نشریه اقتصاد و جامعه
پیاپی 34 (پاییز 1396)

During the last three decades, there has been an increasing interest in institutional theories among university scholars, executives and many others. In this regard, some of these institutional economists are even awarded noble prize for their achievements. Despite this appreciation, we find that there has been many misunderstanding about meaning and functions of institutional economics. This misconception has been particularly arisen from some market fundamentalists in Iran. The misunderstanding gap is deep rooted in our educational system as an educational failure. Therefore, it is very important to rectify this misunderstanding. This Paper aims to discuss the main shortcomings of market by resorting to institutional theories to explain the lacuna, taking into consideration, imperfect information and opportunistic behaviors. We shall also discuss the importance of property rights and transaction costs. Following institutional approach, we shall analyze market and state, value of national currency and other legal and business matters.

Economists of different schools of thought, including neoclassical and institutional economists, are of the opinion that democracy is the premises for growth. In fact, sustainable development goals cannot obtain without transparency, referring to people’s votes, separation of executive and legislative officials, accountability, responding to the public and recognizing the principles of good governance. While this is well established, we can assume that a country will move towards the sustainable development. However, democracy has a gradual and fluctuated process which can be efficient and fruitful only after a country reaches a high stage and achieve a high level of growth. Therefore, interpreting “democracy as the premises of growth” and “lightening the concept of democracy by referring to election and people’s votes” may rather become an impediment factor to growth. Experience of countries such as china during the last four decades illustrate that totalitarian state can facilitate growth and that there is no correlation between democracy and growth.

BaChoosing an appropriate economic order is a basic challenge confronting Iranian economy. So far, we have experienced two types of economic orders, namely, capitalism and socialism. Their main economic peculiarities are dominance of market and state respectively. However, with the fall of socialist block, this division lost its justification. Today we are witnessing mixed economies, where both market and state are working together, though generally market is preferred. In fact, there are various types of market economies .Choosing a suitable types of market is of uttermost important. In this paper, we shall distinguish two main types of markets: Anglo-American (Anglo-Saxons) and European-Japanese continents types. This division is based on the following five criteria: 1-Coordination mechanism.2- Role of state in providing basic needs, 3- Role of guilds system and chambers of commerce,4-Labour relations, and 5- Finance and related affairs.
After discussing the importance of this distinction and justifying our various criteria, we shall discuss the characteristic of an appropriate market and propose the way it can be chosen.

Although many efforts has been done to increase Iran’s productivity, the available official statistics indicate that Iran’s performance are much poor compared to many countries, including members of Asian Productivity Organization. The arisen question is why Iran has failed to improve its productivity and achieve its plans’ target?
To answer this question, we shall follow institutional economics like the framework suggested by Williamson and examining economic plans of the country by taking both pre and post revolution era into account. Our findings indicate that the main reasons for inability of the country to meet the planning targets for productivity performance can be summarized as follow:1-negligiance of institutional Prerequisite for improving productivity, particularly informal institutions. 2- Inadequate attention for proper implementation and overlooking necessary pre requisites of proper plan. 3- Non-consideration of the hierarchy of institutional and ideal developments and Idealistic view of conditions of a society to meet the goals of productivity improvement.

In neoclassical equilibrium models, entrepreneur cannot contribute to making decision. Because in neoclassical theories, rational people make decisions, information and markets are perfect and balanced, and no mistake is made by anyone. In their view, entrepreneur is another factor of production, entrepreneur’s reward is paid based on estimation of cost and benefit. Entrepreneur's profit is only paid based on his risk-taking. However, in reality, the information is not complete, nor is market in equilibrium. The alert and clever entrepreneur tries to receive the signals of lucrative opportunities by seeking out the scattered knowledge and information along with non-equilibrium market prices. Thus, entrepreneurs by using practical information known to him, undertake cost and benefit appraisal of projects and evaluate market and take a decision. In this way, entrepreneurs play a significant role in production and exchange and act as the driving forces of market.

Institutional theoreticians belong to the party, believing that a set of institutions in developed societies creates a space where price and value are taken weights, economic competitions are done between firms incentive are provided for innovation and development. However, these important institutions are neglected by neoclassical economists in developing countries such as Iran, Particularly by those influential economists, whose advices are generally sought by governments, leading to disappointing results. In this paper, we shall discuss the importance of such institutions for proper market performance.

In recent decades, due to spreads of Information technology and electronics in many spheres of human activity, we find that the distance of the countries and territories are highly shortened. As a result, globalization has been a vital subject to be studied by researchers and economic thinkers all over the world. Based on our approach to neo-institutional economics, we try to analyze the challenges that developing countries are dealing with, due to globalization. In this paper, we shall discuss the threats and opportunities that developing countries are confronted due to globalization. In this process, we shall concentrate our emphasis on two pivotal Institutions of market and state in the developing countries. Our main emphasis is on the point that major global issues have long-term strategic and fundamental characters and issues such as energy, environment, and increasing inequalities within and between countries have become increasingly important than the past through applying an institutional view owing to dramatic increase in the limitations and inabilities of the approach of market fundamentalism. These problems are likely to be better rectified by following neo institutional economics.