structures produced by rational and maximising individuals. The Economics of Convention provides a theory of rules that is close to institutional foundations. Thus, an institutionalist-conventionalist approach will explain the interaction between individuals and institutions, shaping goals and desires, in a process of economic change due to institutional change.