The System Paradigm and the Prospects for “Institutional Synthesis” in Economic Theory

Abstract

The constant adaptation of economic theory to changing practice at certain stages requires a theoretical synthesis, during which various (sometimes competing) research  programs are combined in order to develop a more adequate methodology. In orthodox economic theory the two most important syntheses were: the neoclassical synthesis of the 1940–1960s and the new neoclassical synthesis of the 1990s. Both were intradisciplinary in nature. However, the developed toolkit of neoclassical orthodoxy still does not allow the study of the “risks of the system as a whole” and making confident long-term forecasts of economic development. This current situation determines the relevance of research within the framework of the system paradigm, with the help of which such problems can be solved. This paper discusses the characteristics of the system paradigm and analyzes why this paradigm is poorly represented in neoclassical orthodoxy. The paper considers barriers to the spread of the system paradigm, associated with the  worldview of modern economists-theoreticians The paper also analyses the methodological prerequisites of neoclassical orthodoxy, the specifics of which also act as a barrier to the development of the system paradigm in economic research.  This paper outlines, for the first time, the general shape of the interdisciplinary institutional synthesis, the formation of which has been observed in Russia since the beginning of the 2010s. Its distinctive features are as follows. First, it develops outside economic orthodoxy, in the course of research cooperation between heterodox economists and representatives of social, humanitarian and natural disciplines – that is, it is an interdisciplinary (polydisciplinary) synthesis. Second, the main subject of research within its framework are institutions or, more broadly, meso-level structures that ensure the integrity, reproduction, and development of socio-economic systems. Third, the methodological basis of interdisciplinary cooperation within the framework of the institutional synthesis is provided by a system paradigm and holistic approach which are different from the neoclassical orthodoxy. Some examples of the institutional synthesis presented in Russian economic literature and its practical  results are shown. The prospects for the further development of the theoretical interdisciplinary institutional synthesis are outlined.