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Heterodox Economics

Foundations of Alternative Economics

Hasan Gürak

Mainstream economic textbooks propose a kind of economic world which can only exist in fictitious markets where producers and consumers interact like robots, relations are mechanical and assumptions utopian. Accordingly, the expositions are, in substance, nothing but sophistry. Yet, many economists are becoming more and more discontent with the sophistries of mainstream doctrines. The book presents some realistic alternative approaches to the conventional ‘unrealistic’ attitudes of mainstream economists in order to pave the way for a further development of new ideas.

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Chapter 10: INSTITUTIONS & ECONOMICS

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181 Chapter 10: INSTITUTIONS & ECONOMICS At discussions on economic issues and developments, economists, especially those of a neoclassical heritage, in general overlook or ignore the role and im- portance played by the institutions, decision-makers and culture. Yet, institu- tions along with culture practically always and inevitably influence what sort of economic process we pursue and its future implications. For instance, in the ab- sence of institutional decision-makers endowed with contemporary skills, dedi- cation and experience, all or most of the promising targets are bound to remain sterile or inefficient. Because in the end it is the decision-makers’ qualifications which generally shape the very structure and progress of their institutions. There is no doubt that the specific social, cultural and technological devel- opment stage of a country heavily influences how efficiently the institutions are exploited by the decision-makers. For instance, when the socialist economic or- der was overthrown in the former Soviet countries and Eastern Europe, it left behind a very large well-educated labor force ranging from engineers to scien- tists and managers along with an institutional structure. In many former social- ist- oriented countries the proportion of engineers and scientists in the labor force was higher than that in many developed Western countries. However, this highly qualified labor force in terms of its educational skills was not endowed with the “appropriate” qualifications which would allow it to adapt to Western institutional standards and run them efficiently, at least not in the initial phase of the transition period. The practices of...

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