“Some institutions within the market are associated with exchange and contracts in an elemental sense (such as the legal system and the customs which govern the contract)… These would be present even if a formal market did not exist. Other institutions are specifically to do with the development of a market and the coordination of a large number of exchanges in an organized manner.”

Source: Economics and Institutions, 1988, p. 174

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Geoffrey Hodgson7

British economist 1946

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“Market exchange requires a combination of both state and customary institutions. For any developed system of commodity exchange there must be a legal system inscribing and protecting rights to individual or corporate property. There must be a body of contract law with criteria for distinguishing between voluntary and involuntary transfers of goods and services, and courts to adjudicate in such matters. However, the evolution of law is not simply a matter of legislative construction; a great deal of law grows out of custom and precedent. Property and contract law are not exceptions. Consequently, the existence of property and exchange is tied up with a number of legal and other institutions, e. g. government, political system, and common societal values.”

Geoffrey Hodgson (1946) British economist

Source: Economics and Institutions, 1988, p. 150

“We shall here define the market as a set of social institutions in which a large number of commodity exchanges of a specific type regularly take place, and to some extent are facilitated and structured by those institutions. Exchange as defined above, involves contractual agreement and the exchange of property rights, and the market consists in part of mechanisms to structure, organize and legitimate these activities. Markets, in short, are organized and institutionalized exchange. Stress is placed on those market institutions, which help to both regulate and establish a consensus over prices and, more generally, to communicate information regarding products, prices, quantities, potential buyers and potential sellers.”

Geoffrey Hodgson (1946) British economist

Source: Economics and Institutions, 1988, p. 174

“Markets are institutions that exist to facilitate exchange, that is, they exist in order to reduce the cost of carrying out exchange transactions. In an economic theory which assumes that transaction costs are nonexistent. markets have no function to perform, and it seems perfectly reasonable to develop the theory of exchange by an elaborate analysis of individuals exchanging nuts for apples on the edge of the forest or some similar fanciful example. This analysis certainly shows why there is a gain from trade, but it fails to deal with the factors which determine how much trade there is or what goods are traded.”

Ronald H. Coase (1910–2013) British economist and author

1960s-1980s, "The Firm, the Market, and the Law" (1988)

“Outside the firm, price movements direct production, which is co-ordinated through a series of exchange transactions on the market. Within a firm, these market transactions are eliminated and in place of the complicated market structure with exchange transactions is substituted the entrepreneur-coordinator, who directs production. It is clear that these are alternative methods of coordinating production. Yet, having regard to the fact that, if production is regulated by price movements, production could be carried on without any organization at all might we ask, why is there any organization?”

Ronald H. Coase (1910–2013) British economist and author

Source: 1930s-1950s, "The Nature of the Firm" (1937), p. 388

“The cumulative development of a medium of exchange on the free market — is the only way money can become established. … government is powerless to create money for the economy; it can only be developed by the processes of the free market.”

Murray N. Rothbard book What Has Government Done to Our Money?

What Has Government Done to Our Money? (1980)

“International specialization and division of labor requires institutions and organizations to safeguard property rights across international boundaries so that capital markets as well as other kinds of exchange can take place with credible commitment on the part of the players.”

Douglass C. North (1920–2015) American Economist

Source: Institutions (1990), p. 121

“Markets are useful instruments for organizing productive activity. But unless we want to let the market rewrite the norms that govern social institutions, we need a public debate about the moral limits of markets.”

Michael J. Sandel book Justice: What's the Right Thing to Do?

Source: Justice: What's the Right Thing to Do?

“The paper develops a simple macroeconomic framework for the study of exchange rate movements. The purpose is to develop a theory that is suggestive of the observed large fluctuations in exchange rates while at the same time establishing that such exchange rate movements are consistent with rational expectations formation. In developing a formal model we draw on the role of asset markets, capital mobility, and expectations that have been emphasized in recent literature.”

Rudiger Dornbusch (1942–2002) German economist

Rudiger Dornbusch, "Expectations and exchange rate dynamics." The journal of political economy (1976): 1161-1176. p. 1161

“Without civil intervention the free market tends to monopoly. What we should do is try to restore a truly free market, try to restore a market where there are no barriers to access and people have something other than their labour which they can trade or exchange..”

Phillip Blond (1966) British philosopher

“It is because prices are stable, and are perceived by agents to be in equilibrium, that the task facing market institutions is less daunting in this respect. However, market institutions may still have many other functions, such as providing information regarding quality and the location of potential buyers and sellers, and regulating both the product and the entrants to the market. In fact, a crucial function may be more subtle; by ordering trade under the aegis of some institution, the price and quality of the product may be legitimized at its given level. There is a kind of stamp of institutional approval which may contribute in a powerful manner to the emergence of price norms…..”

Geoffrey Hodgson (1946) British economist

Source: Economics and Institutions, 1988, p. 185-6

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Geoffrey Hodgson7

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