MIT 17.186

Institutional Economics: Applications to Comparative Political Economy

 


Overview - Requirements - Grading - Readings - Course Meetings




Fall 2003

Professor: David M. Woodruff

Course 17.194

E-mail: woodruff@mit.edu  Phone: 3-6643

Mondays, 10-1

Office Hours: By willingly granted appointment

E51-393

Syllabus URL:
http://web.mit.edu/woodruff/www/instec.html

 

Course e-mail list: 17.186-students@mit.edu


 

 

Overview

 

This seminar introduces major themes in institutional economics, defined as the study of the private calculations and public policies that shape patterns of exchange and investment.  Our discussions will focus on how individuals’ and firms’ efforts to make their dealings reliable and efficient intersect with the ambitions of agents and organizations of the state to assert sovereignty and collect taxes, and how these intersections are shaped politically and administratively.

The syllabus was designed with two aims in mind.  First, students should come away with an understanding of core arguments both in the “old institutional economics” and the “new institutional economics,” including its transaction-cost, incomplete contracting, and game-theoretic variants.  Second, by the end of the course students should be able to apply, or critique, these arguments in discussing issues in comparative politics and comparative political economy.

 

Requirements

 

Participation: Each session will begin with a lecture on the topic under consideration.  Lectures will be followed by discussion of the readings.  Discussion is vital to the course.  The purpose of the seminar format is to encourage you to engage these texts independently.  Your thoughtful and well-prepared participation in class discussions will be decisive in whether or not the course is a success for you.  If you are not keeping up with the readings, which are of necessity heavy, you will not enjoy nor benefit from the course.
 
Written Assignments:
 
You will produce two short papers of 5-7 pages each.  These can be turned in at any class session, and should discuss one or more of the readings for that session.  You may want to delineate and adjudicate a dispute between two authors, or analyze particular aspects of a particular argument.  You can also relate one or more of the week's readings to earlier ones.  In any event, remember to build your paper about a thesis of your own, rather than mere summary.
 
In addition, there is a final paper of 20-30 pages.  It may take either the form of an independent research paper or a literature review on a relevant topic.  Please discuss your final paper with me by the middle of October.  The paper will be due at the last class on December 8, 2000; those needing an extension should contact me well in advance.
 
NOTE: Students with a large number of final papers due may wish to substitute a final exam.  Please let me know if you wish to take advantage of this option.

 

Grading procedures

 

The final grade will be based on class participation (20%), the short papers (2x20%), and the long paper (40%). Grades are assigned on a letter basis, and combined numerically using the following conversions: A+=4.3, A=4, A-=3.7, B+=3.3, B=3, B-=2.7, etc. 
 
Participation grading is non-rigorous: if you submit questions for each session, and speak at each of them, you will get an A.  Especially frequent and productive participation will get you an A+.  If you fail to submit questions for at least 90% of the sessions, or regularly fail to speak at all in class, you will receive a B.  If you neither speak nor submit questions, but attend class regularly, you will receive a C.
 
Papers are graded according to the following standards.  You may rewrite one of the first two papers if you are disappointed with how it turned out. 


A

Excellent thesis, excellent execution.

A-

Interesting to excellent thesis, good to excellent execution

B+

A good thesis, good execution

B

Summary of others' thoughts (no original thesis!)

B-

Poor summary of others' thoughts

C+ and below:

increasingly inadequate thought and effort. 

 

Cross-registered students should note that MIT does not report plus or minus grades.

 

Readings

 

Many of the readings will be included in a binder, available on reserve under the course number at the Dewey Library.  You will probably want to make a copy for your own use.
 
You will find the following books available for purchase at the Coop, and on reserve at Dewey:

 

Frye, Timothy. Brokers and Bureaucrats: Building Market Institutions in Russia. Ann Arbor: University of Michigan Press, 2000.

Ensminger, Jean. Making a Market: The Institutional Transformation of an African Society. Cambridge: Cambridge University Press, 1992.

McDermott, Gerald A. Embedded Politics: Industrial Networks and Institutional Change in Postcommunism. Ann Arbor: University of Michigan Press, 2002.

Bates, Robert H. Analytic Narratives. Princeton, N.J.: Princeton University Press, 1998.

Course Meetings

 

 

INTRODUCTION   9/8/2003

 

1. OLD INSTITUTIONAL ECONOMICS I      9/15/2003

 

Kennedy, Duncan. 1993. The Stakes of Law, or Hale and Foucault! In Sexy Dressing Etc., ed. Duncan Kennedy:83-125. Cambridge: Harvard University Press.
 
Swedberg, Richard. 1998. Max Weber and the Idea of Economic Sociology. Princeton, NJ: Princeton University Press.  Chapter 4, 82-107.
 
Commons, John Rogers. 1957. Legal Foundations of Capitalism. Madison, Wis.: University of Wisconsin Press: 65-142
 
Granovetter, Mark. 1985. Economic Action and Social Structure: The Problem of Embeddedness. American Journal of Sociology 91: 481-510.

