Tuesday, October 4, 2011
M. Aoki, much more than a business economist (by Pedja dell'Arno)
I thought of Masahiko Aoki as a Japanese economist trained in the US that was expert in the corporate governance of Japanese firms. Now that I am reading his book "Towards a Comparative Institutional Analysis" (The MIT Press, 2001), I see that he is much more than that. In his analysis, he explains how different domains of social life (economic, political, socio-cultural) interact to sustain stable socio-political arrangements. For example, he sees the co-determination of German firms as complementary of what he calls social-compact corporatist states. Beyond particular examples, he sees institutions as equilibria of social games that constrain the behavior of agents in other games. Then reform proposals in particular societies have to be made in reference to these equilibria. It is useless to recommend policy changes that are not equilibria of any game. Institutions, preferences and beliefs coevolve and the role of policy is to advise on how is it possible to coordinate on equilibria that are both fairer and more efficient.