THE PLACE OF THE MARKET ECONOMY IN INSTITUTIONAL THOUGHT.

The article presents response of the author on comments made by Lewis E. Hill on the papers "Toward a Reconciliation of Institutional Economics and Its Critics" by Coldwell Daniel and "Beyond the Market Economy Building Institutions That Work" that were published in the March 1970 issue of the periodical "Social Science Quarterly." Hill's Comment on the exchange between Daniel and the author is perfectly right in pointing out that he gave no reasons for insisting that theirs is an industrial economy rather than a market economy, as Daniel has declared. If it is not too late, the author would like to repair that omission. In various important senses theirs is of course a market economy. Obviously buying and selling go on almost everywhere and almost all the time; and scholar Karl Polanyi was quite right in pointing out that ours is the only economy in history in which buying and selling have been as general and as significant as they are today throughout the Western world--or at least throughout the free world. The question is: significant of what? Many writers have maintained that freedom to buy and sell is the quintessence of freedom, and that people who do not enjoy this freedom are not free. This may be true. But it is not the whole story. In particular it is not the whole story of economic development. Such freedom --the market may have been a necessary condition but not the determinant of the modern Western economy.