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Principles of Exchange and Power

Integrating the Theory of Social Institutions and the Theory of Value


Nikolaus Horster

The General Equilibrium Theory as one of the fundamental theoretical concepts in economics is analyzed and reformulated by using the structuralist theory concept. Subsequently the basic principle of the economic theory, «exchange», is then compared to the basic principle of the Theory of Social Institutions: «power». The Theory of Social Institutions is a power-based theory - in contrast to most sociological theories which take a game-theoretic approach - and is shown to be well suited to explain all the phenomena a General Equilibrium Theory has to handle. Furthermore several weaknesses in the reasoning of theoretical economics are clearly identified. The result is a simpler, more straightforward approach to the various problems underlying the analysis of modern economics.
Contents: The hidden presuppositions of the General Equilibrium Theory - The workings of the Theory of Social Institutions - Game-theoretical versus Power-based theories - The basic principles in Sociology and Economics - «Power» and «Exchange» - and their relationship - The merging of the two theoretic concepts - Illustrating examples.