Beyond markets – ‘social institution’ in the work of Arrow and Hurwicz

Abstract

The paper revisits the place of social institutions in the development of postwar mathematical economics through the work of Kenneth Arrow and Leonid Hurwicz. The rise of formal economic theory is often associated with a turn away from institutions. This paper argues, however, that efforts to bring institutions within the scope of economic analysis were themselves an important dimension of mathematisation. Drawing on published works and archival materials, the paper traces how Arrow and Hurwicz sought to extend economic analysis beyond the competitive market to broader forms of social and economic organisation. Their efforts proceeded through abstraction: by reformulating problems posed in terms of markets and prices as more general problems of information, coordination, communication, and incentives, they developed frameworks within which markets and other institutional arrangements could be represented and compared. The paper thus highlights the conceptual work required to make social institutions into objects of mathematical economic analysis.