Institutionalism : As It Really Is

During the last three decades, there has been an increasing interest in institutional theories among university scholars, executives and many others. In this regard, some of these institutional economists are even awarded noble prize for their achievements. Despite this appreciation, we find that there has been many misunderstanding about meaning and functions of institutional economics. This misconception has been particularly arisen from some market fundamentalists in Iran. The misunderstanding gap is deep rooted in our educational system as an educational failure. Therefore, it is very important to rectify this misunderstanding. This Paper aims to discuss the main shortcomings of market by resorting to institutional theories to explain the lacuna, taking into consideration, imperfect information and opportunistic behaviors. We shall also discuss the importance of property rights and transaction costs. Following institutional approach, we shall analyze market and state, value of national currency and other legal and business matters.