Three approaches to institutions in economic analysis: Polanyi, North and the surplus approach’s third way

I compare three approaches to economic history and institutions: the classical surplus approach, the Polanyian view, and New Institutional Economics (NIE). In the first institutions are seen in relation to the production and distribution of the social surplus. Research in economic anthropology, archaeology and history has validated the fecundity of this approach. The Polanyian criticism to classical and neoclassical theories is then considered and appreciated, although some severe limitations are envisaged. A good part of the paper concentrate upon Douglass North, the NIE most representative author in the field of economic history. Striking of North is the attempt to replicate Marx’s relation between economics and institutions in the context of neoclassical theory. Transaction costs economics revealed a dead end in explaining institutions and the power of predatory élites. Lacking a material anchor such as surplus theory, North’s theory became progressively more elusive and indeterminate. On balance, a surplus-based Marxist-Polanyian approach is the most promising direction although much further work is still necessary to explain the coevolution of the economic and institutional sides of the economy.