Setterfield, M. (1993). A Model of Institutional Hysteresis. Journal of Economic Issues, Vol. 27, No. 3 (Sep., 1993), pp. 755-774. Available online at: http://www.jstor.org/stable/4226717

Institutions institutions are important for the functioning of capitalism as well as dynamics of capitalism affects the nature of institutions institutions in the context of capitalist economy can be defined as any correlated behaviour of agents that reoccurs under the same or similar conditions or simply as a well-established arrangements and structures that are part of the culture or society within which individual action in the economy takes place (e.g., competitive markets, the banking system, kids' allowances, customary tipping etc.)
Institutional Economics Old and New we can observe significant disagreement that exists between different school of thought – this conflict of opinons may be illustrated by the contrast between two highly influential methodologies in institutional analysis, what may be referred to as “old" institutional economics (OIE) and the neoclassical “new" institutional economics (NIE)
OIE
OIE (such as Common, Veblen, Ayres) explains institutions by means of historical analysis using holistic methodology which emphasises that the economy cannot be understood as a set of separable parts and the system and its properties should be viewed as wholes, not as collections of parts for instance, in the OIE, the behavior of individual agents in the economy is seen as a function of existing institutions, which form an environment to which individuals become socialized over time the holistic methodology of the OIE leads to an emphasis on structure (institutions) over action (the choices and activities of individuals) in the determination of economic outcomes (i.e., structuralist approach) potential weakness of the holistic teaching of OIE is that it can lead