 

No class meeting 9/22/2003

 

2. OLD INSTITUTIONAL ECONOMICS II    9/29/2003

 

Stinchcombe, A. L. 1999. Certainty of the Law: Reasons, Situation-types, Analogy, and Equilibrium. Journal of Political Philosophy 7, no. 3: 16-.
 
Stinchcombe, Arthur L. 1997. On the Virtues of the Old Institutionalism. Annual Review of Sociology23: 18-.
 
Chamberlin, E.H. 1956. The Theory of Monopolistic Competition: A Re-Orientation of the Theory of Value. Cambridge: Harvard University Press. 56-70.
 
Coase, R.H. 1960. The Problem of Social Cost. The Journal of Law and Economics 3, no. October: 1-44.

 

3. CORE IDEAS IN NEW INSTITUTIONAL ECONOMICS 10/6/2003

 

Williamson, Oliver E. 1981. The Economics of Organization: The Transaction Cost Approach. American Journal of Sociology 87, no. 3: 548-575.
 
Williamson, Oliver E. 1994. Transaction Cost Economics and Organization Theory. In The Handbook of Economic Sociology, ed. Neil J Smelser and Richard Swedberg:77-107. Princeton: Princeton University Press.
 
North, Douglass Cecil. 1990. Institutions, Institutional Change, and Economic Performance. Cambridge ; New York: Cambridge University Press, 3-69, 92-104.
 
Fama, Eugene F. and Michael C. Jensen. 1983. Separation of Ownership and Control. Journal of Law and Economics 26, no. 2.

 

No class meeting 10/13/2003

 

4. EMPIRICAL ISSUE: VARIETIES OF CAPITALISM AND COMPARATIVE CORPORATE GOVERNANCE      10/20/2003

 

Hall, Peter A. and David Soskice. 2001. An Introduction to Varieties of Capitalism. In Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, ed. Peter A. Hall and David Soskice. London: Oxford University Press.
 
Aguilera, Ruth V. and Gregory Jackson. 2003. The Cross-National Diversity of Corporate Governance: Dimensions and Determinants. Academy of Management Review 28, no. 3: 447-465.
 
Roe, Mark J. 1996. Chaos and Evolution in Law and Economics. Harvard Law Review 109: 641.
 
Skeel, David A. 1998. An Evolutionary Theory of Corporate Law and Corporate Bankruptcy. Vanderbilt Law Review 51: 1325-1398.
 
Dunlavy, Colleen A. 1998. Corporate governance in late 19th-century Europe and the U.S.: The case of shareholder voting rights. In Comparative corporate governance: The state of the art and emerging research, ed. Klaus J. Hopt, Hideki Kanda, Mark J. Roe, Eddy Wymeersch and Stefan Prigge:5-40. Oxford: Clarendon Press.

 

5. CASE STUDY: POLITICS OF ORGANIZED MARKETS IN RUSSIA  10/27/2003

 

Frye, Brokers and Bureaucrats

 

6. CASE STUDY: STATE AND BUSINESS IN KENYA      11/3/2003

 

Ensminger, Jean. Making a Market: The Institutional Transformation of an African Society. Cambridge: Cambridge University Press, 1992.

 

7. INCOMPLETE CONTRACTS AND INTRICATE COOPERATION      11/10/2003

 

Kreps, David M. 1990. Corporate Culture and Economic Theory. In Perspectives on Positive Political Economy, ed. James E. Alt and Kenneth A. Shepsle:90-143. Cambridge: Cambridge University Press.
 
Helper, Susan, John Paul MacDuffie, and Charles Sabel. 2000. Pragmatic Collaborations: Advancing Knowledge While Controlling Opportunism. Industrial and Corporate Change 9, no. 3: 443-486.
 
Xu, Cheng-Gang and Katharina Pistor. 2002. Incomplete Law: A Conceptual and Analytical Framework and its Application to the Evolution of Financial Market Regulation. New York: Columbia University. Law and Economics Working Paper, 204.

 

No class meeting 11/17/2003

 

8. CASE STUDY: POLITICS OF INDUSTRIAL RESTRUCTURING IN THE CZECH REPUBLIC          11/24/2003

 

McDermott, Embedded Autonomy

 

9. INSTITUTIONS AS EQUILIBRIA: GAME THEORY APPROACHES

 

Cooter, Robert D. 1997. The Rule of State Law and the Rule-of-Law State: Economic Analysis of the Legal Foundations of Development. In Annual World Bank Conference on Development Economics, 1996, ed. Michael Bruno and Boris Pleskovic.
 
Milgrom, Paul R., Douglass C. North, and Barry R. Weingast. 1990. The Role of Institutions in the Revial of Trade: The Law Merchant, Private Judges, and the Champagne Fairs. Economics and Politics 2, no. 1: 1-23.
 
Ostrom, Elinor. 1990. Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge: Cambridge University Press. 3-56, 182-216

 

10. CASE STUDIES: GAME THEORETIC HISTORIES     12/8/2003

 
Bates et al., eds. Analytic Narratives