Sustainability in classical institutional economics: A systems theory view

In a recent contribution to this journal, Peter Bradley (2021) explores the ways in which new institutional economics and classical institutional economics approach the notion of sustainability. Drawing on insights from both schools of economic thought, Bradley (2021) synthesizes a conceptual framework for understanding sustainable production and consumption. Building on this framework, the present paper undertakes a Luhmannian systems-theoretic analysis of the ways in which a notion of sustainability is implicated within the normative foundations of classical institutional economics which comprise the paradigms of instrumental and reasonable value. A Luhmannian reconstruction of these paradigms reveals that both of them share a vision of sustainability problems which arise out of the precarious nature of environmental embeddedness of many types of social systems. In line with the instrumental value paradigm, corporations and other types of social systems are supposed to utilize the community stock of reliable scientific and technological knowledge. At the same time, this paradigm is shown to contain the moral conditions of the disclosure and voluntary acceptance of any side-effects of the systems' operations. The reasonable value paradigm imposes the additional requirement that the working rules constituting the relevant social system must be perceived by the affected stakeholders as fair and legitimate. This argument illuminates the ongoing debates on the conceptualization of corporate sustainability within classical institutional economics while highlighting the potential contributions of this school of thought to informing the scholarship on sustainable production and consumption. (C) 2021 Institution of Chemical Engineers. Published by Elsevier B.V. All rights reserved.

Automated summary

This paper discusses how the notion of sustainability is implicated within the normative foundations of classical institutional economics, highlighting the precarious nature of environmental embeddedness of various social systems. It also reveals the moral and ethical considerations that need to be taken into account when utilizing scientific and technological knowledge in line with sustainability goals.